Share Name Share Symbol Market Type Share ISIN Share Description
Just Group LSE:JUST London Ordinary Share GB00BCRX1J15 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  -0.05p -0.05% 95.95p 95.85p 96.10p 97.85p 95.05p 95.05p 2,330,715 16:35:05
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 2,970.7 181.3 16.7 5.8 900.31

Just Group Share Discussion Threads

Showing 376 to 398 of 400 messages
Chat Pages: 16  15  14  13  12  11  10  9  8  7  6  5  Older
DateSubjectAuthorDiscuss
14/8/2018
18:48
Eastbourne 1982, Thanks for your comment but I was really thinking of the 40 year run in house prices UK.
bolador
14/8/2018
18:17
Hopefully the government and regulators don’t want to kill off the LTM business as it may well be a key component of solving the forthcoming lack of savings and pension crisis. If a big stick is waved, JUST will have to raise any necessary funds and reprice or close to new business then move on. All should become clear end of September. Does anyone have a view on the nuclear outcome impact on embedded value? All speculation but £160m has been mentioned before - if that had to an equity raise at say 80p I think that knocks embedded NAV to 197p. Is there a further knock by the actuary?
lovat scout
14/8/2018
16:34
As I've floated before, if the LTM issue isn't going to be too bad, I expect Just to be taken out by a rival who also has LTM exposure and thinks this is a great oppo to take out a rival - who also have Long Term INAs (so not Aviva as would be a monopoly) and enhanced annuity capability and/or DB buy-out expertise. However the downside, if said rivals think LTM is going to massively hit Just, then why do anything other than wait on the sidelines for further damage. ie I don't expect the price to be around £1 at year end but it could be a long way up or down from here so doesn't help much!
scrapheap
14/8/2018
14:47
Can see this company falling to a bid from Legal & General / Aviva if this continues for too long. Its a bit of a bargain, and they would fail to defend a 150p take-out. That would be mightily attractive to another industry player in my view.
topvest
14/8/2018
12:49
bolador, With regards to house prices having a huge run, I don't agree, strip out London and the south east and many places have only gone up circa 5 - 15% since 2008, hardly what I would call a boom. As ever people are clouded by the London and south east market which is now under pressure.
eastbourne1982
14/8/2018
12:09
Anybody considering investing in JUST must be put off trying to understand the technicalities of the various products on offer by the company especially if they have read the most recent posts here. On the face of it we have a company on a PE of under 6 an EEV value of 228pps and a very strong trading statement in July. The share price now looks to be one of those stock market anomalies that crop up from time to time time. The company must be aware that the interest cycle is on the turn and from historically low levels. They must also be aware that the UK housing market has had a huge run that is unlikely to be repeated soon. Can they not adjust their terms to suit or are they stuck with unhappy contracts ? As to house prices ever weaker sterling provides a partial safety net for this business.This perhaps complicates the relationship between option models and the real world. Numis had Just a buy in July after the trading statement with a TP of 220p !
bolador
14/8/2018
07:58
Regulators have to be cautious, it’s their job after all, but surely lower LTVs for LTMs kills the issue off?
lovat scout
13/8/2018
17:30
Do they not just need to record what on their books is in LTV based on current market prices versus debt rolled up to-date and year on year report this and adjust reg capital y-o-y too if things get tighter? Halifax for example have an auto current property value on mortgages for existing borrowers, if Just has something similar for their portfolio of properties, they also know the debt as it currently has accrued on each so the current LTV and buffer. Add in the age of the borrowers on each property so their actuarial likely age to die / go in to care - or say simplicity of 90. Then report to PRA on how much £ debt is sub 40%, 50%, 60%, 70% LTV and then per say <60, 60-70, 70-80, 80-90 age bands - bobs your uncle. I can see the interest in the option pricing debate but it's missing out that clients aren't wanting to use this option - normally they are planning to leave some money still out of their estate and typically haven't maxed out what they could borrow (as allowed by the insurer's own calculations of age/value)- that's safer for me too that way! As an IFA, whilst the NNEG is definitely reassuring to my clients, I can't think of ANY where the amount they have borrowed is expected to wipe out the equity entirely and that's based on assuming no price rise at all before they die / go in to care.... If there's regular MI of how the book LTV is versus automated current property pricing and then build in a 'distress' assumption of a fall of 'x' from here too. Adjust reg cap up and down as a result as needed.
scrapheap
13/8/2018
16:22
@topvest - having admittedly not read the posts above - isn't the issue one of likely risk, ie the range of possibilities? Rather like the bank stress tests (& knock on effect on size of regulatory capital they need to hold) being based on some frightening but perfectly feasible scenarios. It may all be a bit finger-in-the-air but if there's one thing certain about worst-case, it's that it happens eventually.
spectoacc
13/8/2018
16:12
I'm struggling with the logic here. The particular asset on the balance sheet is the value of the original loan compounded with interest less any provisions where property prices end up being lower when the householder dies (say in 20 years time). If the house will be sold in 20 years time, then surely you have to make assumptions over how the price will change (using inflation or some other index) to determine whether the loan value is below the house price (t+20 years). I can understand that you might want to assume something more cautious for regulatory capital, but can anyone explain in plain english why the JUST methodology of assuming 4.25% inflation isn't appropriate if that is the judgement on long run property prices. Why would you assume flat prices if that was not considered the most likely assumption? Surely this should be a sensitivity. Longevity risk is also partially hedging their annuity liabilities, so you can see why its very attrace tive from that perspective. Finally, what is wrong with the 3 main sensitivities on page 110 of the annual report: Base mortality -5% +£30m Immediate 10% property fall -£72m Future property price growth -0.5% -£62m I appreciate that it doesn't factor in a 30% property price drop, but they did disclose a 20% drop a few years back. Hardly armageddon. I agree it could go pear shaped but the same is true of ANY real estate company with LTV above 40%.
topvest
13/8/2018
09:06
Lol I can confirm I have not worked for a fund since 1993. I worked at Bank of England (on the NNEG pricing project, as you can surely guess) now I am retired and sitting at home eating breakfast.
eumaeus
13/8/2018
08:43
Dean, can you confirm you are not still working for a headge fund shorting JUST?
18bt
12/8/2018
23:19
Quoting from SS 3/17 "(II) The economic value of ERM cash flows cannot be greater than either the value of an equivalent loan without an NNEG or the present value of deferred possession of the property providing collateral 3.15 This concept was introduced as the first proposition of paragraph 4.9 of Discussion Paper (DP) 1/16.1 It is derived from the following considerations: (i) Given the choice between an ERM and an equivalent loan without an NNEG, a market participant would choose the latter, since either the guarantee is not exercised, in which case the ERM and the loan have the same payoff, or it is, in which case the ERM pays less. (ii) Similarly, a market participant would prefer future possession of the property on exit to an ERM, given that the property will be of greater value than the ERM if the guarantee is not exercised, or the same value if it is."
eumaeus
12/8/2018
23:13
Sorry not to answer questions in the order you ask them, but I would prefer to deal in the logical order. Since you agree about the valuation of the deferment, it follows you must agree with the ‘upper bound’ logic of the PRA in CP 16/48 (and SS 3/17). They argue that the value of the ERM must be lower than both the pv of the loan at exit, and the pv of deferred possession. The logic is simple. If you are offered a choice between the non-defaultable loan and an ERM, you will choose the loan, which is not encumbered with the NNEG. Likewise, if you are to choose between deferred possession and an ERM, you will choose deferred possession, given that the NNEG may not bite, and if it does, the ERM is worth no more than deferred possession. QED. As for whether Black is valid, it doesn’t matter. Most firms, including Just, are using a closed form option solution such as Black. It follows that if they are pricing the ERM in a way that breaks the logic given above, then they are wrongly valuing it. Whatever pricing method they use, it must yield a result such that ERM(t) is less than min(pv loan, pv deferment). Does that answer your question?
eumaeus
12/8/2018
22:53
eumaeus, I answer your questions, but you don't answer mine! I agree that the deferment price may be less than the spot price (although there are arguments I made earlier about different types of buyer). What I'm unsure about is is taking that deferment price and plugging it into an option valuation formula which depends on continuous hedging. This step seems dodgy.
charlie
12/8/2018
22:13
So Charlie, I have the freehold a property with 20 years of the lease to run. PRA/Dowd pricing techniques tell me that the freehold, i.e. deferred possession is worth about 50% of the value of immediate possession. Indeed that’s about the current market value of the freehold, if you ask Savills or any other reputable valuer. I propose to sell you this for 100%, since you are so keen to benefit from future house price growth, and since you argue that the deferment cannot be hedged. Would you accept my proposal? If not, why would you buy shares on a firm which valued its assets in exactly the same way?
eumaeus
12/8/2018
22:03
No. A static hedge and the possibility of arbitrage is what theoretically enforces the forward priced at the(r-d) rate, rather than just a balance of supply and demand. (But since this market doesn’t exist, I wouldn’t want to be dogmatic about it.) A forward price doesn't, I agree, depend on continuous hedging. But the Black-Scholes equation does, as far as I can see.
charlie
12/8/2018
20:05
@Jane Deer, moving to a deferment rate of 50bp has already cost the firm about £880m by my reckoning. If you look at p.83 of their SFCR, under 'other valuation differences', you can see where it seems to be parked, offset by transitionals.
eumaeus
12/8/2018
20:03
@Charlie, do you accept that neither the value of the deferment nor of the forward contract, which are nothing to do with option pricing, depend on hedging? Yes or no.
eumaeus
12/8/2018
19:59
Is JUST currently using a positive deferment rate of 50bps in its current internal models? So movingto 1% positive deferment rate (seemingly the minimum acceptable to the PRA) could lead to £160 million+. Increasing the volatility from 12% to 13% would add to these numbers. But if there were a 3year phase in then these numbers look just about manageable. The PRA does not appear to have an interest in reducing the matching ajustment - any attack on this (as Dowd would seem to want) would appear to have a much more significant impact on JUST’s capital position.
jane deer
12/8/2018
19:54
Well please write about why the Black-Scholes model works if the underlying is unhedgeable. You haven't really answered this point (nor have the PRA). As I understand it, the surprising idea that the drift in the price of the underlying "drops out" of option valuation depends on hedging. Without this, the Black-Scholes argument doesn't work, and you have to do something else.
charlie
12/8/2018
18:32
Ford writes: "Perform the calculation this [Dowd/PRA] way and the difference is startling. Prof Dowd has computed an illustrative case for a 40 per cent loan to value mortgage compounding at 5 per cent. Bolt in future house price inflation of 4.25 per cent, as he believes at least one firm is doing, then the cost of the NNEG is just 3 per cent of the loan amount. Do it more prudently and the cost rises to a thumping 52 per cent. Apply that to the £10bn odd of mortgages that have been written in the past few years at rising loan-to-value ratios and you get a potential capital shortfall of billions.
eumaeus
12/8/2018
18:30
The link got mangled. In any case, google Eumaeus project and you can follow the story as it happens. Jonathan Ford (FT) has just released a new story on it today, explaining the logic behind the correct pricing.
eumaeus
Chat Pages: 16  15  14  13  12  11  10  9  8  7  6  5  Older
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