Mitchells & Butlers Share Discussion Threads

[tainanmike] 31/10/2003 17:42

toby

My immediate thought was that it is possible - after all, newspapers often report "stock overhang holding down share XYZ."

But I think (and these are just the musings of an enthusiastic amateur) that the real answer is that in most cases no one except the investor wanting to sell the shares can know for sure that a stock overhang exists. After all, if I held 20% of MAB (dream on!) and wanted to sell my holding, it would be very stupid of me to let the market know because, being a market, it would offer me a worse price if it knew I wanted to sell so much. An investor wanting to sell a very large amount of stock is therefore likely to keep his intentions to himself as much as possible, and to "drip" the shares into the market if he has the time and patience to do so. "Knowledge" of a stock overhang is therefore probably a mixture of rumour and interpreting trades and price movements.

Having said all that, the current MAB situation is not "most cases", because the market knows for sure that there are forced big sellers out there - the FTSE tracker funds. I haven't got a clue how much of MAB these funds hold, but obviously enough for tracker fund selling to be cited by The Times as a reason for price weakness a couple of weeks ago. My guess therefore is that the MAB share-price probably is being depressed in part by an overhang or the fear of an overhang at the moment.

Mike.

[toby tots] 31/10/2003 09:02

Mike
To digress for a moment, is it possible to find out which companies are
experiencing a "stock overhang" or am I being nieve?

[tainanmike] 30/10/2003 16:04

bigboyo:

Post 48 is based on the very supposition that big investors own almost all the shares, and it is therefore their actions that move share prices.

It's broken 230, Neil!

[bigboyo] 30/10/2003 10:17

do you seriously believe that it is small investors that owm most of the shares ?

cloud cuckooland

big invesors own most of all the ftse 350 companies --- we are all small fry -- some smaller than others !

a big brokerage house has started coverage of MAB and has a target price of 270p -- whether this is pre or post divi of 68p I am not sure !

[neilavery] 28/10/2003 13:12

Mike, some good points

[tainanmike] 28/10/2003 12:11

Neil,

Yeh, on the S&N pullout, I think they appeared to pull out very early, and that might have worried a few big investors. It probably also disappointed a few who were looking forward to MAB buying themselves a dominant position in the UK market.

But I think most of it is the consolidation and its effects (e.g. FTSE 100 exit).

Also, something I thought of a few weeks back: They have no history - there are no figures for them as a separate entity. So big investors, who I assume would normally have professionals run over the last few years figures before a purchase, have nothing to work with. This is just an idea, but I think it has some validity. After the first set of FY results, big investors may be more willing to buy.

Mike.

[neilavery] 28/10/2003 11:20

Mike,
Since pulling out from the S&N deal, I can't understand the poor performance of this share. If the dividend and the consolidation equal each other out then why the concerns. There has been no bad news and, I would expect, that the good summer has helped profits. Maybe it's all just the ups and downs of the market (and a bit of uncertainty about what the consolidation means to the investor)

[tainanmike] 28/10/2003 11:01

You're right, Neil, we do. But I don't think we're gonna see any real movement until after the payment (I see you've been on this thread from the beginning, so you know the arguments).

I'm very relaxed about this one - there are so many things in the plus column, and so few in the minus. I'm waiting for the payment and consolidation to take place, and then would expect MAB to move closer to the 280p region (timescale: 3-9 months?) that every commentator/analyst and his dog seems to be targetting.

I'll therefore just be sitting on this one and reassessing the situation in 6-12 months or at about 280, whichever comes first.

Mike.

[neilavery] 28/10/2003 09:56

tainanmike - I hope we move soon. We seem to be hitting a wall at 230p

[tainanmike] 27/10/2003 16:06

AFX today:

Meanwhile Mitchells & Butlers took on 2-1/4 pence at 229-3/4 after Dresdner
Kleinwort initiated coverage of the stock with a 'buy' rating and a 270 pence
target price.

[onehanded] 22/10/2003 09:57

Thanks , I have recently been talking to some city boys on the actual money to be made. It's not yet fully known and could be worth more than people think. Don't know how this figure came about but I was told by them that that at a price of £2.30p for every share held it could be equal to a maximum 28p per share payout. I'm sure this is a pie in the sky figure but hey who knows.

[onehanded] 20/10/2003 16:36

The shares WILL not drop by 68p like a normal Divi payment. If anything afterwards the price will stabilise around the 2.20 - 2.40p mark . Then rise to 2.60p mark. Anybody saying it will drop 68p is talking BULL and not understanding the deal.

[onehanded] 20/10/2003 16:36

The shares WILL not drop by 68p like a normal Divi payment. If anything afterwards the price will stabilise around the 2.20 - 2.40p mark . Then rise to 2.60p mark. Anybody saying it will drop 68p is talking BULL and not understanding the deal.

[tainanmike] 20/10/2003 14:13

580/JakNife

I think I'm the one who has been shouting the loudest "it's not a dividend" on this board, so I feel compelled to reply!

First, you're right: it IS a dividend in name. The point I've been making, though, is that, unlike the normal H1 and FY dividend payments, and even unlike many special dividend payments, the shareholder cannot expect a run-up in the share price before the dividend payment, because there's no gain at point of payment (because of the share consolidation you referred to, 580). There were many punters anticipating a run-up in the SCR share price just before a similar dividend/share consolidation move by that company. They clearly knew nothing about the share consolidation, or didn't understand the effects of it if they did.

For this reason, I have made strenuous efforts to tell people who don't know that it's not like a normal dividend (because MAB have linked it to removal of the equivalent value of your shares), and the easiest way to do that has been to shout "it's a payment, not a dividend."

In all but name, it is a payment (for the shares they're taking from you).

Mike.

[580] 20/10/2003 12:49

I think suscribers have got this wrong about it being a capital distribution: it clearly will be a dividend (which is why shareholders don't like it as you can't shelter behind the CGT allowance). The correspondence from MAB certainly says so, and that is what SIXC shareholders were promised at the EGM that determined the split. It is also the way SIXC paid out its special dividend prior to the split, and given that the same directors are involved who steered that through, my guess is on a dividend not a capital distribution. But the 68p per share is certain to be on the reduced number of shares (3 for 2 or whatever) - and that is where MAB have been more than misleading in their press statements.

[flackwell-raineri] 19/10/2003 10:15

Fair point

[tainanmike] 18/10/2003 21:06

Flack

You've read it, I know, but for the benefit of others who might be reading, the announcement we're on about:

MAB said

"Subject to conditions in the debt markets, it is expected that the securitisation will be completed in November. Following the successful close of the securitisation a circular will be posted to shareholders with full details of the proposed return of funds. A further announcement will be made at that time."

Completion could be right at the back-end of November. Add a few days for the circular to arrive on doormats, and add another week or more cos they won't want tardy circulars to arrive after the return has happened, and you're already past the 10th of December. So I'm not saying it will be December, but it is possible.

Mike.

[flackwell-raineri] 17/10/2003 19:17

Mike - Interesting point re:FTSE retention/relegation timings. However having re read the announcement I still see this as a November distribution.

What makes you think it could be December ?

[onehanded] 17/10/2003 08:25

The delayed payment may well be delayed! If you pay tax at 40% you do not want money divi but paid in shares gets round that so for the well of this kind of special share divi is good. Expect any news to be held back as late as possible.

[onehanded] 17/10/2003 08:25

The delayed payment may well be delayed! If you pay tax at 40% you do not want money divi but paid in shares gets round that so for the well of this kind of special share divi is good. Expect any news to be held back as late as possible.

[tainanmike] 16/10/2003 21:46

Flack

From what you've said, I can't see any difference in our opinion on timescale.

Maybe I didn't make it clear what I meant. The payment will probably be made before Xmas, which means up to 2 months of uncertainty and, I anticipate, a share price pretty much stuck around the 235 mark. Only after the payment can the share price begin to make good upward progress (as you said, nicely illustrated by SCR). The time to buy is therefore anytime before the payment. Now, for example. Then sit tight for the rise to come - by Jan or Feb a healthy profit could be in hand. Would you disagree?


By the way, its just occurred to me that a 10 December FTSE-exit ISN'T a certainty: If the payment is made after 10 December, then likewise the share "re-organisation". Could we see tracker funds being forced BUYERS of MAB in December! LOL!

Mike