Paragon Banking Share Discussion Threads

[future financier] 14/5/2009 11:31

AR - chart patterns work brilliantly as a means of looking at the past and "justifying" past share price movements. They also can give some indication of the future to the extent that other "chartists" follow the share and respond to perceived pattarns - thereby causing the very price movements that they predict. So if there is a perceived "head and shoulders" forming then chartists will sell thus causing the price fall they predict.

For this to work there obviously have to be a significant number of chartists following the share - and I suspect this is probably not the case with PAG at present.

[the drewster] 14/5/2009 10:23

not sure if posting links is allowed, but chartpatterns.com give good explanations for starters

[alanrex] 14/5/2009 10:08

drewster - im notfamilair with charts, can you explain please?

[the drewster] 14/5/2009 09:23

Are we seeing the dreaded "Head and Shoulders" forming?

[alanrex] 05/5/2009 11:02

given th perormance of other financials and housing related stocks, its a little disappointing re the performance of this one...
all imo dyor

[the drewster] 30/4/2009 11:26

Yes, only another 30/40pence to get back to the last issue price that rescued the company. Probably significantly more of a movement upwards required for long term holders to break-even.

[alanrex] 29/4/2009 17:08

nice move up for me in recent weeks.

[the drewster] 20/4/2009 20:27

They are the equivalent of 6p/share pre consolidation after a fundraising at £1 (10p in old money)?

Still think there's plenty of choppy water to navigate before they appear as a buy to me.

[future financier] 20/4/2009 12:30

Strong rise over past month - securitisation stats for PAG at end of Feb indicate a declining incidence of arrears >3 months - is this the cause? PAG notoriously "leaky" so could be more good news on the way.

[ejohn3] 16/4/2009 21:23

straight lines rises, bring it on

[the drewster] 23/3/2009 12:57

Suspect normality, and rationality will return soon enough.

[sat69] 20/3/2009 19:47

A rare up day!

[future financier] 24/2/2009 09:41

More evidence that all is not doom and gloom - for landlords at least!

"Buy-to-let lending has slumped once more, latest figures from the Council of Mortgage Lenders (CML) show.

The once-thriving sector saw just 37,000 new loans over the fourth quarter of 2008 being approved.

This is a stunning 56 per cent down on the same period in 2007.

The total value of the buy-to-let loans lent, £3.9 billion, is 65 per cent down on the final quarter of the previous year.

However, there was better news on the question of loan arrears in the sector - particularly in the light of separate home repossession figures released by the CML last week.

These showed that the number of Britons losing their home after falling behind on repayments had shot up from 27,000 in 2007 to 40,000 in 2008.

However, for buy-to-let, the number of mortgages currently in arrears was described by the group as "not large" - with just 0.23 per cent of loans behind by over three months.

Recent rate cuts from the Bank of England could have contributed towards keeping this figure low."

[future financier] 23/2/2009 15:41

An interesting fact has emerged in discussions with a lender - many (if not most) lenders are systematically over-stating their arrears in excess of 3 months as a result of sloppy standards used for calculating this figure. Essentially they are looking at the most recent monthly sum that was due from the borrower and divide this into the total arrears sum. Obviously due to dramatic reductions in interest rates monthly interest charges have reduced - maybe on a typical mortgage from £1,000/month to say £400/month. So if a borrower is £2,000 overdue this may represent only 3 months interest rather than the 5 months indicated by dividing the arrears by £400. This helps to explain some of the dramatic increases in reported arrears.

Not exactly comforting that they are that sloppy in their reporting - but at least arrears over 3 months may not be climbing as rapidly as headline figures would suggest.

Don't know whether PAG's figures exhibit this problem - maybe not, as they are so much better than the average lender's - and have not suffered the dramatic spike experienced by others.

[future financier] 23/2/2009 12:23

Rental demand up 56% on January 2008
Monday 23rd February 2009

BUT INCREASE IN MORTGAGE APPROVALS LOWERS DEMAND MONTH ON MONTH

Demand for rented accommodation boomed 56% over the past year, according to the UK's largest lettings agent Your Move. Despite a 7.6% month on month slowdown in the number of people signing up to new leases, rental demand in January 2009 was up a massive 56.4% on 2008.

Managing director of Your Move, David Newnes, said: "As far as the 2008 property market was concerned, rental demand was a diamond in the rough. House prices were falling, no one could get a mortgage for love nor money, and every day heralded fresh news of economic Armageddon. While the mortgage market was still in dire straits, the drop in lending boosted the lettings market.

But January 2009 saw something different. Although people are still choosing to rent while they wait for property prices to finally bottom out, the number of mortgage approvals has increased. The slight dip in demand for lettings, and the up-tick in mortgage approvals seem to suggest that now most of the banks are owned by the government, they've been forced to start lending again. I think a lot of Government pressure is being applied to lenders to start offering some decent mortgages - rental demand has suffered as a result."

[the drewster] 20/2/2009 13:31

another test of 40p before too long, break through downwards and who knows where it might go.

[future financier] 03/2/2009 13:44

Paragon reverts to 1.95% over LIBOR (there is no question of "not passing on cuts" - this is contractual) - so PAG has a virtuous circle of increasing its margin whilst also lowering its cost to punters as LIBOR reduces.

[the drewster] 03/2/2009 13:28

FF - that's my point too, PAG margins increase (because they will not pass on all of the cuts - do you know what they charge landlords currently not on a product?) but the number of defaults, and the landlord's budgets go out of the window! Hence default rates, arrears, the ability of their customer base to manage through rent voids etc. is significantly threatened.
Still think that much worse is to come.

[future financier] 03/2/2009 10:48

TD - that is precisely what I am saying - once mortgage is out of initial period most of the the morgages revert to 1.95 over LIBOR (some revert to 2.25% over LIBOR) - but since PAG's securitisations have typical initial costs of 10 to 20 bps over LIBOR (probably now averaging at around 25bps as Class A noted are repaid) their margins are fantastic. Bear in mind that PAG will have swapped out the exposure during the initial fixed rate period - this means that inevitably PAG's lending margin over LIBOR will be steadily increasing. Thus offsetting to a considerable degree the erosion of margin as Class A notes are repaid.

Alan - quite agree - my point was just that the reduced costs should enable the landlords to survive lower rents and/or voids.

[alanrex] 30/1/2009 15:19

FF - In fairness, i thinik there is some pressure on rents (falling employment, increased supply as existing sellers are unable to do so, and relative to house prices). we could see increased voids too

dont get me wrong, i am still positive and have my largest stake in this stock but looking at the bigger picture too.
all imo dyor

[the drewster] 30/1/2009 15:17

So you're telling me Paragon are letting their borrowers pay libor plus 1.95%?
I suspect not, when taken in line with their statement about improving margins.

Throw in mass unemployment, unpaid rents, increases in rent arrears without the backdrop of built up capital to fall back on by sale of one or more empty propoerties.

Bleak.

[future financier] 30/1/2009 15:12

Somehow I doubt they are "friends of the Board" now - if they ever were! Was c. 45 staff - believe it is c. 15 now. This was a classic "top of the market " deal that all concerned (wxcept the vendors of the business) have lived to regret.

What near enough all anal-ysts overlook is the dramatic improvement in the economies of being a landlord which mean that a well managed book should have minimal defaults. Suppose a landlord had an 80% mortgage at LIBOR reverting to LIBOR plus 1.95%. With a £100k loan his interest will have gone from £5k to £8000 (at the peak and assuming he is now on SVR 'cos he can't re-mortgage) back to £5000 and prospectively less than £4000 and maybe less than £3000 once changes in base rate have worked thru into LIBOR.

If a landlord was still paying interest in December then he is likely to be able to continue to pay in future - and with a halving of the interest cost this can cover an awful lot of voids (not that there is any evidence of oids increasing significantly)

[the drewster] 30/1/2009 09:45

Numis cuts Paragon Group of Companies (PAG.LN) target price to 39.5p from 51p. Says company is exposed to a "dramatic deterioration in credit quality" as defaults translate into greater impairment as house prices are set to decline for some years, says Numis. Paragon also exposed to first loss tranches of buy-to-let securitisation structures and gearing of 1,618%, adds. Keeps sell rating.

[the drewster] 30/1/2009 08:21

Seems like it is/was a two man operation ... are they "friends of the board" one has to ask? Dodgy looking transactions like this do nothing positive for a company in the current climate.
Still believe the lowest of the low end estimates will be a tough target, and suspect they are beginning to realise this and hence the less positive spin.