Paragon Banking Share Discussion Threads

[techno20] 19/8/2011 20:27

Agree - looking ridiculously cheap at this level. Its now almost £1 below NAV.

Going to release some cash and top up on Monday.

[the drewster] 18/8/2011 09:26

At around 450m Market Cap, take out free cash of over 180m (based on half yearly announcement) and profits almost certain to be over £80m for the full year, and they are beginning to look temptingly cheap!
Final dividend likely to be around 2p on top of the share price recovery in due course.

Blimey, not like me to be bullish about old PAG.

On the downside, the leaky nature (historically) of the share does make you wonder if there is anything more to the fall than the general market doom and gloom.

[techno20] 09/8/2011 18:14

Sell-off looks well overdone. NAV was £2.30+ from memory. Was about to buy more at sub £1.50, but had to go into a meeting and by the tome I emerged the recovery was underway.

I recognise that the Market turmoil may impact sentiment towards securitisation (although I'm not convinced of this in PAG's case), but otherwise the Market volatility and riots will do nothing for people's confidence in home purchase. The end result is more renting and probably less competition for Paragon.

What's the negative impact of what's happening to justify a 25% drop in the share price? What am I missing?

[the drewster] 05/8/2011 08:10

I think there are (long term) bargains galore, that doesn't mean they wont be even better bargains in the coming days or weeks of course.

[techno20] 04/8/2011 20:56

So much for my predicted recovery to £2 this week!

Looks decent value at this price - but there again there's plenty of good buys for those with the nerve to play.

[the drewster] 03/8/2011 08:26

First support being tested.

Why the freefall? Given the historically leaky nature, someone must know something?

[the drewster] 02/8/2011 15:22

185 175 and 165 appear the key support and resistance lines.

[ferries5] 31/7/2011 10:43

Hedge funds lose £100m on Provident Financial



Nothing to do with Pag, but worthy of a post.

[techno20] 30/7/2011 19:20

Agreed, don't think they'll find it hard to get a deal away. One of the private equity players did a deal a few weeks back and was well oversubscribed on a book that had been originally created by some of the american adverse lenders. Paragon is a quality play in comparison. Some coverage in the FT today on issues with MBS in US, which I suspect hit sentiment yesterday - hopefully things should recover back to and above £2 next week.

Bigger challenge for Paragon is originating the loans. Going ok, based on the results, but surprised they've not done more. Btl remains around 10% of all lending, so there should be lots to go for. The Market is increasingly competitive in at the amateur end, but Paragon remains virtually a lone player in Ltd Co's, HMO's etc.

[the drewster] 30/7/2011 09:33

it will be interesting to see the market appetite for mortgage backed securities and how they are priced. I should imagine there are many keen observers on the sidelines for as and when the deal is announced.

[techno20] 30/7/2011 08:22

Surprised to see the shares pull back.

Several buy / add recommendations since the results, including Peel Hunt at £2.76, so should still be some upside.

Based on announcement, we should have the a decent news flow over coming weeks with securitisation and book purchases to come.

[the drewster] 28/7/2011 09:41

"In addition, the Group's loan servicing business has in July assumed the administration of approximately 50,000 additional loan accounts on behalf of a third party ...

We continue to pursue portfolio acquisition opportunities and loan administration contracts to supplement our growth potential."

There seems a significant apetite for acquiring books to administer rather than acquiring the books themselves.

I wonder whether there is significant capacity to take on more workload without increasing overhead, since I struggle to find much by way of recruitment activity by them ... that might explain the cost income ratio being slightly higher than I would have expected.

I would be a buyer if my assumptions prover true and there are portfolio's acquired either to integrate into the group, or simply to administer for a fee and hence improve internal efficiencies and cost ratios.

[the drewster] 27/7/2011 08:30

200 is proving a tough little nut to crack and hold.

[future financier] 15/7/2011 12:25

PAGs skillset lies in 3 areas:

Tight underwriting of BTL mortgages (arguably too tight right now - they are failing to hit any of their new business targets)

Effective mangement of BTL mortgage book and in particular arrears

Financial engineering and securitisation


The first two of these will have no value for the majority of the NR book. And the market is not yet ready for clever securitisations. So I don't get it.

Might be trying to make a partial bid for their BTL book.

Or might just be being nosey.

[the drewster] 04/7/2011 09:09

Not aware they have the financial backing to go in for something that big, but wouldn't rule out the odd acquisition, either of busineses, or more likely assets/loan books.

[techno20] 03/7/2011 22:09

Interesting piece in the Sunday Times suggesting Paragon has requested the sale docs for Northern Rock. Not expecting that, but there is some logic from a funding perspective.

Big bite though - would need £600+m!

Techno

[the drewster] 28/6/2011 09:00

180 to test, and if that doesn't hold, then 165 - at which point time to decide whether to go long.

[the drewster] 02/6/2011 08:35

A retrace a test of 190 looks highly likely to my untrained eye. Holding would be key to a new upwave, and a breach would likely see a test of 180 and possibly even 165.

I think I would be a buyer at 165 without any doom and gloom type newsflow.

[the drewster] 31/5/2011 10:52

News today that this generation may never be able to buy their own properties (Mrs Thatcher was no doubt crying into her cereals on hearing the predictions) but that would mean strong rental demand for an entire generation if it indeed were to be proven true.

[the drewster] 31/5/2011 10:30

Post 1894 - do I feel smug, yes, am I rich because of it, no. Hmmmm.

[techno20] 28/5/2011 13:57

Postive Buy recommendation at £1.96 in this weeks IC. Worth a read.

PE of 9 and a Net Asset Value of £2.39.

IC expecting PAG to tap into securitisation this year.


I agree and think it'll be sooner rather than later - assuming the £95m in the pipeline converts at a decent level and speed, they'll have a £100m tranche ready to securitise within a 2-3 months. Hopefully this will improve confidence in the ability to kick start the model again and lead to the discount to NAV reducing.

Think there's also an outside chance of some PE interest moving forward once proof that the "originate and trade" model is operational again.

Short term there's potential to move up towards the £2.50 mark, but longer term the potential is there for significant upside as recognition grows that the UK property market has fundamentally changed and the rental sector is in for long term sustained growth.

[the drewster] 24/5/2011 10:24

Spike on the headlines, but falling on further analysis?

[future financier] 24/5/2011 10:09

Good to see that the Directors have got their priorities right. One of the two reasons given for the increase in Operating Expenses is "an increased charge for share based remuneration". Buit since that does not use up their ever increasing pot of cash - and they are not shelling out to shareholders - maybe they need to increase their remuneration as well?

But the shares still look good for 20% appreciation p.a. for a few years ahead.

[techno20] 24/5/2011 10:00

More glass half full, than half empty on my side.

Drop in provisions good news as arrears continue to be under control, new lending levels starting to move forward strongly after a slow start, new business streams growing with new deals in the offing, positive statement on securitisation potential and NAV up.

If they deliver the same in H2, looks like £80m profit, rather than the £71m consensus.

Looks in pretty good shape to me.

[the drewster] 24/5/2011 08:53

Declining book, results massively bolstered by the huge reduction in provisions, other income down, net interest income down.

Not all rosey. Did briefly breach £2, but I suspect there are many automatic trades set to trigger as and when it does.