Views on Carillion [CLLN] ?

[tjh290633]

OK, so they do not operate in the Southern Home Counties.

Thanks.

TJH

[Arborbridge]

Quite a few HYP shares have been leeching away in the past year or more. It's suprising that any of us are still in the black:)

Isn't CLLN one of those shares being shorted just now? THe question is: why?
Presumably, the institutions which lend shares to shorters, must be of the opinion that the company is still sound and that the shorting opportunity is a passing phase. Otherwise, wouldn't they just sell out instead of lending?


Arb.

[midgesgalore]

I am not tempted to sell whilst there is such a good dividend with 1.8x cover.
A sell may well come along as a corporate action if a predator / merger occurs. My thinking there is there is bound to be at least something for the main shareholders making them open to agree to the sale that keeps the share price from tanking. Whilst the income keeps rolling in and the pension liabilities remain manageable I shouldn't think (armchair hopefulness) there is that much more in capital to lose so I may as well hold on to the dividend stream.



midgesgalore

[tjh290633]

Quite a few HYP shares have been leeching away in the past year or more. It's suprising that any of us are still in the black:)

Isn't CLLN one of those shares being shorted just now? THe question is: why?
Presumably, the institutions which lend shares to shorters, must be of the opinion that the company is still sound and that the shorting opportunity is a passing phase. Otherwise, wouldn't they just sell out instead of lending?

What I don't understand is, if they are heavily shorted, then the low price must be an opportunity for the shorters to buy back the shares and capitalise on their short. The lenders lend shares to make money. They must be convinced that the fall is temporary.

Anyway we shall all know on Wednesday.

HY shares (looking at the FTSE350HY index, HIX) have lagged the main index (UKX) in the past years, 2014 by -3.9% to -2.7%, and in 2015 by -10% to -5%. However in 2016 the HIX rose by 18.8% compared with 14.4% In UKX.

Every year there are winners and losers. If you are very unlucky the losers outweigh the winners. Being roughly equal weighted helps a lot.

RSA was the last share I dumped. Somehow I don't think that CLLN will attract that fate.

TJH

[Bouleversee]

So should I blame them rather than Openreach for the fiasco over my recent switch to fibre which required 3 different engineers to attend the cabinet and sort out the routing problem, with long delays in between and took forever? And when an Openreach engineer visits the house to see if the problem is inside, which it never has been, is that really a Carillion employee wearing an OR hat and driving an OR van or are they only involved in the big stuff?

Do they work in your area, Lorna? CarillionTelent is a joint venture working for Openreach. I don't know if they do more that provide the infrastructure. When I upgraded in the past I have had a subcontractor to Openreach and Openreach themselves do the work in the house.

Do they use vans in Openreach livery?

TJH

I honestly don't know, Terry. Nobody came to the house when I upgraded to fibre but before that when I was having endless problems (ultra low speeds and frequent dropouts) various chaps in OR vans came to the house. One would imagine Bucks is a Northern home county. Anyway, with so much broadband installation to be done, presumably with some push from govt., there should be plenty for Carillion and its subcontractors to do, though it remains to be seen how long Openreach retains its monopoly in that sphere; their reputation doesn't exactly glow and there is pressure on govt. to do something about it.

[spiderbill]

Are you leaving them alone in your HYP then Spider? I'm 32% down currently and they're a real drag on the HYP. It is tempting to sell out and move on but I don't like to tinker if I can help it. I don't get the share at all, with no bad news and steady contract wins, what gives? My intention was to top up CLLN next month but we'll see what happens come their results on 1 Mar.

Hi Ian, I'm reluctant to sell at a loss while the dividends are still coming in to compensate, but if they were show signs of dropping then I'd ditch them. Fortunately it's a fairly small holding compared to some of my more recent ones so it's not such a big deal for me as it stands. I agree they are hard to fathom, but then we've seen something similar with Balfour Beatty which I used to hold (and which they tried to buy at one time) - every time they announced a new contract the share price dropped. I'm wondering if a similar problem exists with Carillion of poor pricing of tenders leading to narrow margins and no room for mistakes or delays.

This continual shorting that we've seen shows no sign on unwinding and for those of us not used to the intricacies of those situations it's hard to get a clear idea of what might happen next. I don't mind a risky high-yield if I understand the risks but in this case they're rather opaque.

Reckon Luni would have to invent a new zone name for this one - Ultra Danger, or Imminent Apocalipse

[idpickering]

You guys are of course correct regarding the dividend. I should give myself a metaphoric kicking for forgetting the number one proviso. It's all about the income and capital gains/losses are immaterial to HYPing. It is not in my planning to sell CLLN.

Regards,

Ian.

[ayshfm1]

it remains to be seen how long Openreach retains its monopoly in that sphere; their reputation doesn't exactly glow and there is pressure on govt. to do something about it.

Properly off topic now. If the Government does anything it will be to break openreach away from BT. The only reason the would do this is to get bigger investment than BT is prepared to do on the last mile. BT believes that the last mile requirements can be met by copper. In fairness it does have some technology on the way which rather supports it's case (G.Fast), but the real reason is obvious - sweat the installed infrastructure (which as a BT investor I'm in support of!). The Government favours an all fibre solution and would like BT to invest in providing it, which I'm much less keen on since capex means potentially less dividends.

I would suspect a breakup would generate more work for Carillion, it's BT that a breakup means problems for, lots of lovely cash thrown off by Openreach, in fact I'd rather bite the last mile investment bullet than see Openreach separated.

[Bouleversee]

Not all that off topic. I should think most of us hold BT and CLLN and would appreciate your views on this subject.

[moorfield]

What I don't understand is, if they are heavily shorted, then the low price must be an opportunity for the shorters to buy back the shares and capitalise on their short. The lenders lend shares to make money. They must be convinced that the fall is temporary.

There's a theory on the ADVFN discussion I linked that it's do with their convertible bonds. It may be in holders' interests to keep the share price suppressed well away from the strike price while those pay coupons and some charge is held over the company's assets and contracts. I'm not sure how much to read into that nor have I checked the bond's prospectus.

Anyway we shall all know on Wednesday.

Indeed. It is a make or break result for me. If the dividend is held, then a top up will follow and I should comfortably be able to achieve the target income I want from my (SIPP) HYP this year (assuming no dividend cuts elsewhere, and without needing further top ups) meaning I can doze off again and accumulate cash until 2018. If not, then most likely I will need to continue reinvesting dividends later into the year. I am being cautious about a top up because it would take CLLN up to a contribution of 10% of my overall income for the year, my self-imposed limit.

[Bouleversee]

"There's a theory on the ADVFN discussion I linked that it's do with their convertible bonds. It may be in holders' interests to keep the share price suppressed well away from the strike price while those pay coupons and some charge is held over the company's assets and contracts. I'm not sure how much to read into that nor have I checked the bond's prospectus."

MEGO.

[Arborbridge]

MEGO.

Who or what is MEGO?

[Arborbridge]

MEGO.

Who or what is MEGO?

[Arborbridge]

sorry about the double post - something odd about my connection - which is appropriate since BT was mentioned?

The thing about Openreach is that other companies had the chance to make these investments and they didn't bite the bullet. Now BT have done much of the work, they are all picky about it - but the truth probably is, that they wouldn't have done it any better. Sour grapes, I reckon.
It would be a gross injustice in BT were forces to lose Openroeach after all the effort they are putting in.

Arb.

[77ss]

MEGO.

Who or what is MEGO?

Well, I don't suppose its the toy company!

Probably:

The drugged-out sensation one gets when poring over spreadsheets or instruction manuals; acronym for "my eyes glaze over"

[Bouleversee]

MEGO.

Who or what is MEGO?

Very strange. Another of my posts has disappeared; must have crossed with that of 77s, who is quite correct. Or it was reported.

[funduffer]

MEGO.

Who or what is MEGO?

According to the Urban dictionary:

The drugged-out sensation one gets when poring over spreadsheets or instruction manuals; acronym for "my eyes glaze over"



FD

[Arborbridge]

Thanks, always good to learn something!

[monabri]

Full year Divi increased by 1% to 18.45p.

[Wizard]

Full year Divi increased by 1% to 18.45p.

Well, I'll take that given how high the yield was already!

Terry.