Renationalising utilities

[Wizard]

Moderator Message:
Please remember this is the HYP practical board and as such posts should be relevant to running a HYP. This seems to be at odds with this and more relevant to the PD board. Raptor

If that reproach is directed at me, Raptor, all I can say is that since I am in control of 3193 SSE shares, 1850 being in my ISA and l343 of them being the last holding in my late husband's estate, which are now much below probate value, I am struggling to know what to do about them and my interest is entirely practical and not in the nature of a polite discussion though I do try to be polite even when irritated by the thought police. It is, of course, impossible for anyone to know for certain what is going to happen in the future but so far as I am concerned any views or bits of information thrown into the pond by Fools wiser than me which might shed any light and help me take a decision are very welcome. Surely politics will be the major determinant as to both dividends and capital value in the case of the utilities so I should have thought some discussion as to the likelihood of Labour winning the next election and what they are likely to be able to do in the event or the current government's attitude to charges was entirely relevant. And does it really matter, on a grey, wet afternoon if comments become a little too generalised for your prescribed limits? Would you rather a dead board? It may be coincidence but things seem to have rather dried up after your intervention after some lively discussion on various items raised..

Perhaps it might be more productive to try to sort out the delay which arises when trying to submit a comment, often resulting in duplication of posts.

In the meantime, perhaps I'll just go back to reading the weekend papers and muddle through on my own.

Personally I don't think your opening post was in anyway problematic Bouleversee. It was some of the comments about wanting the Tories to win, coming up with anti-labour campaign tactics where the issue is.

In terms of a "lively discussion", why not post on the other high yield board which has a much broader remit than this one? Not a criticism, just a suggestion.

Terry.

[PinkDalek]

There have, of course, been prior threads here on the subject matter. Here are a couple of more recent ones, which may merit a read on a cold and wet evening:

United Utilities 17 Nov 2017 viewtopic.php?p=96536#p96536

HYP Utilities and Corbyn Risk 21 Nov 2017 viewtopic.php?p=97441#p97441

There's been plenty more over at Polite Discussions, unsurprisingly.

Anyway, for those interested, here's today's Today http://www.bbc.co.uk/programmes/b09r3241. It is 2 hours long so if anyone knows when the discussion took place, could they let us know?

[UncleEbenezer]

I heard an explanation of that on the wireless, that differs somewhat from what's been said here. They'd nationalise water and National Grid, but the "big six", and other power companies, would remain private. That would put SSE and Centrica outside the scope of this discussion.

I think it was also the railways, but I didn't catch that (wasn't properly listening).

As for paying in government bonds at no cost to the taxpayer, surely that's just another instance of the same money-printing they call QE. In terms of the slippery slope, the difference from where we are now seems pretty negligible.

[mike]

Have a look at this yahoo plot of utilities (SSE, CNA & PNN) vs Royal Mail (RMG) https://tinyurl.com/ya5ob7uw

If Royal Mail is also under threat from re-nationalisation, it certainly does not show it !

Perhaps something else is affecting the utilities, but I can't for the life of me think what it could be.

Mike

[Dod101]

I heard an explanation of that on the wireless, that differs somewhat from what's been said here. They'd nationalise water and National Grid, but the "big six", and other power companies, would remain private. That would put SSE and Centrica outside the scope of this discussion.

I think it was also the railways, but I didn't catch that (wasn't properly listening).

As for paying in government bonds at no cost to the taxpayer, surely that's just another instance of the same money-printing they call QE. In terms of the slippery slope, the difference from where we are now seems pretty negligible.

If that is the case it just shows how muddled their thinking is considering that SSE performs much the same function in Scotland that National Grid does south of the Border.

Dod

[UncleEbenezer]

If that is the case it just shows how muddled their thinking is considering that SSE performs much the same function in Scotland that National Grid does south of the Border.

Dod

Heard something similar on the evening news (after posting). Yes it does include the railways, though the details weren't specified.

It wasn't at all clear whether they were talking of the grid as a company or a function. That is the nature of a brief news headline, and of paying limited attention listening to it. I expect journalists now to start digging for detail and giving them a hard time over it. Though there is, as ever, a strong chance the journos will dig deep on side-issues or even non-issues, and miss the really important questions.

[Dod101]

Actually renationalising the railways has a modicum of sense to me, but what we are concerned about are the utilities. I have no idea how nationalising the grid would help because it is not noticeably letting down society at the moment, but for all I know it may be highly profitable to National Grid, SSE and Scottish Power (which 'does' the distribution from the Central belt south in Scotland.)

If they simply want to strip out the grid or distribution function that might not do too much harm to SSE.

Anyway it may never happen as the Tories are reported to be at least even if not slightly ahead of Labour in the opinion polls, even at their current level of competence (which does not seem to be very high)

Dod

[Wizard]

Actually renationalising the railways has a modicum of sense to me, but what we are concerned about are the utilities. I have no idea how nationalising the grid would help because it is not noticeably letting down society at the moment, but for all I know it may be highly profitable to National Grid, SSE and Scottish Power (which 'does' the distribution from the Central belt south in Scotland.)

If they simply want to strip out the grid or distribution function that might not do too much harm to SSE.

Anyway it may never happen as the Tories are reported to be at least even if not slightly ahead of Labour in the opinion polls, even at their current level of competence (which does not seem to be very high)

Dod

My bold.

It may be what you are concerned about, but as I hold Royal Mail and Stagecoach it is not the only thing I am concerned about!

Terry

[88V8]

McDonnell's assertion that he can renationalise for free has not been sufficiently challenged. Even if Labour could notionally service the debt, it's still a debt. And his observation on Today that the industries should be run by 'those who understand then and the workers' or words to that effect, reminded me so much of the 70s.
Unfortunately, as has been said there are plenty of voters who do not remember the 70s and do not wish to learn. His polemic against dividends in general is well received by those who are not in receipt and do not understand the workings of pension schemes, and I fear his communist policies could well come to pass.

The market agrees. My holdings of NG, Centrica, SSE, UU, are all down. This is a very practical problem. The Govt is not helping by its blundering attempts at price caps on the spurious grounds that a saving of £100 pa is important, and the nonsense about 'fuel poverty'. We never hear about takeaway meals poverty, or too many children poverty, or in my case too many cars poverty.

All this feeds the probability that whoever is in power, something detrimental will happen to the sector.

For me, the practical decision is between ditching the lot and sitting tight. The only thing that prevents me from selling is a lack of clarity as to what I might buy. Sitting on a lot of cash already.

One good thing is that if we sell, the CGT loss will enable us to unload more of the perilous GSK on which we are still heavily overdependant.

So much easier to buy a couple of ITs and stop making all these decisions. Now, which ITs... errrm. Oh dear, another decision.

V8

[Bouleversee]

88VB said:

"One good thing is that if we sell, the CGT loss will enable us to unload more of the perilous GSK on which we are still heavily overdependant."

Not if we hold them in our ISAs as I do. I hold all the utilities plus Stagecoach and Royal Mail and I am actually managing to show a loss on Glaxo as well. My big gains are mostly outside the ISAs. I think you will find that many of the ITs hold these shares as well.

[ZipserSir]

You may laugh ZipserSir but I can assure you there are divers opinions on that subject (see below). I wouldn't presume to know who is right but I definitely heard/read comments on the lines of this following CLLN's collapse.

http://markwadsworth.blogspot.co.uk/200 ... s-can.html

Like you, I am not an expert, but Mark's blogpost seems to suggest that if your private sector isn't hamstrung by debt it might be able to borrow money as cheaply or perhaps more cheaply than than the government. Its an idea, but conveniently doesn't provide an example to illustrate the principle.

In the meantime our Government can borrow more cheaply than the private sector - 'Just sayin', is all'.

[JMN2]

It's some countries that haven't experienced socialism which entertain the idea of it being the answer (UK, Finland). Go ask a Pole, a Czech or an East German. The mind boggles.

[johnstevens77]

And if the Mods will allow me a comment, it is always the nationalised industries that have their budgets cut when the government is short of cash. Just as happened to BR.

john

Moderator Message:
This again is a relevant point (I can recall it happening), but I don't think that we need further discussion of the political dimension -- MDW1954

[TahiPanasDua]

It's some countries that haven't experienced socialism which entertain the idea of it being the answer (UK, Finland). Go ask a Pole, a Czech or an East German. The mind boggles.

I think the UK did experience aspects of socialism. What follows is not an irrelevant political diatribe. It has consequences for our HYPs. Investors should strive to be unbiased.

Many readers of this forum are old enough to remember the nationalised industries of the 70s when the UK was acknowledged as the sick man of Europe. Overstaffing, high costs, inefficiency and strikes were major features.

Unfortunately, younger voters did not experience the joys of our nationalised industries.

Not everything about socialism was bad. As a working class boy, I would never have had the education and opportunities of the immediate post war period without the efforts of the Labour party. That doesn't justify putting industries back under state control.

TP2.

[BBLSP1]

TPD wrote:

Unfortunately, younger voters did not experience the joys of our nationalised industries.

If the government lasts until 2022, 'younger voters' will be those under about 50 in terms of having meaningful memories of the 70s.

I am making plans to exit the utilities as I think this may really come to pass - I'm hoping that in the next couple of years there will be a (temporary) rebound in prices as the issue goes quiet for a while.

[idpickering]

TPD wrote:

Unfortunately, younger voters did not experience the joys of our nationalised industries.

If the government lasts until 2022, 'younger voters' will be those under about 50 in terms of having meaningful memories of the 70s.

I am making plans to exit the utilities as I think this may really come to pass - I'm hoping that in the next couple of years there will be a (temporary) rebound in prices as the issue goes quiet for a while.

How many utility stocks do you hold , and where else are you intending to put the released cash please? I'm curious as this may help others here, maybe me too.

Ian.

[BBLSP1]

Ian,

I’m a bit of a lurker due to work, but first off let me say that your postings on HYP subjects are always most welcome.

Regarding my utilities, I hold NG, SSE, UU and CNA in my 24 share HYP (well 23 now given the demise of CLLN!) and these represent 21% of income and 17% of current value.

I am running an IT portfolio alongside my HYP and am increasingly drawn to this side. So any money raised by cashing in the utilities will go to these – predominantly internationally focused ITs, both developed and emerging markets, with an emphasis on income. I will still look for HYP type shares when the price is right, but these will have to be the real stalwarts such as Unilever etc.

I am done with diversification of HYP shares to tick sectoral boxes – Carillion and Interserve being cases in point.

[idpickering]

Ian,

I’m a bit of a lurker due to work, but first off let me say that your postings on HYP subjects are always most welcome.

Regarding my utilities, I hold NG, SSE, UU and CNA in my 24 share HYP (well 23 now given the demise of CLLN!) and these represent 21% of income and 17% of current value.

I am running an IT portfolio alongside my HYP and am increasingly drawn to this side. So any money raised by cashing in the utilities will go to these – predominantly internationally focused ITs, both developed and emerging markets, with an emphasis on income. I will still look for HYP type shares when the price is right, but these will have to be the real stalwarts such as Unilever etc.

I am done with diversification of HYP shares to tick sectoral boxes – Carillion and Interserve being cases in point.

Thank you very much for coming back on this, and your kind words too. I hold National Grid, Sse plc, and Pennon Group. I gave up on Centrica and United Utilities some time ago. I don't hold any ITs, and don't intend doing so to be honest. Besides, they're off topic here. I like your idea regarding the stalwarts. I fell foul of Carillion and Prov Finance by chasing the yield. Silly of me really, and I should've known better. Diworsification is the worst diversification. As Dod would say, "Don't chase the yield." Wise words indeed.

Ian.

[BBLSP1]

Just to be clear – I am currently making plans; whether these plans are executed – wholly or partially – is a different matter and I am prepared to let things run as they are for now, notwithstanding the possibility of a snap general election.

There may be scope to reduce utilities to say 10% of my HYP income, and take the hit if need be. I also note Uncle Ebenezer’s comments above (117213), that CNA and SSE may not be included in Labour’s plans – so the situation, as ever, remains fluid.

[Darka]

I disposed of my United Utility shares this morning, I wanted to bank some profits before the sliding share price gets any worse (assuming it does) and before there is any chance of a Labour government.

Anyway, I managed a 32% capital gain on original costs plus received over 50% of those costs back as dividends so I'll take that.

I've been thinking of getting out of them anyway as the dividend was pretty poor anyway, but the risk is now too high for me to take on.
All the best for those continuing to hold, I'll have a think about what I'll do with the money before rushing into anything.

regards,
Darka