Greene King - SOLD!

[Arborbridge]

Am all ears. Have been investing recent topups into NRR but the recent director sales have spooked me a touch.

Lloyds and Legal and General are both on my radar for top ups but would be interested in what you are looking at.

Ps I'm maxed out on Tobaccos

Hoist on my own petard!

Well I would not be adding to the tobaccos anyway. L & G, HSBC, Unilever, and I guess Shell (unless you are full with any of those already) have got to be on the radar of anyone interested in high yields. I know Unilever is not really high yield but good enough for me and I would add Diageo. UK based exporters are surely the way to go for the moment anyway. Do not chase yield but look at what the share will do in the future, especially if you do not need the income now (in the 'building' phase)

Nothing exciting there or very different I appreciate. Otherwise I am looking at overseas ITs, HFEL, Murray International and other ITs. Personally I struggle with a UK based HYP these days. Obviously you can buy Primary Health Properties and a few small niche property companies but apart from Segro, I would keep clear of the big ones and certainly no supermarkets or for that matter retail.

Sorry for being negative but that seems to me to be the way it is, at least outside of the speculative market.

Dod

You certainly are negative! Yet, despite there being - in your terms - few HYPables, you wave off the pasing of Greene King as unimportant, and suggest DGE which yields 2% (though I agree it is a great investment, it is not a HYP investment). If that's the best you can come up with - less than half the yield of the FTSE - then your HYP well has run dry.

Actually, it's ironic that in this period of angst and high yields when we ought to see bargains aplenty, some of us are being fearful. What is peculiar, is that both the market price and certain yields are both high at the same time.

Arb.

[Dod101]

It's right to be pragmatic - one doesn't have much choice - but that does not mean we should celebrate the virtual demise of a two hundred year old famous British company any more than one could ever defend the demise of Cadbury, Tate and Lyle and others.

Thanks. Maybe the curse of this medium. I agree that the loss of yet another British company is not to be welcomed but I guess the same is said elsewhere in the world where a Brit (maybe like Unilever) buys a locally good company. It is the way of the World. The last British company that I felt that way about was Amlin, maybe because I was a shareholder and it was a great British exporter (and still I suppose is an 'invisible exporter except for the dividends which will go off to Japan).

OK Let there be peace.

Dod

[Bouleversee]

MDW1954

Good timing!

https://www.fool.co.uk/investing/2019/0 ... over-sold/

I wrote that on July 30th, and it went out as an email 'Collective' a couple of days later. TMF always waits a few weeks before re-publishing as an article on the main site. Hence today's publication -- pure coincidence.

But yes, a useful data point. UK investors don't want a share, but foreigners with a longer-term focus will pay 50% over the odds. They can't both be right. And my money is on the foreigners. So far this year, I've lost Dairy Crest, Cobham, and now Greene King.

MDW1954/ Malcolm Wheatley

Is Cobham a done deal then? I thought there was quite a lot of opposition to it and the govt. had been asked to stop it. I also hold it and held Dairy Crest and RPC. I don't hold Greene King but I do hold Marston's and was pleased to see they went up 9.59% today, reducing my loss to 24.6%.

How much of this opportunistic taking over for peanuts is down to shorting? What else makes them worth 50% more today than yesterday? Let's hope investors all pile into Marston's now and go to their pubs for their entertainment and refreshment rather than GNK establishments. Marston's also holds a fair bit of property which I hope they can hang on to. Weren't they contemplating some rather drastic moves in that context recently? Unfortunately, I can't remember the details.

[Dod101]

I think a lot of this is down to opportunists taking advantage of the cheaper pound; in fact it is almost a general result of cheaper currency. Assets are priced down say 10/15% on a week or two ago? Of course people are waiting in the wings.

Brexit is not all bad.

Dod

[IanTHughes]

I could provide a few recommendations if you need them for future investment.

You already have - and I have a couple of yours in my HYP, for which, thanks.

Dod101 is always helpful in this regard. For myself, I have found his "Don't touch with a bargepole" assessment particularly useful in providing rich pickings for any HYP


Ian

[Bouleversee]

Dod 101 wrote:

"Well I would not be adding to the tobaccos anyway. L & G, HSBC, Unilever, and I guess Shell (unless you are full with any of those already) have got to be on the radar of anyone interested in high yields. I know Unilever is not really high yield but good enough for me and I would add Diageo. UK based exporters are surely the way to go for the moment anyway. Do not chase yield but look at what the share will do in the future, especially if you do not need the income now (in the 'building' phase)"

Did you see that Questor in the Telegraph was recommending Unilever as a buy as they had done so well since he rated them a sell in Jan. 2018? Weren't you thinking about trimming them the other day? I've been doing a bit of pickering myself; yes, I do know one should buy low and sell high according to one school of thought but there is another which tells you to let your winners run and there are plenty of examples to prove or disprove either viewpoint but on the whole I prefer to stick with those who have been good to me so I still haven't sold anything. There have been days when I thought I might sell Marston's but today's big rise has put that thought out of my head until at least I recover my loss.

Dod also wrote (in response to my question about how much shorting was responsible for manipulating share prices to a level attractive to foreign companies):

" I think a lot of this is down to opportunists taking advantage of the cheaper pound; in fact it is almost a general result of cheaper currency. Assets are priced down say 10/15% on a week or two ago? Of course people are waiting in the wings.

Brexit is not all bad."

How much has the £ come down since the referendum? Not having been abroad for many years I haven't kept a close watch. A 50% increase in the s.p. can't just be down to the exchange rate, can it?

[Dod101]

It is much too late in the night to give you a sensible answer, but I would think that a lot of the increase in the share price is down to a much lower pound. Specifically, the HK Dollar exchange rate with sterling used a few years ago to be around 12.50/13.00 and is now down to less than 10 to the £1 sterling. The Chinese love a bargain and that may be what they are getting with Greene King even at a 51% premium on the last buying price. Good luck to the sellers! Some like Arb seem to be reluctant. Can't think why!

Dod

[IanTHughes]

How much has the £ come down since the referendum? Not having been abroad for many years I haven't kept a close watch. A 50% increase in the s.p. can't just be down to the exchange rate, can it?

Approximately from a rate of GBP1.00 = USD1.48, just before the referendum, to USD1.21 today. So quite a drop although not entirely unprecedented. The Hong Kong Dollar (HKD) is pegged to the USD at a rate of 7.8 or thereabouts, and has been since I worked there in the 1980's. So, as USD gains in value versus GBP, so does HKD.


Ian

[Arborbridge]

It is much too late in the night to give you a sensible answer, but I would think that a lot of the increase in the share price is down to a much lower pound. Specifically, the HK Dollar exchange rate with sterling used a few years ago to be around 12.50/13.00 and is now down to less than 10 to the £1 sterling. The Chinese love a bargain and that may be what they are getting with Greene King even at a 51% premium on the last buying price. Good luck to the sellers! Some like Arb seem to be reluctant. Can't think why!

Dod

Maybe because, as you say, the Chinese can spot a bargain - if it's good for them, it probably would have been good for us to retain it. Like Amlin, which you pointed out you and I would rather have retained.
It does go with the territory of owning stock, I have accept that: the phenomenon that one finds a good company, an "earner" only to have it snaffled from under one sometime later.

Oh well: onwards and sidewards

[Arborbridge]

Hi Arb.

I generally applaud taking a long term view, which I have certainly taken with Greene King. I’ve held them for about 20 years and watched years of steady reliable progress. But it has had its ups and downs – doing a large share buyback at about £10 and then a couple of years later a large rights issue at 270p. I ended up having a very large holding partly because I took up the rights issue in full, not wanting to be diluted.

But everything changes eventually and for pubs things have got pretty difficult. It has been an increasing struggle for Greene King to stop profits sliding. There is little scope for increases in future as far as I can see.

In this case I say don’t look a gift horse in the mouth. There are plenty of solid British companies out there, seemingly modestly priced. Take the premium (and it is certainly a premium price in this climate, and the board evidently feel that too) and reinvest in one of them.

Things are always difficult for pubs - have been as long as I have been investing. As you say, nothing is forever, which is why they have adapted by becoming servers of food. However, I'm assuming these new owners can see what a good company this is and have confidence in the future. Unless, of course, they intend to sell off the estate and build flats on all the sites!
I must say, it seems an odd coincidence that as soon as they get a new man in charge (who someone mentioned was "into" property) the whole company gets turned upside down and possibly the property value will be outed in some way.
On thing is certain: the only people to get rich from this will be those who push it through, whilst the shareholders are kept happy by being thrown a bone. Before anyone mentions it's a huge premium, I'm convinced that GNK's SP would have recovered eventually to a similar level, and do I care about the wait? I need the steady income which the company would have provided.

Arb.

[idpickering]

I have just regrettably sold all my Greene King shares. Going have a pause whilst I Pickering about what to do with the cash.

Ian.

[Arborbridge]

I have just regrettably sold all my Greene King shares. Going have a pause whilst I Pickering about what to do with the cash.

Ian.

Looking on the bright side (as I have been urged to do!):

with this increase in price, the greater capital amount gives one choices: to reinvest at a similar yield to what Greene King was and achieve more income, or invest for a similar income at a lower yield, and possibly (therefore) with a lower risk.

Arb.

PS is it a good thing to sell now?

[Darka]

I would have preferred to keep them, but have also just sold out.

Will be reinvesting in at least one HYP share and some other things that are off topic.

[UncleEbenezer]

Interesting that Marstons have just risen 8.9% as well! Seems a tad optimistic - are people buying hoping they'll be bought out too?
Or maybe hoping they'll have less competition if the new owners concentrate on the real estate rather than the brewing.

I heard the news on t'wireless last night, and my first thought was "buy MARS ...", followed after half a sec by "... it'll have risen quite a lot - too late to pick up a bargain."

Oh well, the search for where to put the dosh begins.

Buy MARS, of course!

[idpickering]

Interesting that Marstons have just risen 8.9% as well! Seems a tad optimistic - are people buying hoping they'll be bought out too?
Or maybe hoping they'll have less competition if the new owners concentrate on the real estate rather than the brewing.

I heard the news on t'wireless last night, and my first thought was "buy MARS ...", followed after half a sec by "... it'll have risen quite a lot - too late to pick up a bargain."

Oh well, the search for where to put the dosh begins.

Buy MARS, of course!

It is my intention to do just that, but I already have a full capital value weighting in them. A small top up wouldn’t be bad I guess. Having only 29 different shares in my HYP is playing havoc with my OCD. 30 was a nice round number. I’m likely to top up LGEN and HSBC, but still need that 30th share. Or i’ll Have to just live with 29. I have/had the usual suspects already. I agree Arb, it is a nice problem to have I guess.

Ian.

[IanTHughes]

I have just regrettably sold all my Greene King shares. Going have a pause whilst I Pickering about what to do with the cash.

PS is it a good thing to sell now?

All I can offer is an anecdote about the takeover of KCOM Group (KCOM). Straight after that announcement I decided to sell up in order to be in a position to re-invest the proceeds at an earlier date than waiting for the whole takeover process to go through. I therefore missed out on the counter offer and an extra 11%!

So for this takeover of Greene King PLC (GNK) I have decided to wait, for now at least!


Ian

[idpickering]

I have just regrettably sold all my Greene King shares. Going have a pause whilst I Pickering about what to do with the cash.

PS is it a good thing to sell now?

All I can offer is an anecdote about the takeover of KCOM Group (KCOM). Straight after that announcement I decided to sell up in order to be in a position to re-invest the proceeds at an earlier date than waiting for the whole takeover process to go through. I therefore missed out on the counter offer and an extra 11%!

So for this takeover of Greene King PLC (GNK) I have decided to wait, for now at least!


Ian

Cheers for offering an alternative view Ian. Good luck.

Ian.

[Arborbridge]

So for this takeover of Greene King PLC (GNK) I have decided to wait, for now at least!


Ian

My usual policy is to wait and let things grind through. As against that, one could sell now and get on with it (which I guess is Ian's philosophy), but in general I'm happy to wait and see.

[kempiejon]

Things are always difficult for pubs - have been as long as I have been investing. As you say, nothing is forever, which is why they have adapted by becoming servers of food. However, I'm assuming these new owners can see what a good company this is and have confidence in the future. Unless, of course, they intend to sell off the estate and build flats on all the sites!
I must say, it seems an odd coincidence that as soon as they get a new man in charge (who someone mentioned was "into" property) the whole company gets turned upside down and possibly the property value will be outed in some way.
On thing is certain: the only people to get rich from this will be those who push it through, whilst the shareholders are kept happy by being thrown a bone. Before anyone mentions it's a huge premium, I'm convinced that GNK's SP would have recovered eventually to a similar level, and do I care about the wait? I need the steady income which the company would have provided.

Arb.

I used to work in the licensed on-trade at the turn of the millennium, pubs, bars, nightclubs etc, I remember attending conferences and trade fairs and the tales were always of declining footfall, trade and volumes. I saw it at the place I worked, over a few years the nightly spend halved whilst prices rose and attendance remained steady so this is not a new story. Perhaps there value is in selling the property and focusing on the off sales? This is the second booze HYPable I have lost Scotish and Newcastle was wrestled from me a new years back.
Arb your last 2 sentences especially ring true.

[scrumpyjack]

There are many in the City who thought the dividend was not safe, so I don't think one can say they would definitely have been able to carry on paying the current level of dividend. They have very high levels of borrowings. I would not have wanted to rely on their divi for retirement income.

One advantage the bidders have is that they can probably refinance those borrowings at a much lower interest rate and so make the business more viable.