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Unilever restructuring - buying opportunity

General discussions about equity high-yield income strategies
Wizard
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Unilever restructuring - buying opportunity

#167524

Postby Wizard » September 19th, 2018, 6:17 pm

Sorry to create a new thread when there is one running on HYP Practical, but my understanding is it is only OK to discuss Unilever in the context of managing an existing holding and not purchases or top ups.

With a reasonable number of institutions lining up to vote against the restructuring I am beginning to thjnk it is a real possibility it may be voted down. If that does happen it makes the board and executive management look a bit silly. Now they may tough it out, but it may also result in some departures and I am womdering if such events may create a buying opportunity. Anyone have any thoughts on this?

Terry.

moorfield
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Re: Unilever restructuring - buying opportunity

#167546

Postby moorfield » September 19th, 2018, 8:08 pm

Wizard wrote:With a reasonable number of institutions lining up to vote against the restructuring I am beginning to thjnk it is a real possibility it may be voted down. If that does happen it makes the board and executive management look a bit silly. Now they may tough it out, but it may also result in some departures and I am womdering if such events may create a buying opportunity. Anyone have any thoughts on this?


Terry, whether its discussed on this thread or the other my thoughts are it wouldn't really be a high yield buying opportunity unless the SP crashed to sub £31 (-25% ish) from here. That would take some extreme event I think, I'm not sure even index tracking mandatory selling would move the shares that much. I may be completely wrong of course.

Apropos of nothing, the Company Analysis board also permits such discussion I believe.

Scope is quite broad... e.g. how capital/equity structure is changing, whether this makes the company more or less desirable.


(that's just an observation btw)

Dod101
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Re: Unilever restructuring - buying opportunity

#167575

Postby Dod101 » September 19th, 2018, 10:28 pm

I suspect that the shares might increase in value if the proposals are voted down, but whatever happens, it is really up to the individual to act at the time. Certainly I think that the Directors will look a bit silly if they lose. It will be a kick in the teeth for Euro supporters and wonderful for the Brits (assuming that is that the shareholders of Unilever PLC are mostly Brits because it is that body that will have caused the problem)

Watch this space. I am going to attend the meeting on 26 October in London to hopefully watch the fun and games.

On the matter of the voting, I guess that the Leverhulme Trust is going to be a key since they own over 5% of the PLC shares.

Dod

monabri
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Re: Unilever restructuring - buying opportunity

#167685

Postby monabri » September 20th, 2018, 1:26 pm

I can't see Polman being booted out. His C.V. is pretty impressive!

I don't hold ULVR shares but would buy in at ~3750p (*) (3.5% yield) hoping that the dividend growth rate would continue as it has done over the last 15 years (it's been a consistent growth rate).

So, if the share price stays where it is at the moment or increases, then my money would go elsewhere.

I think it is a case of just keeping some money in reserve for the next couple of months in case an opportunity arises - as Dod says, "watch this space".



(*) I should have ventured in at the end of March 18 but missed that opportunity.

Dod101
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Re: Unilever restructuring - buying opportunity

#167705

Postby Dod101 » September 20th, 2018, 2:42 pm

Polman is due to retire soon anyway I think and the Chairman has only been in office for a couple of years.

On price we are likely to get some volatility if the proposals go through because of the inevitable reshuffling of portfolios when they leave the FTSE100. For someone who wants to buy at the right price all he/she can do is fix the price and watch fro the opportunity.

Dod

Gengulphus
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Re: Unilever restructuring - buying opportunity

#167830

Postby Gengulphus » September 21st, 2018, 5:09 am

moorfield wrote:Apropos of nothing, the Company Analysis board also permits such discussion I believe.

Not really - that board's subtitle is "Analysing companies' finances and value from their financial statements using ratios and formulae", which is not a good description of trying to work out the market reaction to the outcome of Unilever's reorganisation attempt!

If anyone wants to discuss possible buying opportunities without the question of whether the shares to be bought are high-yield (or indeed anything else, other than that they are shares!) being a possible stumbling block, I think Share Ideas is the board to use - its subtitle is "Discuss Shares, buying selling, tips and deals", which I would say fits very well.

As far as I'm concerned, I'm afraid I think that the question of what the outcome of Unilever's reorganisation attempt will be is probably difficult enough, and furthermore, if the answer becomes reasonably clear, the market will have reacted to it well before the October 26th meetings - or indeed, if it were to become clear that it's not going to pass (and quite possibly even if it becomes clear that there's a substantial risk of it not passing), the company might well announce that they are deferring the meetings following feedback from shareholders to allow their concerns to be addressed. Or some such wording - there are quite a few face-saving formulae for such situations...

Anyway, as I said, the question of what the outcome will be is IMHO difficult enough, and trying to work out the market reaction just adds a further layer of difficulty! If one does want to try to exploit it, I think about the only thing one can usefully do right now is make certain one is prepared to react quickly - in particular, that one will have both cash and time available to react to it. But I personally am not going to try to react to it - that's because the market will have massive numbers of participants trying to read it similarly, many of them with far more resources than me! I do sometimes try to get to grips with the question of what the market in a particular share is doing, but on far smaller caps where I reckon that isn't the case...

Gengulphus

Lootman
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Re: Unilever restructuring - buying opportunity

#167941

Postby Lootman » September 21st, 2018, 2:32 pm

Gengulphus wrote:I personally am not going to try to react to it - that's because the market will have massive numbers of participants trying to read it similarly, many of them with far more resources than me! I do sometimes try to get to grips with the question of what the market in a particular share is doing, but on far smaller caps where I reckon that isn't the case...

I think that is correct for any large and well-followed share like Unilever.

But if you take that thinking to its logical conclusion you could say the same thing about any other aspect of a share like Unilever i.e. the sum total of knowledge about a company greatly exceeds what any one individual can know, and so that individual is always at an information disadvantage. It is a similar type of thinking that leads to the efficient market hypothesis in its various forms. And to the adoption of index funds over active investment.

There is a cognitive conflict for me there. I don't really believe that I have any kind of edge when it comes to large widely-held shares. Yet I make buy and sell decisions on shares like Unilever anyway. This might be because I have mechanical criteria for trading, such as tax reasons or a re-balancing methodology. Or perhaps a set of rules like HYP has which effectively bypasses or replaces the process of evaluating the prospects for a share. But the irony remains that I largely believe that I can't add value whilst continuing to try to anyway :D

Gengulphus
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Re: Unilever restructuring - buying opportunity

#167992

Postby Gengulphus » September 21st, 2018, 5:43 pm

Lootman wrote:
Gengulphus wrote:I personally am not going to try to react to it - that's because the market will have massive numbers of participants trying to read it similarly, many of them with far more resources than me! I do sometimes try to get to grips with the question of what the market in a particular share is doing, but on far smaller caps where I reckon that isn't the case...

I think that is correct for any large and well-followed share like Unilever.

But if you take that thinking to its logical conclusion you could say the same thing about any other aspect of a share like Unilever i.e. the sum total of knowledge about a company greatly exceeds what any one individual can know, and so that individual is always at an information disadvantage. It is a similar type of thinking that leads to the efficient market hypothesis in its various forms. And to the adoption of index funds over active investment.

Except that you haven't said the same thing! I talked about the resources available to those who are trying to read how the market will treat a share, and since they're basically playing against each other, not co-operating, that means the resources available to each one of them individually, not the sum total of those resources. For smallcaps, I reckon I have a reasonable hope of winning at that game, provided I avoid playing the aspects that are highly automatable (high-speed trading is not for me!). For large caps, I don't reckon the same: there are vastly more players for them and the bigger players are able and willing to throw far more resources at it than I am.

You're instead talking about the sum total of knowledge / information that is out there. That difference doesn't really matter as far as I am concerned with regard to a big company like Unilever - the amount of information a big fund can pull together and analyse is probably quite a bit less than the sum total of all available information about the company, but either is vastly greater than the amount I can pull together and analyse. But it matters a good deal more for smallcaps, because they're beneath the big funds' radar.

Lootman wrote:There is a cognitive conflict for me there. I don't really believe that I have any kind of edge when it comes to large widely-held shares. Yet I make buy and sell decisions on shares like Unilever anyway. This might be because I have mechanical criteria for trading, such as tax reasons or a re-balancing methodology. Or perhaps a set of rules like HYP has which effectively bypasses or replaces the process of evaluating the prospects for a share. But the irony remains that I largely believe that I can't add value whilst continuing to try to anyway :D

I basically don't try to add value with my HYP, apart from the minor value of keeping costs very low and certain things I personally value even if they don't correspond directly to financial value - things like taking the level of income I want without having to make selling decisions and being able to cater fairly precisely to my own personal views about the ethics of investing in particular industries. It's the smallcaps part of my strategy that I try to add value with - and the above indicates why I think I've got a better chance of doing so than with the HYP.

Gengulphus


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