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Virgin Money (VM.)

WickedLester
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Virgin Money (VM.)

#130617

Postby WickedLester » April 7th, 2018, 8:18 pm

I have a few shares in these and can't work out why they're so cheap and am beginning to wonder whether the market knows something I don't.

The price is £2.59 yet eps last year was 37.8p. This represented growth in profits from the previous year of over 20%. The dividend yield is modest but rising and the shares trade at a discount to TNAV. I think they only lend to consumers at the moment but are moving into SME's.

The outlook statement in the results stated:

We expect to maintain solid double-digit returns and a progressive dividend in 2018

I would have thought that these are small enough to be able to grow for a good few years to come, I doubt they have much in the way of toxic loans on their books and they have a trusted brand.

I have heard that some of their products are pretty poor value but It doesn't seem to be hurting them.

So does anyone know what I am missing?

westmoreland
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Re: Virgin Money (VM.)

#132543

Postby westmoreland » April 16th, 2018, 2:34 pm

WickedLester wrote:I have a few shares in these and can't work out why they're so cheap and am beginning to wonder whether the market knows something I don't.

The price is £2.59 yet eps last year was 37.8p. This represented growth in profits from the previous year of over 20%. The dividend yield is modest but rising and the shares trade at a discount to TNAV. I think they only lend to consumers at the moment but are moving into SME's.

The outlook statement in the results stated:

We expect to maintain solid double-digit returns and a progressive dividend in 2018

I would have thought that these are small enough to be able to grow for a good few years to come, I doubt they have much in the way of toxic loans on their books and they have a trusted brand.

I have heard that some of their products are pretty poor value but It doesn't seem to be hurting them.

So does anyone know what I am missing?


i have also looked at virgin money - as i understand it, you invest in banks that consistently compound book value, pay a healthy and rising dividend, and are run prudently.

now i'm not a bank expert so cannot comment on whether it is run prudently, but the capital ratio's they have are good as far as i can see. it has compounded book value and pays a decent dividend. it also doesnt have the legacy issues that the other banks have.

honestly, i think there is a large % of investors who will not even look at banks following the financial crisis. i can understand most company accounts with a bit of time and effort, but not banks.

WickedLester
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Re: Virgin Money (VM.)

#132666

Postby WickedLester » April 16th, 2018, 9:49 pm

Well i'm quite relieved that you haven't spotted anything massively wrong with these.

The only thing I have found is this:

https://www.telegraph.co.uk/investing/f ... cker-fund/

I'm a bit suprised that they're taking advantage of the trust that many people have in the Virgin brand to rip them off. I thought Richard Branson was quite protective of his brand image. It also strikes me as a poor commercial decision, they could probably gain quite a bit of market share and make a decent profit just by offering competitive plain vanilla banking products that most people want. The whole banking sector is so tainted by scandal and malpractice that anyone offering a decent alternative could probably do very well.

westmoreland
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Re: Virgin Money (VM.)

#132673

Postby westmoreland » April 16th, 2018, 10:14 pm

WickedLester wrote:Well i'm quite relieved that you haven't spotted anything massively wrong with these.

The only thing I have found is this:

https://www.telegraph.co.uk/investing/f ... cker-fund/

I'm a bit suprised that they're taking advantage of the trust that many people have in the Virgin brand to rip them off. I thought Richard Branson was quite protective of his brand image. It also strikes me as a poor commercial decision, they could probably gain quite a bit of market share and make a decent profit just by offering competitive plain vanilla banking products that most people want. The whole banking sector is so tainted by scandal and malpractice that anyone offering a decent alternative could probably do very well.


remember that the 1% charge included the platform charge.

if HL charge 0.1% for a tracker, you're paying 0.55% overall (0.45% platform charge).

the 'fund' was also introduced when rip off charges were the norm. in fact i'd take 1% all in with no entry and exit fees compared to some of the rip off spreads and various fees with some pension providers.

WickedLester
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Re: Virgin Money (VM.)

#137462

Postby WickedLester » May 8th, 2018, 9:05 am

There's been a takeover approach from CYBG. My first thought is that it undervalues VM. and I don't really want CTBG paper. I think i'll hang on for now.

https://www.investegate.co.uk/virgin-mo ... 00092626N/

vrdiver
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Re: Virgin Money (VM.)

#137474

Postby vrdiver » May 8th, 2018, 10:04 am

My first PEP was a Virgin Money tracker. Held it for 10 years, during which time it wiped its face, value wise, before considering inflation.

A very expensive product (or was, compared to how the rest of the market was doing).

That they're only now reviewing the charges speaks volumes: not a product I would ever recommend. As a shareholder however, it may be different!

VRD

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Re: Virgin Money (VM.)

#148012

Postby WickedLester » June 25th, 2018, 9:40 pm

Well I sol out of these a while ago on the announcement of the improved offer from CYBG which I still think undervalues VM. but it looks like going through and I don't want to hold the combined group.

I made a reasonable return fairly quickly so not a disaster but this was one I was prepared to hold for longer in the hope of benefitting from continued growth.

dspp
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Re: Virgin Money (VM.)

#148073

Postby dspp » June 26th, 2018, 9:27 am

WickedLester wrote:Well I sol out of these a while ago on the announcement of the improved offer from CYBG which I still think undervalues VM. but it looks like going through and I don't want to hold the combined group.

I made a reasonable return fairly quickly so not a disaster but this was one I was prepared to hold for longer in the hope of benefitting from continued growth.


Is there a reason you didn't want the combined group ? As a challenger bank Clydesdale have already done well for their shareholders and this doubles their scale.

regards, dspp

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Re: Virgin Money (VM.)

#148079

Postby Dod101 » June 26th, 2018, 9:35 am

If I held Virgin Money I think I would regard the takeover by CYB as a good thing. It actually gives them a combined size that may enable them to be a genuine challenger bank. Clydesdale has a substantial and loyal following in Scotland and I gather the same is true of Yorkshire Bank in their part of the world.

As we saw with TSB there is of course an execution risk but they (CYB) came through the financial crisis OK so I do not understand.

I have no interest in either.

Dod

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Re: Virgin Money (VM.)

#149657

Postby WickedLester » July 3rd, 2018, 10:45 am

Maybe I didn't look very closely at how CYBG has performed in the past but I did take a look at them and saw that they seem to have been up to all the old tricks that the big banks were, PPI etc and I might have to look again but the balance sheet looked fairly shoddy and profit post exceptionals was poor.

I generally don't like banks as investments but I figured VM. didn't come with much of the baggage the rest of them do and if they did things properly they could continue to grow what is still a trusted brand.

Anyway right or wrong I got a pretty good return on them pretty quickly so i'm not going to worry too much.


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