The Lemon Fool

I must admit the 10% dividend increase was a relief to me and does suggest there is nothing too much wrong with IMB.

I can believe the Woodford fund enforced selling has been a significant factor.

Continuing to hold.

FD

idpickering wrote:This from TMF may be of interest here;

Imperial Brands shares have fallen 45% in two years. Here’s what I’d do now

It’s fair to say Imperial Brands (LSE: IMB) shares have had a shocking run over the last two years. Back in late 2017, the shares were changing hands for more than 3,000p. Today however, Imperial’s share price stands at just 1,700p.

Personally, I’m down around 40% on my Imperial Brands holding (excluding dividends). It’s the worst-performing share in my dividend portfolio by a long way. That said, I’m not willing to give up on it just yet. Here are a few reasons I believe the FTSE 100 stock has the potential to rebound.

https://www.fool.co.uk/investing/2019/1 ... id-do-now/

One of the guys at TMF that does seems to know what he's talking about...maybe it's those three little letters after his name?

One of the guys at TMF that does seems to know what he's talking about...maybe it's those three little letters after his name?

And holds the shares.

I hold Imperial Brands: the share price has had the mother of all beatings over the last several years, most disappointingly as I bought them as a defensive stock, and have topped up on the way down. I have had some decent dividends so it isnt as big a disaster as the headline figure appears, but there is an opportunity cost to bear in mind too.

I am putting it out of my mind right now: The question is should I top up again or cut my losses? I can't bring myself to sell what appears to be a business that has some very attractive attributes. I am a little reluctant to double down again, as there is a big debt pile and the secular decline in smoking makes me a bit nervous.

So I will do nothing for now, and wait to see some more good news.

JoyofBricks8 wrote:I hold Imperial Brands: the share price has had the mother of all beatings over the last several years, most disappointingly as I bought them as a defensive stock, and have topped up on the way down. I have had some decent dividends so it isnt as big a disaster as the headline figure appears, but there is an opportunity cost to bear in mind too.

I am putting it out of my mind right now: The question is should I top up again or cut my losses? I can't bring myself to sell what appears to be a business that has some very attractive attributes. I am a little reluctant to double down again, as there is a big debt pile and the secular decline in smoking makes me a bit nervous.

So I will do nothing for now, and wait to see some more good news.

If I may say so, you are not being very consistent. Are you not the one who posted the other day that he was selling Murray International because it had gone to a premium against NAV? Murray has behaved much better than Imperial so I find your support for Imperial (even if it is somewhat reluctant support) very odd.

Dod

JoyofBricks8 wrote:I hold Imperial Brands: the share price has had the mother of all beatings over the last several years, most disappointingly as I bought them as a defensive stock, and have topped up on the way down. I have had some decent dividends so it isnt as big a disaster as the headline figure appears, but there is an opportunity cost to bear in mind too.

I am putting it out of my mind right now: The question is should I top up again or cut my losses? I can't bring myself to sell what appears to be a business that has some very attractive attributes. I am a little reluctant to double down again, as there is a big debt pile and the secular decline in smoking makes me a bit nervous.

So I will do nothing for now, and wait to see some more good news.

I sold out of all my IMB in stages. Last one being when they hit 1700. With bad news about vaping every other day, and even more places actually banning it, baccy is hardly would could be described as a growth industry. And their MJ related assets are miniscule.

JoyofBricks8 wrote:I hold Imperial Brands: the share price has had the mother of all beatings over the last several years, most disappointingly as I bought them as a defensive stock, and have topped up on the way down. I have had some decent dividends so it isnt as big a disaster as the headline figure appears, but there is an opportunity cost to bear in mind too.

I am putting it out of my mind right now: The question is should I top up again or cut my losses? I can't bring myself to sell what appears to be a business that has some very attractive attributes. I am a little reluctant to double down again, as there is a big debt pile and the secular decline in smoking makes me a bit nervous.

So I will do nothing for now, and wait to see some more good news.

A good idea to do nothing. The share price has suffered, not least because of the Woodford problem, but also because of various worries about vaping.

The dividend has been increasing, is well covered, and there is no suggestion that it will be reduced or cut.

No reason to sell.

TJH

Dod101 wrote:

JoyofBricks8 wrote:I hold Imperial Brands: the share price has had the mother of all beatings over the last several years, most disappointingly as I bought them as a defensive stock, and have topped up on the way down. I have had some decent dividends so it isnt as big a disaster as the headline figure appears, but there is an opportunity cost to bear in mind too.

I am putting it out of my mind right now: The question is should I top up again or cut my losses? I can't bring myself to sell what appears to be a business that has some very attractive attributes. I am a little reluctant to double down again, as there is a big debt pile and the secular decline in smoking makes me a bit nervous.

So I will do nothing for now, and wait to see some more good news.

If I may say so, you are not being very consistent. Are you not the one who posted the other day that he was selling Murray International because it had gone to a premium against NAV? Murray has behaved much better than Imperial so I find your support for Imperial (even if it is somewhat reluctant support) very odd.

Dod

No inconsistency here: Any investment decision logically should be driven by the concept of fair value taking into account all the information available to the investor at the time.

It is very easy to see when an IT is overvalued. We have impeccable information. They offer a big clue by publishing the NAV of their portfolio and once the delta between NAV and market price becomes sufficiently bigger than frictional costs it is an easy decision to make a trade in order to seek better value elsewhere. It is easy to find better value in the investment trust sector elsewhere by the same process.

The situation with a single company like IMB is very different. We have no ready handrail as to what the true value of a company is. To make an estimate of the real value of the company one must come to a judgement about its future prospects. This is not at all simple in the case of IMB- we don’t have a clear picture of the future legality of its product or the degree to which the market for tobacco will shrink in each territory. We have uncertainty about the new leadership and uncertainty about the success or otherwise of its transformation program. Thus our estimate of fair value must have rather a large error bar to contend with due to the various imponderables involved.

So with rather a shaky picture of true value the investment decision is correspondingly less clear-cut- one is reduced to guessing the best course of action based on guesses about the future plugged into a model. Not very satisfactory but it’s all I have. The frictional costs are the one thing we can elucidate with certainty. So in the absence of a clear valuation signal inaction is slightly favoured psychologically.

(As an aside, this is explains why climate change has not been effectively tackled.)

In the face of valuation uncertainty some investors dispense with the idea of fair value altogether. Some prefer technical analysis, and have a variety of aphorisms that are occasionally helpful crutches when arriving at a decision. Take for example- “the trend is your friend”- a brief glance at IMB suggests that paying attention to the trend would have been rather better than inaction. The idea of the support level also plays in my mind- this share has not really hit an obvious wave of buyers forming a floor under the share price. From experience I think such things ought to make one very nervous.

Thus I am not choosing my inaction very comfortably, despite the fundamentals analysis suggesting that the company is rather cheap.

I am aware of most of what you say, certainly re Imperial which is why I still hold them, but they clearly have a shaky support level around where they are, because the price has not fallen much below those levels. There is obviously no great enthusiasm though because otherwise the price would have been rising.

Undervalued? Probably. I have found nothing to suggest that the company has any problems which are not common to the tobacco industry in general. Meanwhile they offer a great income and a very low PE. If I did not hold them would I be a buyer at current levels? Probably.

Where I am at odds with you is in selling out of Murray International, apparently also on valuation grounds. Are you sure that, like Imperial being probably undervalued, you do not hold other shares that may be temporarily over valued, and quite probably by more than MI's premium to NAV? Happens all the time in the ebb and flow of investor sentiment, and if MI is over valued it is probably by only about 4% or so. You are I guess indulging in a form of arbitrage but you are also assuming that your next IT purchase (at a discount to published NAV of course) will soon see the discount closed. I have found it better just to keep a good IT, and let the ebb and flow of normal trading wash over me. It also costs me no hassle nor trading costs.

BTW there is nothing very technical about using 'The trend is your friend', is there? Maybe you meant that ironically. I often do follow that aphorism and it certainly would have got me out of the large paper loss from the peak price of Imperial. I was probably influenced by the fact that my holding is for free because I have long since extracted much more than my original cost price from my holding

Dod

Chief Executive Officer and Directorate Change

Thérèse Esperdy, Chair of the Board said: "After a thorough search process, which attracted strong, high calibre interest, the Board is delighted to appoint Stefan as Chief Executive of Imperial Brands. Stefan has significant experience across multiple consumer sectors and within large multinational organisations, particularly in brand building and consumer-led sales and marketing. He has demonstrated strong strategic and operational leadership and has developed a track record of delivering successful transformational change during his tenure at Inchcape. Stefan takes on the Chief Executive role at a significant point in Imperial’s development and the Board is confident that his experience and expertise will drive the business forward. Stefan’s initial priorities will be to strengthen performance and enhance shareholder value.”

Stefan said: “I’m delighted to be joining Imperial as the next Chief Executive. I believe the business has a great future and I’m looking forward to working with the Group’s employees to maximise the opportunities that lie ahead and build a stronger, more sustainable business.”

https://www.imperialbrandsplc.com/media ... hange.html

Stefan said: “I’m delighted to be joining Imperial as the next Chief Executive. I believe the business has a great future and I’m looking forward to working with the Group’s employees to maximise the opportunities that lie ahead and build a stronger, more sustainable business.”

I hold both Inchcape and Imperial and am intrigued by this development. Interestingly Alison Cooper the departing Imperial CEO was in recent years an Inchcape board member. I had a decent chat with Stefan at last years' Inchcape AGM, he's a seriously bright man. Inchcape is at a comparable Strategic Impasse as Imperial, 90%+ of Inchcape profitability comes from Distribution contracts and while it continues to dispose of Retail sites the hundreds they continue to operate are barely profitable. It is going to be Really Interesting to discover what attracted a mind of Stefan Bomhard's calibre to Imperial. I can't see this news as anything but Positive for Imperial shareholders, going to be interesting to see who picks up the reigns over at Inchcape.

AGM Update

Tobacco trading remains in line with expectations, with a weighting to the second half as previously guided. However, following the US FDA's ban on certain flavours of cartridge-based vapour devices and weaker than expected consumer demand for vapour, we now expect constant currency full year Group net revenue to be at a similar level to last year and adjusted earnings per share to be slightly lower than last year.

First half adjusted earnings per share is expected to be down c. 10% at constant currency, due to the phasing of inventory write-downs, primarily relating to the US flavour ban.

https://www.investegate.co.uk/imperial- ... 00040240C/

Ouch. The sp is down over 9% as I type. They’re one of my largest bets in my HYP, although a smaller bet now! I’m not going to panic sell, and will think about my holdings in IMB for now.

Ian.

New Revolving Credit Facility/Trading Update

https://www.investegate.co.uk/imperial- ... 00051802I/

idpickering wrote:
New Revolving Credit Facility/Trading Update

https://www.investegate.co.uk/imperial- ... 00051802I/

This snippet might be interesting for income-seekers who hold -

COVID-19 and Current Trading -

Although the economic and social impact of COVID-19 is developing rapidly, there has been no material impact on Group performance to date and current trading remains in-line with expectations.

Cheers,

Itsallaguess

Revised Publication Date for Interim Results

Imperial Brands announces a revised publication date for its interim financial results for the six months to 31 March 2020. In order to provide sufficient time to prepare and review financial information in the current climate, the interim results will now be published on 19 May rather than 5 May as originally scheduled

https://www.investegate.co.uk/imperial- ... 00040041K/

I would not be surprised if they take the opportunity to at least rebase the dividend as well. We'll see.

They write of 'both businesses' Presumably they mean tobacco and NGP.

Dod

Dod101 wrote:I would not be surprised if they take the opportunity to at least rebase the dividend as well. We'll see.

They write of 'both businesses' Presumably they mean tobacco and NGP.

Dod

You seem to be willing them to cut the dividend Dod

Dod101 wrote:I would not be surprised if they take the opportunity to at least rebase the dividend as well. We'll see.

They write of 'both businesses' Presumably they mean tobacco and NGP.

Dod

Oh No, Dod, you've fallen into using directorspeak. It's a cut You're writing more like a southerner: you'll be talking about directors having "compensation" for turning up to work next

Arb.

To Wizard and Arb I must say that my confidence has been badly shaken by HSBC's forced cancellation of their dividend. The trouble with Imperial Brands was there of course long before Coronavirus. I would certainly expect them to at most only hold the dividend at the half year. They have almost said as much, but I just wonder now whether with new auditors, a new Chairman and a new CEO coming shortly if now is not the right time for a dividend cut to put it bluntly. Putting back the half year results does not give me any great comfort. I have no inside story but things are just beginning to look like that.

Dod