British American Tobacco - Second Half Pre-Close Trading Update 2018

[88V8]

Patrick Hosking in The Times last weekend, noted that sixteen of eighteen asset classes declined during 2018.

He observed that during the last ten years, QE has lifted all boats. Now its withdrawal is sinking them.

I'd be avoiding companies with pensions deficits. Their next valuation is likely to be gloomy.
Afaik, the tobaccos do not have this problem.

V8

[Bouleversee]

Thanks to Monabri and Breelander for the education. So is HL's last entry under trades the totality of all the IMB trades in the SETS auction

"16:35 - 07/01 Sell 1116533 2,330.00p £26,015,218.90" and is this a normal or exceptional daily figure? What happens if there are not enough buying orders to match selling orders?

[monabri]

Thanks to Monabri and Breelander for the education. So is HL's last entry under trades the totality of all the IMB trades in the SETS auction

"16:35 - 07/01 Sell 1116533 2,330.00p £26,015,218.90" and is this a normal or exceptional daily figure? What happens if there are not enough buying orders to match selling orders?

Looking at the London Stock Exchange, 1 million shares is not an abnormal daily amount. The graph , link below, suggests daily volumes approaching 5 million shares can occur. ( left hand scale - orange bars indicating daily volumes).

https://www.londonstockexchange.com/exc ... 9GBGBXSET1

I'm guessing that if there are not enough buyers then the shares dont get sold ..seems logical. Perhaps they stay on the brokers sell ledger to be sold tomorrow / next trading session?

[monabri]

Patrick Hosking in The Times last weekend, noted that sixteen of eighteen asset classes declined during 2018.

He observed that during the last ten years, QE has lifted all boats. Now its withdrawal is sinking them.

I'd be avoiding companies with pensions deficits. Their next valuation is likely to be gloomy.
Afaik, the tobaccos do not have this problem.

V8

The JLT report ( link to the download) dated September 2018 indicated that BATS pension assets/liabilities was 101 % so no issue.

IMB was about 87% assets/liabilities. The deficit being £716m ...or approx 50% of their annual dividend...not an issue imho.

https://www.jltemployeebenefits.com/our ... isclosures

[monabri]

Thanks to Monabri and Breelander for the education. So is HL's last entry under trades the totality of all the IMB trades in the SETS auction

"16:35 - 07/01 Sell 1116533 2,330.00p £26,015,218.90" and is this a normal or exceptional daily figure? What happens if there are not enough buying orders to match selling orders?

Looking at the London Stock Exchange, 1 million shares is not an abnormal daily amount. The graph , link below, suggests daily volumes approaching 5 million shares can occur. ( left hand scale - orange bars indicating daily volumes).

https://www.londonstockexchange.com/exc ... 9GBGBXSET1

I'm guessing that if there are not enough buyers then the shares dont get sold ..seems logical. Perhaps they stay on the brokers sell ledger to be sold tomorrow / next trading session?

Typical volume seems to be ~2.5 million shares per day or about 0.26% of the total (957 million).


____________________________________________________________________________________________________________________________________
Sanity check

957m shares x £23.3 per share = £22.3billion...close enough to the mkt cap.

https://www.londonstockexchange.com/exc ... 25763.html

"Following the above transfer, the Company holds 74,289,137 Shares in treasury"

"The total number of Shares in issue (excluding Shares held in treasury) is 956,736,947"

(Should I include the 74m shares in treasury?)

[Arborbridge]

I am really beginning to lose patience with stockmarket investing which now seems to be entirely governed by algorithm controlled gambling rather than any rationality.

I don't believe that's entirely fair. The "stockmarket" is trying to weigh up all the known risks and rewards and come to a view - it isn't irrational, just not accurate and immensely prone to nervous bouts and competing forces. You are watching shifts across small slices of time in this discussion, whereas the bigger picture gets nearer to the truth. Thus the saying about voting machines and weighing machines. Voting tends to be subject to frenetic activity which can be irrational (...B...) but in the long term the weight of a share will be outed.

My advice would be to keep an eye on the longer terms facts which emerge, pariticularly as they impact the dividends.

Discussion on the boards and reading the press, unfortunately tends to make us too sensitive to these short term views - it's only natural - but maybe it is sometimes better to switch off and stop thinking too hard

Arb.

[idpickering]

I must admit to still being tempted by the high yields on offer from both tobacco shares (BATS & IMB). I like to buy the income when it's on offer, and share price movement is immaterial.

Ian.

[Arborbridge]

I must admit to still being tempted by the high yields on offer from both tobacco shares (BATS & IMB). I like to buy the income when it's on offer, and share price movement is immaterial.

Ian.

Sometimes it is, sometimes it isn't: the problem is, we never know which it will be

[monabri]

I must admit to still being tempted by the high yields on offer from both tobacco shares (BATS & IMB). I like to buy the income when it's on offer, and share price movement is immaterial.
Ian.

You're undecided......you're thinking about it....... weighing up the pros and cons ....now what's the verb I'm looking for?..no, it alludes me...

[Dod101]

Coming back on topic. If someone offered you a couple of shares which have currently got an assured worldwide market, a huge moat, great cash conversion of their booked profits, no advertising costs, pensions fully funded, and a secure dividend yield of more than 7% what would you think? Sooner or later the market is surely going to back these shares again bearing in mind some of the other stuff on offer. I just do not know when and anyway I have more or less enough.

Dod

[idpickering]

Coming back on topic. If someone offered you a couple of shares which have currently got an assured worldwide market, a huge moat, great cash conversion of their booked profits, no advertising costs, pensions fully funded, and a secure dividend yield of more than 7% what would you think? Sooner or later the market is surely going to back these shares again bearing in mind some of the other stuff on offer. I just do not know when and anyway I have more or less enough.

Dod

Well put Dod. As for owning enough already, I'm 'full' regarding IMB, but not so with BATS. I guess a further top up, for a long term hold, wouldn't hurt. Maybe not this month's choice though?

Ian.

[Bouleversee]

I must admit to still being tempted by the high yields on offer from both tobacco shares (BATS & IMB). I like to buy the income when it's on offer, and share price movement is immaterial.
Ian.

You're undecided......you're thinking about it....... weighing up the pros and cons ....now what's the verb I'm looking for?..no, it alludes me...

I don't think it's quite made the Oxford Dictionary yet but I think the verb to which you are alluding but which is eluding you might start with a P.

[OLTB]

As for owning enough already, I'm 'full' regarding IMB, but not so with BATS. I guess a further top up, for a long term hold, wouldn't hurt. Maybe not this month's choice though?

Ian.

Hi Ian

In respect of your comment above, although you are 'full' of IMB, but not so with BATS, how is the overall 'tobacco' industry reflected in your overall HYP? I can imagine that, on a capital basis, the percentage level is fairly low given the falls in tobacco shares generally over the last few years, but how about income wise - is it in-line with your other industries in your HYP?

Just interested as my capital is low compared to what I've invested (I'm only in IMB and first purchase was in Aug 2016 when shares were valued at £41.1888 ) but income wise it's building up nicely when looking at the overall HYP.

As an aside, IMB is a strong contender for a top-up once I get some dividends through (I'll perhaps have to wait until the BHP Group special is paid at the end of this month).

Cheers, OLTB.

[moorfield]

There's a lot of over analysis going on here ... Ian I agree with your sentiments in your second post - what's apparent is tobacco shares are going through a beaten down phase, but nothing to fret about.

BTW, Google "stephen bland hyp strategic ignorance" and you'll find this gem written by Stephen.

Several decades ago smoking was discovered to cause a range of very serious diseases. Tobacco shares were hit and there was a lot of talk of them being in terminal decline. The truth turned out to be the precise opposite. Tobacco shares have been amongst the best shares you could have owned in the last fifty years, with outstanding returns both from increasing dividends and increasing capital values.

https://www.southbankresearch.com/the-dividend-letter/

Plus ca change perhaps.

[Arborbridge]

In that case of both BATs and IMB, because the SP has been "beaten down", although my capital weight was well over median, it is now well under median. There's plenty of room for me to top up - it's just a question of when rather than if.

Arb.

[idpickering]

I must admit to still being tempted by the high yields on offer from both tobacco shares (BATS & IMB). I like to buy the income when it's on offer, and share price movement is immaterial.
Ian.

You're undecided......you're thinking about it....... weighing up the pros and cons ....now what's the verb I'm looking for?..no, it alludes me...

That would be my self-penned nickname, and refers to my fickleness, that over the years has become a well known adjective called "pickering". I never took offence to this, as although amusing, it does aptly fit with my monthly dithering. On a serious note though, I think we're all here to learn from one another. Back to the subject of this thread, although it's unlikely I'll top up BATS this month, IMB is very likely, in time for their next ex divi date next month. Although uncomfortable (I'm human) I can ignore the loss in capital value terms, I'm buying an income, and that's what we're about here.

Ian,

[idpickering]

As for owning enough already, I'm 'full' regarding IMB, but not so with BATS. I guess a further top up, for a long term hold, wouldn't hurt. Maybe not this month's choice though?

Ian.

Hi Ian

In respect of your comment above, although you are 'full' of IMB, but not so with BATS, how is the overall 'tobacco' industry reflected in your overall HYP? I can imagine that, on a capital basis, the percentage level is fairly low given the falls in tobacco shares generally over the last few years, but how about income wise - is it in-line with your other industries in your HYP?

Just interested as my capital is low compared to what I've invested (I'm only in IMB and first purchase was in Aug 2016 when shares were valued at £41.1888 ) but income wise it's building up nicely when looking at the overall HYP.

As an aside, IMB is a strong contender for a top-up once I get some dividends through (I'll perhaps have to wait until the BHP Group special is paid at the end of this month).

Cheers, OLTB.

Thanks for your message OLTB. As for my exposure to tobacco shares, as of now, they amount to 6.2% in capital value of my HYP. IMB weigh in higher than BATS. I topped up the later in last October, and the former, last month. The lowering of their share prices has brought them on target as likely top ups. I've talked myself into this, Imperial Brands get the nod for this months top up.

Ian.

[Bouleversee]

So what made you switch from BATS, Ian?

[Wizard]

So what made you switch from BATS, Ian?

In the space of 2 hours 43 minutes...

...have we now entered the era of Speed Pickering?

[idpickering]

So what made you switch from BATS, Ian?

Hi Bouleversee, nothing more complicated than me buying more IMB before their next ex divi date, that being 21 Feb 2019, qualifying for the 65.46p per share dividend. To be honest I'm likely to buy more BATS thereafter too.

Ian.