"A week ago we were all preparing to wave goodbye to the European Union (EU). Opinion polls swung in favour of Brexit, making a 'Leave' vote far more likely than not. However, since the tragic death of MP Jo Cox and subsequent suspension of ..."
Judging by the fall since the RNS seems like you made a wise decision (wish i had been more decisive I took a 14% gain on the capital account but held in my ISA which fortunately still shows a small profit)
A little worrying that they are dumping Nedbank when its looks a profitable concern, or is it really given the african and ad particualy South Africa politics and weakening rand. I have a feeling that giving it back to share holders piece meal is less risk than not securing a good price for it as a commercial lump (smacks of MRO smoke and mirror returns to share holders) And do I really want to hold Nedbank shares?
Hopefully there will be some intersting discussions on this board over the weekend
I've sold out too. I quite liked the diverse group, with growing income from Africa. I don't like separation and I fear whether it might be in response to weaker results. So a modest profit will have to do.
"The sleepy world of insurance has woken up in the past few weeks. The FTSE 350 Insurance index has grown at twice the pace of the FTSE All-Share over the past seven days, and this weekend we hear that LSE:OML:Old Mutual is on the cusp of being ..."
Given this news it may be interesting watching the share price tomorrow. Given the falling Rand and SA politics a break from the roots may be favourable.
On the other hand a long slow break up with no RNS explaining the situation may see the price fall
Worth watching the trend tommorrow
On emerging markets I do suggest reading the Jeremy Grantham newsletter, it is incredibly detailed. I would summarise the view as being that emerging markets do gently outperform over the very long term, which is consistent with my views.
I'm sure that you know that OML generates very little profit in the US, so you must be a believer in a big S&P fall. I am too, and this will affect all cyclical stocks like fund managers.
Where I disagree is that in my view we are in the grip of a profoundly deflationary cycle, possibly recessionary too. The good and bad news is that this means cheap commodities, which should kick off the next upwave, probably in younger parts of the world (emerging markets!). But credit cycles can take 25 years to get going again. It's only 8 years since the bubble popped.
Because of the above, real returns will be very hard to come by. Equities may be the only source. This makes me believe that stock markets will tend to stay higher than usual.
I do, however, believe that the S&P is a disaster zone; way overvalued and enormously flattered by debt funded stock buy backs. This tends to reinforce my view;
In summary, I think that OML may be in for a rough patch due to falling markets. But I also believe that the long term value is there, and that the downturn will not be as extreme as you believe.
Finally, I do think that central bankers will try to find a new inflationary strategy if things turn completely bad. Personally I wish that they'd done nothing all along, we would by now be coming out of the bust. In my lifetime rock bottom oil prices have always led to a recovery, a couple of years later.
How do you come to the conclusion emerging markets are cheap? Most have massive current account deficits should the U.S.$ strengthen this year then emerging markets could completely disintegrate. But Old Mutual, is a straight play on the big U.S. indices, emerging markets aren´t a too greater concern unless this turns major U.S. investment banks insolvent. The likes of WalMart have a big exposure in Latin America. Much of the U.S. indices p/e was Asian growth driven.
I have OM on my radar, but not at these prices, I am waiting for 15p-20p!, which may shock you but I believe this is a realistic target rice. Some estimates have these markets over priced by around 75%.
Wow....we are 4 yrs back now. Just dipped my toes back in.....(Jaws theme song in the background) duunnn dunnn... duuuunnnn duun... duuunnnnnnnn dun dun dun dun dun dun dun dun dun dun dunnnnnnnnnnn dunnnn
Why? Heavy linked to the U.S indices, the Dow doesn´t look cheap by any stretch of the imagination. By OM you´re basically betting which way the Dow will go. The Dow, has sky rocketed since 2009 & so with it OM SP. This is why you´re waiting for a crash, then it will be time to go into OM, not before. It doesn´t appear to have any exposure to markets.
South Africa-focused Old Mutual (LSE: OML) has followed the FTSE 100 down by 6% this year, while Aviva (LSE: AV) has fared better, adding 6% to its valuation.
On the face of it, Aviva has been a better investment in 2015. The market is currently taking a cautious view of Old Mutual, thanks to its ownership of a large South African bank and its heavy exposure to emerging market currencies.
These currencies have generally been falling in value in 2015, meaning that profits earned abroad translate into lower profits in the UK. There are also concerns about the strength of the South African economy, which has been hit quite heavily by the mining downturn.
Contrast that with Aviva. The majority of its operations are in the UK and Europe, yet despite this, Aviva is expected to report flat profits this year. Meanwhile Old Mutual is expected to report a sizeable rise in earnings.
Is it time to switch your attention from Aviva to Old Mutual? Lets look at how the two firms compare on valuation and income.
Heres how the two companies P/E ratings compare:
2014 historic P/E
2015 forecast P/E
2016 forecast P/E
Old Mutuals share price has fallen by 15% over the last six months, while Avivas has remained broadly flat over the same period. While neither company looks overly expensive, the market definitely appears to be discounting Old Mutual for its heavy exposure to African currencies.
Insurance companies are popular income stocks and both Old Mutual and Aviva offer dividend yields above the market average:
2014 dividend yield
2015 forecast yield
2016 forecast yield
Avivas dividend payout is still recovering from the cuts made in 2011 and 2012. This years forecast payout of 20.9p is still 20% below the 26p payout made in 2011. However, Ive been impressed with Avivas newfound focus on cash generation and financial strength. As a shareholder, Im cautiously optimistic that Aviva may finally be able to shed its reputation for regularly having to make dividend cuts.
Like many financial firms, Old Mutual was forced to suspend its dividend payout in 2009. However, dividend payments were resumed in 2010 and have since grown to last years total of 8.7p per share. Investing in Old Mutual provides investors with a higher yield opportunity than Aviva, while still remaining below the 6% level commonly seen as risky.
Best buy for 2016?
Both Aviva and Old Mutual delivered solid performances during the first half of the year. We dont yet know how each firms full-year results will shape up, but by this point in the year any nasty surprises should have become apparent and been made public.
I continue to rate Aviva as an attractive long-term income play and own the stock myself. However, Im tempted to say that at todays prices, Old Mutual looks a more promising buy for its growth potential and a generous yield.
Its worth remembering that Old Mutual is less than half the size of Aviva and operates in one of the worlds least developed financial markets. For investors with a long horizon, Old Mutual could be a smart buy in 2016.
Yes, a real punishing period for my investments, especially this one. I'm feeling pretty bruised.
The trouble is that all emerging markets are tanking, most down more than 25% this year. They should now represent a good entry point, but only if governance starts to improve. It's dreadful and getting worse. Having said that, I'm here for the long haul and I'm not exiting any of my emerging market investments; to do so would be to lock in losses, and I'm reasonably confident of getting good dividends while I wait for things to turn round.
It's also true that any share that disappoints is now being hammered.
In my view emerging markets and SE Asia are now good value. The trouble is that the S&P is monstrously overvalued, and if it blows, it will take world markets with it.
From now on in, we're going to need strong nerves.
It isn't a suprise. The South Africa down grade has significant implications for all sizeable finance businesses based in or reliant to some degree on SA. Look at Standard Bank Groups share price for example.
I don't think there is much wrong with Old Mutual per se. It's a wider issue somewhat beyond their control. Of course the big thing also weighing on the markets is the general downgrading to Negative which implies that they do no see good news in the short term.
South Africa isn't in great shape economically and until they turn that corner investing in stocks like this is going to be risky because you will be at the mercy of an announcement like the other day.
I bought at the beginning of the year at around 190 and was feeling quite smug through to April. Since then, it has been rocky but OK - until the last 2 days, which have been gut-wrenching. The volume is massive too (nearly 15m already today), so it seems unlikely it's the MMs. I like the story on the company (always dangerous!) but am perplexed by the recent SP moves. Is there some bad news out there? Currencies are always fluctuating, and broker notes don't actually change the operations in a business. So what's new? Or is my near-namesake offering a great buy opportunity?
I was lookign at this share only a few days ago, along with the other banks, I have an Excel sheet where I collect basic data for the stocks I care about, anyway, OML stood next to the other banks and insurers, and my notes at the time were "exposure in africa good financials (by banks) highish P/E" - the last company statement was "all good" - now that's rare, when do you hear "all is well" statements from CEOs these days, and then I looked at the chart trying to guess a reasonable "opportunity" entry price, and I got 170, why? Because on the 3 year chart there had been no less than 3 approaches to 170. In conjunction with the fact that the financials have not really improved over the past 5 years' accounts (all data from Hargreaves Lansdown, no login required).
Imagine my surprise then when I saw yesterday OML dropping like a tone, and then I thought "why?", oh just an RBS downgrade, who cares, but then it said SA political troubles, rand hitting 40 year lows, huge exposure to the SA currency ... Still I thought the bank says they are doing fine, a rare phenomenon, where most other companies are selling assets like in a fire sale to prop up their balance sheets, and cut dividends, but luckily I held off the "buy" button, to see where the dust settles.
And today another opportunity, another 9% down - now surely we should be expecting a comprehensive company announcement.
This reminds me the huge drops in SBRY, when the management was saying "challenging but fine" (unlike Tesco who were saying "oops we have been cooking the accounts for 5 years and now we need to sell off in Asia") however the market had different ideas, and guess what the market was right.
Like you, I've bought into OML this week. For me, I think they're a good (bargain??) buy. I like to buy and hold for the long run although I owned these shares back in 2009 and then sold after a year because the dividend income didn't match my criteria.
Maybe I'll be able to keep them longer this time !!!
I have two holdings in OML, one certificated and one in a SIPP.
I received a bank credit of approx. 4.47p per share on 26th August 2015 for the certificated shares but not for the SIPP shares. I note from the dividend section that no dividend was paid around that time. Has anyone else received a similar payment or can otherwise shed any light?
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