Author Topic: BARC (London) = Barclays  (Read 6019 times)

moore_capital54

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BARC (London) = Barclays
« on: August 04, 2011, 11:06:48 PM »
In addition to BAC, Barclays is now extremely attractive as well. I have been buying and will continue to do so.
« Last Edit: August 05, 2011, 12:15:57 AM by Parsad »


Ballinvarosig Investors

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Re: BARC (London) = Barclays
« Reply #1 on: March 01, 2016, 04:41:03 AM »
I haven't really being paying attention to Barclays as it's always looked far too expensive with far too many unpleasant surprises. They've been through a few CEO's, they've had to take some lumps with sub-prime, mis-selling insurance, investment banking division tanking, etc. The bad news has been never-ending and with the latest results today, it looks like a lot of investors have just capitulated with the share price tanking 10% after a dividend cut. If you look at the underlying business though, things have actually stabilized quite a bit, and over the next year, I would be expecting capitalization levels to return to normal, the negative earnings thanks to misspelling insurance to finally end, with hopefully the added juice of some cost cutting (cost ratio's are nutty). The investment banking bit may still be in the toilet, but other other core operations (retail, Barclaycard) are doing quite nicely. I think the new CEO (who has a proven track record turning around another high cost, struggling insurer) has been going about the things the right way, and has a lot of scope to get cost under control while reverting back to the core (profitable) business. I am thinking between 20p-30p earnings per share for 2016 - would puts this on a PE of between 5.5-8. With a substantial discount to tangible BV, and a payout of 6.5p between now and next year, I see very little downside, for what could be a doubling on the share price (all things going well).

petec

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Re: BARC (London) = Barclays
« Reply #2 on: March 01, 2016, 04:53:50 AM »
I may just have a mental block here, but I really struggle to have conviction in European banks that are 20x levered in countries that have huge housing price issues (the UK).   I know one needs to go deeper into the asset base than that very simple analysis but even doing so I've never developed the confidence I need (except for a tiny investment in Svenska Handelsbanken which might be the best bank in the world).

Ballinvarosig Investors

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Re: BARC (London) = Barclays
« Reply #3 on: March 01, 2016, 06:17:40 AM »
True, but the de-leveraging story isn't over yet. They're selling their African division and they've cut the dividend for 2016 and 2017. Leverage ratio's should continue to go down as non-core assets get sold off, while more earnings are retained.

Sunrider

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Re: BARC (London) = Barclays
« Reply #4 on: March 01, 2016, 02:35:33 PM »
True, but the de-leveraging story isn't over yet. They're selling their African division and they've cut the dividend for 2016 and 2017. Leverage ratio's should continue to go down as non-core assets get sold off, while more earnings are retained.

Not to disagree with the general thesis on BARC.L (no view), I'd like to question the above specifically. For BARC to sell BGA and realise a meaningful benefit they need to sell ca. 12.6% to no longer consolidate BGA from an accounting perspective and more than 42.5% to no longer consolidate from a regulator (capital) perspective. So all the reasons they cite for selling may/may not be right (e.g. Regulatory costs, complexity, etc.) but it will take them quite a while to unload that much stock into the SA market. There are no major banks that would want to take this off them in one go - and if they were, they'd require approval from the SA authorities, which is questionable given past experience with international bidders leaving brides at the altar. Maybe they can sell 20% a year without dumping the price - but that may be a stretch ... So I wouldn't count on this making a huge difference to the BARC thesis in the very near future.

Ballinvarosig Investors

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Re: BARC (London) = Barclays
« Reply #5 on: March 01, 2016, 03:33:24 PM »
True, but the de-leveraging story isn't over yet. They're selling their African division and they've cut the dividend for 2016 and 2017. Leverage ratio's should continue to go down as non-core assets get sold off, while more earnings are retained.

Not to disagree with the general thesis on BARC.L (no view), I'd like to question the above specifically. For BARC to sell BGA and realise a meaningful benefit they need to sell ca. 12.6% to no longer consolidate BGA from an accounting perspective and more than 42.5% to no longer consolidate from a regulator (capital) perspective. So all the reasons they cite for selling may/may not be right (e.g. Regulatory costs, complexity, etc.) but it will take them quite a while to unload that much stock into the SA market. There are no major banks that would want to take this off them in one go - and if they were, they'd require approval from the SA authorities, which is questionable given past experience with international bidders leaving brides at the altar. Maybe they can sell 20% a year without dumping the price - but that may be a stretch ... So I wouldn't count on this making a huge difference to the BARC thesis in the very near future.
On the conference call they gave a timeline of 2-3 years to dispose of the African operation, so management themselves aren't expecting instant results. I think the important thing is that the new management have understood that the the future of Barclays is going to be as a smaller, less leveraged entity. This transformation isn't going to be easy, but at least they're going about it the right way (dividend cuts, selling assets) rather than issuing equity way below TBV. Also, I think earnings will come back before capital ratio's are where they want them to be - the important thing is that things have continuously been going the right way for the last few reports.

Trading at 2/3rd's TBV, I just see very little potential downside

Spekulatius

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Re: BARC (London) = Barclays
« Reply #6 on: March 01, 2016, 06:42:03 PM »
Quote
Trading at 2/3rd's TBV, I just see very little potential downside

Tell that the owners of Deutsche Bank Stock. Also BAC wasn't selling higher not a long time ago and has not as many issues.
To be a realist, one has to believe in miracles.

ajc

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Re: BARC (London) = Barclays
« Reply #7 on: January 29, 2018, 12:19:56 AM »

Anyone else looking at this?

Currently trades at a P/B ratio of 0.6, but so far Jes Staley (https://en.wikipedia.org/wiki/Jes_Staley) has delivered on most of his goals ahead of schedule. The stock has been languishing for years, he does still have an investigation against him for trying to track down a whistleblower, and they still need to settle with the US government over mis-selling mortgages, but it also most likely wouldn't be cheaply priced if it wasn't facing those hurdles.

On the other hand, British bankers are all doom and gloom about Brexit and how bad the deal is going to be so that could be priced in, The FTSE has not had the run-up the S&P500 has had because of Brexit, we're in what looks like a rising rate environment, and politicians and people are starting to substantially move beyond the bank-bashing that has gone on for the past decade and focus on things like Trump, tech companies, etc.
Also for those who are interested in that kind of thing, Chase Coleman of Tiger Global recently took a $1B stake in the bank.

So with global growth and deregulation coming back as a government and business priority, Barclays could be relatively well positioned among cheap large cap stocks to benefit from that trend. And even if it only gets to 0.8x BV in a year or so, that's still a very decent return given where it's currently priced.

Here's a recent-ish write-up from Barron's:
https://www.barrons.com/articles/barclays-adrs-could-double-1508426772

A Seeking Alpha piece from a year ago:
https://seekingalpha.com/article/4038487-barclays-heavily-undervalued-offering-considerable-long-term-upside

And a long Bloomberg TV interview from last year with Staley:
https://www.youtube.com/watch?v=3ep8tzl82aM


« Last Edit: January 29, 2018, 01:07:42 AM by ajc »

compoundvalue

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Re: BARC (London) = Barclays
« Reply #8 on: January 29, 2018, 05:28:20 AM »
Interesting. Reminds me of C in March 2016

CorpRaider

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Re: BARC (London) = Barclays
« Reply #9 on: January 29, 2018, 06:10:28 AM »
I've been looking at it for a while.  Well just tracking.  I was not left with a favorable impression of their board and regulators from Sorkin's book.  Not that they got into trouble but they couldn't make quick moves like JPM could.  They ended up having to dispose of ishares/blackrock stake, right?  I do like Staley. 

I keep debating if Lloyd's wouldn't be preferable, given better retail deposit base and lesser exposure to investment banking, which I don't like as a business for public shareholders.