Standard Life Shares

Buddy195

Honestly can't believe how low the shares in SL. fell yesterday. Bought a few hundred and will keep them as can see them being a very good long term investment

tradetime

Buddy195 wrote: »

Honestly can't believe how low the shares in SL. fell yesterday. Bought a few hundred and will keep them as can see them being a very good long term investment

Well you've picked the most fearful sector, in the most fearful market we have seen in many many years, financials will remain a rollercoaster with a bias towards the downside for some time to come, at least until bankers are unable to lie anymore.

sabretoothtigger

I wont say its unfair but the company does appear badly valued imo.

If the target price of 230 was correct with ftse 100 at 4500 then if it had fallen in line it should be at 179.
Thats just the float price and they have had eps growth since then and they have not fallen back because of recession or are expected to fall back that far afaik?

They may be in the financial sector roughly but they arent leveraged, they didnt borrow in foreign currencies, buy subprime debt and call it an asset, take over another company at peak prices and SL do have a banking and mortgage side but its being run down and was never substantial afaik and they dont do corporate loans.

It would be good to hear confirmation of all that in results next thursday I think it is. Their capital reserves was a massive 3bn at year end and the company presently has a market cap of not far off that, valuing all their business at zero apparently.

Again we'd need to hear how much that has been reduced by apart from the 100m sterling hit.
I'm probably biased in my opinion but I would look at Standard Chartered for a comparison of a good company in a bad place still doing ok, they actually increased profits so maybe not that well but both undeserved imo.

Market Cap (GBP m) 3,016.17
EPS 21.7
PE Ratio 6.38
Dividend Cover 1.89
Dividend Yield 8.3
Price to Sales .3

Prudential, Legal & General and Standard Life were adamant that they would not report their full-year figures under the new accounting measure Market Consistent Embedded Value (MCEV). Aviva and Old Mutual embraced MCEV this week.

MCEV requires them to use a more conservative, standardised measure that allows comparisons of their balance sheets. It also requires investment profits to be recorded as they occur, rather than estimating their future returns..
Philip Scott, chief financial officer of Aviva and the forum's chairman, said: "MCEV gives clear and better quality views of the cash flows within the business."
Andrew Birrell, chief actuary, said Old Mutual's profits would have been "at least 25pc higher" if it had used the old standards. Old Mutual said there was a fear that companies not reporting under the new standard were hiding something.
Prudential, L&G and Standard Life all denied they were afraid of publishing less flattering numbers.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4950726/Insurers-fall-further-as-accounting-row-emerges-over-MCEV.html

Very bad news for the share price as it means doubt falls on the true value of the results reported





Pension deficits rise by £27bn in one day

Final salary pension schemes have endured one of their most volatile weeks on record as global stock markets have dived, research has showed.

http://www.telegraph.co.uk/finance/personalfinance/pensions/4948042/Pension-deficits-rise-by-27bn-in-one-day-as-companies-face-roulette-wheel.html









Standard Life to increase dividend and scotch rumours of rights issue


Published Date: 08 March 2009

But pre-tax profits are expected to rise 1% to about £888m, taking account of expectations of future growth, or "embedded value". However, underlying pre-tax profit could be down as much as 73% to £194m due to harsh market conditions.

Analysts say the group's dividend payment to shareholders will be increased from 11.5p to 12.06p.

analysts say that while some insurance companies have run up sizeable exposure to corporate debt, none will be forced into raising capital.

Andrew Hobson, analyst with Williams de Broe, says: "Standard Life's solvency is pretty good and a rights issue is unlikely, although it may be overpaying on its dividend."

Craig Bourke, analyst with Blue Oak Capital, says the problems hitting insurers in the past year arise from "phoney solvency issues". If companies are to take a hit on the back of the recession it will not be until 18 or 24 months down the line.

Standard Life Bank is set to report a 34% fall in profits to £21m

http://scotlandonsunday.scotsman.com/business/Standard-Life-to-increase-dividend.5049799.jp










Trawling the thread for some perspective, this is all from 9 months ago or more

ad44downey wrote: »

It's probably best to avoid all banking and insurance shares for the next year or two. It'll only probably get worse than it already is.

http://forums.moneysavingexpert.com/showpost.html?p=12021183&postcount=967

http://www.theherald.co.uk/business/news/display.var.1850474.0.0.php

http://www.ft.com/cms/s/0/6403be1e-baff-11dc-9fbc-0000779fd2ac.html

http://uk.biz.yahoo.com/14032008/323/standard-life-says-chairman-gerald-grimstone-lifts-stake-co.html

He also defended the share price, which fell 1p to 243¼p yesterday, just 6 per cent above its 2006 flotation price of 230p. "The market is not at all in love with stocks in our sector," he said.
His comments came as Standard Life increased operating profit under European embedded value principles from £353m to £534m in the six months to June 30.
The figure was boosted by a deal to offload the risk of holders of annuities - contracts that promise to pay an income for life - living longer than expected, which delivered a one-off benefit of £119m.
Net flows into UK policies, which take into account money leaving, fell 3 per cent to £1.43bn, as market movements hit the value of money going into Standard Life's flagship self-invested personal pension product.
Standard Life also sought to reassure investors on Standard Life Bank and indicated it intended to keep this business. Under International Financial Reporting Standards, the loss was £112m (£78m profit), al-though excluding the tax payable by policyholders, there was a pre-tax profit of £201m (£63m). An interim dividend of 4.07p (3.8p) is payable from earnings a share of 7.4p (2.6p).
FT Comment
That Standard Life has learned painful lessons from past mistakes is underlined by its resilience in the face of falling equity markets. Investors can also take heart from its limited exposure to the vagaries of the UK consumer. Like its main rivals, its shares trade at discount to embedded value of 277p. In a devastated sector this may not be enough to mark out Standard Life. Hopes of a bid might be.

http://uk.biz.yahoo.com/07082008/399/crombie-defends-standard-life-succession.html

wonderman

I think Std Lifes days are numbered - in the long term. They (along with others) used to make lots of money from with profits policies, pension and life insurance schemes that were deliberately complex to hide high charges. I had a SL with profits policy that matured and the returns were truly shocking even during times of good stockmarket performance. Consumers have got wise to this over the years and are gradually shunning these schemes. On top of that Std life culture does not seem to be customer friendly - for example access to information on their web site is not 7 * 24 - in efect they "close" the internet "office/ access" - they also remove access to information on funds on their web site for weeks on end whilst they "review" them. They are slow and ponderous to deal with; I can see no reason to hold their shares at all.

sabretoothtigger

Im not sure that applies especially to SL or just the sector in general. Ive seen SL sipp adverts and they say they are aware of this general trend.

You can also see this consumer sentiment in the rise of spreadbet companies if you check their results, etc People wish to be more involved in their investments

I dont figure it as an unknown factor in the price



Anyway just a general article on market sentiment I thought was worth copying up

One reliable sentiment indicator, the weekly survey of the American Association of Individual Investors, had by far the highest “bearish” reading yet, with 70 per cent of respondents describing themselves as bearish.

Even in the immediate weeks after the collapse of Lehman Brothers, six months ago, this figure peaked at 61 per cent.

Meanwhile, “good” news is ignored. Commodity prices are rising, which might imply an early revival in economic activity. Oil was up 50 per cent from its December low at one point yesterday. Yet no one is seizing on this as an excuse to be optimistic about shares.

Extreme negativity does not mean that the market is about to bounce. But it does suggest that the market is well into the “revulsion” phase, when it finds a bottom at which all the worst possible outcomes have been priced into shares.

If the world economy somehow outperforms that most gloomy prediction, it might then even be possible to make some money.

http://www.ft.com/cms/s/0/6027c8f6-0cd6-11de-a555-0000779fd2ac.html


SL wasnt great today and slipped to a new low I think but also regained later to form a slowing of the recent drops. NU rose back today strongly as they should considering their yield is about 24%
They were the only stock to rise in the sector though

tradetime

Yes sentiment is very bearish, about as bearish as I have seen it, I too am expecting a bounce, however, I expected the last bounce to last a lot longer, so take what you will out of that.
As your article points out, put another way, a an oversold market can become more oversold, or to labour the cliche's "the market can remain irrational longer than you can remain solvent" It's quite possible for the S&P to drop another 12-15% before a bounce, a lot of money on the sidelines, parked in bonds, and GLD, if we get something the market likes the move up could be fast.

loveabargin

Hi all

Since the gloom kicked in I've been looking at this thread to try and get an idea what others are doing with there SL shares/endowment. I have SL shares (free ones) and a endowment with profits policy which matures in 2011.

Sorry to be thick but I dont understand the markets at all, except I'm now very aware that I should of sold my shares and cashed in my endowment last summer.

On reading this thread it appears that the outlook, is for things to get worse. So I'm wondering whether to sell my shares and cash in the endowment now and take what I can.

Luckly I have no mortgage so dont need the money for that, it would just be added to my savings at 5.8% to Dec 2009.

I'm happy to leave it with SL to 2011 with hope that there might be some final bonus, as long as I'm not going to loose the lot. As for my shares if holding on to them for the long term is a good option I'll do that too.


I accept that this is peoples opinions and not advice.

Thanks

sabretoothtigger

long term is a good option

sl is just off an all time low and who knows could go lower but that would be unjustified afaik.
They've recently moved with the market indiscriminately so as I understand it the same could be true of your endowment and if you dont need the money you are in the right place

loveabargin

Thanks sabretoothtiger

As there is such a big shortfall in the endowment I just didnt want it going down even more by 2011.

tradetime

They should be moving pretty well now. +14%