Tate, Nat Grid and GoAhead...

A_Flock_Of_Sheep

National Grid shares were recommended back in January by Motley Fool along with Tate and Lyle.

Tate mainly as a more reliable defensive for longer term growth.

I have also personally been monitoring GoAhead group shares which seem to be quite positive.

Any opinions on each would be appreciated.

Glen_Clark

The attitude of the Local Regulator is everything with private monopolies like National Grid. Their problem is they have operations in USA where the Regulator is not as soft as in Britain. You need an expert on American Politics, which I am not.

sabretoothtigger

Tate I owned at 200 or so back in 2009. I should have kept them but they dont even own their sugar supply I think
Think I'd rather take them on general market doom sell off

GOG I do own, nice dividend and turn over

Think I prefer centricia to nat grid. How does UU compare also

purch

Go-Ahead have a slightly different business model to many of their peers in the Transport sector.

Their Rail businesses are normally in partnership with another company, and most of them seem to work well.

Their Bus business model sees them buying up existing operators, and allowing them to retain their original identity, but with added senior management and access to the groups purchasing power. These methods have worked very well so far.

I like the company.

sabretoothtigger

^^ Nice take, I think Questor wrote about them and he often has a reasonable point of view in good times and bad. Look up if he wrote about these, Tate he also likes if I remember right

bigadaj

NG is an interesting one, obviously still a monopoly so no excuse about competition requiring a higher return.

Investment now and going forward is massive, primAilry due to te fact that nothing has been spent for half a century or so, and whilst the company is no doubt leveraging debt and needs to both service that debt and maintain a good credit rating, can a regulator really approve the income to sustain such a dividend given current interest rates?

I quite like them as an investor, but as a taxpayer, and utility user, would want the regulator to crack down on costs reasonably hard; must admit I don't know what their current settlement is for in terms of timescale.

A_Flock_Of_Sheep

Thanks so much for you inputs.

As you may know from other threads I am now beginning to invest a little. I have some funds in a S&S ISA and now have some Tesco Shares but they fell by 8p the day after I purchased them. I think this is because they went ex-Dividend?!? They climbed a little yesterday.

I am now seeking a few more shares to add to my portfolio so have been spending time researching.

I was tempted the other day with Stobart Group and now really wished I had dabbled £1k in this as the next day would have pocketed £163 upside.

sabretoothtigger

Bad shares can rise dramatically, its not possible to know immediately if they will go to zero or not. You could make 40% on HMV before they went bust. Last year I think some other guy made 100% on a company which went to zero so obviously anything he didnt sell was lost.
Stobart was a good trade then but day trading is something else. I usually invest but trade the extremes if I can define them, often keeping a core holding. A good share will keep rising year after year so trading it is often bad but maybe stobart will flick up and back down wildy so a great trade


NG requires investment and a return on that money is normal, the whole 'will we let them make a profit' is socialist type thinking
IF they lose or cost less money then gov would spend doing the same, we gained. However they manage to do it is their business, once they are licensed a regulator should just be about safety.

Punishing profit wrecks the whole idea I reckon though we could argue about companies not paying taxes on profits also

a monopoly so no excuse about competition requiring a higher return.

A monopoly while regulated and with a license I think is fair enough. If it was that great a money maker we'd never have sold it.
It requires lots of spending is I guess why we keep it arms length, fine by me and explains the 5% div on their debt or shares as its not high growth by nature

bigadaj

Understand your reasoning, but to say that in a monopoly market the regulator shouldn't be involved in regulating price or revenue is a little naive surely?

No doubt NG have armies of accountants justifying their costs; it is obviously in their interests to.claim higher costs, and the. Liam they are so efficient that they have beaten their forecasts.

The sad thing is that no one knows whether they would be cheaper or more expensive in public hands, and interesting argument to get into after thatchers death. Her legacy obviously looms over this specific debate, and a review of privatisation shows a range of examples, where things are much better to signficantly worse.

The level of profit is surely proportionate to risk, with a low risk business, and base rates where they are, dividends on commercially competitive companies are higher partly because if their inherent risk. They certainly need stability and foresight to aid stability and manage investment, but at each review then this needs it be revalued agains currnent, historic and future experience.

In terms of if it was that profitable we'd never have sold it then that doesn't hold water at all. Most privatisation s are political, not economic or market decisions, and the pricing level just reflects that. The adviser and city fees generated for ex politicians and their associates are just a nice bonus. There are obviously instances of selling off loss making businesses, in which case you just guarantee subsidies, the railways neiva. Cracking sample, and national express east coats debacle being the risk you run in such a scenario.

sabretoothtigger

The railways license shows how the terms are important, I guess NG could be taking advantage. I presume they are limited to inflation and/or various customer service achievements before they can raise prices.

Take the Royal Mail, that should have been privatised years ago. Its not saved us from rising costs, I think it would be cheaper making a profit privately then how its run now.
They do need to make changes and the license terms obviously are not straightforward but I think its doable and beneficial even while its a monopoly

bigadaj

sabretoothtigger wrote: »

The railways license shows how the terms are important, I guess NG could be taking advantage. I presume they are limited to inflation and/or various customer service achievements before they can raise prices.

Take the Royal Mail, that should have been privatised years ago. Its not saved us from rising costs, I think it would be cheaper making a profit privately then how its run now.
They do need to make changes and the license terms obviously are not straightforward but I think its doable and beneficial even while its a monopoly

Fair enough we could debate these points endlessly no doubt. Ultimately we can never know whether public or private is better in any circumstance, though its difficult to make private work efficiently for the custo er where there is a monopoly.

Royal Mail could be cheaper if privatised, however there would. No doubt have to be a similar subsidy as the railways to maintain a universal postal system, so were back at square one really. I wouldn't trust Dhl, ups or whoever not to be paying their accountants to emphasise the costs of delivery to rural areas, so were back to regulation as the only form of control, and looking at the various offs then that doesn't inspire confidence.