The sell in May challenge

IronWolf

yay, I went from -400% to -100%.

Things are looking up lol.

Reaper

sabretoothtigger wrote: »

They doubled since then, up 15% today. I think they could have recovered anyway but the gold price has been surprisingly bouyant just as Fed threatens to act tough, of course that is bs but strange market timing as usual. The graph is strong and still looks it, I'll put in an order and expect to sell some AMA tomorrow.

It would be nice to think the low point has passed but having been stung in the past I don't plan to buy any more. Prices of both gold and junior gold miners seem to defy logic.

sabretoothtigger

Miners are leveraged. So gold moves slower and we know it cant go to zero but the miners can totally go broke so its fear of that which produces the lows really more then actual losses

I think Amara is bouncing back as they never realised a trading loss, if gold does go up it removes the storm clouds overhead also

I did sell some today, most of what I bought on Monday. I hope to buy again if they can go down.
Theres alot of hokey cokey going on, might as well play it if possible. Helps bring my average buy price down as overall I have lost with Amara though doubled on some of it


No mention of Ledgers day on this thread. Sept 24th ? That'd be the close to the challenge I guess.
My personal take was Lloyds and thats 8p off the 64p to not gain, Im -12% I think

Ark_Welder

sabretoothtigger wrote: »

No mention of Ledgers day on this thread. Sept 24th ?

Probably because it is St Leger Day....?

Race day itself is on the 14th.

http://www.doncaster-racecourse.co.uk/st-leger/?page_id=15

sabretoothtigger

I figured there was a finance link, ledger and they made him a saint ?
no ok


So we close on 14th, market is going down at the moment

http://en.wikipedia.org/wiki/130-30_funds

IronWolf

OK well I guess as the markets are closed this is the end of the bet.

Only 3 people actually made money

My choice was far and away the worst performer, but that company is so going bankrupt I'm sure I'll have the last laugh

I think this has put me off shorting for good

sabretoothtigger

Might they be going insolvent and they have some assets that would be acquired in the break up of the company.
Quite often even big successful companies are worth more being sold off and split up then together especially if they can offload bad debt somehow. This Royal mail sell off is likely a bargain because gov said they will handle the pensions, leaving a quite liquid business.
no idea what the CPP deal was just generalising

I very rarely short for this reason, its hard to do and requires hyper activity to watch it.
My idea failed, people like lloyds being sold by gov but I thought a major shareholder dumping shares was negative

gadgetmind

gadgetmind wrote: »

In real life, I'd probably be closing my short on the Co-op prefs right now and perhaps even going slightly long on them.

I think that the Co-op as equity holders need to understand that they are in a total loss situation and get to the back of the queue behind the more senior debt. There are powerful forces at work behind the scenes and I see an asymmetrical risk/reward ratio to the upside.

Blimey, am I good or am I good! :T

bowlhead99

gadgetmind wrote: »

Blimey, am I good or am I good! :T

Well predicted!
As mentioned in post 31, I bought into the Co-op 9.25% prefs at 58p against 100p nominal.

Based on the much improved offer to retail investors announced yesterday, effectively each thousand pounds nominal gets turned into £601 nominal of bonds in a co-op group entity, which pays 11% coupon on the £601 for 12 years (£66 a year) and then pays back the £601. Plus you get something for November's half year divi payout that had been in doubt.

So to someone buying in at £580 like me or £450 like some who came after, that's a pretty decent result and I'll happily take it, given the alternative is wipeout in a Resolution of the bank, sitting right after equity. Bank of Ireland pref holders got 5 cents on the Euro...

They even have an alternate option where you don't take a drop in cashflow, and instead convert your £1000 nominal to an amortising bond that pays your old £92.5 a year but stops after 12 years and doesn't return capital. That would seem to suit a 90-year old who doesn't want the drop in income to £66 a year and isn't going to live long enough to spend the capital.

All in all a good deal considering the circumstances. Obviously if you had been buying them at par or even 110-120p in the few years until this May, the haircut is harder to swallow. The deal has a timelimit and if they don't get a meaningful amount of holders (2/3rds?) to vote 75% in favour of the plan for each respective tier (pref, 5.55% bonds, 13% bonds) within the next 4 weeks, it will go back to a worse offer (amounts apparently 8% lower according to yesterday's announcement) or failing that there is Resolution at surely MUCH lower returns for these tiers.

If the investor base of these tiers is indeed little old ladies who have paper certificates, don't understand bank finance and don't like the idea of voting to take a haircut to convert a perpetual pref or long term paper for something of a shorter term or lower interest rates or lower principal (or all three!), trying to getting them to vote in the time limit will be like herding cats. So seems a very real danger that these (relatively) good terms will not be taken up.

Still if it comes off I should be able to exit at a profit relatively quickly, or wait for a larger return over time through the coupon.