Share portfolio - heavy on Utilities. What to do?

John_Smith_2019

ffacoffipawb wrote: »

Or threaten to dismantle the company, i.e. remove the generating facility and demolish the power stations.

If the owners are going to lose the business with no compensation, may as well torch it.

I don't think that's the way the grown up business world works.
There would be no advantage to existing shareholders in demolishing assets, as:
1. The demolition would cost money.
2, It would reduce any compensation offered even further.
3. It would damage future working relationships and reputation.

Denial of assets is something that happens in conflict situations, not business.

ffacoffipawb

Thrugelmir wrote: »

A consequence of a Labour election win will be an immediate freeze on capital investment. Much of the funding comes from overseas.

Torching a nuclear power station isn't an option.

I was speaking metaphorically.

You could easily strip a power station of its valuable bits.

Or destroy a dam like Llyn Celyn, which should not have been built in the first place.

John_Smith_2019

eskbanker wrote: »

It must be said that anyone looking to visualise 'steady risers' is unlikely to be expecting a price chart like this....



(A to E being the above five shares in the same order)

But does that graph include dividend reinvestment?

I would class utilities as similar to tobacco companies; low growth, higher dividend, defensive stocks with political risk.

John_Smith_2019

ffacoffipawb wrote: »

I was speaking metaphorically.

You could easily strip a power station of its valuable bits.

Or destroy a dam like Llyn Celyn, which should not have been built in the first place.

It will be interesting to see whether the Environmental Movement pushes for more such dams to be built in the future.
They seem to be divided on these kinds of projects, wind power, tidal barrages etc.

eskbanker

John_Smith_2019 wrote: »

But does that graph include dividend reinvestment?

No; as stated, the chart is prices rather than total returns, in the context of the comment about 'steady risers'....

Johnnyboy11

Apodemus wrote: »

That’s a slightly selective view of the SSE annual accounts! Comparing only Total Liabilities with market capitalisation is meaningless in the absence of the Total Assets figure. Looks to me that they have Net Assets of about £5.8bn. Still reasonably highly geared, but far from the impression of insolvency that you are giving.

OK then, so the Chuckle Brothers decide to wind up SSE on 13th December and offer £5.8bn to the shareholders who were expecting £13.6bn...?

Thrugelmir

Johnnyboy11 wrote: »

OK then, so the Chuckle Brothers decide to wind up SSE on 13th December and offer £5.8bn to the shareholders who were expecting £13.6bn...?

Where's the £5.8 bn going to come from?

John_Smith_2019

Thrugelmir wrote: »

Where's the £5.8 bn going to come from?

The BoE will create the currency digitally.

(Technically, it will then 'lend' this currency to the Treasury dept, who will then pay it to the SEE shareholders. But it's still another £5.8bn of currency that hasn't come from someone else in the world - but has instead been just magicked into existence)

So the govt could really pay any price in GBP it wanted to the shareholders. It doesn't matter to the govt as it's all QE magic money anyway.

hit_and_run

John_Smith_2019 wrote: »

The BoE will create the currency digitally.

(Technically, it will then 'lend' this currency to the Treasury dept, who will then pay it to the SEE shareholders. But it's still another £5.8bn of currency that hasn't come from someone else in the world - but has instead been just magicked into existence)

So the govt could really pay any price in GBP it wanted to the shareholders. It doesn't matter to the govt as it's all QE magic money anyway.

You are correct that the government will have no problem creating however much money or gilts they want to. However, the amount they create will matter to them, but for different reasons.

They wouldn't want to pay too much for nationalisations, because they think (correctly) that there already is a problem with excessive inequality; and if they overpay, most of the excess would be going to richer people (who own most of the shares). And, more pragmatically, they also don't want newspaper headlines about Labour giving windfall profits to shareholders of already-unpopular energy companies.

OTOH, they also don't want to pay too little, because they don't want to be accused of mugging pensioners (since DC pensions for many not-at-all-rich people own a few of the shares).

So I'd expect nationalisations to happen at prices that are not too far from recent share prices. But perhaps a little on the mean side to shareholders.

So, while there is no strong reason for the OP not to dump all their individual shares now (and reinvest immediately in something better diversified), I don't think it would be that bad to wait and see if these nationalisations happen, and then use the proceeds to reinvest.

Or if Labour don't get in, hope for these share prices to bounce a bit, giving a decent opportunity to sell then (and reinvest). There is no certainty that there will be any such bounce, of course. There are plenty of other factors affecting their prices.

Apodemus

hit_and_run wrote: »

Or if Labour don't get in, hope for these share prices to bounce a bit, giving a decent opportunity to sell then (and reinvest). There is no certainty that there will be any such bounce, of course. There are plenty of other factors affecting their prices.

There was a piece in the Economist a number of years ago that looked at post-election stock market response to General Elections which suggested that a post-election bounce is more likely after a Labour win. The expected result tends to be priced in before Election Day, after which the market just gets on with the job again. Market losses ahead of a predicted Labour win get made up again after the expected event comes true, while an expected Tory win has not caused a pre-election drop, hence no post-election bounce. Of course the analysis must have been based on very few data points, so the stats might be questionable and not reliable as a pointer to future events.

EDIT: Also worth noting that the analysis referred to the market as a whole and not any individual stocks.