Member poll: ITV reinvestment decision

Discussion of the proposed Cashback Investment Club

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Should we reinvest in ITV?

no, definitely not, I'd rather invest in something else
5
28%
yes, if the share price is at least 40% less than our previous purchase
0
No votes
yes, if the share price is at least 35% less than our previous purchase
4
22%
yes, if the share price is at least 30% less than our previous purchase
4
22%
yes, if the share price is at least 25% less than our previous purchase
5
28%
 
Total votes: 18

garindan
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Member poll: ITV reinvestment decision

Post by garindan » Tue Jun 28, 2016 5:50 pm

Members,

Further to circumstances of the past few days things have come to a head with ITV. A few weeks back you will recall the Club voted to:

- remove the ITV -20% stop/loss
- review the situation after the EU Referendum

The first point was implemented previously but now we need to decide whether there is appetite to reinvest in ITV or not. We have sufficient funds to reinvest ~£600 (same as previously) and still have funds to choose another share to purchase or reinvest in.

This vote is to decide whether we reinvest and if so at what price threshold to buy. First some background:

- many analysts still think ITV is a strong buy, even after BREXIT (it was the no.1 recommendation to invest in, in the case of a REMAIN vote)
- the pound has weakened and the share price of ITV has plummeted to ~35% less than we paid for our own shares (it was ~42% down yesterday 27th June)
- essentially the company still has a strong pedigree and satisfactory performance over the past year and its future expansion plans look good
- the lower the share price and exchange rate the better chances of a takeover bid happening and share price increasing significantly as a result

A bit of analysis from yesterday that is of interest:
(ShareCast News) - Nothing had changed with respect to ITV's fundamentals following Brexit despite the approximately 20% share price drop on 24 July, analysts at Liberum said, as they stood by their 'buy' recommendation and 375p target on the stock and singled it out as a 'top-pick'.
That was true even assuming a decline in advertising revenues of post-Lehman proportions, analysts Ian Whittaker, Ciaran Donnelly ad Annick Maas said in a research note sent to clients and dated 27 June.

The shares were offering a "very attractive" dividend yield to boot, the analysts said.

Furthermore, the 10.5% drop in the value of sterling against the US dollar - combined with the fall in the price of the company's stock - meant increased chances a bid from one of the major US media companies might soon surface.
That target price is currently 209p more than the current value.

The above said, there is risk of pouring more money into a bad thing, so reinvestment does not come without a risk. The real question is how big a risk is it? Is it worth us buying more at the right price? What is the right price? Let's find out what appetite we have for this.

As before - it is important we complete this vote as quickly as we can :thumbup:
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Re: Member poll: ITV reinvestment decision

Post by AAAlphaThunder » Tue Jun 28, 2016 6:21 pm

I voted "if the share price is at least 35% less than our previous purchase" becuase in my view ITV is still a god company with good dividend and good takeover prospects.

I voted "if the share price is at least 35% less than our previous purchase" becuase there is no guarantee that the price will drop 40% again so I vote to buy the share at what is very significant 35% less than we originally paid.

In essence I am saying ITV is a good share and I'm voting to buy at a good discounted price.
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Re: Member poll: ITV reinvestment decision

Post by kevinchess1 » Tue Jun 28, 2016 8:21 pm

It's a big fat NO for me
We have some share all ready and voted to buy more shares in different sectors with a view to holding 8
This goes against what we agreed on
I'm not convinced it has hit rock bottem and/or will gain anyway near what we paid
I'm out
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Re: Member poll: ITV reinvestment decision

Post by garindan » Tue Jun 28, 2016 8:42 pm

kevinchess1 wrote:It's a big fat NO for me. I'm not convinced it has hit rock bottem and/or will gain anyway near what we paid
That's fair enough :thumbup:
kevinchess1 wrote:We have some share all ready and voted to buy more shares in different sectors with a view to holding 8
This goes against what we agreed on
I have mentioned on at least two other occasions that your interpretation of what it says in the strategy is not actually what it says. Yes we are looking to build up to a portfolio of ~8 but we are not looking at doing this just for the sake of it and to the detriment of the Club's well being. If it makes sense to reinvest in existing holds then that's what we need to consider. In the longer-term we also want to be holding a greater value in each longer-term income generator, to provide a strong base for the Club. It also enables us to do what Beachboy mentioned in a thread earlier this week - selling a proportion of our holding if the price is attractive whilst holding the remainder. If we can get to this point as well as having a broad base of ~8 shares our portfolio will lend us greater flexibility and financial power :thumbup:
By buying more ITV shares the Club would be sitting in with this one for the longer-term, which is fine in terms of income as it is actually also the highest dividend paying share we have in our portfolio, so fits the requirement well in that respect.
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Re: Member poll: ITV reinvestment decision

Post by kevinchess1 » Tue Jun 28, 2016 9:11 pm

having re read the entire propasal HereI'm not sure it says what you think it says either
The V first line is 'The Club will build towards a portfolio of up to ~8 shares,'
There isn't a single word there about buying more shares in something we all ready own
As for the 'detirement of the club' your proposing buying even more shares in some thing we all ready own in the hope that it rises?
It that wise or sensible
Like I said No for me
Not that it really matters any proposal to Buy always results in a Buy
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Re: Member poll: ITV reinvestment decision

Post by garindan » Tue Jun 28, 2016 9:22 pm

This is the part that talks about it:
The Club should look to increase stakes in long-term shares. This should be approached so as to ensure as evenly distributed investment as possible. Investment should be targeted when prices are favourable, thus aiming to ensure the continued long-term growth potential. Therefore, once the Club is ~3 years old, it should aim to have at least four strong long-term holdings, each of at least £1000+ in total.
I thought it was quite clear. If it is not then perhaps we need to rethink the wording to reflect that need?
kevinchess1 wrote:As for the 'detirement of the club' your proposing buying even more shares in some thing we all ready own in the hope that it rises?
It that wise or sensible
Like I said No for me
Not that it really matters any proposal to Buy always results in a Buy
I'm not knocking your views on the ITV vote Kevin - your view is your view and nothing is wrong with that. Please don't think I am - I just want to make sure all members understand the strategy as it is written otherwise we'll have continued confusion about it :thumbdown:
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Re: Member poll: ITV reinvestment decision

Post by garindan » Wed Jun 29, 2016 8:29 am

5 votes still to be cast. ITV has recovered another 2.5% as of 8:30am today, so currently 32% down from our purchase price.
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Re: Member poll: ITV reinvestment decision

Post by garindan » Wed Jun 29, 2016 9:54 am

Still 2 votes to be cast. Currently:

8 votes in total for buying 30% down and 7 against
If the price reaches 35% down, it is 11 for and 4 against

Currently 32% down.
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Re: Member poll: ITV reinvestment decision

Post by William Joseph1 » Wed Jun 29, 2016 12:33 pm

Now thats an interesting outcome. Can we re run this vote please :lol:
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Re: Member poll: ITV reinvestment decision

Post by garindan » Wed Jun 29, 2016 12:43 pm

So the votes are now in. This is the situation:

Currently:
We will not reinvest in ITV right now (essentially 9 votes against and 8 for at the current price).

Over the coming days:
If the price should go back down again we will look to reinvest should it reach the minimum of 35% less than the price we originally paid (12 votes for and 5 against). This decision will enable us to act quickly and decisively should the scenario occur.

I think this is a great example for how our future voting can work to set out a good buying plan for shares. I'd like us to do this for more shares in the future when we have cash at hand, so we buy at the right time :thumbup:
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