United Utlities

Discussion of the proposed Cashback Investment Club

Moderator: CIC officers

Beachboy
Posts: 1069
Joined: Tue Jun 29, 2010 8:53 pm
Has thanked: 1350 times
Been thanked: 1245 times
Contact:

United Utlities

Post by Beachboy » Fri Jan 11, 2019 11:14 am

Hot on the heels of our successful reduction of our GKN holding (with the sale yesterday on of our our two previous purchases) I wanted to open the debate as to whether we should look at something similar with United Utilities. Like GNK we doubled up in terms of purchases and both were initially up approximately 15+% for a short period but have languished in the negative for some time now. At some points both tranches have been down over 20%. At present our first block is down by only 4% which is the smallest it has been for a very long time.

Unless we have a very clear feeling that these shares are going to rocket then if we can reduce our holding (or exit altogether perhaps?) for a break even amount I would potentially be interested. The reasoning being that we have held these for ages, as far as I can see they were not designated as particularly a long-term income generating share and are not currently proving to be that even they were. Also and possibly most importantly I thinks some new purchases might stimulate a bit more interest and enthusiasm amongst members. Whilst I still actively follow developments, chip into discussions and am very keen to see the club succeed there is nothing like some actual buying and selling to feel a bit a more engaged. I am not proposing at all that we just start buying and selling for the sake of it but having had to pay out for members leaving from our funds it has curtailed our ability to do much pro-actively on this front recently.

Also I think some refinement of our portfolio might help us move towards the strategy that very well presented by Gardinan, which we all agreed, with a mixture of income generators and riskier shares.

As an aside whatever we do/do not about United Utilities I still think it would be good if our Current Investment Report could be coded in some way (e.g. colour coded, or an extra column perhaps) so we can easily identify what shares are 'long-term income generators', 'risky', functional (e.g Share Group - i.e. not an investment as such but a mean to an ends to get a better deal on the share platform); etc. They might not be exactly the right descriptors but hopefully you get the general point I making :thumbup:
Last edited by Beachboy on Fri Jan 11, 2019 11:56 am, edited 1 time in total.
Thanked by: richard@imutual, garindan

blythburgh
Posts: 13692
Joined: Tue Jun 29, 2010 6:14 pm
Location: The Far East
Has thanked: 28374 times
Been thanked: 5537 times
Contact:

Re: United Utlities

Post by blythburgh » Fri Jan 11, 2019 11:36 am

I can but hope this does not happen. But there could be a General Election which Labour win. If this happens and when the market thinks this could happen then I fear that shares in the water industry will suffer.

If I had personal shares then I think I would be selling if I had made money if I factor in the dividends received. As the club has two tranches and one could be in profit if you include dividends I can see the logic in selling one lot of the shares and keeping the other for the dividend.

But that does not mean I am looking at things correctly of course.

We are not due a General Election for some years but Labour are pushing for one to solve Brexit empasse. Not sure how that works as I did not consider Brexit when voting and I doubt it will affect my decision in the next election when it comes. And I am lucky to be in a swing seat, many people know for certain who their next MP will be when the list of candidates is released. So how come an election resolves Brexit is beyond me.

Of course some form of PR would change that in many seats but that race has been run and my horse lost. I hope there will be another referendum at some time in the future but not calling for one in the near future.
Thanked by: Beachboy
Keep smiling because the light at the end of someone's tunnel may be you, Ron Cheneler

Beachboy
Posts: 1069
Joined: Tue Jun 29, 2010 8:53 pm
Has thanked: 1350 times
Been thanked: 1245 times
Contact:

Re: United Utlities

Post by Beachboy » Fri Jan 11, 2019 11:45 am

Neither tranche are currently in profit even if the dividends are factored in but they are the closest to break even they have been for a very very long time hence why I wanted to just kick off the discussion now should (fingers crossed) we breach that point some point in the near future.
Thanked by: blythburgh

richard@imutual
Posts: 4511
Joined: Wed Jun 23, 2010 9:19 am
Sharing: 4stars.png
Has thanked: 1837 times
Been thanked: 4074 times
Contact:

Re: United Utlities

Post by richard@imutual » Fri Jan 11, 2019 11:52 am

I think we need to ween ourselves off the aversion to crystallising a loss. What's happened has happened, and has no bearing on the future prospects for the share.

I'd favour your proposal
Thanked by: blythburgh

pabenny
Posts: 995
Joined: Tue Jun 29, 2010 4:21 pm
Has thanked: 348 times
Been thanked: 1031 times
Contact:

Re: United Utlities

Post by pabenny » Fri Jan 11, 2019 1:04 pm

It’s a good point by Richard and we can all be reluctant to sell something at a loss. But for buy/sell/hold decisions, the question is about the future prospects for the share, not the price originally paid. The price paid for shares (or for that matter any other asset) is only really useful for understanding whether you have made a gain or a loss.
Thanked by: blythburgh

garindan
Posts: 1855
Joined: Wed Jun 30, 2010 2:20 pm
Location: Midlands
Has thanked: 958 times
Been thanked: 1171 times
Contact:

Re: United Utlities

Post by garindan » Fri Jan 11, 2019 1:55 pm

blythburgh wrote:
Fri Jan 11, 2019 11:36 am
I can but hope this does not happen. But there could be a General Election which Labour win. If this happens and when the market thinks this could happen then I fear that shares in the water industry will suffer.
My view is the fear of Labour has already impacted the price of this share. It may not be totally factored into the price but certainly is partially so.
Thanked by: blythburgh
Chairman: iMutual's Cashback Investment Club (CIC) - contact me about joining!
Visit the Cashback Investment Club forum to find out more.

garindan
Posts: 1855
Joined: Wed Jun 30, 2010 2:20 pm
Location: Midlands
Has thanked: 958 times
Been thanked: 1171 times
Contact:

Re: United Utlities

Post by garindan » Fri Jan 11, 2019 2:19 pm

So we did buy these as one of our very first investments and I have always classified them as a long-term investment, since we looked at our portfolio a few year ago and worked out what shares were what type.

As far as I see it there are the following pros and cons:

Cons
- potential Labour government nationalisation (however, this would take time.....it's not like they will be able to buy all utilities up on day one...)
- lower end of the long-term income dividend

Pros
- apart from the Labour issue above, has been a pretty steady share
- if BREXIT is all resolved (?) and Conservatives dig in, we could see a confidence spike
- as far as I am aware the company performance is still in line with expectations
- even with the share price having been struggling we are still almost break even, with already qualified dividend due payment of ~1.5% in early Feb

In my mind what this one boils down to is whether we expect Labour to gain power - personally I'd expect the Tories to win a confidence vote at the moment still, as neither their rebels nor the DUP will want less power and I cannot see how Labour can easily circumvent parliament to get power. It also concerns BREXIT but then this concerns all shares we own and will look to purchase, to one degree or another.

The above said - if we did get to a point where the share was at breakeven point for each tranche of shares I would not be adverse to considering their sale, just to give us some opportunity to liven things up. I don't see there to be any need for a fire sale on this share, just for the sake of it, unless there is a change of situation.
Thanked by: blythburgh
Chairman: iMutual's Cashback Investment Club (CIC) - contact me about joining!
Visit the Cashback Investment Club forum to find out more.

parchedpeas
Posts: 291
Joined: Tue Jun 29, 2010 12:34 pm
Has thanked: 170 times
Been thanked: 330 times
Contact:

Re: United Utlities

Post by parchedpeas » Fri Jan 11, 2019 2:26 pm

I'd support halving our interest in UU but a few thoughts:

- Labour threat priced in already, election not on the horizon
- Labour would force purchase stuff at the market rate, if they didn't they'd cause a crash across the private sector, so in theory we'd get the price they were at at the time of the purchase
- It's a decent earner so for the divi

Mainly though, we're turning loads of shares into cash but we really need some suggestions for where to go next. I've suggested Barclays elsewhere, and also thought about having a look at BATS who are suffering in the decline in smoking but are well placed for the new vape scene. However, we need more voices - both on the suggestions that are made, and people to flag up things they think are interesting.
Thanked by: garindan, blythburgh

parchedpeas
Posts: 291
Joined: Tue Jun 29, 2010 12:34 pm
Has thanked: 170 times
Been thanked: 330 times
Contact:

Re: United Utlities

Post by parchedpeas » Fri Jan 11, 2019 2:28 pm

It's a shame we couldn't get in on shares in Seaborne Freight recently. They've taken on a huge contract recently which seems to involve paper shuffling and biding your time.

garindan
Posts: 1855
Joined: Wed Jun 30, 2010 2:20 pm
Location: Midlands
Has thanked: 958 times
Been thanked: 1171 times
Contact:

Re: United Utlities

Post by garindan » Fri Jan 11, 2019 2:44 pm

parchedpeas wrote:
Fri Jan 11, 2019 2:26 pm
Mainly though, we're turning loads of shares into cash but we really need some suggestions for where to go next.
This has always been our struggle - some members have got uneasy as soon as the negative position of our shares has arisen and suggested selling. However, selling involves us getting cash to reinvest and without options the idea of selling shares we have interest in already is far less appealing to me, at least.

If we had some solid suggestions - more than just a couple of them - and from a larger cross-section of our membership then we'd have some more to talk about and it is more likely we'd have a greater interest in taking a sales position as we know what happens next.

I just posted an email that arrived from The Share Centre - interesting read and relevant to our discussions here and going forward.
Thanked by: blythburgh, parchedpeas
Chairman: iMutual's Cashback Investment Club (CIC) - contact me about joining!
Visit the Cashback Investment Club forum to find out more.

Post Reply

Who is online

Users browsing this forum: No registered users and 2 guests