Category Archives: $DLG

Post Trump Opps: Financials could benefit…

If you are underweight financials – go equal or overweight to around 20%.

The Trump presidency could be the start of the end of low interest rates as growth and inflation picks up. The yield curve has already started to steepen (implying rates will start to rise).

Insurance companies will also benefit – they sit on a lot of cash – and usually invest it in long term assets.

US Banks have rallied – perhaps a bit too much – earnings estimates will be revised , so fair values below are conservative:

Px vs FV

$BAC  19 vs 19   Yield 1.6%

$JPM 76 vs 70 Yield 2.5%

$GS 204 vs 210 Yield 1.27%

$MS 38 vs 36 Yield 2.1%

$C 53 vs 58 Yield 1.2%

So C is the cheapest – it also one of the few banks trading below tangible Book Value.

2CentView has a core position in Morgan Stanley and may add $C (Citi).

$JPM is a great bank with a great CEO in Jamie Dimon but the stock has overrun a bit.

UK Based International Banks

$HSBC 617 vs 580 Yield 5%

$BARC 200 vs 200 Yield 1.49%

2CentView has a core position in $HSBC.

Also think Insurers will do well in a higher rate environment:

US Names:

$AIG $63 vs $62 Yield 2%

UK Names

$DLG 355 vs 400 Yield 6%

$LGEN 229 vs 251 Yield 6%

2CentView has a core position in $DLG and trading position added at 347.

No need to rush into any of the above – if you like $JPM for example, wait for a pull back to 70 before buying.

However, these stocks will benefit from less regulation and hedge you against rising rates – which could lead to higher mortgage costs and lower property prices…..

$DLG and $ESUR updates – one is a buying opportunity…

FV Updates:

$DLG 400 (includes the 30p Cash) Yield 5.5% Beta 0.4

$ESUR 300 Yield 3.5% Beta 0.8

Pull back to 350 on DLG represents buying opportunity [just under 15% upside, with great carry]

2CentView has added a trading position at 351, take profit target 400.

Keep at least one low beta domestic dividend paying stock in your portfolio!

$DLG(Direct Line), stock up 8% following results ….look to

Take some profit around 385 to 390 area, if you are in the trade sent out on 4th July.

Interim and Special Dividend announced today , could see as much as 24p dividend for the full year, yielding 6% plus….so keep a core position if you need a good income!

FV = 390

2CentView has exited the trading position at 385, keeping a core position.

Post Brexit Opps: DLG and ESUR

2CentView likes these 2 domestic insurers as they offer great capital returns, share price growth and low bet [risk].

ESURE is now 10p higher than pre-Brexit at 283, but DLG has lagged a bit, dropping from 374 to 339 post Brexit but not quite recovering.

You should be long one these low beta names – low beta means they have relatively low volatility with respect to the FTSE100 – means you can sleep at night when markets are turbulent!

DLG FV = 390 yield 5% [ includes around 27p a share of cash]

ESURE FV = 270 yield 4%

2CentView has a core position in DLG with a trading position added at 345, target 390.

$DLG (Direct Line) FV=390 vs 350…boring stock paying great returns dip back to 350 is…

After trimming some of the core position in $DLG in December 2015, when the stock hit the 420 fair value, have topped up the position at an average price of 355.

Fair value = 390 – it has just gone ex-dividend, so the value has dropped reflecting the pay-out, but the market seems to have over sold $DLG when it dipped below 350.

Buy below 355 for the great dividend yield and cash returns this company provides!.

FV= 390 which includes the surplus cash on the balance sheet.

2CentView has a core position in $DLG.

2CentView Performance in 2015

The 2CentView portfolio was up 1.5% and flat if you exclude dividends for 2015, which matched the S&P500 but above the FTSE100 which was down 5%.

The portfolio was up nearly 10% mid year, but then the Chinese stock market plunged and was followed an amazing drop in commodity and oil prices, the scale of which no one predicted, sees stocks like Anglo American, Glencore and BHP Billiton drop to record lows.

The objective of the 2CentView system is to outperform the index in rising markets and be at least in line when the major index is flat or falls up to 20%, and outperform if the market corrects more than 20%. The portfolio is benchmarked vs. the SP500 (50%, flat ) and FTSE100(50%, down 5%), so the outperformed by 2,5% in a flat year. Overall return since 2013, 74%.

The exposure to USD/GBP exchange rate is also something to keep an eye on – and 2CentView started using the PUS3 3x Leverage ETFS Short USD, Long GBP to hedge foreign exchange risk, locking in at 1.52.

Where it did badly:
2 Core positions were savaged – SAVE (down 60%), $YHOO (down 50%), $TWTR (down 50%) which cost the portfolio nearly 5% – 2CentView exited these positions, when the 50% threshold was hit. $ACA (Acacia Mining – Gold) was also down 40% due to lower gold prices.

Trades in $AMBA (Amberalla), $GNW (Genworth),$KORS (Michael Kors), $BHP (BHP Billiton) and $AAL (Anglo American) were all stopped out. In the case of $GNW, $BHP and $AAL, these stocks continued to fall and the stop loss system saved the portfolio from losing a lot of money.

Trades in $FIT (FITBIT), $HSBC were hit their targets and were profitable.

Core positions which did well: $FB up 40%, $MRKT, $DLG (Direct Line, up 30%+dividends),$NFLX (NetFlix), $TWOD (Taylor Wimpey, up 50%), $GOOGL up 60%.

Other core positions in $AAPL, $NASDAQ:AAL (American Airlines), $SWKS, $MS, $CELG and Ionis pharma were fairly flat.

Main lesson learnt from 2015 – STICK to your stops – downward moves can be savage – Analysts forecast can severely LAG the market on the downside as well as the upside, so do not fight the market, exit at your stop, re-evaluate and come back in lower down if you still like the stock.

Happy 2016 from the 2CentView team.

$DLG – Direct Line – 420 target approaching, take some profit, keep a core…

In times of market volatility, having low beta names with great dividend returns help smooth out the ups and downs of the market.

Direct Line Insurance has returned well over 100% in 3 years – and this is low risk!

FV= 420 on $DLG yield now below 4% as the price approaches the fair value

2CentView is trimming some here but keeping a core and reducing the overall cost basis of the position.

 

$DLG and ESure – stick with these boring stocks with great returns….

In times of market volatility, having low beta names with great dividend returns help smooth out the ups and downs of the market.

Direct Line Insurance has returned well over 100% in 3 years – and this is low risk!

FV= 420 on $DLG yield 4.2%

A slightly more risky name is ESURE, it stock went from low 200 to 260 and then back to 220 now back at 260 again!

FV=275 Yield = 5.2%

Stick to one of the above names – they are great boring investments!

$DLG (Direct Line Group) FV = 385 now following consolidation….

DLG recently consolidated its shares on a 11 for 12 basis, giving cash in lieu of fewer shares (cash due 24th July).

FV = 385 , 4.8% dividend yield – so use the cash to buy more shares if you want to top up your position.

This is a great low risk (beta = 0.65) domestic (UK) play not subject market volatlity and pays a great dividend – you should have at least one of these types in your portfolio – it did not budge during the Greek Fiasco!

Comparable: $ESUR , FV = 265, yield nearly 6%!

$DLG (direct line insurance) – approaching 310 take profit target

Look to take some profit in this low beta high dividen name to lower your cost base and leverage your yield when dividends are raised.

This is a great low risk (beta = 0.65) domestic (UK) play not subject market volatlity and pays a great dividend – you should have at least one of these types in your portfolio!

$DLG FV=310