Category Archives: $HSBC

$HSBC – approaching FV = 520, look to ….

Take some profit on trade recommended in Feb 2016 (‘HSBC – market Discord with CEO Creates 8% Yield’). Hopefully you are still in the trade as the level did flirt at the stop mid-April.

HSBC providing a trading update yesterday, announced a share buyback and removed the word ‘progressive’ from its dividend policy – the market was pricing in dividend cuts….so the market was wrong, but the dividend policy is no longer progressive…

Gulliver will probably maintain dividends for the next 1 to 2 years as the assess the impact of Brexit – but they will continue to sell assets, as they try to maintain a decent ROE, dividend and hopefully scope for more share buy backs.

2CentView retains a core position in $HSBC – for the yield and for the strategy of simplifying the business and returning excess cash.

HSBC – market discord with CEO Creates 8% dividend yield

HSBC announced results on Monday, and although this was a tough quarter with a down turn in China , Stuart Gulliver maintains the progressive divdend policy.

This is clearly at a discord with market, which thinks the dividend policy is not sustainable – but according to the FT, Gullivers plan to sell more businesses and reduce risk weighted assets, will ensure the dividend policy will continue.

All this means, HSBC has a yield of 8%! If you agree with Gulliver, hold or buy HSBC around here at 4,60 for the great yield.

FV= 520 now, so still decent upside to the current price.

Trade buy here at 4,60. Take profit target = 520, stop 4.20 . Yield = 8%!

HSBC has exposure to china and in a sector which is out of favour – Financials – so this is risky and hence why it is cheap.

2CentView has a core position in HSBC.

2CentView Sector Views…

At the beginning of each new year, take a look at your portfolio allocation across different sectors, for which there should be at least 5.

Be Overweight in sectors you think will be do well – up to a maximum of 35% in one sector.

2CentView is overweight in Tech and Financials and underweight in commodity/oil.

This view is unchanged, with core positions in TECH: $FB and $GOOG, $SPWR (Sun Power – solar), $SWKS (Sky works) and $NFLX (Netflix), AND Financials: $MS, $HSBC and $DLG.

Tech will continue to drive costs lower via the cloud and shape the we work and play.

Biotech is also making beakthroughs,  but risky.  2CentView has a core position in $CELG (Celgene) – if  there is a cure for cancer,  there is a good chance CELGENE would be involved.

Financials should do well when rates go higher and economies recover, which the UK and the US are on course.

Top Picks: $MS (Morgan Stanley) 32 vs. FV=$40, Yield 1.7%: Stock was hit hard on last earnings as Fixed Income still shows volatility in earnings. $MS Have addressed this by cutting the department and focus on equity underwriting and wealth management.

$HSBC – 537 vs 620 Yield, 6%. Gulliver is determined to cut down the size of the business and improve return on capital. You are paid a nice 6% dividend while you wait for his turnaround plan to take shape.

Sectors to keep an eye on are Energy and Commodity – but is still perhaps too early. Credit default Swaps are very wide and Earnings too unpredictable and the winter is SO WARM!

Keep plugged into 2CentView to get idea updates in these sectors.

If you want to buy now, 2CentView top pick is $BP , 354 vs 400 FV, Yield 5.5%, solid balance sheet, and can withstand low prices.

Finally always keep a look out for recovery plays – QUALITY companies which have been beaten down but can recover – Rolls Royce (FV=550), G4S (FV=300 vs 225), VRX (FV=185 vs 102).

 

 

HSBC FV=650 vs 635px Yield 5.7% – approaching take profit 645 take profit target

Tweeted HSBA as an opportunity to buy back on Mar 11 given 560 px vs 650 Fair value.

Look to take some profit soon as the move up has been quite rapid on the back of a soaring HangSeng and it’s decision to review it’s headquarters.

Sometimes, hated stocks are oversold (the 2Centview model tells by how much), and if they have good underlying assets and a management team that can turn things around then the trade is on.

2CentView is selling it’s trading position butkeeping a core position for the 5.7% yield and to get a cost base sub 5 pounds a share.

FV=650, Yield = 5.8%

HSBC FV=650 vs 560px Yield 6% – hated company but quality assets? Academics…

Banks continue to find it hard going – last tweeted about HSBC in July 2014, where the recommended trade was stopped out at 590 as the scandals continue to hit the banking market and HSBC.

Banks are finding it tough going – tighter regulation, ultra low interest rates and legal provisions covering potential heavy fines in all markets – gold, silver, libor, cds etc…

HSBC have also been accused of helping clients from one of their swiss operations avoid paying tax – for which FLint and Gulliver were hung up by a committee in London!

So should you buy now? Academics have shown that Hated Companies which have quality underlying businesses outperform – HSBC do have a quality underlying business, but it is perhaps to big to manage and they need to divest more and ensure core operations are clean. A strong dollar and rising interest rate environment should help also.

Trade: Buy here at 560, target 645 for 15% Plus 6% carry – Stop 520.

Comparables:
$Barc FV = 300 vs 250
$JPM FV = 72 vs 61
$STAN FV=1200 vs 1010

2CentView has trading position in $HSBC opened at 560.

Banks have been battered in 2014, but is it time to buy after RBS results?…

Banks have been trading at a discount to fair value all year – but instead of converging to fair value, they have just been getting cheaper – the market’s concerns about regulators coming down on them hard for ‘unsound’ business practices and trading complex instruments nobody including themselves really understand and manage the risk….have been justified

JPM 13billion $ Fine
BNP $9bn for dealing in the US with sanctioned countries
HSBC 1.9bn for money laundering

plus other lawsuits, for fixing prices in the gold and silver markets, deceptive practices in dark pool share trading…. !!!

However, is at the times when the news flow is bad and the stocks are really cheap, it is time to buy!….unless you think it will get worse from here …. in which case or trade only half what you want now, and the other half further down.
Morgan Stanley has shown the way of how to generate revenue by focusing on wealth management & investment banking – no need to trade complex debt instruments. Commercial Banks should focus on Lending to businesses, mortgages etc… RBS has shown how profitable that can be in a growing economy!

Some Market prices vs. Fair Values for names with potential upside + Carry

$BARC 275 vs 220 Yield 3%
$HSBC 720 vs 630 Yield 5.2%
$BNP 55 vs 49 Yield 3%
$JPM 64 vs 59 Yield 2.65%

2Centview pick is $HSBC – it should benefit from the growth UK & US Economy and offers an attractive yield. Results due 4th August. Buy here at 6,30 target 700, stop 590
2CentView has a trading position in HSBC at 6.23 and has a core in Morgan Stanley from 2013.