Royal Mail anyone?

Unless I'm missing something I don't see anyone talking about the recent privatisation of Royal Mail in the UK. Anyway taking a position?

Will the big players sell off on Monday/Tuesday to make their 36% gains or hold on for the 6% dividend? Or attempt both? Interested what you think.

I'm not planning a position , its all a bit hypeless really.

They'll cover their behinds either way with call/puts.

not sure what RM's weighting in ftse will be, but all those fundies have got to get hold of the right proportion if they haven't already done so.

RMG traded as high as 475p - 44% return for those who got in at 330p
I asked for the reports from Accendo Markets which was good and bought some which is in profit so far. Hope RMG will send me some profit by post

Well I dunno what it started out as, just heard on the news that it is not all its cut out to be.

Just watching it now. If ever anyone wants to know why many retail traders are confirmed as LOSERS then watch todays events on Iplayer.

at least the employes have made a few K
and made the Tories look bad again

http://www.theguardian.com/business/2013/oct/13/postal-workers-strike-ballot-pay-conditions
http://www.cwu.org/royal-mail-strike-ballot-vote-yes.html
http://www.thisisderbyshire.co.uk/U...tory-19882612-detail/story.html#axzz2hoUCnSVr

Strike ballot closes Oct 16, earliest strike date Oct 23
Could be a good short if strike announced tomorrow

Hope everyone has done their online xmas shopping,
if not, I really wouldn't recommend ordering during a strike period.
All your stuff will end up at the bottom of the backlog pile,
this from last 2009 strike:

As expected, no surprise:
http://uk.reuters.com/article/2013/10/16/uk-royalmail-strike-idUKBRE99F0JU20131016

Royal Mail went up for sale months ago, no one bought it, that alone should give you warning signs. They are well behind technology wise to the likes of DHL, TNT, Fedex, UKMail. Not only that but they have to deliver post from them companies too! Increasing the work load.

This is a definite NO from me, the only benefit would have been to buy it and then sell within the first few days.

MayZerG said:

Royal Mail went up for sale months ago, no one bought it, that alone should give you warning signs. They are well behind technology wise to the likes of DHL, TNT, Fedex, UKMail. Not only that but they have to deliver post from them companies too! Increasing the work load.

This is a definite NO from me, the only benefit would have been to buy it and then sell within the first few days.

Click to expand...

Agree, short or not at all.
RMG have widespread competition, directly with TNT end to end delivery trials in London.
Growing parcels sector fiercely competitive.
Poor industrial relations, ludicrous regulation that allows competitors
to cherry pick best contracts, then get RM to deliver.
List is endless, asset stripping of prime London sites for re-development
might paper over the cracks for a while though

Liquid validity said:

Agree, short or not at all.
RMG have widespread competition, directly with TNT end to end delivery trials in London.
Growing parcels sector fiercely competitive.
Poor industrial relations, ludicrous regulation that allows competitors
to cherry pick best contracts, then get RM to deliver.
List is endless, asset stripping of prime London sites for re-development
might paper over the cracks for a while though

Click to expand...

Everything has a price. All those risks can be factored into forecasts, plus some room for nasty surprises, and a valuation derived. Whether it's above or below the current market price I don't know as I haven't done the work, but if equity investing (as opposed to trading) was as simple as buying 'good' stories and selling 'bad' ones, we'd all be rich...

Jack o'Clubs said:

Everything has a price. All those risks can be factored into forecasts, plus some room for nasty surprises, and a valuation derived. Whether it's above or below the current market price I don't know as I haven't done the work, but if equity investing (as opposed to trading) was as simple as buying 'good' stories and selling 'bad' ones, we'd all be rich...

Click to expand...

True, my point was the current balance sheet does not always tell the whole story.
Another example would be Tesco, balance sheet analysis only gets you so far.
Without looking at the mechanics of the business and its competition,
you only get half the picture.

Example, Tesco in my view have overstretched themselves with store numbers.
They are currently trying to rationalise operating costs in a way which may
impact customer service more than culling excess stores.

Another example with RM - van fleet modernised and updated inline with the
whole modernisation program. What most analysts and even RM procurement
were not aware of at time of appraisal and acquisition of that new fleet was the
weakness of diesel particulate exhaust filters and short journeys combination.
In fact due to the RM modernisation process, more vans are needed for much shorter trips.
https://www.google.co.uk/#q=diesel+particulate+exhaust+filter+and+short+journeys
http://www.thisismoney.co.uk/money/...l-cars-Drivers-warned-diesel-filter-trap.html
http://www.honestjohn.co.uk/faq/diesel-particulate-filters/
All modern diesels are affected.
Diesel particulate filters frequently need replacing much earlier with short trips.
Typical consumer repair bill £1000-3000, although that will be lowered
with in house fleet maintenance (labour charge and bulk trade discount).
That extra fleet maintenance cost won't appear on the balance sheet for a while.
That may seem peanuts to a large company, but then margins are peanuts as well...

RM fleet size:
https://www.whatdotheyknow.com/requ...5/attach/html/4/Burchell DTUP 8SJLTT.pdf.html
http://www.drivingforbetterbusiness.com/casestudies/royalmail.aspx
Approx 28000 car derived vans, obviously the whole fleet is not brand new,
but at the very least half of that number is affected.

They have a new modern van fleet unfit for purpose, with breakdowns
and potential engine damage, but more importantly increased running costs
and shortened vehicle lifespan.

None of this information can be found on a balance sheet.
Thats just a few examples, all this is public domain if you know where and how to find it...

Liquid validity said:

True, my point was the current balance sheet does not always tell the whole story.
Another example would be Tesco, balance sheet analysis only gets you so far.
Without looking at the mechanics of the business and its competition,
you only get half the picture.

Example, Tesco in my view have overstretched themselves with store numbers.
They are currently trying to rationalise operating costs in a way which may
impact customer service more than culling excess stores.

Another example with RM - van fleet modernised and updated inline with the
whole modernisation program. What most analysts and even RM procurement
were not aware of at time of appraisal and acquisition of that new fleet was the
weakness of diesel particulate exhaust filters and short journeys combination.
They have a new modern van fleet unfit for purpose, with breakdowns
and potential engine damage, but more importantly increased running costs
and shortened vehicle lifespan.

None of this information can be found on a balance sheet.
Thats just a few examples, all this is public domain if you know where and how to find it...

Click to expand...

That wasn't really my point. You can put numbers on all the things you've mentioned, and good job if you've done some primary research. Equity analysts (the good ones at least) go sniffing round the businesses they look at all the time to get that kind of information edge by kicking the tyres. When you've put all this in your model you can come up with a valuation and then decide whether it's a buy or a sell. Otherwise how do you know the price isn't already (over)discounting the risks?

Jack o'Clubs said:

That wasn't really my point. You can put numbers on all the things you've mentioned, and good job if you've done some primary research. Equity analysts (the good ones at least) go sniffing round the businesses they look at all the time to get that kind of information edge by kicking the tyres. When you've put all this in your model you can come up with a valuation and then decide whether it's a buy or a sell. Otherwise how do you know the price isn't already (over)discounting the risks?

Click to expand...

Agree, numbers can be put to anything.
My point is that equity analysts who are good don't generally tend to
give public recommendations, or at least I've rarely come across any I would trust.
At institutional level, it may well be different, but thats the whole point,
the money comes from not making that info public.

Liquid validity said:

My point is...

Click to expand...

That wasn't your point at all, at least not in your original posts. Your point was: here are a load of reasons as to why I wouldn't touch RM with a barge pole, and my point was : that's too simplistic, you can't reach that conclusion until you've made some attempt to discount those risks quantitatively. We seem to have established at least that that is true... That there might be some issues not captured in backwards-looking financial statements was never in dispute.

Jack o'Clubs said:

That wasn't your point at all, at least not in your original posts. Your point was: here are a load of reasons as to why I wouldn't touch RM with a barge pole, and my point was : that's too simplistic, you can't reach that conclusion until you've made some attempt to discount those risks quantitatively. We seem to have established at least that that is true... That there might be some issues not captured in backwards-looking financial statements was never in dispute.

Click to expand...

Yes fair point and true, but unless you can link to a public analyst report
that highlights the factors I've mentioned in a more thorough and quantitative
manner, I'll take my simplistic back of a fag packet reasons first.
Just because I'm not fleshing it out in any more detail does not mean I don't have a point.

Personally I've yet to come across a public analyst report or recommendation
that was worth the paper it was printed on.
Usually they are way off beam or deliberately misleading.
I may well be too, I didn't post this as some sort of exhaustive analysis in the
first place though.

Its pretty clear most people punting at a basic level were not even aware of the
strike issue, let alone anything else.

Well its pretty clear the strike announcement impact only lasted one day.
Can it crack 500?

A little bit of extra info some may not be aware of:
Massive turnaround in profitability - large one off exceptional costs
during 08-10 for van fleets, new technology (PDA's and automated mail processing),
dented profitability during that period.

2011 profits boost from property rationalisation (190m):
http://www.bbc.co.uk/news/business-15820647

Threats to future business:
http://www.telegraph.co.uk/finance/...ts-deliver-blow-to-embattled-high-street.html

None of that means price cannot and will not carry on rising (done well last 2 days).
From where I'm standing, there are still significant upside risks to a
long term holding though.
Not that I imagine many here are into buy and hope...

I can't help but wonder if the threat to future business is the real reason
the govt. have offloaded.

My feeling is that, I don't have any empirical evidence for this, but it seems to me that RM is having the same problems that the USPS is having. Competition from email and the like is driving it out of business. That's why they're selling RM to the public.