23rd May 2014
1) Regulatory risk combined with competitive threats came back to haunt investors in the Royal Mail. It posted a decent set of first annual results since the float. But it also saw the chief executive Moya Green warning that if competitors were allowed to continue to cherry pick direct services while Royal Mail has to deliver six days a week everywhere it may not be able to maintain profitability margins set by the regulator. More significantly still she put a number on it, £200 million in 2017/2018. Shares tumbled. A further sting came when Capita Asset Services warned that there were better dividend prospects elsewhere in the market.
2) BlackRock, the biggest shareholder in AstraZeneca, calls for talks at the earliest possible stage, which looks like in three months’ time. Other shareholders are clearly not so convinced. Neil Woodford saluted the firm’s resolute resistance but he is not the firm’s biggest shareholder – not yet anyway.
3) Saga lists at the lowest end of its price range of 185p, but rises a few pence in conditional trading this week. Lombard Odier has a view at to why – among other things investors’ uncertainty about how to categorise the stock. Much of its business is non-life insurance which usually trade at a lower price to earnings ratio than consumer focused stocks.
4) When will it ever end? Barclays is fined £26m for gold price fixing though it does sound as if this time it is a rogue trader who is responsible though accompanied by the usual systems flaws.
5) Henderson’s Simon Ward thinks global investors may be holding too much cash and are being too conservative given the economic signals. He also expects cyclicals to outperform. One to bear in mind when thinking about tactical asset allocation.