BOI shares steadily rising... Worth a punt?

Soulja boy

Despite reporting losses the share is up 7% already today, have people not seen the news yet, or is it that they are surprised about how little the losses are.

ixus

Sonnenblumen wrote: »

http://www.irishtimes.com/newspaper/finance/2012/0220/1224312049721.html?via=rel

Interesting piece about one major investor who also believes in my earlier prediction of a +300% gain in BoI.

Next 12 months will be a very big and revealing time for this bank.

Investor who is heavily long says he expects investment to go up. Shocker!

Soulja Boy, the increase today is probably due to this article.

I don't really follow this shareprice as my view on the Irish economy hasn't shifted but, I do know people who's opinions I respect have been long this for a short while. But, it would be a small part of their portfolio.

karltimber

Goodbodys text from today - might see some downside

FY11 - Stock has run too far too quick year to date
BOI reported FY11 results yesterday. The company's updated commentary on margins positions BOI closer to our forecast of 1.9% margin by 2015. Improved deposit volumes and pricing is already reflected in our models, which combined with anaemic economic momentum and lower for longer interest rates sees margin accretion relatively subdued in 2012 (flat to modestly up; lower in H1, better in H2). On impairments, our house view is that many of the key macro-economic variables are already trending towards the adverse PCAR assumptions, so we are feeding c.75% of the difference between the base and adverse case losses into our model (c.€2bn of the €2.7bn difference).

A number of factors are supporting BOI's c. 80% share price increase year to date including progress on deleveraging, stronger than anticipated deposit growth in H2 (mainly in the UK), tighter sovereign spreads, hopes for improved deposit pricing in 2012 and expectations for the LTRO carry trade, in addition to some hopes that asset prices are approaching floors. However, these factors will still only deliver a flat-to-modestly up margin in 2012 (on a reported basis) and the macro-economic trends are more closely aligning with the adverse case PCAR assumptions.

Using PCAR and taking a firm view on the level of likely loan losses now sees us estimate a trough TNAV of 17.3c per share (previous range 14-23c based on PCAR adverse/base case). We see BOI generate a low teens ROE in 2016, which discounting back by 20% p.a. from our fair value P/NAV multiple of 1.25x implies it is worth 0.6/0.7x TNAV. This generates our fair value of 11c. At 14.6c, the shares are trading at 0.85x our trough TNAV with the sector trading at 0.8x TNAV, with its most directly comparable peers closer to 0.6x. Alternatively, looking at BOI on a FY12f pre-provision profit basis, we estimate it is trading on 7.6x earnings with the sector is on 4x (UK banks 3.5x). In summary, in our view the share price rebound year to date looks premature, with c.25% downside. Sell.

Sonnenblumen

karltimber wrote: »

Goodbodys text from today - might see some downside

FY11 - Stock has run too far too quick year to date
BOI reported FY11 results yesterday. The company's updated commentary on margins positions BOI closer to our forecast of 1.9% margin by 2015. Improved deposit volumes and pricing is already reflected in our models, which combined with anaemic economic momentum and lower for longer interest rates sees margin accretion relatively subdued in 2012 (flat to modestly up; lower in H1, better in H2). On impairments, our house view is that many of the key macro-economic variables are already trending towards the adverse PCAR assumptions, so we are feeding c.75% of the difference between the base and adverse case losses into our model (c.€2bn of the €2.7bn difference).

A number of factors are supporting BOI's c. 80% share price increase year to date including progress on deleveraging, stronger than anticipated deposit growth in H2 (mainly in the UK), tighter sovereign spreads, hopes for improved deposit pricing in 2012 and expectations for the LTRO carry trade, in addition to some hopes that asset prices are approaching floors. However, these factors will still only deliver a flat-to-modestly up margin in 2012 (on a reported basis) and the macro-economic trends are more closely aligning with the adverse case PCAR assumptions.

Using PCAR and taking a firm view on the level of likely loan losses now sees us estimate a trough TNAV of 17.3c per share (previous range 14-23c based on PCAR adverse/base case). We see BOI generate a low teens ROE in 2016, which discounting back by 20% p.a. from our fair value P/NAV multiple of 1.25x implies it is worth 0.6/0.7x TNAV. This generates our fair value of 11c. At 14.6c, the shares are trading at 0.85x our trough TNAV with the sector trading at 0.8x TNAV, with its most directly comparable peers closer to 0.6x. Alternatively, looking at BOI on a FY12f pre-provision profit basis, we estimate it is trading on 7.6x earnings with the sector is on 4x (UK banks 3.5x). In summary, in our view the share price rebound year to date looks premature, with c.25% downside. Sell.

Given Goodbody's long history until sold by AIB might influence some investors. IMO - Disregard this waffle.

ranger4

Sonnenblumen wrote: »

Given Goodbody's long history until sold by AIB might influence some investors. IMO - Disregard this waffle.

I agree and choose to ignore goodbodys along with so called ratings agencies rubbish.

Bluefox21

Anyone else feel the RBS results really reflect how well BOI are turning it around?

neris

Bluefox21 wrote: »

Anyone else feel the RBS results really reflect how well BOI are turning it around?

It looks much better for boi alright so maybe a small profit or small loss next year. In the context of global banking its a small loss for this year. But Ulster Bank really seems to be dragging RBS down if the figures I saw and heard today are right. Newstalk were saying over a billion euros lost in ulster bank and then cnbc were say over a billion pounds lost by rbs which make it out that rbs themselves would be ok without ulster bank.

karltimber

Header from Goodbodys morning wrap text

I wish

Analyst: Eamonn Hughes
Bank of Ireland
Recommendation Closing Price
Sell €8.05

RR2026

In last few days, BOI shares are up more +10%? Wondering is it a good time to invest in these shares?? Thanks

Soulja boy

RR2026 wrote: »

In last few days, BOI shares are up more +10%? Wondering is it a good time to invest in these shares?? Thanks

Buying shares in BOI is a gamble on the economy, if it does well BOI will improve. Be clear that it is not an investment, it is a gamble.

For:
Share price is low
Economy has to improve right... right?

Against:
Cannot short bank shares
SP is dictated by many different factors, for instance if Bank of america takes a large write off it hits all the other banks.

That being said I baught at 10c for this and I've been pretty pleased with it's performance.

RR2026

Many thanks.

California Man

edit: wrong thread

Adolf Hipster

How does one buy shares?

I spend alot of time analysing them and predicting rises and falls out of my own interest, but have never actually tried to buy them.

California Man

Adolf Hipster wrote: »

How does one buy shares?

I spend alot of time analysing them and predicting rises and falls out of my own interest, but have never actually tried to buy them.

Open an account with an online broker.

Sonnenblumen

Soulja boy wrote: »

Buying shares in BOI is a gamble on the economy, if it does well BOI will improve. Be clear that it is not an investment, it is a gamble.

For:
Share price is low
Economy has to improve right... right?

Against:
Cannot short bank shares
SP is dictated by many different factors, for instance if Bank of america takes a large write off it hits all the other banks.

That being said I baught at 10c for this and I've been pretty pleased with it's performance.

Fair points there. I suppose if you follow doomsday predictions, you'll likely stay clear of BoI etc. However as the only independent (OK 15% state ownership) Pillar Bank which is reasonably positioned to improve as Irish economy improves, it is difficult despite almost certain knocks along the way, not to be at least optimistic about the share's potential.

Every share is a gamble, but surely BoI is too big to fail Ireland?:eek:

Monty Burnz

Sonnenblumen wrote: »

Fair points there. I suppose if you follow doomsday predictions, you'll likely stay clear of BoI etc. However as the only independent (OK 15% state ownership) Pillar Bank which is reasonably positioned to improve as Irish economy improves, it is difficult despite almost certain knocks along the way, not to be at least optimistic about the share's potential.

Every share is a gamble, but surely BoI is too big to fail Ireland?:eek:

It doesn't have to go bust for you to lose all your money. You can just get diluted out of existence as happened with shareholders who bought before the collapse.

AP_MAN

+1

exactly.. lost a ton loads of money by so many including me on this..

Monty Burnz wrote: »

It doesn't have to go bust for you to lose all your money. You can just get diluted out of existence as happened with shareholders who bought before the collapse.

EdenCyrus

Its pretty sad now though isnt it. sp that is! I mean I guess it could get worse. In terms of dilution, i guess its possible. But Ireland isnt exactly in the limelight anymore in terms of debt and total financial destruction. Its kind of in the back ground sticking its head in the sand etc. I would say it might be worth a shot. I would do it. But if it did increase, it would be over a extremely long time. I would say it will be on par with the recovery rate of the country since BOI are one of the back bones of the Irish economy.

Please correct me if i'm wrong. I dont want to mislead

Monty Burnz

EdenCyrus wrote: »

Its pretty sad now though isnt it. sp that is! I mean I guess it could get worse. In terms of dilution, i guess its possible. But Ireland isnt exactly in the limelight anymore in terms of debt and total financial destruction. Its kind of in the back ground sticking its head in the sand etc. I would say it might be worth a shot. I would do it. But if it did increase, it would be over a extremely long time. I would say it will be on par with the recovery rate of the country since BOI are one of the back bones of the Irish economy.

Please correct me if i'm wrong. I dont want to mislead

It depends - if the bank needs to be recapitalised again, current shareholders would be wiped out. And whether it needs to be recapitalised largely depends on how much they will lose on defaulted mortgages when they finally face up to them - right now they are not carrying out any repossessions (well, low single figures per quarter) and are effectively allowing people to keep houses they are not paying for. This can't go on.

Soulja boy

Monty Burnz wrote: »

It depends - if the bank needs to be recapitalised again, current shareholders would be wiped out. And whether it needs to be recapitalised largely depends on how much they will lose on defaulted mortgages when they finally face up to them - right now they are not carrying out any repossessions (well, low single figures per quarter) and are effectively allowing people to keep houses they are not paying for. This can't go on.

At the moment the cost of repossession is more detrimental then getting irregular payments from mortgage holders. Most of these properties will stand vacant even if they are taken. It is possible that as the economy improves people will start paying mortgages regularly and the bank won’t have to take that hit.

Sonnenblumen

Monty Burnz wrote: »

It doesn't have to go bust for you to lose all your money. You can just get diluted out of existence as happened with shareholders who bought before the collapse.

Who are you telling, hurting bad from earlier blood letting. Perhaps we're splitting hairs now? Bank will only go bust if it needs another significant round of raising fresh capital investment, ie to solve a new liquidity crisis. But I would have thought that would be very unlikely now?

Monty Burnz

Sonnenblumen wrote: »

Who are you telling, hurting bad from earlier blood letting. Perhaps we're splitting hairs now? Bank will only go bust if it needs another significant round of raising fresh capital investment, ie to solve a new liquidity crisis. But I would have thought that would be very unlikely now?

We'll see how it pans out when they finally face up to the issue of non-performing home loans. I read elsewhere that 16% of of loans will be in 90+ days of arrears by the end of the year - that is a bloodbath, way worse than the stress tests allowed for.

Bullish

just wondering if this tread could be used as an timing indicator,
when it sinks to page 5 - 10 on the index, time to buy and when it makes it back to page 1 for 3 or more days time to sell

shangri la

Adolf Hipster wrote: »

How does one buy shares?

I spend alot of time analysing them and predicting rises and falls out of my own interest, but have never actually tried to buy them.

i am genuinely interested to know how you analyse shares.

shangri la

Monty Burnz wrote: »

It doesn't have to go bust for you to lose all your money. You can just get diluted out of existence as happened with shareholders who bought before the collapse.

about 50,000 mortgages more than 6 months in arrears in ireland with no light at the end of the tunnel.

how much is boi exposed to?

if spains banks go what happens to boi?

is there more money if needed to cover a slew of mortgage bad debts?

is there a better investment to be had?!

shangri la

EdenCyrus wrote: »

Its pretty sad now though isnt it. sp that is! I mean I guess it could get worse. In terms of dilution, i guess its possible. But Ireland isnt exactly in the limelight anymore in terms of debt and total financial destruction. Its kind of in the back ground sticking its head in the sand etc. I would say it might be worth a shot. I would do it. But if it did increase, it would be over a extremely long time. I would say it will be on par with the recovery rate of the country since BOI are one of the back bones of the Irish economy.

Please correct me if i'm wrong. I dont want to mislead

eye of the storm imo.

shangri la

Sonnenblumen wrote: »

Who are you telling, hurting bad from earlier blood letting. Perhaps we're splitting hairs now? Bank will only go bust if it needs another significant round of raising fresh capital investment, ie to solve a new liquidity crisis. But I would have thought that would be very unlikely now?

expect to see about another E10bn spread through the banks from a fresh round of mortgage defaults.

RR2026

Hi bank of ireland repurchased shares, what this table signifies?

Settlement Date
ISIN
Issuer

Pre Repurchase Balance
Nominal Amount
Post Repurchase Balance

CCY
10-Apr-12
XS0737001247
BANK OF IRELAND

1,850,000,000
50,000,000
1,800,000,000

EUR

c montgomery

Shares after taking a dip recently however im thinking of investing for the long term, maybe 3 to 5 years.

What are peoples thoughts on this? I know the personal insolvency act coming in the next few months may cause the bank some troubles however over the long term i think they are worth a punt.

Monty Burnz

c montgomery wrote: »

Shares after taking a dip recently however im thinking of investing for the long term, maybe 3 to 5 years.

What are peoples thoughts on this? I know the personal insolvency act coming in the next few months may cause the bank some troubles however over the long term i think they are worth a punt.

Do you have an idea how much capital the bank has? Do you have an idea how much of this will be destroyed by their mortgage book going bad? Do you know what Basel III and the relevant capital adequacy regulations are?

If the answer to any of these is no, then run a mile - you'd be better off sticking it on a horse.

By the way, 3 to 5 years is not the long term.

euroboom13

buying...bravely....

euroboom13

8 cent to 9.6 in one week....whats that 20%;)

something happening!..or more of the same?

euroboom13

another great thread bites the dust.....feel the pain of lost hope

or is there any brave`s left!!.....(9.3cent for the record)

Monty Burnz

euroboom13 wrote: »

another great thread bites the dust.....feel the pain of lost hope

or is there any brave`s left!!.....(9.3cent for the record)

These things will wobble all over the place. It's a gamble, not an investment.

HerrScheisse

I am actually thinking of buying more BoI at this point.

Either they let the euro fail and the zone break up and become an economic backwater in the brave world of brand new superpowers or they complete an incomplete task and make the euro currency durable, and capable to withstand turbulence.

Of all the PIGS countries, Ireland is the only one to comply with targets to date, maybe it is a raw deal but I believe long term BoI has a healthy future once the European Commission get their collective act together. The choice is stark - failure of the currency, or continue as a economic and political block. And time is running out, the alternative is much Scheisse...

Monty Burnz

HerrScheisse - remember that regardless of which occurs, your BOI shares could still be diluted to the point of worthlessness.

euroboom13

very few investments these days could be consider gamble free...(with qe guns cocked)

and the up side on boi are massive....."IF" they survive which looks likely..(to me)

HerrScheisse

I agree fully with you Monty my good friend.

Dilution is a short term strategy. I am thinking BoI long term as in a 10 year time frame. Bear in mind that GM was bankrupt less than 3 years ago and is now in the top class of car manufacturers. If you gave a Buy vote in 2010 you would have been considered insane.

I like to take short term risks but I find many look at the dailies and weeklies. Be honest, which European government has let a major bank fail?

Zero. Meaning you have a government sponsored buffer. Although no absolute guarantee, it is certainly better than gambling on Ford or GM two years ago, which would have reaped a fine profit if you did dare so.

I like the big picture, I am assuming that the European painting must continue in parallel to to the US design of economic reform to create an new economic picture based partly upon the German model. A design and manufacturing base in Europe for starters.

HerrScheisse

Monty Burnz wrote: »

HerrScheisse - remember that regardless of which occurs, your BOI shares could still be diluted to the point of worthlessness.

That can happen to any company in Scheisses - you have no guarantee.

Monty Burnz

HerrScheisse wrote: »

That can happen to any company in Scheisses - you have no guarantee.

Yes, but that's like saying 'you could be hit by a bus tomorrow'. A truism that adds nothing to your analysis. BOI is odds on to require another massive recapitalisation, which will wipe out your whole investment. Even if it doesn't, there's no reason to believe it will suddenly become massively profitable again - it will most likely creep on as a zombie for a decade.

euroboom13

Monty Burnz wrote: »

Yes, but that's like saying 'you could be hit by a bus tomorrow'. A truism that adds nothing to your analysis. BOI is odds on to require another massive recapitalisation, which will wipe out your whole investment. Even if it doesn't, there's no reason to believe it will suddenly become massively profitable again - it will most likely creep on as a zombie for a decade.

its opinions like this that create value for risk takers...like in good days people never see a downside and on the way up ,can never see a good day(never i mean not on the near side of a decade).....negativity WILL fade and bank shares will be the first sign of possitive upside.Not saying it will be a nice one to watch but great upside!

Losses on the way down are played against profits on the way up, making the climb up easier.

definely a complete gamble but could easily multiply x5 in 2yrs...with 1st sign of crisis end.....already x2 briefly (7c /15c)

(9.4cent)

Monty Burnz

euroboom13 wrote: »

definely a complete gamble but could easily multiply x5 in 2yrs...with 1st sign of crisis end.....already x2 briefly (7c /15c)

(9.4cent)

Yup, that's exactly my point.

euroboom13

Monty Burnz wrote: »

Yup, that's exactly my point.

i`d rather have 20 similar plays like this than any slow safe "investments".

analysis and charts didnt help many "investments" in this crisis

investment /gamble = low risk/high risk

(high)risk is where to be now ........upside way undervalued.

I was considered negative(to safe) in "celtic tiger" and now i`m consider reckless!:)
I`m very happy with that!

"Buying property, bank shares and other reckless stuff"
(i will draw ye a chart in a year or 2 ,something like this/):)

swagger121

is now a good time to buy BOI, they are hovering at 9c for the past few weeks and considering that Wirbur Ross bought them for 12c they look like a safe bet. With the book value valuing each share at around 33 cent per share, do they not look like a bargain??? Surely they will come on par with their book value in the next year or two?

Monty Burnz

swagger121 wrote: »

is now a good time to buy BOI, they are hovering at 9c for the past few weeks and considering that Wirbur Ross bought them for 12c they look like a safe bet. With the book value valuing each share at around 33 cent per share, do they not look like a bargain??? Surely they will come on par with their book value in the next year or two?

Nope. Book value is wrong.

c montgomery

swagger121 wrote: »

is now a good time to buy BOI, they are hovering at 9c for the past few weeks and considering that Wirbur Ross bought them for 12c they look like a safe bet. With the book value valuing each share at around 33 cent per share, do they not look like a bargain??? Surely they will come on par with their book value in the next year or two?

Are you gonna go for it. Been thinking about buying some bank shares myself but not sure which ones to go for. There must be safer bets out there but there still a bet.

Anyone any ideas?

tfjmor

BenThere wrote: »

This evenings closing price is €0.076 & Bloomberg states the market cap is €2,290,070,000 (or thereabouts) which implies there are 30,132,500,000 (or so) shares in issue not 79,000,000,000.

It also implies the PE (per your basis of calculation above) is approximately 2.3

What an I missing?

Ben

Ben,

I am new and have no knowledge of the workings of the share investment market but like so many feel BOI may be worth a punt. I think that the estimate of number of shares already issued must be key to the share value in the years ahead. Say if one bought 10,000 shares at todays price; is'nt likely that some form of rationalisation will take place in the future that will render this very modest holding of little value. One of my main concerns is how the shares can be manipulated to suit BOI.

tfjmor

xertpo

tfjmor wrote: »

Ben,

I am new and have no knowledge of the workings of the share investment market but like so many feel BOI may be worth a punt. I think that the estimate of number of shares already issued must be key to the share value in the years ahead. Say if one bought 10,000 shares at todays price; is'nt likely that some form of rationalisation will take place in the future that will render this very modest holding of little value. One of my main concerns is how the shares can be manipulated to suit BOI.

tfjmor

There's better places to invest right now. This share is a lame horse with too many problems to be worth a punt. Steer clear is my advice.

tfjmor

I have no knowledge of share trading and like so many, it seems, am interested in taking a punt on some BOI shares. I would like to invest €1000 for between 10 - 15 years. However, I understand BOI already have issued many millions of ordinary shares therefore any growth will be so diluted that individual shares will be of little value even in the longer term. Will there be share rationalisation down the road similar to the Eircom debacle and is there any truth in my understanding?

Also, Government bailed out BOI with many billions of Euro. Will BOI have to repay these billions to Govt. over many decades and if so and taking the former in to account it is difficult to see making any investment being prudent.

It would be of great interest if one would get a brief overview of the committments etc. BOI must meet in the coming years.

Monty Burnz

tfjmor wrote: »

I have no knowledge of share trading and like so many, it seems, am interested in taking a punt on some BOI shares. I would like to invest €1000 for between 10 - 15 years. However, I understand BOI already have issued many millions of ordinary shares therefore any growth will be so diluted that individual shares will be of little value even in the longer term. Will there be share rationalisation down the road similar to the Eircom debacle and is there any truth in my understanding?

Also, Government bailed out BOI with many billions of Euro. Will BOI have to repay these billions to Govt. over many decades and if so and taking the former in to account it is difficult to see making any investment being prudent.

It would be of great interest if one would get a brief overview of the committments etc. BOI must meet in the coming years.

Without wanting to sound rude, I don't think you really understand how investing in shares works. All the publicly available info on BOI is already in the price. Before going near investing in bank shares (one of the most opaque of all businesses) I'd suggest you spend a couple of hours researching the basics of how shares work. http://www.fool.co.uk/ used to have a good introduction to share investments - perhaps that might be a good place to start.