Below is a small section of my research, which I have published over the years, while working at various investment banks and stockbrokers. Much of it is imperfect, and didn’t get things 100% right. But I thought it was worthwhile, letting people see what I have written in the past, and whether my analysis was a decent guide to the future.
Abbey May 04
A note on Abbey, which I upgraded to buy in May 2004, because I thought that management would sell to Santander. This had been rumoured in the sunday newspapers, but no one else seemed to think it likely. On the other hand, I could see a deal made sense for the reasons outlined in this short report.
Bank of Georgia Oct 2011
In July 2011 I received an email from Irakli Gilauri, Chief Executive of Bank of Georgia. He had got hold of all of the analysts covering UK banks, and wanted them to write research on them – as a precursor to a full London listing. I was the only analyst that looked up financial reports, and thought a bank making a 20% return on equity, with a 20% core tier 1 ratio and trading on 5x earnings made sense as an investment case.
I am interested in some of the cultural aspects of banking. I was also frustrated by the misinformation about where the losses in banking were coming from. So I added up all the losses in retail banking divisions of large universal banks, and compared to the total losses reported by the same organisations.
Barclays April 2010
This is a research note on Barclays I published in 2010, when there were 33 “buy” or “hold” recommendations on Barclays and the share price was 330p. I was the only “sell” recommendation, and I based this on the fact that extrapolating historic growth at Barclays Capital was absurdly optimistic. At the time, no one else seemed to think so.
Bradford & Bingley July 08
I thought that after Northern Rock, the Bank of England might support the funding at the other UK mortgage banks. It took me a while to realise in 2008, that funding difficulties were actually justified, because the banks were insolvent. When I did realise this, I downgraded to SELL with a zero pence target price.
Lloyds Oct 10
I wrote this note about Lloyds In Oct 2010, just before Antonio Horta-Osario arrived. The bank was fundamentally cheap, yet we didn’t know how much smelly stuff the new management would announce. Quite a lot, as it happened.
Lloyds RBS July 10
A note about the two banks which were partially owned by the government. I was worried that they were achieving higher profitability by gouging their customers. No one at the time seemed worried about this. As it turns out, cumulative conduct-related provisions since 2011 are over £30billion. Of this, around £20 billion related to mis-sold payment protection insurance. That was more than twice as large as total UK mortgage write-offs since 2008.
A bearish note about the mortgage banks in 2006, written while I was at Soc Gen. I got the graduates they employed to phone up mortgage brokers, and ask how much money they could borrow.
Nationalisation July 2008
In July 2008, for inspiration I looked at the Swedish and Japanese banking crises. I thought the UK Govt might have to nationalise the banks, but was unsure about timing. Paul Mason interviewed me for the BBC Newsnight, but the story was pulled, presumably because the editors felt it might be irresponsible to even talk about bank nationalisation.
NRK Sep 07
A note I wrote about Northern Rock, just as the crisis was starting. I later changed my price target to the mathematical symbol “i”, that is – the square root of minus one.
Windward side Jan 09
A research note I wrote at the lowest point in the crisis. I failed to call the turn, in part because I was no longer working in March 2009. Rather than surfing the internet, this research report was the result of sitting in the library for a couple of days. It looks at bank balance sheets going back to the 1930s.