Unilever Live Discussion

Barney_Scott 22 Sep 2018

Going Dutch NewBill1703: You shouldn’t overstate the direct index issue, Games, far fewer funds than you might think are rigidly tied to the FTSE100 - and fewer than there used to be. Are you sure? In the USA, “Their report pegged passive ownership of U.S. equity funds at 37 percent, up from 19 percent in 2009, though that analysis was limited to funds and did not include an estimate of privately held assets.” [link] From that article, globally, 17.5% of assets are in index trackers, when non-fund owners (pensions etc.) are counted too. Are you saying the UK has gone against the trend? This paper reckons that, globally, passive funds have gone from about 8% to 20% of assets, between 2007 and 2017. [link]

NewBill1703 22 Sep 2018

Going Dutch Gamesinvestor1: It’s not a uestion of the managers ignoring it, it’s what happens with all the funds that are linked to the FTSE100 – If it’s not in the index they can’t hold it and there are so many funds where Unilever is a top 10 holding it’s incredibly significant - not to know that I would consider to be more naive. We shall see what happens when all those funds are forced to sell their holdings. You shouldn’t overstate the direct index issue, Games, far fewer funds than you might think are rigidly tied to the FTSE100 - and fewer than there used to be. And pretty much no active managers are directly tied, even if some might look at the FTSE100 as an informal benchmark. The symbolic issue, of ULVR arguably abandoning UK plc (though not really), is probably a bigger one, and I suspect the likes of Nick Train are more exercised on this point - he can (and does) buy shares from any index globally. It’s not an issue at all for me - even as private investors, we can buy shares pretty much anywhere these days, with absolutely no reason to tie ourselves to the FTSE100 or any other inanimate index. ULVR is retaining it’s London listing and £-denominated SP and dividend payments, so what’s the fuss? But up to others if they want to get all Rule Britannia about it, knock yourselves out! The biggest - and only real - negative for me is the greater protection against takeover that it will likely give ULVR, which I suspect is the real reason Polman is so keen - he has been damaged goods ever since the Kraft episode and the sooner he goes the better IMHO. It wouldn’t necessarily stop me buying the shares - there are other, more fundamental reasons I wouldn’t be buying, at least not here - but it is not something any shareholders should welcome.

Barney_Scott 21 Sep 2018

Going Dutch “Small Unilever investors can block HQ move - regardless of how much stock they own” - [link] But it also requires a majority of voting shareholders to approve, regardless of how much stock they own. This means a single investor with a handful of shares has as much power as a large fund with billions of pounds in Unilever. If enough private shareholders oppose the proposals, cooked up by Unilever’s Dutch chief Paul Polman, they will fail even if investors holding 75 per cent of the stock approve. Unilever has 35,000 private investors and 8,500 institutional. The rules, in the small print of the 120-page document sent to shareholders, set the scene for a knife-edge vote next month. I have Unilever shares in a SIPP. Do I count as one private investor, or is the SIPP provider one institutional investor?

Gamesinvestor1 20 Sep 2018

Going Dutch J - Personally I think it’s a mistake to effectively delist and it will take away the visibility associated with it. Whatever the outcome in terms of the Netherlands index, which is small compared to London, much of the current bid premium will go as a result of the motion being passed and the company protects itself behind the Netherlands jurisdiction. As well as the currency shift it will experience, I anticipate the price will retrace back close to the pre-Kraft bid. It’s also worth noting that the dividend has been increasing at a far faster rate than profit growth, a long term unsustainable situation. We shall see what happens, but this is much more a vanity and political move than a pragmatic one in my view, dressed up as simplification. Games

J_Westlock 20 Sep 2018

Going Dutch Gamesinvestor1: It’s not a uestion of the managers ignoring it, it’s what happens with all the funds that are linked to the FTSE100 – If it’s not in the index they can’t hold it and there are so many funds where Unilever is a top 10 holding it’s incredibly significant That’s correct but they will then have an increased weighting in many European indexes… as well as being listed in the Netherlands and the US. I assume Unilever’s latest notes means that… if necessary… they will get around the withholding tax by issuing a scrip divi as an option rather than cash.

Barney_Scott 20 Sep 2018

Going Dutch Now 6 shareholders, total of about 7.3% holding, saying they’re not happy about it: [link] As well as the problem with FTSE-100-based funds dropping it, there’s this: Many foreign shareholders currently pay a 15 per cent ‘withholding tax’ on dividends, which would sting UK investors. The Dutch government has pledged to scrap this but faces a backlash from voters. Bosses at Unilever say it has found a loophole to pay British shareholders even if the authorities U-turn, but many doubt they will be safe for ever.

Gamesinvestor1 20 Sep 2018

Diageo EM hit I guess this will be a problem for Unilever when it next reports :- “”“Diageo has been buffeted by “increased volatility in some markets” and heightened emerging market foreign exchange instability in recent weeks, which will results in a £45m hit to profits.”"" Perhaps another pressure point on the share price to add to currency and the clusterfuxk the management is applying to the company structure. Games

Gamesinvestor1 19 Sep 2018

Sold out HE - I suspect Nestle is the one here - they are aggressively overpaying at the moment. The Starbucks deal was laughable in my view but wtfdik eh? I think as Unilever are trying to, and possibly in error, push for more of a personal care approach at the expense of food brands. I’m guessing they just want to drive the price up for Nestle or the KKR vultures. I still think Unilever’s price is largely propped by currency (as far as the UK listing is concerned), bid premium, and the increase in dividends over and above the underlying growth. It seems to be heading back to 4000 sharpishly now, but a fairer price would be close to what it was before all the excitement of the Kraft bid - so 35XX or thereabouts is likely if the move to The Netherlands succeeds, because by that time the bid premium will be all but gone. Games

Hydrogen_Economy 19 Sep 2018

Sold out HI Games All fair points and it’s hard to see too many counter arguments, no disapproval here. Unilever have a great track record over many years but it does look like they have made some questionable moves of late. They are no doubt still feeling the heat from the failed KH bid and the criticism of margins and efficiency which caused something of a knee jerk reaction culminating in their own Brexit. I see they are in the bidding for Horlicks along with Nestle and others. Not sure that is a great move, hopefully they don’t overpay. Not sure how big the challenge to brands from Amazon will be in ULVRs key emerging markets (Asia). Alibaba, (Lazada) and others are stronger there and I doubt they can displace trusted western brands like ULVR quickly. I hold 4.4% ULVR, having lightened up over last few months, I’m inclined to reduce further. I’m keeping a little cash in hand to buy in dips. H2

Uncle_Doug 18 Sep 2018

Sold out Good luck to you. I sold out @ 4356 2 months ago but I doubt you’ll ever see your 35xx let alone 3xxx but I concede we might get huge buying opps again at sub 40. Pretty sure they’ve still got some great brands that will stand the test of time.

Gamesinvestor1 18 Sep 2018

Sold out The lot, lock stock and barrel - it was 4.2% of my wad and leaves a chunky hole, but I see anumber of things wrong here, obviously in my own limited view - others will think very differently. It seems to have risen from the mid 35XX level to the 42 to 45XX level for two reasons - Kraft bid premium and currency shift. The dividend growth rate has outstripped the real earnings growth for some years now resulting in a dividend cover below 1.5X - was above 1.8X a few years back – can’t do that forever The exposure to emerging markets is very admirable, but it’s going to hurt in the medium term as many of the currencies in those regions have been hammered. I don’t like some of the acquisitions - $ shave seemed silly, paying over $bn and when every one else has already caught up with offering a subscription service - made the $ guy very rich though. The move to the Netherlands isn’t as genuine as the managment dress it up to be and it is satisfying the ego’s of Polman’s legacy and Mark Rutte for his position in politics seen to be bringing business to the Netherlands. The FTSE100 index fund issue is real - many will sell the shares and that will put downward pressure on the stock. Perhaps an unclear point and one that might be diliutive to the one’s just stated. Amazon and own brand seem to be growing - it could have a global impact on margins - Bezo’s motto is “your margin is my opportunity”. He’s aggressive I’ll give him that. I was too dump to invest in Amazon at the get go, and too fearful to do so now at it’s current P/E. See you again at 3XXX perhaps? Games - No doubt there will be roars of disapproval from some. That’s what makes a market innit?

Gamesinvestor1 17 Sep 2018

Going Dutch jkz, indeed the prospect could be interesting, except any future bid premium is likely to be gone from ULVR and the level it returns to may be lower and lower for longer - hard to say for sure, but 35XX looks a strong possibility. Trouble is I’d have to offload a fair chunk and wait - loathsome prospect getting out of a good company, but the “possible” opportunity is there. Games

jkz 17 Sep 2018

Going Dutch Gamesinvestor1: If there are not suffiecient votes to stop it, the share price will fall like a lead balloon. Agree Bargain time! Cannot wait.

Sir_Buns-Up_Knealing 17 Sep 2018

Going Dutch Games, Thanks for the tech info. As you say the SP could be trimmed if outwith the FTSE. But I think that would be short lived. The company is so strong that it would soon be bought up by Europeans, NY and then London again. For PIs there could be a window to short this or a medium term opportunity to go long if indeed it does tank. IMHO, SBK

Gamesinvestor1 17 Sep 2018

Going Dutch SBUK - The new system is certainly a testing one - don’t forget to use the link symbol before inserting a URL or it’ll lock up your typing of new messages and you have to go through a whole sequence to unlock it. Maybe you are right about Aviva, although quite a few others are miffed, like Nick Train (2.5% of Unilever) of Finsbury Growth. If there are not suffiecient votes to stop it, the share price will fall like a lead balloon. Games