Standard Chartered - Short Position
I meant to publish this Friday, but got tied up with other things.
I was originally looking at this share as a long position early last week, it appeared in one of my stock filters for long positions.
Standard Chartered (STAN) is supposed to be the 3rd most shorted stock on the UK index by the big players (one being Steve Eisman from the "Big Short").
If you look at STAN figures the bank sits very well financially, no real debt ($60BN cash balance), 29.2% Operating Margin, $2.5BN Net Profit forcast (Operating of $4.7BN)
and a forward PE of 10.5 ( Ranked 233rd out of 803 companies in the UK & Ireland market.) - so for the sector the PE might be a little higher than the average.
Why short:
- Was fined $1.1BN for money laundering - There might be more bad news to come. The provision for fines in its 2018 accounts was only $900M - Could Stan get a BNP type size fine in the future?
- Though it looks on paper a good prospect, it might be a little over valued for the sector, its PE on 2018 figures is 35, so the price is dependent on future forecasts being correct.
- On Friday 8th November 2019 ( the day I shorted) the pension allowances for its chief executive and chief financial officer are to be halved from January following a shareholder protest.
- In May 36% of votes cast at Standard Chartered's annual shareholder meeting were against its remuneration report, which had recommended that Winters receive a pension allowance in 2019 of 474,000 pounds ($607,000), on top of his fixed salary in cash and shares of 2.4 million pounds.
- Profits over the last 4 years haven't been that good,
Operating Profit $M 2013 2014 2015 2016 2017 2018
6,064 4,235 -1,523 409 2,415 2,548
The forecast for 2019 is $2,550 M
- The general trend for the shares over the last 5 years has been in a downward direction. Presently trading at roughly the same price as after the financial crash in 2008. So no added value in the last 10 years.
- The more I researched STAN early last week the more I got a gut feeling I didn't want to buy the share, something just didn't feel right ( I know this isn't a reason, but it is the way I felt).
- The share has been trading in a cycle between trades resistance at 740p and support of 600-630, so if I am wrong on the reasoning I do have a technical reason for the trade.
My Trade was
Open at 729.7p
SL 749.7p
Get out quick was 742p
Limit 667p
Though I tend to drop a limit and go with a trailing stop loss when I hit a soft limit like this, my aim is 640-650ish.
I was originally looking at this share as a long position early last week, it appeared in one of my stock filters for long positions.
Standard Chartered (STAN) is supposed to be the 3rd most shorted stock on the UK index by the big players (one being Steve Eisman from the "Big Short").
If you look at STAN figures the bank sits very well financially, no real debt ($60BN cash balance), 29.2% Operating Margin, $2.5BN Net Profit forcast (Operating of $4.7BN)
and a forward PE of 10.5 ( Ranked 233rd out of 803 companies in the UK & Ireland market.) - so for the sector the PE might be a little higher than the average.
Why short:
- Was fined $1.1BN for money laundering - There might be more bad news to come. The provision for fines in its 2018 accounts was only $900M - Could Stan get a BNP type size fine in the future?
- Though it looks on paper a good prospect, it might be a little over valued for the sector, its PE on 2018 figures is 35, so the price is dependent on future forecasts being correct.
- On Friday 8th November 2019 ( the day I shorted) the pension allowances for its chief executive and chief financial officer are to be halved from January following a shareholder protest.
- In May 36% of votes cast at Standard Chartered's annual shareholder meeting were against its remuneration report, which had recommended that Winters receive a pension allowance in 2019 of 474,000 pounds ($607,000), on top of his fixed salary in cash and shares of 2.4 million pounds.
- Profits over the last 4 years haven't been that good,
Operating Profit $M 2013 2014 2015 2016 2017 2018
6,064 4,235 -1,523 409 2,415 2,548
The forecast for 2019 is $2,550 M
- The general trend for the shares over the last 5 years has been in a downward direction. Presently trading at roughly the same price as after the financial crash in 2008. So no added value in the last 10 years.
- The more I researched STAN early last week the more I got a gut feeling I didn't want to buy the share, something just didn't feel right ( I know this isn't a reason, but it is the way I felt).
- The share has been trading in a cycle between trades resistance at 740p and support of 600-630, so if I am wrong on the reasoning I do have a technical reason for the trade.
My Trade was
Open at 729.7p
SL 749.7p
Get out quick was 742p
Limit 667p
Though I tend to drop a limit and go with a trailing stop loss when I hit a soft limit like this, my aim is 640-650ish.
Comment:
Expected Length of trade 30 days