The Week Ahead 3 - 29th April to 3rd May 2013

The week ahead.

Data:

30th April 

UK Mortgage Approvals
UK Consumer Confidence
UK M4 Money Supply
US Consumer Confidence
EU CPI

1st May

UK Manufacturing

2nd May

UK Construction
US Balance of Trade
US Initial Jobless Claims
EU ECB Interest Rate
EU Manufacturing

3rd May

US Non-Farm Payrolls
US Unemployment Rate


Company Announcements

Can you be sure of Esure?

It is often the sign of a bull market that you see more IPO's coming to the market. Yesterday was the final day for anyone interested in buying shares in Insurance company Esure to register their interest.

Insurance firm esure has set a price range of 240p to 310p per share ahead of its much-anticipated London initial public offering.

The mid-point values the company - founded and chaired by Peter Wood, one of Britain's wealthiest entrepreneurs - at £1.1bn.

The home and motor insurer said it would repay "all of esure's outstanding debt" with the £50m it hopes to raise from the sale of new shares.

http://news.sky.com/story/1061865/esure-sets-price-range-ahead-of-flotation

There is talk that the starting price will be around the 270p mark, which if true puts it on a dividend yield of around 6% and prospective P/E of around 10, lower than its market peers. The last big insurance company to float was Direct Line, which also offered a yield of around 6%. There were doubts about Direct Line, but since the IPO the share price has been a steady riser, although the bull run recently should have helped it. Chances are Esure could also be a steady performer, at least while markets are good, and the prospective yield does look good for income seekers at a time of low IR's for savings on cash.

IPO's though seem to be back in fashion, as we also have estate agent Countrywide coming to market this week as well.

Britain's biggest estate agent, Countrywide, is poised to sell its shares in an initial public offering on Wednesday at the highest possible price it had planned for, in a further sign that the UK housing market is gaining momentum.

The company is preparing to offer its shares at the top end of the range – 330p to 350p a share, up from an initial 260p-350p – two unnamed sources told Reuters.

http://www.guardian.co.uk/business/2013/mar/18/countrywide-flotation-optimism-housing-market

Not sure about that UK housing market momentum, but it's perhaps typical of an estate agent it wants the highest price possible at float, so not as attractive for income seekers as Esure.

Ignore the "experts"!

I've long been a follower of Robbie Burns Naked Trader website.  Here is a trader who has had amazing success over the years, who has managed to find a system that works for him and is reaping the benefits of joining the 10% or so that manage to make money trading. One of the amazing things about Burns is that he has consistently managed to be successful even during the financial crash.  If anything he has had his best years since 2007 and most of the time he has been on the long side. He doesn't claim to know anything about economics either and hasn't let the prevailing doom and gloom of the last 4-5 years get in the way of trading well.

Occasionally he comes up with little gems of sound advice which everyone should take heed of.  Take this from his latest update.

I got some Direct Line shares (DLG) in the IPO picking up 2,800 shares at the offer price of 175. Turns out this IPO is going to turn out okay.

One of the reasons I decided to go for Direct Line was that Investors Chronicle, Shares Magazine and most of the newspapers said not to buy it or sell it at the opening.

Doing the opposite of what so called "experts" tells you usually works out well so I bought! Going well so far! Might keep them longer term and there is a nice dividend.

Same with bulletin boards - just do the opposite of what anyone puts on those and you'll make some dough!

http://www.nakedtrader.co.uk/

Direct Line, are the Sid's back?

Back in the 1980's when privatization was all the rage for the Conservative Government, Sid was chosen as the campaign name of the imaginary ordinary bloke in the street who just might be interested in buying into the nationalised industries that were being sold off.  Millions joined in, often selling for a quick profit as they were priced to sell, BT, UK water, and British Gas to name but three (UK Water ad below).

Such IPO's, especially ones where the public are invited to buy are now rare.  Direct Line Insurance is the latest big IPO, which while not owned by the Government, is owned by RBS the bank saved by the taxpayer from going under back in 2008. In effect, the Government does still own 83% of  RBS and it wouldn't be around today if it wasn't for the taxpayer.