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What Hammerson, BT Group and GlaxoSmithKline are really trying to say...

By Chris Bailey | Tuesday 24 July 2018


Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


I know the summer heat is starting to get to everyone but today's regulatory and brokerage output is a little...coy on a few names I have written about in the past few months. So in the spirit of helping market transparency...here is what three large corporate names are trying to say...

First, property giant Hammerson (HMSO) who you may recall I criticised a while back for turning down a perfectly reasonable 635p bid from a Continental European property concern, a level which currently the shares sit a full quid below. No wonder shareholders are hacked off. And so what is the grand plan to make up this given today's results for the first half showed a 3% net rental fall, a flat NAV and a measly 3% rise in the dividend? Well step forward buybacks and disposals! Boys, when you say things like 'due to increased risks in the current market environment, the start on site of the development at Brent Cross is to be deferred...(and) by reprioritising our capital deployment and repositioning our portfolio, we will accelerate future shareholder value and returns', a better strategy is always TAKE THE LUNATIC TOP OF THE MARKET BID. No wonder the Sunday press mused about the continuing tenure of the CEO...

So a CEO-trying-to-save-his-backside strategy from Hammerson. Meanwhile I see BT Group (BT.A) has announced via its semi-independent Openreach brand a cool up to 40% price cut on a bunch of its broadband/fibre offerings. Apparently this is to allow us to help ourselves or - as the company put it - 'Openreach delivers wholesale broadband discounts to help Britain upgrade its broadband' or absolutely nothing to do with regulator agitation. Unsurprisingly this will cost 'high tens of millions' in earnings, but BT is not going to change its full year guidance...which is good news. What I do see here - and I hoped for it in my last update on the stock - is that the newish Chairman is trying to get ahead of the curve, get the elbows out, not wait for regulator forced action. That is good news. Now I wonder who he will choose for his next CEO?

Finally, GlaxoSmithKline (GSK) which I see placed a couple of newspaper stories 'suggesting' chat about a divisional break-up was on the cards. Well it appears this was one big spoof - as I kind of guessed judging by its recent acquisition actions as noted in my last piece on the pharma giant HERE. As noted in today's Times:

'Analysts at Citi said that speculation over a split was “an attempt by the chairman to buy time and support the recently rebounded GSK share price”. UBS was also sceptical, saying that “on paper . . . a break-up would seem to make sense, but we caution that the dividend cover as well as the current repositioning of GSK would not allow for this for a few years to come” '.

Double ugh. If you are a dividend muncher and have still got this one, I really would exit into the night now. You are caught between the devil and the deep blue sea... Whenever markets are spoofed to 'buy time'...it rarely ends that happily.


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