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The Royal Bank of Scotland Group plc Message Board

  • robbhyland robbhyland Dec 26, 2008 11:50 AM Flag

    RBS Prferreds Are A Good Value

    Below are the current yields on RBS ADR Preference shares (This is mid-day pricing)

    Symbol Yr Div Price Yield
    RBS-PM $1.60 $7.15 22.38%
    RBS-PQ $1.69 $7.58 22.26%
    RBS-PH $1.81 $8.17 22.18%
    RBS-PP $1.56 $7.11 21.97%
    RBS-PN $1.59 $7.25 21.90%
    RBS-PR $1.53 $7.11 21.54%
    RBS-PS $1.65 $7.67 21.51%
    RBS-PF $1.91 $8.92 21.44%
    RBS-PL $1.44 $6.74 21.33%
    RBS-PT $1.81 $8.90 20.36%
    Average 21.69%
    At current pricing you can lock-in a 22% yield.

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    • Thank you for your advice, but I am doing just fine. I think doing the opposite of whatever it is you are doing would be a good start.

      I think its time for you to move on as you provide no insight for your doom and gloom forecast.

    • Ash129, you clearly are a novice trader and think you have hit the lottery. This is what gets many into trouble as it becomes more of a gamble rather than an investment.

      You need to do your own DD and not listen to the pumpers who want your money. MoronFinder bought this stock at par value and is stuck, but he tells of many different stories.

    • Very nice thread. Think of how much you would have given away had you sold at that point. Why would you buy in the first place? Oh, I forgot, the great MsChen knows the books of all the banks. Has a friend in the banks that lets her in on all the little secrets.

      RBS is going to be sticking around but your days on this board are about numbered MSChen.

    • Hey Ash..... RBS-PF was up almost 21% today. I really don't know why Ms Chen is still here. According to her post, she sold all her preferreds the week of Nov 10th (Near the bottom)

    • Another 10-15% today. Too bad you did not hold MSprint, but you knew better. We are the silly ones for making money. :P

      2009 is looking pretty good so far

    • Dude, why are you still here? To protect us from the evil Rob and RBS preferred stock?

      Since I got in, the stock has almost tripled and is paying me over 22% avg yield. You once said these were a buy and then started to bash as they moved up and got govt backing. If you do not want to join the party, just get off the board or post something worthy. To claim that Rob gives bad advice is absurd, esp after reading your crap.

      RBS is the golden egg and your just pissed because you sold too early

    • Did you cash out yet Robby? There is no profit until its taken off the table. You got that first div, lets see about the rest of 2009.

      You are giving out bad info that could destroy retirements and lives. To recommend that one should put that much in banking pref stocks is not wise. Lets see how this plays out and who has egg on their face in 6 months. RBS has so much bad investments on the books... this is why they had to give so much away to govt. If you think they are on firm ground, you are sadly mistaken. The deposits are safe and backed by the govt, but dont bank on those pref holding value in a year. What goes up, will come down!

      I do not give out bad trading advice like you and find your arrogance insulting. Lets be glad this is just a Yahoo board and your not an actual financial adviser.

      Good Luck Robby boy, you are going to need it

    • My 12% short-term yield target is not based only on the BOE preference shares. (You are correct, these will not trade publicly)

      The interum 12% target is based on my a risk adjusted forecast. If you look at the preferred yields on many of the banks that are in a much healthier position, you will not they are trading at sub 10% yields. And those banks that are in a similar financial condition (Citigroup for example) are trading in the 12% yield area.

      I use C-PP as a reference and recently it has been trading with a 2-3% yield discount compared to RBS. Citi is now dropping to the 12% area again (going to 10% IMHO), so if the traditional spread continues, RBS should move to the 12% yield area in the next 30-90 days... and then rise further to the sub 10% yield area in the next 120-240 days.

      This is my prediction. I am always willing to listen to oposing views. (if support by a rational theory)

      IMHO, Preferreds in general are a great value now...... and I have almost 40% of my portfolio in them. In full disclosure, RBS preferreds make up 11% of my preferred portfolio.

      I don't suggest you put all your eggs in one basket, but RBS, in IMHO, is still priced under fair value.

      Good luck to you.

    • robbhyland,

      I have followed your comments and respect your insight, but I wonder why you peg the value of these to the BOE preferreds.

      The BOE preferreds are not traded and presumably will not be. The BOE presumable took 12% on these as they were also floating the ordinary offering where they put up $3 for every $1 of preferred. As the ordinary pay no dividend, the BOE's interest yield on investment is currently 3%. I don't think the 12% PFDs were ever intended to be offered to retail or institutional investors.

      However, even if the 12% preferreds were traded, I would make a case that the yield on existing preferreds ought to be lower as they are trading at a discount to par. In addition to the interest rates, the existing have a significant upside in the event that they are ultimately redeemed.

      Still, where these trade is ultimately based on the percieved risk of RBS not maintaining the dividend, or worse, ultimately going bankrupt or failing in a way that wipes out shareholders equity. WHile I don't see this happening (and own a fair amount of these), perceived risk relative to other high yield institutional preferreds ought to be the benchmark for rate of return, not the BOE PFDs(which to reitterate are not traded, but which presumable would also be trading below par at this time if they were.

      If RBS was perceived as rock solid, all PFDs might be trading ABOVE par at this time, given the low interest rate environment at this time. There are very few fixed yield vehicles out there yielding more than 4%.

      Valuation seems to be entirely based on perceived risk, and as the risk disappears, these should move closer to par with a yield well below 12%. Conversely if things get worse for RBS, we will continue to see these PFDs with yields in the high teens and higher.


      Keep posting. I appreciate your perspective. It is nice to see a thoughtful message board -- not one dominated by hyping and bashing.

    • GXP Great Plains Energy has a great history of paying its dividend. Its yield is still over 8% and it has climbed back above 19. I have owned this stock for a long time and have kept adding when it goes down. It has never cut or missed a div payment in its long history. I was very lucky again, and sold 1/2 of my stake at $32 when it hit its high of $35 in 2004.

      Their are many energy companies that offer attractive yields with potential growth. They got hammered hard, much like the finance sector early on in this mess.

      Good Luck

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