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Unilever
tinca tinca
Posted: 19 April 2018 08:32:08(UTC)
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An interesting piece in the FT today about the UK's third largest company and its plans to move its hq to Holland entitled "Unilever faces mounting investor unrest over UK exit".

It states that UK fund managers with very large holdings in the company are "extremely worried" about the possible move;
"In particular, they object to Unilever’s likely exclusion from the FTSE 100, a popular benchmark index used by funds, fearing they would be forced to sell their shares at an unfavourable price."

The proposal is to be voted on in the autumn. It requires 75% approval from UK shareholders and 50% of Dutch shareholders. For the vote to be carried, both sets of investors must agree.

I'd be interested to know your thoughts as to whether or not it's worth keeping or selling shares in the company.
5 users thanked tinca tinca for this post.
Tim D on 19/04/2018(UTC), Harry Trout on 19/04/2018(UTC), Mr Helpful on 19/04/2018(UTC), AJW on 19/04/2018(UTC), Guest on 20/04/2018(UTC)
kWIKSAVE
Posted: 19 April 2018 08:55:13(UTC)
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I try not to tinker.

Unilever is a core holding for me along with others such as Prudential.

I am not adding to either though in order to have some spread.
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tinca tinca on 19/04/2018(UTC)
Tom Mozy
Posted: 19 April 2018 09:15:03(UTC)
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Bought more today. It really doesnt matter to me where its HQ is. The dutch have stated there will be no withholding tax on dividends by 2020 anyway. (not 100% guarenteed im sure)

Added some more shares on weakness today after good update and increase in the dividend.
3 users thanked Tom Mozy for this post.
tinca tinca on 19/04/2018(UTC), Harry Trout on 19/04/2018(UTC), Sara G on 19/04/2018(UTC)
dyfed
Posted: 19 April 2018 10:09:04(UTC)
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Core holding for me too but top sliced on peak last year. Will buy again when cheap enough, but not yet as a) brand loyalty is fading in favour of supermarkets own brands, so not as compelling as it was b) want to find out more about share buy back - are they cancelling the shares?
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Harry Trout on 19/04/2018(UTC)
Mr Helpful
Posted: 19 April 2018 10:43:48(UTC)
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If ULVR drops out of FTSE100, then the FTSE becomes an even weirder collection of Stocks for the trackers.
Would be a sad loss IMHO.
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Tim D on 19/04/2018(UTC), tinca tinca on 19/04/2018(UTC)
Tom Mozy
Posted: 19 April 2018 10:54:55(UTC)
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dyfed;60880 wrote:
Core holding for me too but top sliced on peak last year. Will buy again when cheap enough, but not yet as a) brand loyalty is fading in favour of supermarkets own brands, so not as compelling as it was b) want to find out more about share buy back - are they cancelling the shares?



a) in the west as we are getting poorer. In the emerging markets, where ULVR are trading more and more, they are inspiratinal brands. Rose tinted glasses being sat at a computer in a UK town! The UK is a tiny market for ULVR
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Tim D on 19/04/2018(UTC), Captain Slugwash on 19/04/2018(UTC), what me, worry? on 20/04/2018(UTC)
dyfed
Posted: 19 April 2018 12:12:29(UTC)
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Tom Mozy;60886 wrote:
dyfed;60880 wrote:
Core holding for me too but top sliced on peak last year. Will buy again when cheap enough, but not yet as a) brand loyalty is fading in favour of supermarkets own brands, so not as compelling as it was b) want to find out more about share buy back - are they cancelling the shares?



a) in the west as we are getting poorer. In the emerging markets, where ULVR are trading more and more, they are inspiratinal brands. Rose tinted glasses being sat at a computer in a UK town! The UK is a tiny market for ULVR


I agree with you that a key attraction of ULVR is that it has a good presence in EMs. But N America, Europe are also profitable markets which may well be impacted by the move to supermarket own brands. Not sure what the colour of my glasses has to do with it.
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tinca tinca on 19/04/2018(UTC)
jvl
Posted: 19 April 2018 13:54:14(UTC)
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tinca tinca;60869 wrote:

I'd be interested to know your thoughts as to whether or not it's worth keeping or selling shares in the company.


My perhaps cynical thoughts is that the move is mainly about:

1. Protectionism. I think this is the main reason for the move. After the Kraft-Heinz move, the board want to protect themselves from a takeover. You may think that growing the company sufficiently and being more efficient would protect them naturally because then shareholders wouldn't want to cash in but perhaps, just perhaps, they're a bit lazier and prefer the artificial protection Dutch law provides.

2. Paul Polman. His last year. He's very publicly anti-Brexit and wants to make a point.

Neither of those reasons seems good. But if Terry Smith is still holding, I suppose it can't be too bad.
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Tim D on 19/04/2018(UTC), tinca tinca on 19/04/2018(UTC), Harry Trout on 19/04/2018(UTC), Stephen Lockie on 21/04/2018(UTC)
Captain Slugwash
Posted: 19 April 2018 14:58:21(UTC)
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I hold, and I don't mind where the HQ is, but I am not a fan of annual dividends which seems to be common in European companies, and of course withholding tax which has already been mentioned.

If it wasn't in my ISA I may have been tempted to put the funds in one of a number of U.S. Consumer Staples instead.

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tinca tinca on 19/04/2018(UTC)
colin overton
Posted: 19 April 2018 18:21:45(UTC)
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I hope that Unilever don't "go Dutch" with their divs. Non-Uk dividends are often much lower than FT100 and 250 companies. Good divs make many companies a hold thru' bad times, with only 0.75-1.50% divs holding is harder to justify.
As to Unilever markets, I would have thought that they are still a Western based seller. Their products are relatively expensive. Unilever were always weak in the US and Japan, historically. DOBs now have a much higher market share than in the 70s and 80s.
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tinca tinca on 19/04/2018(UTC), Guest on 20/04/2018(UTC)
xcity
Posted: 19 April 2018 18:47:24(UTC)
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Paul Polman has wanted this move for some time, and the bid approach was an opportunity for him to win the argument.

Continental companies tend to put more weight on management and employee interests and less on shareholder interests. Therefore whatever Unilever was worth before, it is worth less now and less again once the move is approved. I don't hold, so it doesn't affect me; if I had, I would have sold when I heard that this proposal was to be made,
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tinca tinca on 19/04/2018(UTC)
King Lodos
Posted: 19 April 2018 19:35:11(UTC)
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Unilever's my top holding this year .. I'd suggest viewing it as a business; not as a stock.

If there's a threat to the stock (dividend, index inclusion), it gets a bit cheaper .. If there's a threat to the business, you might want to reassess.

Brand value's why I hold it .. I think the day I stop eating Marmite would be a better reason to sell
4 users thanked King Lodos for this post.
tinca tinca on 19/04/2018(UTC), Sara G on 19/04/2018(UTC), Peter59 on 21/04/2018(UTC), Guest on 22/04/2018(UTC)
tinca tinca
Posted: 19 April 2018 19:56:24(UTC)
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FYI. This research update from HL, published today;
http://www.hl.co.uk/shar...ry-3.11p/share-research

2 users thanked tinca tinca for this post.
Sara G on 19/04/2018(UTC), Jim S on 25/04/2018(UTC)
Sara G
Posted: 19 April 2018 20:21:01(UTC)
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I bought some the other day at 3914 and just put in a limit order to buy more at 3750p... I might be lucky if the rumblings over the HQ continue, as seems likely.
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tinca tinca on 19/04/2018(UTC)
Sara G
Posted: 20 April 2018 20:19:28(UTC)
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This analysis from John Kingham is somewhat sobering...

https://www.ukvalueinves...-buy-hold-or-sell.html/

It's a few months old but still relevant. In summary he thinks the stock is only worth buying if it slips below £23. Might have to rethink that top-up...

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Vince. on 20/04/2018(UTC), Jim S on 25/04/2018(UTC)
tinca tinca
Posted: 20 April 2018 20:49:31(UTC)
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Sobering indeed...
Interesting to note his thoughts on the possible impact Amazon might have on ULVR's longer term growth prospects.
Thanks for digging that up, Sara.
King Lodos
Posted: 20 April 2018 21:10:47(UTC)
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Sara G;60982 wrote:
This analysis from John Kingham is somewhat sobering...

https://www.ukvalueinves...-buy-hold-or-sell.html/

It's a few months old but still relevant. In summary he thinks the stock is only worth buying if it slips below £23. Might have to rethink that top-up...


This may be a bit of a chart salad here – over the years I've developed a high tolerance to charts.

But I read some fairly negative analysis of Unilever – then I go and check the long-term fundamentals, and I don't think things have changed much.

In 1993:
– Dividend was 2.2%
– PEG Ratio (PE relative to Growth) same as today
– Operating Margins quite a bit lower back then
– Return on Capital 23 then; 23 today
– PE Ratio 23 today ; 23 in 1997

– In dark blue (Year on Year Revenue Per Share Grwth) .. we can see that decline Kingham was talking about – but on a longer chart, it doesn't look so concerning .. It's harder to make the long-term trend case when you're looking over nearly 30 years.

https://i.imgur.com/cZW3h10.jpg


I think the basic picture is it's been more expensive; it's yielded less; it's been less profitable .. Obviously at some point growth stocks do slow down .. But one big difference is you could get 10yr Treasuries on 6% in 2000 .. Unilever looks cheaper than most the market to me .. I'm still a pessimist at heart, but I can't quite recreate Kingham's pessimism on this one
5 users thanked King Lodos for this post.
Vince. on 20/04/2018(UTC), Sara G on 21/04/2018(UTC), antigricer on 22/04/2018(UTC), blackandgold on 23/04/2018(UTC), Jim S on 25/04/2018(UTC)
Captain Slugwash
Posted: 25 April 2018 10:35:11(UTC)
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Tim D on 25/04/2018(UTC)
jvl
Posted: 25 April 2018 12:25:52(UTC)
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What a surprise it would be for a prominent Remainer head of a huge company to co-ordinate policies with an EU government to make it cosy for himself while stiffing voters and taxpayers. That's surely not why big companies are hugely in favour of the EU and pressurising May & Co to water everything about Brexit down...

King Lodos, if you tried Vegemite, you'd never look at Marmite ever again.
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Slacker on 26/04/2018(UTC)
Dian
Posted: 26 April 2018 08:33:57(UTC)
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Unilever Indonesia also had a stellar run over the past 10 years. Infact it is a multibagger. It is also one of the leading consumer names in the fast-Growing Market. But Valuation has stretched now. However they are having an impressive ROE.

ROE range over the past 10 years

Min: 83.12 Max: 141.83

As I replied in another thread, for some reason I have been using their products since my childhood. Emerging world is one of the places where Unilever has strong sales. Their brands such as Knorr, Bango and Pot Noodle are popular in emerging world. Recently, I bought some Lipton breakfast tea because I enjoy the taste.
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