NAB - National Australia Bank

[YELNATS]

Seems a bit of a drought on NAB related posts here... very cheap at the moment although I read an article with reference to David Hunts predictions (he correctly predicted that the market would downturn after october last year) - he reckons that the market will bottom out in mid-Oct/early Nov after the US hits its predicted bottom in early/mid Oct. so the question is to hold or sell and buy back at a lower price? Extremely cheap today at under $20 given that most analysts value it at $33-35.

NAB has an amazingly good dividend yield of over 10% fully franked at the current price around $19.15, assuming they can hold or improve their dividend.

 

[mit]

Reminds me back in 2002 where the dividends were over 7% and higher than home loans. You could borrow to buy the banks and make money on the dividend.

However, it is different today, even if our Banks are not hiding many more nasties, the fact that they cannot get funds to loan to others could crimp their earnings quite a bit and if I wanted to buy a bank I wouldn't buy the worst performing bank.

 

[xoa]

If the Australian housing bubble starts to burst, our banks will find themselves in a very difficult position. That's what investors are afraid of. They're profitable for now, but so were Fannie Mae, Bear Stearns and Lehman Brothers until late last year. NAB has been hammered the most, because it has a reputation for being the worst managed Australian bank.

 

[robots]

hello,

so today we had 7 bil sold and 7 bil bought, thats a lot in for the buy man

the funds are setting up there returns

thankyou
robots

 

[mit]

The funds could be ones selling. A third of the volume happened at the lowest price at the market open. sounds like dumping to me.

Of the 32 million shares exchanged 10 million sold at the lowest price.

 

[oldblue]

hello,

so today we had 7 bil sold and 7 bil bought, thats a lot in for the buy man

the funds are setting up there returns

thankyou
robots

Hi robots.

Where does the 7b figure come from? My broker reckons it was a shade under 32m which admittedly sounds like a bit more than retail investors having a dabble.

 

[oldblue]

Hi robots.

Where does the 7b figure come from? My broker reckons it was a shade under 32m which admittedly sounds like a bit more than retail investors having a dabble.

The penny's finally dropped, robots.
I guess it's the ASX turnover figure for the day? The point is that funds may be buying but funds are also obviously selling.

 

[mit]

If the Australian housing bubble starts to burst, our banks will find themselves in a very difficult position. That's what investors are afraid of. They're profitable for now, but so were Fannie Mae, Bear Stearns and Lehman Brothers until late last year. NAB has been hammered the most, because it has a reputation for being the worst managed Australian bank.

Hasn't our Housing bubble already burst? I know it kept going for some markets but tt peaked in 2003 for Sydney/Melbourne which are the biggest markets.

 

[xoa]

Hasn't our Housing bubble already burst? I know it kept going for some markets but tt peaked in 2003 for Sydney/Melbourne which are the biggest markets.

Take a look at the median house price in Australia for the past decade. It's spiked like an exponential curve. Dorothy, we're not in Kansas any more.

 

[Sunder]

Hasn't our Housing bubble already burst? I know it kept going for some markets but tt peaked in 2003 for Sydney/Melbourne which are the biggest markets.

Take a look at the median house price in Australia for the past decade. It's spiked like an exponential curve. Dorothy, we're not in Kansas any more.

Mit was talking Sydney/Melb

Syd:
RPData Index
30/06/05 538.484
30/06/06 546.197
30/06/07 559.770
30/06/08 562.292


Melb
RPData Index
30/06/05 353.468
30/06/06 368.093
30/06/07 402.817
30/06/08 444.414

In Sydney, you could have done better holding cash.

I wouldn't call it the bubble bursting, but it's not exactly "exponential growth" either.

 

[xoa]

In Sydney, you could have done better holding cash.

I wouldn't call it the bubble bursting, but it's not exactly "exponential growth" either.

That's good then (maybe) for any banks which are only exposed to Sydney.

Nationally though, Australian house prices have inflated faster than anywhere else in the English speaking world, including the USA or UK. That in itself makes our banks very vulnerable.

 

[oldblue]

Meanwhile, a nice trade in the banks for those with the money and nerve to have bought yesterday, particularly NAB.
Where to now is the bigger question.

 

[mit]

That's good then (maybe) for any banks which are only exposed to Sydney.

Nationally though, Australian house prices have inflated faster than anywhere else in the English speaking world, including the USA or UK. That in itself makes our banks very vulnerable.

I know that WA has still been going strong but I thought that the volume would have been less than the Melbourne/Sydney markets

 

[mit]

Meanwhile, a nice trade in the banks for those with the money and nerve to have bought yesterday, particularly NAB.
Where to now is the bigger question.

I was thinking about it Dividend at 10% and the PE ratio of under 8, it was tempting but I didn't like the fact that it was falling so much faster than the other banks

 

[Nashezz]

I had bought the day before at $21.29 (at what I though was already pretty good value) on margin. So while I wasn't overly concerned at the big drop the next day I was spewing I had bought one day too early to get the fat prophets.... When I looked on Thursday during the day it was $18.80 and probably even lower at some stage!!!!

 

[chatty]

NAB will raise capital by $3 Billion. Do you think this will have negative impact on its current share price? As this will certainly have dilution effect. In addtion, given the loss from some corporate loans, future dividends will have to be revised down as well imo.

 

[Ruincity]

Chatty i'm no expert but I believe the answer to your question is YES.
This sort of money hungry BS is unfair to current shareholders.
Especially those holding at higher prices.

Apparently there is going to be an offer to retail customers to buy at the same price..
This will probably be around the time that the price falls below the $20 offer which I predict it now will soon.

Anyway I look at it 2 ways:
1. Fkn greedy bastards you stink.
2. Get in now and make the money before everything goes bust (ie intelligent move because NAB is uncertain and scared).

Consider trying to raise funds for something like Iron Ore in the present times.....
Surprised there hasn't been more discussion regarding this..

 

[sammy84]

I think the opposite will happen, and I quite positive as a NAB shareholder. The capital raising was oversubscribed firstly, indicating the willingness of institutional investors to be part of NAB. Their tier 1 capital will be at 8% now. Also if you look at mirvacs share price today, I think they rose around 15% after a successful capital raising. Finally, but most importantly, they beat ANZ and Westpac to it. The amount that the other banks are going to be raise will have to be lower, or a bigger discount given 3b that NAB has now secured. This can only give NAB a competitive adv against the other banks for any acquisitions in future.

 

[Ruincity]

Fair points Sammy.

In my limited history I have seen few capital raising's that have had a beneficial result on SP.
It is just an outright admittance of a cheaper value for the SP IMO.
One thing must be kept in mind that the price is discounted!
And quite substantially I feel.

I am a holder.

 

[alphaman]

most importantly, they beat ANZ and Westpac to it.

It's not that simple. With this placement NAB's tier 1 increases to 8%, but ANZ is already 8.1%.

Anyway capital raisings rarely reverse price trends. Any price effect is just a reflection of the current state of the general market.