TLS - Telstra Corporation

Frank D · 25 April 2012

Frank D; Jan 2012 said:
TLS Primary and Secondary cycles

2012 Primary target remains 3.58

Currently hitting resistance around the January highs :- 3.43 (secondary cycle)

1st Quarter support @ 3.21 (secondary cycle)

it began with the 3-year breakout pattern (primary cycle) in the 3rd quarter of
2011 ....

Stalled at its february highs @ 3.45 and reversed down towards its secondary
support

found dynamic secondary cycle support in March @ 3.19....

and is now making its way towards the Primary target of 3.58.

Random resistance 3.49/52

Boggo · 26 April 2012

Frank D said:
Stalled at its february highs @ 3.45 and reversed down towards its secondary
support

found dynamic secondary cycle support in March @ 3.19....

and is now making its way towards the Primary target of 3.58.

Random resistance 3.49/52

Nice and predictable behaviour Frank, well done.

First target zone achieved today on mine.
https://www.aussiestockforums.com/forums/showthread.php?t=4270&p=692578&viewfull=1#post692578

(click to expand)

tinhat · 26 April 2012

Boggo said:
Nice and predictable behaviour Frank, well done.

First target zone achieved today on mine.
https://www.aussiestockforums.com/forums/showthread.php?t=4270&p=692578&viewfull=1#post692578

Just goes to show that there are all sorts of people that make up a market. You are in the market to trade for capital gain and have your charts and elliot wave analysis software on the go.

I've got a spreadsheet open with my current holding's buy prices and am working out what my fully franked yield will be if I add to my holdings over a range of potential prices. Aiming to top up a pension fund account while maintaining 12% grossed up yield. I've got a buy order in now that probably won't get filled today. I'll be happy for a pull back though.

Boggo · 26 April 2012

tinhat said:
Just goes to show that there are all sorts of people that make up a market. You are in the market to trade for capital gain and have your charts and elliot wave analysis software on the go.

I've got a spreadsheet open with my current holding's buy prices and am working out what my fully franked yield will be if I add to my holdings over a range of potential prices. Aiming to top up a pension fund account while maintaining 12% grossed up yield. I've got a buy order in now that probably won't get filled today. I'll be happy for a pull back though.

And I get both the capital gain and the franking credits and I only hold TLS via instalment warrants for about two months a year, thank you for TLSIOU and TLSIOI for the last two dividend profits and franking credits (and current profit position).

Good to see we both enjoy a good pull back

MrBurns · 27 April 2012

Ok when the Libs take over they say they will scrap the NBN.

If they do how will that effect Telstra and the share price ???

Klogg · 27 April 2012

MrBurns said:
Ok when the Libs take over they say they will scrap the NBN.

If they do how will that effect Telstra and the share price ???

The Libs still want to go with Fibre to the node (as opposed to Fibre to the home), so all is not lost. There is still work and Telstra will still benefit - actually, Thodey recently came out in support of this, so I can't imagine it'd hurt the company much...

MrBurns · 27 April 2012

much........ok thanks but it will have some effect.

At current price showing about 8% yield, not worth risking capital for an extra 2% above TD rates.

Bintang · 27 April 2012

Its 8% fully franked! Is your TD interest fully franked?

MrBurns · 27 April 2012

Bintang said:
Its 8% fully franked! Is your TD interest fully franked?

I don't pay tax at present, get a nice refund though

McLovin · 27 April 2012

MrBurns said:
much........ok thanks but it will have some effect.

Thodey actually said words to the effect that he thought the coalition's idea was better than the government's. The Coalition's idea involves renting the last mile of copper off TLS, rather than the Government's idea of cabling everywhere and paying TLS to decomission its network.

He wouldn't be talking up an increasing dividend if he believed that change of government would materially change TLS's financial position.

MrBurns · 27 April 2012

McLovin said:
Thodey actually said words to the effect that he thought the coalition's idea was better than the government's. The Coalition's idea involves renting the last mile of copper off TLS, rather than the Government's idea of cabling everywhere and paying TLS to decomission its network.

He wouldn't be talking up an increasing dividend if he believed that change of government would materially change TLS's financial position.

So result would be the same as what we have on the table now or close enough.....as far as TLS goes.

McLovin · 27 April 2012

MrBurns said:
So result would be the same as what we have on the table now or close enough.....as far as TLS goes.

That's my take. They're pretty conservative at TLS.

tinhat · 27 April 2012

MrBurns said:
I don't pay tax at present, get a nice refund though

That's the whole point. Example:

You own 1,000 TLS shares.

You receive $280 dividends for FY12 (@28c per share). These dividends are fully franked so you receive an imputation credit (franking credit) of 12c per share which is a credit for the tax TLS paid on those dividends. Total franking credit is $120.

You declare a total income received in your tax return of $400 (being the $280 received in cash and the $120 received as a franking credit). The $120 franking credit is offset against the tax you owe the ATO for the financial year. If your franking credits are in excess of the tax you owe, the ATO refunds you the difference. If you don't owe the ATO any income tax they refund you the full amount of the franking credits ($120).

[edit to add...] Think of the imputation credits as a credit note with the ATO. Telstra have paid you $280 in cash and given you a credit note with the ATO which is good for $120. If you owe the ATO income tax you use the credit note to offset what you owe the ATO. If the imputation credit exceeds what you owe the ATO they refund you the difference in cash.

Please read some general investing and stock market investing books. You need to be able to calculate the after tax returns on your investments.

MrBurns · 27 April 2012

tinhat said:
That's the whole point. Example:

Thanks tinhat I havent done my own tax since the 70's and I dont have a clue and havent bothered to educate myself.

TLS will go up further when rates go down after the next RBA meeting (I asked Bill Shorten when that wil be but he doesnt know) then I think the market wil strike a balance of return against risk, if the market panics and tanks that will be the time to get in I presume.

Boggo · 27 April 2012

tinhat said:
That's the whole point. Example:

You own 1,000 TLS shares.

You receive $280 dividends for FY12 (@28c per share). These dividends are fully franked so you receive an imputation credit (franking credit) of 12c per share which is a credit for the tax TLS paid on those dividends. Total franking credit is $120.

Or, you buy 2250 TLSIOI instalment warrants for the same cost as 1000 TLS shares, you now get $630 dividend, fully franked and if you buy them in a SMSF which pays 15% tax you now get a 15% tax credit towards any other profits for that FY.
Oh, and for the fans of yield, that is around 18%

Of course this is not advice, but you know that.

tinhat · 27 April 2012

Boggo said:
Or, you buy 2250 TLSIOI instalment warrants for the same cost as 1000 TLS shares, you now get $630 dividend, fully franked and if you buy them in a SMSF which pays 15% tax you now get a 15% tax credit towards any other profits for that FY.

Of course this is not advice, but you know that.

Boggo of course you are taking on the additional risk of gearing. You aren't buying an immediate income stream because you need to use the dividends to pay the instalments (and interest). You get the benefits of the additional franking credits due to the gearing so as you say, quite tax affective. I can see how they are attractive to a SMSF account in accumulation phase.

If a SMSF is in pension phase however, it needs to generate an income stream of at least the minimum draw down rate.

Anyway, because I don't know anything much about warrants, can I ask, what are the differences between self funded instalment warrants versus regular instalment warrants? I've never learnt about warrants - I only started actively managing a share portfolio two years ago due to a death in the family. Until then all my super was in an industry fund and my personal savings went into boats.

Also, if I understand you, you have been buying the instalment warrants on the secondary market and holding them briefly just for the franking credits? Is that right? I assume then that the standard 45 day holding rule applies?

Cheers

PS. Your signature should read "if you can read this you can Google".

Muschu · 27 April 2012

Boggo said:
Or, you buy 2250 TLSIOI instalment warrants for the same cost as 1000 TLS shares, you now get $630 dividend, fully franked and if you buy them in a SMSF which pays 15% tax you now get a 15% tax credit towards any other profits for that FY.
Oh, and for the fans of yield, that is around 18%

Of course this is not advice, but you know that.

Question: I just checked and there were no TLSIOI trades today. One buyer and 2 sellers. Not exactly high liquidity. If things go pear-shaped and you want out..... what happens?

skyQuake · 27 April 2012

Muschu said:
Question: I just checked and there were no TLSIOI trades today. One buyer and 2 sellers. Not exactly high liquidity. If things go pear-shaped and you want out..... what happens?

Marketmakers keep a bid and ask there. Generally spread a bit more than the underlying. Highly recommend you read the entire PDS if you decide to do business with warrant marketmakers

Boggo · 27 April 2012

tinhat said:
Boggo of course you are taking on the additional risk of gearing. You aren't buying an immediate income stream because you need to use the dividends to pay the instalments (and interest). You get the benefits of the additional franking credits due to the gearing so as you say, quite tax affective. I can see how they are attractive to a SMSF account in accumulation phase.

If a SMSF is in pension phase however, it needs to generate an income stream of at least the minimum draw down rate.

Anyway, because I don't know anything much about warrants, can I ask, what are the differences between self funded instalment warrants versus regular instalment warrants? I've never learnt about warrants - I only started actively managing a share portfolio two years ago due to a death in the family. Until then all my super was in an industry fund and my personal savings went into boats.

Also, if I understand you, you have been buying the instalment warrants on the secondary market and holding them briefly just for the franking credits? Is that right? I assume then that the standard 45 day holding rule applies?

Cheers

PS. Your signature should read "if you can read this you can Google".

Re your first paragraph, yes, they are very effective but you need to understand the type of warrant and where it is in its life as well as the greeks especially delta if you are in for a hit and run approach.
The interest is treated differently in a SMSF than a personal account.
If a stock is in an uptrend you can buy and hold, collect the divvy and after a correction the stock will proceed in its upward direction.
If the stock is in a downtrend then you may be able to capitalise on the run up to the dividend but it may not be a wise move to hold for the dividend if it is likely to turn and maintain a downward trend ("the trend is your friend" always).

Re your second paragraph, you can do both ?

Re your third paragraph, you buy and sell them just like any stock. If you are buying them in a SMSF then you need one of these for compliance...
http://www.lawcentral.com.au/CreateDoc/createlink.asp?docId=207

The 45 day rule has a few variables depending on account type and $ values etc, nothing is straight forward.

Your PS re Google, I could write pages but Google is the way to go as well as the ASX site. Citi warrants are probably the best provider of warrants at the moment - http://www.citifirst.com.au/Installs_price.html

Muschu said:
Question: I just checked and there were no TLSIOI trades today. One buyer and 2 sellers. Not exactly high liquidity. If things go pear-shaped and you want out..... what happens?

Muschu, you need to read up a bit on how they work, look at the depth, as long as you have liquidity in the underlying the rest is up to the market maker as skyQuake says below.

skyQuake said:
Marketmakers keep a bid and ask there. Generally spread a bit more than the underlying. Highly recommend you read the entire PDS if you decide to do business with warrant marketmakers

Agree entirely skyQuake, TLSIOI has a constant 300000 in both the bid and ask and a tight spread too.
A view of the matrix is also of interest, if you have a target for the underlying then the daily matrix will provide the matching warrant bid/ask for each price (read the last three letters carefully).

Warrants can be a big learning curve initially but a worthwhile exercise even if you never use them.

My

Muschu · 28 April 2012

Ok - seems I don't understand. Thx for comments. Hopefully illumination will follow...

Do these (TLSIOI/IOU) suit a SMSF in pension phase?

TLS - Telstra Corporation

Frank D

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