TLS - Telstra Corporation

[Bintang]

Sooner the better I hope because then I will buy some more.

 

[Bintang]

You haven't factored any ex-div top in your calculation. Will drop at least 10c on ex-div date.

You are right. I haven't and I don't need to because I will not be selling. You see after Sep12 I will get another 14cents per share paid into my bank account around 22Mar13. Let's see, (0.14/3.86)*12/6 = 7.25% which will be like having left my money in a bank account for another 6 months at an annualised interest rate of 7.25% except it will be better because that nasty taxman is going to take less of it from me.

And besides if I had been worried about the ex-div top (which is bleeding obvious) I would not have bought in December 2010 at $2.74 or in July 2011 at $3.04 or in December 2011 at $3.34.

 

[Bintang]

At some stage when alll the good news dries up and the return guarantee is close to finishing people will start to get out, how long away is that ?

And good luck to them finding somewhere else to put their money that gives them a better rate of return.
When they are ready to sell there will be eager buyers waiting - me for one!

 

[Julia]

And good luck to them finding somewhere else to put their money that gives them a better rate of return.
When they are ready to sell there will be eager buyers waiting - me for one!

In your unbridled enthusiasm for your splendid rate of return, if the SP were to fall to half what it is now, will you still be so thrilled?

And, of course you wouldn't be ramping TLS, would you?

 

[Muschu]

At some stage when alll the good news dries up and the return guarantee is close to finishing people will start to get out, how long away is that ?

Who knows Mr B. There is no certainty. People keep waiting to buy cheap . How long have you been waiting?
I have been buying TLS since it was $2.84. I don't think I have been rash.
I even bought y'day at $3.82.
As a retiree, and in today's climate, l am OK with this.
I am also 80% in cash. Is that wise? No idea !
But I buy on momentum and uptrends.... Not when a stock appears cheap.

I am definitely not suggesting that you buy TLS. Will it reach $4? Will it go back to $3?

My only observation is, that today, it looks OK. And, with it's FF dividend, better than a TD.

As always I could be completely wrong.

Regards

Rick

 

[Ves]

In your unbridled enthusiasm for your splendid rate of return, if the SP were to fall to half what it is now, will you still be so thrilled?

And, of course you wouldn't be ramping TLS, would you?

Would it fall to half because of bad news, or because a major shareholder decided to sell out again for no good reason?

 

[Julia]

Would it fall to half because of bad news, or because a major shareholder decided to sell out again for no good reason?

Why would it matter? The question relates to Bintang's situation and his concern or otherwise for capital preservation.
(PS I doubt too many major shareholders would decide to sell their substantial holding 'for no good reason'.)

 

[Ves]

Why would it matter? The question relates to Bintang's situation and his concern or otherwise for capital preservation.

Capital preservation in the long term is linked to business performance; in the short term it is linked to market sentiment (which may or may not be riding on the back of business performance - something as simple as a Fund wanting to reduce or completely sell their holding can have massive implications that have nothing to do with long-term prospects).

It certainly does matter.

 

[Bintang]

At some stage when alll the good news dries up and the return guarantee is close to finishing people will start to get out, how long away is that ?

In your unbridled enthusiasm for your splendid rate of return, if the SP were to fall to half what it is now, will you still be so thrilled?

And, of course you wouldn't be ramping TLS, would you?

In terms of my overall investment portfolio I can withstand a fall of 50% in the TLS share price as unlikely as that is. I am sorry for offending you with my unbridled enthusiasm. You are free to ignore it.
And of course you wouldn't be talking down TLS, would you?

 

[Bintang]

Why would it matter? The question relates to Bintang's situation and his concern or otherwise for capital preservation.
(PS I doubt too many major shareholders would decide to sell their substantial holding 'for no good reason'.)

Well, well, well. I think that is exactly what the Future Fund did. Maybe be there should be a Senate enquiry into why they did it!!

 

[Julia]

In terms of my overall investment portfolio I can withstand a fall of 50% in the TLS share price as unlikely as that is. I am sorry for offending you with my unbridled enthusiasm. You are free to ignore it.
And of course you wouldn't be talking down TLS, would you?

I have no interest in talking TLS up or down. Do not own it. Never have.
You have not offended me. I am simply curious about how people rate capital preservation.

So should I understand from your above comment that - if it were to happen - you would allow your capital investment to fall 50% without any intervention?

No need to answer if you are offended by the question. I am, after all, just being curious.

 

[Muschu]

Just kidding but maybe the interchanges are becoming as defensive as TLS is, may be, may be not....

 

[Bintang]

I have no interest in talking TLS up or down. Do not own it. Never have.
You have not offended me. I am simply curious about how people rate capital preservation.

So should I understand from your above comment that - if it were to happen - you would allow your capital investment to fall 50% without any intervention?

No need to answer if you are offended by the question. I am, after all, just being curious.

Fair question and I am not offended. When I first became interested in Telstra ( towards end 2009) I was tantalised by the dividend yield but concerned about capital preservation having observed how far TLS had fallen in previous years. So I decided to study Telstra's annual reports, model its cashflows and make my own independent assessment of what I thought it would be worth paying for a Telstra share.
As the TLS share price continued to decline through 2010 I could see no fundamental reason for it other than general Telstra bashing and negative sentiment brought about in part by the Future Fund selling. Once TLS dropped below $3.00 I began to buy - why, because at this level I decided the downside risk to capital preservation was very small and yet the dividend yield had become absolutely compelling.
So having bought in at low values I am minimally concerned about a share price drop from current levels. If it dropped 50% I would not sell because I don't think Telstra's earnings would fall by 50%. Also if TLS was down 50% it would mean that the general stock market would probably be down 70% so I would rather have my money in TLS anyway. The dividend yield would still be good and such a precipitous drop would have to be temporary. Therefore if it did drop by that much I would be a heavy buyer.
Believe me I am not ramping TLS. Each time I get TLS dividends I immediately reinvest them and I therefore like the TLS price to be as low-priced as possible.

 

[sammy84]

You are right. I haven't and I don't need to because I will not be selling. You see after Sep12 I will get another 14cents per share paid into my bank account around 22Mar13. Let's see, (0.14/3.86)*12/6 = 7.25% which will be like having left my money in a bank account for another 6 months at an annualised interest rate of 7.25% except it will be better because that nasty taxman is going to take less of it from me.

Ha, you quoted a 17% annual return based on buying TLS today, but in order to achieve this return we have to ignore the ex-div drop because you won't be selling and are assuming that price will return to today's levels. Amateur hour....

 

[Bintang]

Ha, you quoted a 17% annual return based on buying TLS today, but in order to achieve this return we have to ignore the ex-div drop because you won't be selling and are assuming that price will return to today's levels. Amateur hour....

I take a long term view but perhaps your view is shorter. You think after the ex-div drop the price will not recover but I disagree. Sure there is risk attached to my assumption but it is tempered by a higher potential return. Each to his own.

 

[MrBurns]

I think, rightly or wrongly, that the higher the price goes the closer it gets to a tipping point where it tanks, this will become clearer the closer we get to the end of the dividend guarantee.

So it becomes pass the parcel, who will be first to cash in and run ?

 

[Julia]

Just kidding but maybe the interchanges are becoming as defensive as TLS is, may be, may be not....

On the contrary, Rick. Bintang has now provided his/her entirely rational explanation for what came across as irrational enthusiasm for the stock.

Thanks for that, Bintang. You're obviously the archetypal value investor. I wish you luck.
The level of focus any of us place on capital preservation changes, I think, with our age and outside earning capacity.

Fair question and I am not offended. When I first became interested in Telstra ( towards end 2009) I was tantalised by the dividend yield but concerned about capital preservation having observed how far TLS had fallen in previous years. So I decided to study Telstra's annual reports, model its cashflows and make my own independent assessment of what I thought it would be worth paying for a Telstra share.
As the TLS share price continued to decline through 2010 I could see no fundamental reason for it other than general Telstra bashing and negative sentiment brought about in part by the Future Fund selling. Once TLS dropped below $3.00 I began to buy - why, because at this level I decided the downside risk to capital preservation was very small and yet the dividend yield had become absolutely compelling.
So having bought in at low values I am minimally concerned about a share price drop from current levels. If it dropped 50% I would not sell because I don't think Telstra's earnings would fall by 50%. Also if TLS was down 50% it would mean that the general stock market would probably be down 70% so I would rather have my money in TLS anyway. The dividend yield would still be good and such a precipitous drop would have to be temporary. Therefore if it did drop by that much I would be a heavy buyer.
Believe me I am not ramping TLS. Each time I get TLS dividends I immediately reinvest them and I therefore like the TLS price to be as low-priced as possible.

 

[Bintang]

I think, rightly or wrongly, that the higher the price goes the closer it gets to a tipping point where it tanks, this will become clearer the closer we get to the end of the dividend guarantee.

So it becomes pass the parcel, who will be first to cash in and run ?

Ah now I see .... Thanks MrBurns ...... so it is a bit like investment real estate except that:
- the yield on IPs is worse than bank interest and there is no franking
- buying and selling the IP incurs real estate agents fees and stamp duty
- the IP investment is not very liquid

Besides, the end of the dividend guarantee will be another great TLS buying opportunity because the negative sentiment will cause over-shoot.

 

[Muschu]

On the contrary, Rick. Bintang has now provided his/her entirely rational explanation for what came across as irrational enthusiasm for the stock.......

Don't think I mentioned Bintang........

 

[notting]

There all putting the boots into Facebook due to everything going mobile.
Not many seem to be putting the boots into Rudds NBN wastage. Still popular