A m p

[traineeinvestor]

I have held off on answering your question Gonzo, because I don't think I am the person to answer it. As a value investor my gut feeling is to hold on while things are down. The other question to bear in mind is, if you sold where would you put your money? The again if you decided to hold at what point would the share become overpriced?

I don't have an answer to those two questions. One question I ask myself when holding a share is would I be happy to be a customer of the company? IIRC back in the day being invested with (as opposed to in) AMP what what 'responsible people' did. There was lots of 'feel good' advertising on the TV of the day too. The jingle "I"ll be there...." (referring I think to the nest egg you would build up if you kept investing with AMP until your retirement) still resonates with me. While the idea behind building up a nest egg for later in life was OK, the way it was structured by AMP for kiwis was problematic.

This was the days of AMP sales people arriving at your house in an impressive car. The car was funded by clients who when they signed up paid the equivalent of two years of their contributions direct to AMP and their agents as a sign up fee. There were ongoing annual management fees too. My other recollection is that the AMP funds of the day were not very tax efficient. Am I right in recollecting they had to pay capital gains tax on all of their share trading activities? The other problem with signing up the responsible young people was that homeowners (wow remember when young people could afford to buy a house!) would have been far better off paying down their mortgage than investing with AMP. Back in the day even then, I was a 'share picker' so I couldn't imagine myself as an AMP customer.

I remember the demutualisation but can't remember exactly why it occurred. I do remember friends getting AMP shares who had never considered investing in the sharemarket themselves in their lives. Were those new AMP shares trading at $8 or something at the time? Over 20 years ago?

The closest I have come to investing in the likes of AMP was when Westpac demerged their investment business, now trading as Pendal Group a few years ago. I remember thinking this doesn't add up. If Westpac wants out, why should I want in - and choosing not to invest. IIRC the Pendal share price did fall after the float before it rose to dramatic heights - so I missed out, Which all goes to show I have no idea what I am talking about with these insurance / investment fund companies. Warren Buffett once said: "Don't invest in companies that you don't understand." I still find the insurance industry in general baffling, so I don't invest in insurance companies to this day.

I suspect my reply is not that helpful to you Gonzo, but there it is.

SNOOPY

AMP listed at AUD 36.00 and traded as high as AUD 45.00 (link below - not sure how exact these prices are).

Between the returns to shareholders and the returns to customers, I can't think of any other Au/NZ company that has destroyed more investor wealth than AMP (including many that have gone broke).

Re Westpac/Pendal - part of the reason for Westpac spinning off its wealth management business was regulatory - there was a clampdown on conflicts of interest and misaligned incentives in Australia's large financial institutions so most of them were getting rid of businesses like this. The Haynes Royal Commission subsequently looked into these issues in considerable detail.

https://www.intelligentinvestor.com....entrance/47193

Disclosures: Hold Westpac, former holder of and investor with AMP

[Snoopy]

AMP listed at AUD 36.00 and traded as high as AUD 45.00 (link below - not sure how exact these prices are).

Wow AMP trading at just $A1.135 as I write this! Reminds me of another Buffett meme of looking for cigar butts in the gutter to give them one last puff. i.e. If you pay next to nothing for a company there may just be a residual of real value left in there!

If even Gonzo who has held for so long is thinking of quitting, are we looking at capitulation? If I wasn't so involved in other investment prospects right now, even I might be looking at breaking my own 'never invest in insurance companies' rule!

SNOOPY

[Biscuit]

hi Biscuit, what indicators are there that AMP has "potentially hit the bottom" or is that more of a "surely they can't go any lower" type comment

I'm not into TA, so can't comment on indicators. The share price seems to have stopped, or at least paused, the long slide to oblivion its been undertaking for quite a while. I'd buy if I thought there was a good reason to think the share price fall was over-done, but I haven't found one yet. It's trading around NTA, profit fell again on last report (covid they say). They've slimmed down and focusing on core areas. To be honest, i found their latest report a bit full of jargon and hard to grasp any insight that they have materially transformed. They've had to pay a lot of reparations to their customers for what seems to have been somewhat shady dealings and that is 80% done now. The dividend yield reflects capital repayments rather than income.

[macduffy]

Still not investible for me.

https://www.abc.net.au/news/2021-04-...-agm/100101518

[blackie]

thanks Biscuit

[Biscuit]

Still not investible for me.

When you are selling insurance and financial products, your reputation counts. Their reputation has taken a fairly large hit and they are not getting that back any time soon.

[ralph]

When you are selling insurance and financial products, your reputation counts. Their reputation has taken a fairly large hit and they are not getting that back any time soon.

Exactly my point for quite a few years, the last ten -twenty they have been as complacent as most financial intuitions and more then some this has lead to the predicament they have been in for the last 3-4 years .
for the last couple they have been reorganizing & restructuring & are profitable again, plus Investors in their financial management service & such are seeing good returns at long last .
Obviously shareholders are not happy with the drop in share price and the shorts are rapidly rising. https://www.shortman.com.au/stock?q=amp very Interesting

[Dassets]

Wow, that shorting is super aggressive