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MBSR/MBSP: Where do you hold them?

Gilts, bonds, and interest-bearing shares
Wizard
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Re: MBSR/MBSP: Where do you hold them?

#388637

Postby Wizard » February 22nd, 2021, 9:52 am

GoSeigen wrote:
carnie wrote:Hello GS,

I hold some of each with ii. I also hold some with AJ Bell in my SIPP. I used to be able to trade all online but in recent months I get the message "via telephone only". ii today does show a price for 1000 nominal of MBSR but anything bigger won't work.

I assume therefore it is a liquidity thing and suspect these are being bid up on tiny volumes in the hope that the court case throws up a surprise ruling.

I think its incredibly unlikely though longer term I do think there is value here.

I hold at an average price of c40p so I'm still a little underwater despite the recent gains.

All the best
C


Thanks for your experiences. As I wrote earlier II have said that they have deliberately set MBSP to telephone-only trading, so it is not a liquidity issue. Perhaps if we holders all raise the matter with II they may look into it and re-enable online trading? It's not a terrible hardship I must say but with spreads getting tighter this is a nice share for Fools to hold in sensible quantities.

GS

I see the price continues to go in the right direction for these. I have a very small holding in MBSP and I'm now almost back to breakeven having bought
a few years back, just before the dip to the teens - great timing. Despite the recent increase in price (and therefore presumably increase in confidence surrounding Manchester BS) I am not inclined to add to my curent holding.

Out of interest HL will still quote me online to buy or sell these.

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Re: MBSR/MBSP: Where do you hold them?

#392404

Postby GoSeigen » March 4th, 2021, 5:52 pm

GoSeigen wrote:
carnie wrote:Hello GS,

I hold some of each with ii. I also hold some with AJ Bell in my SIPP. I used to be able to trade all online but in recent months I get the message "via telephone only". ii today does show a price for 1000 nominal of MBSR but anything bigger won't work.

I assume therefore it is a liquidity thing and suspect these are being bid up on tiny volumes in the hope that the court case throws up a surprise ruling.

I think its incredibly unlikely though longer term I do think there is value here.

I hold at an average price of c40p so I'm still a little underwater despite the recent gains.

All the best
C


Thanks for your experiences. As I wrote earlier II have said that they have deliberately set MBSP to telephone-only trading, so it is not a liquidity issue. Perhaps if we holders all raise the matter with II they may look into it and re-enable online trading? It's not a terrible hardship I must say but with spreads getting tighter this is a nice share for Fools to hold in sensible quantities.

GS


https://www.themanchester.co.uk/downloads/main/annual-report-and-accounts-2020.pdf

Manchester Building Society published its results and annual report. Nothing much to say really: another operational profit but provisions leave a small loss for the year. The regulatory capital position is unchanged in the wording of the report but looking at the figures it seems to me that the relevant ratios are improving steadily, mostly from the run-down of the lending book and liquidity is good. I wonder if there is pressure on the board from the PPDS holders to prolong the capital shortage -- because the fewer payments made to PIBS the more they retain themselves?

Summary: steady as it goes and no solid info about the Supreme Court judgement delivery date.

GS

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Re: MBSR/MBSP: Where do you hold them?

#392633

Postby 88V8 » March 5th, 2021, 10:25 am

GoSeigen wrote: steady as it goes ...

These have moved up very nicely since you began flagging them. Thankyou.
Just wish I'd bought more... coulda shoulda..

V8

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Re: MBSR/MBSP: Where do you hold them?

#413901

Postby GoSeigen » May 21st, 2021, 2:01 pm

Quick heads up: the Supreme Court publishes its judgement in the Grant Thornton case next Friday 28 May:

https://www.supremecourt.uk/cases/uksc-2019-0040.html

As a reminder, (keeping it simple) MBS were claiming significant compensation for bad advice and partially won the original case but were awarded meagre compensation. At appeal they lost and had to pay GT's costs. Costs of this final appeal should be modest, so the downside is fairly limited but if they win there is the possibility of a large payout.

However the market prices of both MBSR and MBSP have been run up over the past year so presumably much of any good news will already be in the price. What happens next Friday is anyone's guess!


GS

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Re: MBSR/MBSP: Where do you hold them?

#413954

Postby Surerera » May 21st, 2021, 3:55 pm

Congrats on that trade GS, excellent call.

Surerera

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Re: MBSR/MBSP: Where do you hold them?

#414008

Postby GoSeigen » May 21st, 2021, 7:59 pm

Surerera wrote:Congrats on that trade GS, excellent call.

Surerera


Thanks Surerera, got a bit lucky to be honest. I really have no idea what will happen next week and I've only top-sliced a fraction of the holding so may end up giving back most of the gains...

GS

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Re: MBSR/MBSP: Where do you hold them?

#414542

Postby Gan020 » May 24th, 2021, 10:42 am

I can't believe how much time has passed since I spent about 2 hours listening to some of the video evidence.

At the time I concluded it was beyond my skill-set to work out what the outcome would be.

I have again reviewed the evidence this morning and once again concluded I am not sure that applying my brain to this issue is going to produce any better insight to the outcome that if I tossed a coin.


What I can figure out is it seems outrageous that GT proposed a set of accounting rules which would allow profits not to be shown based on a mark-to-market situation if underlying trades went against the company. But what is just as outrageous is that any accountant, never mind the FD of a building society would also think the same regardless of whether the advice came from an expert. Or put another way what everyone seemed to agree on was that "paper losses" aren't actual losses until you close the trade. :roll:

I await the outcome of this more from an intellectual basis than anything else. I hold no position.

What may be interesting is that the share price rose strongly in the days after the hearing last year so at the time the "market" believed MBS's case was strong.

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Re: MBSR/MBSP: Where do you hold them?

#414550

Postby Padders72 » May 24th, 2021, 11:05 am

I strongly suspect it is a glitch and linked to their on off inability to offer on line dealing with these, but the price ii show for these is now 16.25p. everyone else still has them at circa 40p so I think they have a data issue and are falling back on an incorrect earlier price. Or at least I hope so lol. It has been this way since last Friday so presumably not linked to any impending appeal decision.

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Re: MBSR/MBSP: Where do you hold them?

#414887

Postby 88V8 » May 25th, 2021, 9:21 am

Padders72 wrote:I think they have a data issue and are falling back on an incorrect earlier price. Or at least I hope so lol.

I hope so too.
This morning they can't even calculate a value for MBSR, and neither MBSP nor MBSR are recognised under the Bonds heading.

Nor for that matter are SKIP, NOTP, LBS. Or 1SBB.
But they can quote ENQ1, albeit under the Equities heading.

I guess all this oddball stuff is of little importance to ii in the scheme of things and they reckon not to lose too many customers over it.

Oh well, there's always Cannacord.

V8

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Re: MBSR/MBSP: Where do you hold them?

#415550

Postby carnie » May 27th, 2021, 12:01 pm

Friday 28 May 2021
9:45am
Judgment hand-down
Please Note: the following two judgments that were scheduled to be handed down on Friday 28 May at 9.45am have been postponed:

Manchester Building Society (Appellant) v Grant Thornton UK LLP (Respondent)

Khan (Respondent) v Meadows (Appellant)

The Court has agreed to receive further submissions in the case of Manchester Building Society (Appellant) v Grant Thornton UK LLP (Respondent). As this judgment is interlinked with the judgment in Khan (Respondent) v Meadows (Appellant) and they both need to be read together, this judgment has also been postponed.

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Re: MBSR/MBSP: Where do you hold them?

#415599

Postby GoSeigen » May 27th, 2021, 3:19 pm

carnie wrote:Friday 28 May 2021
9:45am
Judgment hand-down
Please Note: the following two judgments that were scheduled to be handed down on Friday 28 May at 9.45am have been postponed:

Manchester Building Society (Appellant) v Grant Thornton UK LLP (Respondent)

Khan (Respondent) v Meadows (Appellant)

The Court has agreed to receive further submissions in the case of Manchester Building Society (Appellant) v Grant Thornton UK LLP (Respondent). As this judgment is interlinked with the judgment in Khan (Respondent) v Meadows (Appellant) and they both need to be read together, this judgment has also been postponed.


Thank you carnie for posting this, and what an interesting development it is!

First, I think the fact that further submissions are being accepted and the judgment delayed can only mean that the case is finely balanced, which at least is not a negative for MBS.

Second, I had no idea that these two cases were being considered together; it was very useful to look at the second Khan v Meadows case and see how the issues are described there. This enabled me to get a better grip on the SAAMCO principles, and then looking back at MBS vs GT I am rather surprised that MBS lost both at the High Court and at Appeal.

The two lower court judgements look quite inexplicable to me, I can only conclude that the honorable judges were confused by the financial aspects of the case. It seems to me that even if this were an information case in the SAAMCO terminology, the fact that the M2M losses incurred when the swaps were closed out was a direct consequence of the way the swaps were supposed to work, both in their financial and accounting senses. GT were fully aware of how MBS were using the swaps and that if they were to perform their volatility-reducing role then they necessarily also would see their value move markedly either up or down. The M2M loss suffered at the time of the claim was forseeable (at lease the risk of the same) and was a real loss to MBS and its members and would NOT have been incurred if GT's advice had been correct.

I assume that the Lords will be much more comfortable with the financial aspects and see clearly what was going on and I am now fairly hopeful of the appeal being granted. However, I'd temper that by saying that I don't think MBS will in any case be granted the full quantum of the M2M loss because there will likely be a degree of contributory negligence on MBS's part.


It's certainly interesting though -- I wonder if other Fools agree with the above? I've taken the foolish decision to increase my already silly exposure, noting that MMs seem also to have been accumulating lately and the trading spread is relatively tight at 33.5/35.

GS
Disclosure: Long MBSP and MBSR

P.S. Any guesses how long the postponement will be for?? Just a week, or much longer?

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Re: MBSR/MBSP: Where do you hold them?

#415759

Postby Gan020 » May 28th, 2021, 10:37 am

A reminder:

"The judge said that he had not found the question of assumption of responsibility easy to answer and that his mind had wavered [176].
His ultimate conclusion, however, was that GT had not assumed responsibility for the MTM losses for the reasons set out in [179]:

"179. Ultimately, as with so many questions with which courts must wrestle, it is necessary, having examined the evidence and the opposing arguments, to stand back and view the matter in the round. Having done so it seems to me a striking conclusion to reach that an accountant who advises a client as to the manner in which its business activities may be treated in its accounts has assumed responsibility for the financial consequences of those business activities. I do not consider that the objective bystander, or indeed the parties themselves, viewing the matter in 2006 would have concluded that the Defendant had assumed responsibility for the Claimant "being out of the money" on the swaps in the event of a sustained fall in interest rates. Although it can be said, as I have attempted to explain, that the particular manner in which the Claimant suffered the loss on the swaps (that is, by deciding to close the swaps out when it was appreciated that the Defendant's advice was wrong) flowed from the particular feature of the Defendant's conduct which made it wrongful, the very same loss would have been sustained had the counterparty decided to close the swaps, as the regulator feared might well happen and as Mr. Cowie appreciated. That circumstance illustrates, it seems to me, that the loss suffered by the Claimant, looked at broadly, sensibly and in the round, was not in truth something for which the Defendant assumed responsibility or the "very thing" to which the Defendant had advised the Claimant would not be exposed. Rather, the loss flowed from market forces for which the Defendant did not assume responsibility. Just as the Defendant had not assumed responsibility for the losses which would have been incurred had a counterparty exercised its right to terminate a swap, so the Defendant had not assumed responsibility for the very same losses which were incurred when the Claimant decided to close the swaps out, notwithstanding that that decision was taken because the advice given by the Defendant had been wrong."


So, it's unsurprising we are here because the judges mind wavered and left it open for another appeal. I note the swaps were closed out for a loss of £33m with MBS having had to provide that much cash as extra collateral. I assume had they not been closed out even more collateral would be provided as of today's date as interest rates have fallen further, although this is not relevant to the case.

What surprises me most is that some 15-20 years after the swaps transactions took place and just a few days before the judgement of the court new evidence has been submitted by one of the parties. If it's MBS why has it taken 20 years to come up with something that would strengthen their case they didn't submit as evidence many years ago and if it's GT the same can be said.

SAAMO appears relevant if GT's advice had been correct. The linked claim. I'm not sure how relevant this is and it's beyond my skillset. Unless of course the new evidence relates to challenging MBS's position that it would not have closed out the swaps but for GT's bad advice. The collateral would now be much higher than £33m and I assume this is coupled with people living much longer. I am probably wandering off point now.


If the judge was wavering last time who knows which way this will go. More than anything it would be helpful to know what the new submissions to the court are from.

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Re: MBSR/MBSP: Where do you hold them?

#415837

Postby GoSeigen » May 28th, 2021, 1:38 pm

A few comments on this post

Gan020 wrote:A reminder:

"The judge said that he had not found the question of assumption of responsibility easy to answer and that his mind had wavered [176].
His ultimate conclusion, however, was that GT had not assumed responsibility for the MTM losses for the reasons set out in [179]:

[quotation from case snipped]


"The judge" here and in your final paragraph of course refers to the judge in the original High Court case [NOT the Appeal case] who came down comprehensively on MBS's side throughout, save for that one confused paragraph.


So, it's unsurprising we are here because the judges mind wavered and left it open for another appeal.


No, we are here because the Appeal Court also ruled on this case, actually overturning some of the judge's sound points but still finding in favour of GT, though for different reasons.

I note the swaps were closed out for a loss of £33m with MBS having had to provide that much cash as extra collateral. I assume had they not been closed out even more collateral would be provided as of today's date as interest rates have fallen further, although this is not relevant to the case.

Probably correct and yes, not really relevant. Of course if GT's advice had been correct the hedging would still be in place, the hedge accounting would have erased the volatility in the accounts and MBS would not be having any problems.

What surprises me most is that some 15-20 years after the swaps transactions took place and just a few days before the judgement of the court new evidence has been submitted by one of the parties. If it's MBS why has it taken 20 years to come up with something that would strengthen their case they didn't submit as evidence many years ago and if it's GT the same can be said.

UIAVMM, new evidence cannot be submitted at appeal. Only points of law can be contested. So the submissions are not evidence but some point of law which one party or the other wishes to put forward.

SAAMO appears relevant if GT's advice had been correct. The linked claim. I'm not sure how relevant this is and it's beyond my skillset. Unless of course the new evidence relates to challenging MBS's position that it would not have closed out the swaps but for GT's bad advice. The collateral would now be much higher than £33m and I assume this is coupled with people living much longer. I am probably wandering off point now.

The linked claim is 100% relevant because it is also a SAAMCO case and concerns a very similar issue i.e. how much of the claimants' loss should compensated by the negligent party. The Supreme Court would hardly have linked them if they were irrelevant to each other!


If the judge was wavering last time who knows which way this will go. More than anything it would be helpful to know what the new submissions to the court are from.


As mentioned above the judge wavered two cases ago not last time.

I doubt we'll be told anything concrete about the submissions. My hunch is that the Court gave sight of the judgment to counsel before the publication and asked for comments and that is how the submissions arose. Seems likely to me that some new law has been made, maybe a refinement of or supplement to the SAAMCO principles.

GS

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Re: MBSR/MBSP: Where do you hold them?

#415839

Postby Gan020 » May 28th, 2021, 1:49 pm

I'll sign off now on this topic. My post embarrassingly shows I have little construction to offer.

Good luck. You've clearly done your research and deserve the outcome to go your way for the sheer amount of time and effort you've put in.

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Re: MBSR/MBSP: Where do you hold them?

#415847

Postby GoSeigen » May 28th, 2021, 2:03 pm

Gan020 wrote:I'll sign off now on this topic. My post embarrassingly shows I have little construction to offer.

Good luck. You've clearly done your research and deserve the outcome to go your way for the sheer amount of time and effort you've put in.


I've appreciated your input and any further thoughts you have will be very welcome. I'm not at all confident in my position, the Lords have far bigger brains than mine and huge experience so I am eager to see what they say.

A few years ago there was a bondholder vs Lloyds Bank case where at the High Court stage I very much thought the bondholders had the better case and offloaded all my bonds when they won. Then when I read the beautifully argued judgment at appeal I completely changed my mind and saw the soundness of the "manifest error" point. Sure enough the Supreme court agreed with the Appeal judges.

This persuasiveness of argument by the judges was an eye-opener for me and I have great respect for their abilities now... hence my lack of confidence in my view which is contrary to that of the two lower courts.


GS

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Re: MBSR/MBSP: Where do you hold them?

#420410

Postby GoSeigen » June 18th, 2021, 10:51 am

:D :D :D :D :D :D :D :D

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Re: MBSR/MBSP: Where do you hold them?

#420417

Postby 88V8 » June 18th, 2021, 11:08 am

Unanimous.
Caramba.
Price only moved up 10% so far. Mind you, 10% of your holding is probably not 'only'.
You deserve it not just for your perspicacity but for sharing it with those on this forum.

V8
who should have bought more

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Re: MBSR/MBSP: Where do you hold them?

#420435

Postby Gan020 » June 18th, 2021, 11:41 am

GoSeigen wrote::D :D :D :D :D :D :D :D


Well done

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Re: MBSR/MBSP: Where do you hold them?

#420467

Postby rthak » June 18th, 2021, 1:09 pm

GoSeigen wrote::D :D :D :D :D :D :D :D


Well done indeed and fortunately I managed to invest a sizeable amount (for me anyway) last year!

If you are in London I would be very happy to buy to a beer when restrictions lift to say thank you!

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Re: MBSR/MBSP: Where do you hold them?

#420516

Postby GoSeigen » June 18th, 2021, 3:29 pm

rthak wrote:
GoSeigen wrote::D :D :D :D :D :D :D :D


Well done indeed and fortunately I managed to invest a sizeable amount (for me anyway) last year!

If you are in London I would be very happy to buy to a beer when restrictions lift to say thank you!


Thank you 88V8, Gan020 and rthak. There's a lot of luck in this outcome, I wouldn't dare accept a beer off the back of my witterings, though if I were close enough I'd very much enjoy the company and mutual backslapping of an evening in the pub. And it would be very much mutual because the input, often questioning my assertions as well as agreeing, of other Fools on the Gilts and Banking boards has been critical to making my own decisions and honing the arguments that drove me to build a very large position in these MBS PIBS. My allocation was about 15% of net worth which is insane so if and when we do meet it will be ME buying the drinks!! Sadly I'm based abroad for now so the celebration will have to wait -- bar a bottle of very tasty red tonight and a glass raised to my daughter whose 16th birthday falls on this happy day.

Thanks again to all for the excellent company.

Cheers!

GS


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