Unilever (ULVR)

[BullDog]

Very happy to be out of this share and managed to exit without losing anything.

This company is starting to show signs of not being here in five years time. I have seen it before. When a company isn't happy with it's core businesses and always wants to be something else but it's not sure what.

It's ICI all over again

I think Terry Smith got his assessment of this company absolutely right.

I have held it for about 25 years and have no intention of selling. We will see the results for 2021 on Thursday . It is so very easy to talk a share down, sometimes with justification of course.

Dod

I admire your confidence. I am likely wrong.

I held ICI shares for ~25 years. It's tomorrow that matters, not the last 25 years. I am happy to be out. I am also happy to be wrong. It matters not one bit to me now.

[scrumpyjack]

I think Jope's misjudgement re attempting to buy Glaxo's health side, combined with Unilever's poor performance over the last few years and failure to achieve the margin improvements they promised after the Kraft takeover attempt, has put them 'in play' and under huge pressure. So at the present price I would certainly not sell. I think either they do improve performance substantially and put shareholder's interests first, or they get taken over.

[scrumpyjack]

Further to the above I see that the FT reports major shareholders are pushing for the split of the business (food vs non-food) and for the chairman to be replaced. They are unhappy that the board let Jope make the abortive bids to Glaxo. Poor corporate governance.

[Dod101]

Of course who is to say that Jope was wrong in trying to take over the Glaxo healthcare business? I have been trying to find the article, but now cannot, but I read in one of my weekend papers that one of the problems that the UK has is its lack of confidence (or ability?) to do this sort of merger/takeover. The news was out before Unilever had any opportunity to make a proper case for it and the usual security for this sort of deal was clearly absent. If there had been better security the whole idea would never have seen the light of day. As it is, they may have to wait until the new company is floated and if they are still interested in it, possibly pay even more for it.

I too read that some are unhappy with the Chairman and that he let down Jope as he should have been sounding out the major shareholders about the now aborted bid. As I said above though, it was all very tentative and should never have seen the light of day.

Dod

[scrumpyjack]

Of course who is to say that Jope was wrong in trying to take over the Glaxo healthcare business? I have been trying to find the article, but now cannot, but I read in one of my weekend papers that one of the problems that the UK has is its lack of confidence (or ability?) to do this sort of merger/takeover. The news was out before Unilever had any opportunity to make a proper case for it and the usual security for this sort of deal was clearly absent. If there had been better security the whole idea would never have seen the light of day. As it is, they may have to wait until the new company is floated and if they are still interested in it, possibly pay even more for it.

I too read that some are unhappy with the Chairman and that he let down Jope as he should have been sounding out the major shareholders about the now aborted bid. As I said above though, it was all very tentative and should never have seen the light of day.

Dod

I think the clearest argument against Unilever bidding was that they had demonstrated they could not run their existing business well (compared with their competitors and with the promises made at the time of the Kraft bid). So they could not possibly justify paying a premium for the acquisition. Also their announced strategy for funding the acquisition was that they would sell certain existing businesses thus making themselves a forced seller of those businesses and ensuring they would not achieve a premium price. Lastly they would be funding some of the acquisition by issuing more Unilever shares when the SP is depressed by Unilever's poor performance.

[ADrunkenMarcus]

It is so very easy to talk a share down, sometimes with justification of course.

And talk the dividend yield up.

Best wishes


Mark.

[absolutezero]

It is so very easy to talk a share down, sometimes with justification of course.

And talk the dividend yield up.

Best wishes


Mark.

Merely returning your own capital to you from an already depressed share price.
You are no better off.

[ADrunkenMarcus]

Merely returning your own capital to you from an already depressed share price. You are no better off.

Even at today's depressed levels, about 56 percent of my total return from Unilever has come from capital gains and the remainder from dividends, so the bulk has come from capital growth.

Best wishes


Mark.

[77ss]

....
Even at today's depressed levels, about 56 percent of my total return from Unilever has come from capital gains and the remainder from dividends, so the bulk has come from capital growth.

Best wishes


Mark.

Interesting.

A naive/ignorant question, I am sure, but I wonder how you do that calculation.

As it is total return that matters to me I have never bothered with exactly where it comes from, but your figures sparked my curiosity.

Having held ULVR for a shade over 11 years, my (1 notional untinkered share) TR is 154% of which 102% is capital growth - ie about 66% of the total. Toss in the tinkering and it will be even higher.

Is that how you do it? Or do you have something more sophisticated?

Just curious/seeking guidance.

[ADrunkenMarcus]

Or do you have something more sophisticated?

Don't mistake me for being sophisticated!

I acquired my holding in 2013 and have held since, with no sales or purchases. I simply looked up the dividend received per share (taken as cash, not reinvested) and the capital gain per share, adding them up to get the total return. Then, I compared how much of the total return was made up of each. I treated it as if the dividends were still sitting there in cash, rather than having been spent on pleasurable activities.

Best wishes


Mark.

[77ss]

Or do you have something more sophisticated?

Don't mistake me for being sophisticated!

I acquired my holding in 2013 and have held since, with no sales or purchases. I simply looked up the dividend received per share (taken as cash, not reinvested) and the capital gain per share, adding them up to get the total return. Then, I compared how much of the total return was made up of each. I treated it as if the dividends were still sitting there in cash, rather than having been spent on pleasurable activities.

Best wishes


Mark.

Thanks for that Mark. I approach it slightly differently, as I like to see TR as a %age, but the overall arithmetic is identical.

[absolutezero]

Merely returning your own capital to you from an already depressed share price. You are no better off.

Even at today's depressed levels, about 56 percent of my total return from Unilever has come from capital gains and the remainder from dividends, so the bulk has come from capital growth.

Best wishes


Mark.

What I'm getting at is a dividend makes nobody better off (and depending on you own tax situation it can be worse) as it just gives you a chunk of money and the the share price falls by the same amount +/- market movements on the day.
It would be interesting to see what the share price would be if it didn't pay a dividend and instead reinvested that money for you at the chunky ROCE that ULVR enjoys. But we don't have that parallel universe share to study.

[TheMotorcycleBoy]

Merely returning your own capital to you from an already depressed share price. You are no better off.

Even at today's depressed levels, about 56 percent of my total return from Unilever has come from capital gains and the remainder from dividends, so the bulk has come from capital growth.

Best wishes


Mark.

What I'm getting at is a dividend makes nobody better off (and depending on you own tax situation it can be worse) as it just gives you a chunk of money and the the share price falls by the same amount +/- market movements on the day.
It would be interesting to see what the share price would be if it didn't pay a dividend and instead reinvested that money for you at the chunky ROCE that ULVR enjoys. But we don't have that parallel universe share to study.

My view about their recent bout of share buybacks, was that they were unintentionally signalling to the markets "we don't really have a clue how to grow, and how to position our business".

If you study the time period from when their BB campaign started to it's end, you will still the SP fell over that time, whilst the FTSE gained. That's why I formed my view above. Perhaps I'm showing my naivety.

Personally ULVR has been one of my many lessons as a newish investor, starting in March 2018. My average purchase price for ULVR is sadly about £44.50 per share. Since it was one of my larger holdings, after the GSK bid debacle I reduced the holding by about 28% to reduce my exposure to it. I now regret letting myself be lured into the understanding that "Oh they're Unilever, they won't fail, they will impress etc." When really I should have exercised better DD and not merrily continued to top up.

Alas I'm going to hang on to them while they sit in this range, and will have to take view later on in time, if they move drastically one way or the another.

Matt

[dealtn]

If you study the time period from when their BB campaign started to it's end, you will still the SP fell over that time, whilst the FTSE gained. That's why I formed my view above. Perhaps I'm showing my naivety.

The Buy Backs have been going since at least 2017 - although you could still make observations about the share price over that period - not materially different to the FTSE I imagine.

[Dod101]

Merely returning your own capital to you from an already depressed share price. You are no better off.

Even at today's depressed levels, about 56 percent of my total return from Unilever has come from capital gains and the remainder from dividends, so the bulk has come from capital growth.

Best wishes


Mark.

What I'm getting at is a dividend makes nobody better off (and depending on you own tax situation it can be worse) as it just gives you a chunk of money and the the share price falls by the same amount +/- market movements on the day.
It would be interesting to see what the share price would be if it didn't pay a dividend and instead reinvested that money for you at the chunky ROCE that ULVR enjoys. But we don't have that parallel universe share to study.

My view about their recent bout of share buybacks, was that they were unintentionally signalling to the markets "we don't really have a clue how to grow, and how to position our business".

If you study the time period from when their BB campaign started to it's end, you will still the SP fell over that time, whilst the FTSE gained. That's why I formed my view above. Perhaps I'm showing my naivety.

Personally ULVR has been one of my many lessons as a newish investor, starting in March 2018. My average purchase price for ULVR is sadly about £44.50 per share. Since it was one of my larger holdings, after the GSK bid debacle I reduced the holding by about 28% to reduce my exposure to it. I now regret letting myself be lured into the understanding that "Oh they're Unilever, they won't fail, they will impress etc." When really I should have exercised better DD and not merrily continued to top up.

Alas I'm going to hang on to them while they sit in this range, and will have to take view later on in time, if they move drastically one way or the another.

Matt

With respect (because on these Boards we seldom get the full thinking of the other party, and I may be missing something) I do not think you can measure the success or otherwise of a long established share like Unilever over a period of less than 4 years, especially a four year period which has included nearly two years of a pandemic. That is not a very good period in which to judge any share. Personally I think that Unilever needs a spell of stability. After all, apart from the pandemic it has also been distracted by the reorganisation into one single company, including the silly idea of moving to Holland and then being forced to change their mind. A change of two or three directors would also be a good idea.

Dod

[Dod101]

For what it is worth Unilever is not totally ignorant of healthcare products. I have just noticed that they produce Vaseline. Presumably they do other similar products as well.

Dod

[Lootman]

For what it is worth Unilever is not totally ignorant of healthcare products. I have just noticed that they produce Vaseline. Presumably they do other similar products as well.

It is all semantics of course but I'd consider a product like Vaseline to be "household" rather than "healthcare". It's all a bit arbitrary but the market sector often referred to as Consumer Staples (i.e. things you pretty much have to buy) includes:

Non pharma and non-devices Healthcare: Example, Johnson and Johnson, Colgate-Palmolive

Household: Example, Proctor and Gamble, Clorox

Food: Example, Nestles, Mondelez.

Unilever is something of a hybrid. The efforts of companies like Unilever to either become staples conglomerates, or else sell off non-core holdings and become just one of the above, seems to be an endlessly recurring feature.

[Bouleversee]

Well, I would def. consider Vaseline a healthcare product. Whst household uses does it have?

[servodude]

Well, I would def. consider Vaseline a healthcare product. Whst household uses does it have?

You know those times when you can use a candle for lubrication with wood? Like drawer runners, or bed sides to bed heads, or on screws?
It can be pretty good for that (and actually a bit less messy as you can be more accurate)

It's also not bad as a preventative for corrosion on exposed electric terminals - car batteries, push fit blade terminals that kind of thing
There are more specialised products but vaseline is readily available
- and elicits an interesting response when you present it along with the 3' soil moisture probe that's needing installed https://aquacheckusa.com/wp-content/uploads/2020/04/Probe2_F.png

- sd

[Bouleversee]

Thanks, Servodude. I learn something every day . Mostly not my territory but I'll stick with candlewax for drawers.