20 February 2009 / by None
Customers at leading execution only share dealing broker TD Waterhouse are hoping to turn Lloyds’ bad luck into a charm by buying up the bank’s tumbling shares.
This week, TD Waterhouse customers bought four Lloyds shares for every sell hoping to cash in on the bank’s 32 per cent share price fall.
“When Lloyds’ share price fell by a staggering 32 per cent on Friday the 13th, TD Waterhouse customers were clearly hoping to take advantage of the volatility to either make a short term profit, or gain by holding the stock for the longer term,” said Angus Rigby, CEO at TD Waterhouse share dealing.
“Indeed, the Black Horse has moved into first place as this week’s most popular trade, accounting for 38 per cent of the buys as its share price was battered following reports that its recently acquired subsidiary, HBOS, had made an £11 billion pre-tax loss in 2008,” he said.
Mr Rigby said that due to the fact expected write-downs were exceeded by more than £1.6billion, HBOS’s loss caused its new parent company’s shares to crash by as much as 40 per cent over the week and TD Waterhouse share dealing customers were quick to snap them up, buying 74 per cent more than last week, buying up seven shares for every single share sold on Friday alone.
“Overall, ‘buying on a discount’ continued to be the strategy of the week across the top shares, with the number of buys in the tables up 32 per cent on last week as customers dug around for a good deal,” said Mr Rigby.
“However, our customers tempered buying activity (by 34 per cent) in Royal Bank of Scotland (RBS) shares compared to last week.
“Perhaps this was due to Lloyds’ overwhelming popularity, but it could also be in reaction to the state-owned bank’s struggle to find the £8billion required to enter the Governments insurance scheme, where it was hoping to re-house £200billion of its toxic assets.”
TD Waterhouse’s research reveals that the top five retailer buys this week were Lloyds Banking Group, Barclays, RBS, Legal and General and BT – last week Lloyds was down in number three. The top sales were Lloyds, Barclays, RBS, Rio Tinto and Max Petroleum.
Mr Rigby says Rio Tinto’s decision earlier in the week to go ahead with a $12.3billion deal with Chinalco rather than raising a rights issue is likely to have been a factor in the high number of shares sold in the company.
However, this could all change today as it has been reported Chinalco has pulled out and the mining company’s independent directors are trying to gauge support for a multi-billion-pound rights issue after all.
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