Monday, 1 August 2016

Strategy Report: August 2016


For the month of August, I have subscribed to Morningstar's reports via IBKR. I was previously given a free trial and I liked the content. It costs $14.90/month, cheaper than subscribing through their website. More importantly, its very easy to switch on and off IBKR subscriptions. Since Morningstar is FA oriented, and fundamentals don't change that month, one could subscribe say, once every 3 months and not miss much.

Investing Idea: Banco Santander? (SAN - ADR)

I don't have any foreign bank counters apart from LYG and HSBC.  

US Banks will hit me with 30% withholding tax and their dividends aren't fantastic. If I really wanted US Banking exposure, it would be better to buy the SPDR financials ETF listed on LSE and with15% withholding on dividends. But I prefer to look for yield.

Banco Santander is Spain's largest bank with exposure to Latin America and the UK. It is listed on the LSE as BNC but there are also ADRs based on the underlying Spanish share. Spain has a 19% dividend withholding tax but the good news is that if you choose scrip dividend, you do not have to pay withholding tax :

With a 5% dividend yield and  a "real"  banking business as opposed to "investment banking" (which some say is fake banking), I think that SAN is a better addition to my portfolio than another UK bank like Barclays (at the moment, no thank you) or Royal Bank of Scotland (my UK bank account is technically with RBS since they absorbed my previous bank during the last financial crisis).

So anyway, I have never been able to time the bottom and TA suggests signs of downside. But its a new month so I have initiated a position in SAN.

Footnote: Results of bank stress test: Bank stress test  - 4 UK banks were tested, LLOY best result, HSBC second, then RBS and BCS.

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