Royal Bank (Symbol-RY)

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Keithm
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Royal Bank (Symbol-RY)

Post by Keithm »

Just a big thank you to yielder and Shakes for a great call on RBC at $58.00 back in Sept. I jumped in at $59.00. I'm a very happy camper today. The new target is $85.00???
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Shakespeare
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Post by Shakespeare »

You're welcome, Keith.


With the Big 5, I usually ignore targets, unless I'm overweighted and want to reduce. (Which I might in this case; RY's my largest position.)
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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Bylo Selhi
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Post by Bylo Selhi »

I procrastinated and finally pulled the trigger at $63. I thought that was a bit rich and the subsequent retreat made me regret that I paid too much. Now I wish I'd loaded up. Like the weather, if you don't like a stock price, wait and it will change ;)

Thank y'all.
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arthur
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Post by arthur »

Just think how much you would have made if you had just bought Call options with the money, probably 30 times as much. :shock:
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yielder
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Post by yielder »

True but I don't swing for the fences. With options, you have to get the time right. Long the stock, I get paid the increasing dividend to wait.

Mike
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adrian2
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Post by adrian2 »

I'm Howard wrote:Just think how much you would have made if you had just bought Call options with the money, probably 30 times as much. :shock:
Howard, your math is off by an order of magnitude.
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arthur
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Post by arthur »

ADRIAN, key word is PROBABLY, so correct my math, i just threw out a possibilty? :evil: :evil:
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Post by adrian2 »

I'm Howard wrote:ADRIAN, key word is PROBABLY, so correct my math, i just threw out a possibilty? :evil: :evil:
And I'm telling you that, even with the benefit of hindsight, there is no option trade you could have entered any time between last September (RY's low) and today (RY's high) that would have made you 30 times more money than buying RY (same number of shares) at that time and today.

If you would have said 3 times as much money, I would not have quibbled.

OTOH, if you would have risked the same amount of capital, then maybe. But it would have been an extremely risky venture. I would have never done it.
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yielder
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Post by yielder »

Disclosure sucks. Last fall, RY restructured with 5 divisions becoming three.

The new Canadian consumer division includes banking, mortgages, retail brokerage, mutual funds, and insurance. You can't tell how the bank itself is doing.

You can't tell if the insurance business is still growing at ~20%.

You can't tell how RBC Centura is doing.

How did this massive turnaround occur in just one quarter? Is it sustainable? Don't know/can't tell because of the new lack of disclosure.

Most companies would opt for greater disclosure when things are going well. Why has RY gone the other way?????

I wouldn't be a buyer right now because I don't really know what I'm buying. I would be a buyer if the stock gets hammered because the turnaround isn't sustainable.

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Shakespeare
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Post by Shakespeare »

I'm reasonably sure the bank deliberately overloaded the bad news in the quarter before the last, so the "turnaround" is exaggerated.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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Bylo Selhi
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Post by Bylo Selhi »

If it's that obvious to you two then it should also be obvious to all the pros out there who run institutional money. (I presume that represents the bulk of RY trades.) Why have they bid up the price so high when they all (should) know that it's just a house of cards waiting for an ill wind to blow?
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Shakespeare
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Post by Shakespeare »

I'm less sure about the exaggerated "goodness" of the just-reported results than I am about the exaggerated "badness" of the previous quarter. Loading "everything but the kitchen sink" into a bad quarter is a well-known tactic.

The error lies in traders overreacting to quarter-to-quarter news. Unless there is a very serious extraneous event in a quarter, quarter-to-quarter variations aren't that important.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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yielder
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Post by yielder »

Bylo wrote:If it's that obvious to you two then it should also be obvious to all the pros out there who run institutional money. (I presume that represents the bulk of RY trades.) Why have they bid up the price so high when they all (should) know that it's just a house of cards waiting for an ill wind to blow?
Whoa. I didn't say that it was a house of cards. What I said is that I'm pissed that they chose to go to far less disclosure which leaves me uncertain that these numbers are sustainable. What I'm saying is that I don't know.

As for the pros, many will buy because they can't afford to be left behind if RY has turned the corner. If it turns out that RY is still struggling, then the price will drift down and they will all be affected together, ie, none will be noticeable. What rationale investor would buy when disclosure has been reduced and you can't see into the engine room?
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Shakespeare
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Post by Shakespeare »

Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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Post by NormR »

Are RBC's results sustainable? Who knows?
Although providing less info to investors isn't usually a good thing, I've found that DeCloet provides a very useful contrary indicator. I'll have to check out RY to see if it's time to load up. :wink:
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Post by Bylo Selhi »

https://secure.globeadvisor.com/servlet ... /RWILLIS04
Prior to the release of earnings, most institutions were massively underweight RBC in their portfolios, compared with its relatively large position in the S&P/TSX benchmarks. This is a hugely important decision for this crowd. In simple terms, if Canadian money managers get the banks right, they outperform and earn a bonus. If they blow this call, they get fired. Overweighting CIBC and TD, while being light on RBC, was the winning formula last year.

On Friday, managers fell over themselves to get back into RBC. The stock shot up a record 9 per cent in that one session, to an all-time high of $73.10.

However, most analysts did not switch their view on the stock. The broadly held view is to wait and see if RBC can sustain this performance. And most money managers just got back to holding RBC in step with its index weight -- they didn't load up. If the next set of earnings from RBC confirms the turnaround, watch for analysts to capitulate, and another stampede into the stock.
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yielder
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Post by yielder »

That's the way it works. Many managers are either closet indexers or sheep as I said up thread.

Mike
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Post by Shakespeare »

The time to buy a solid, but temporarily underperforming, company is when all the (pseudo)indexers know it's a loser..... 8)

(Of course, you also have to think the problems are solvable; RBC's US operations aren't core.)
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
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Post by Bylo Selhi »

Yielder wrote:That's the way it works... as I said up thread.
Which is why I posted that excerpt. These guys seem to have no shame when they're using OPM to "earn" their bonuses.
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yielder
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Post by yielder »

NormR wrote: I'll have to check out RY to see if it's time to load up. :wink:
Nope. Not unless you want to make some pretty generous assumptions about growth. It's a hold here. I would buy at $66 up to $72 although I'd need convincing at $72. Another good quarter might get me interested at $72.

Using TTM eps of 4.65, a 12 month price of $80-85 would mean a multiple of 17.2 - 18.3. If you figure that the multiple will be at the top end of its historical range, ceteris paribas, say 14.5, then a price of $80-85 will put 2005 earnings between $5.52 and $5.86 which is 18-26% higher than current TTM earnings. Maybe, but until I see another quarter or more info on this quarter, I'm content to hold.

The market has no info on which to base the current price and multiple; it's short term emotion.

Disclosure: I own RY.
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yielder
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Post by yielder »

Access to Royal Bank of Canada investor presentation (cnw)

Gord Nixon to speak at NBF Canadian


Financial Services Conference

TORONTO, March 24 /CNW/ - Gordon M. Nixon, president and chief executive officer of Royal Bank of Canada (RY on TSX and NYSE), is scheduled to present at the NBF Canadian Financial Services Conference in Montreal on March 30, 2005, beginning at 10:15 a.m. (EST). Following the presentation, there will be a question and answer period.

Investors may listen to Mr. Nixon's presentation and the question period live via webcast at http://www.rbc.com/investorrelations/conference.html. The webcast will be archived for three months.

Mr. Nixon's remarks and slides will be available on RBC's website at http://www.rbc.com/investorrelations/invpres.html starting March 30, 2005.

/For further information: Media contact: Beja Rodeck, Media Relations, (416) 974-5506; Investor contact: Nabanita Merchant, Investor Relations, (416) 955-7803; Archived images on this organization are searchable through CNW Photo Archive website at http://photos.newswire.ca. Images are free to accredited members of the media. To request a free copy of this organization's annual report, please go to http://www.newswire.ca and click on reports(at)cnw./
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Shakespeare
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Post by Shakespeare »

Dividend hike?

Disclosure: I own RBC shares. :D
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Post by Keithm »

Thanks again boys, an extra share in my Drip :D Keep them coming.

Now if I could only figure out what's going on with X, up a couple of bucks today??
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yielder
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Post by yielder »

I ignore analysts' forecasts and recommendations (they are very short term oriented & are sell-side biased) but I find them useful for methodology. Periodically, they provide an interesting intangible such as the following.

From TD Newcrest this morning:
Royal Bank (Royal) hosted an investor presentation on April 22, 2005, focusing on it’s Canadian retail and US & International business segments. The event was an opportunity for the company to introduce new management to investors.

Impact: Positive

It was perhaps most interesting to see the confidence that Royal management displayed during the day. In Canada, the bank clearly holds a strong position and is pressing ahead with revenue growth initiatives. While challenges remain in the US retail operation, management seemed fairly confident they will manage to return Centura to profit levels earned prior to Royal buying the south-east US bank.
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Post by Keithm »

Dividend up 6 cents. Quarter profit up but the stock is falling???
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