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Barclays, ‘the cheapest bank in the world’, draws investors
Private investors snap up Barclays shares, while a few high-profile fund managers move in too.
Bargain-hunting private investors have snapped up Barclays (BARC.L) shares since the bank was exposed for manipulating inter-bank rates, according to data published by stock brokers.
Barclays, which last Wednesday became the first bank to be fined over the rigging Libor rates, was by far the most popular ‘buy’ among shares snapped up by TD Invest clients in the week ending Monday 2 July. It accounted for nearly half of the top ten trades recorded by the company, with a buy:sell ratio of 4.7:1.
Platform Selftrade reported the same trend, with buys of Barclays shares far outstripping any other. Barclays was also the most popular share to sell, but with less than a third of the volume of ‘buy’ trades.
Several high-profile investors have already spoken out in favour of the shares in recent days.
Lee Freeman-Shor, manager of the Skandia Best Ideas Fund, which itself invests in portfolios run by ten managers, said two of these sub-funds had been buying in Barclays, seeing the fine as a ‘one-off hit’.
‘There are many positives in that the stock looks to have been oversold – as seen in the way the share price rose on Diamond’s departure. They are also already dealing with the US and UK regulators which is a sign that the process may be contained,’ he said.
David Cumming, head of UK equities at Standard Life Investments, told Citywire how he remained bullish on the banking sector in spite of the Barclays fine, pointing to low valuations and a positive outlook for the company.
Hedge fund manager Crispin Odey has been topping up his existing holdings in the shares, according to Reuters. ‘It's the cheapest bank in the world’, said Odey, as he bought another £10 million worth of shares at around 160 pence on Tuesday.
However, other longer-term sceptics of Europe’s banks, like Mark Burgess of Threadneedle and Henderson’s Stephen Peak, have reiterated their doubts. Barclays faces big problems: the scaling back of Barclays Capital, the investment banking division that former chief executive Bob Diamond used to run; exposure to Spain and the troubled eurozone; and the threat of legal action from investors over the Libor fixing scandal.
Oriel Securities says the shares trade at just 0.4 times book value but downgraded the bank to 'hold' from 'buy' this week, saying the negative factors 'will constrain a rerating'.
The shares were little moved when the joint fine of £290 million from the US and UK authorities was announced, but then fell sharply the following day. They are down some 15% since the notice of the fine during which time chief executive Bob Diamond and Chief operating officer Jerry del Missier have both resigned. Shares are now trading at 165.6p and have lost three quarters of their value in the past five years.
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- Lee Freeman-Shor
- Skandia Best Ideas fund
- David Cumming
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