I have ridden this piggy on a number of shorts for some time, basically based on the odd behaviour of the management (Particularly the doggo loving ex-Chairman Vernon Hill).
I have to admit I have been nervous about continuing a short position and actually got out quick on my last position and adopted a long position on Friday 15th November 2019 at 207p, it has been a nervous few days, as I was questioning my senses.
So I think this is a risky punt last week, I still do now, but the Bank wasn't bankrupt or in financial trouble, so the price will only fall so far, until it is perceived as good value (PE is presently 6, low for the Uk banking sector which has recently had a surge in interest).
Why Go Long:
- firstly Vernon Hill hasn't been viewed as the best person to run the bank, but the company is actually good, no debt (£2.2bn cash), makes a profit (£27M), good systems (10% Operating margin).
- Customers generally say the bank is a good bank to use, with 4 stars on trust pilot. "https://uk.trustpilot.com/review/www.metrobankonline.co.uk"
- The Vernon Hill left in October 2019 and an Interim Chariman Sir Michael Snyder was appointed (upstanding bloke with good connections).
- Since early September 2019 the share price has struggled to get past a price of 220p, a couple of times it has hit around 240p and 270p based on Takeover rumours.
- Takeover rumours are rife, but sometimes there can be some truth behind them Lloyds Bank is supposed to be interested, as is RBS and possibly HSBC .
Today it has burst out of the doldrums based on another rumour with some large £50K+ purchases on level 2 backing them up and sitting at 231p roughly 10% up since 12 noon, it could be just another false indicator of a hedge funds positioning, who knows.
I am using a 30p point trailing stop loss with this idea as I couldn't say where the limit will be, as Metro Bank ( MTRO ) was trading at 1734p at the start of the year and 600p in June 2019.
So if I get stopped out I can always jump back on the train at a later date.
SL was 20p, with get out quick at 10p.
I will probably review this stock again in the month, to see if my opinion has changed or updated.
The big funds are still adding to their holdings, but I haven't been back since to the share, I'd milked it enough.
Personally there are better opions in the market at the moment duew to Coronavirus.