Shell: “Its Shell Investor Relations here. Have you seen the Chevron profit warning?”

Analyst: “No, I’ve been stuck in Kent by an inch of snow.

Shell: “Well you should definitely read it. Might be important”

Analyst: “You mean that if I was better at my job you wouldn’t need to call to point out a piece of publicly available information that I could have acted on two days ago? You mean that I ignored a direct competitor warning of industry wide margin pressure?

Shell: “Yes and goodbye”

Click

He was born Vasile Frank Timis in Romania in 1947. “I have no education. My father died when I was eight. He was outspoken against the Ceaucescu regime. He was killed in an underground mine. As he passed some dynamite, it exploded. It was a set-up. I have no doubt. He was murdered.” (There’s also a different reported Timis version, in which his father was shot by a Ceaucescu hit squad).

Timis and Watling mention his support of Sparks, the children’s medical charity and his investment in a company developing a more effective method of treating malaria. “The drug-running entrepreneur’ is just not true,” says Timis. “If I make a mistake, you can slap me, no problem. Then I’ll buy you a beer.”

Stock remains inexpensive in our view: Aviva is trading modestly below our FY09e MCEV forecast of 447p – this is despite our expectation of a 19% operating RoEV for FY10. We also believe that the dividend yield is attractive at 5.8% (FY10).

Where we could be wrong: The biggest risk to our view is that the benefits of Aviva’s ongoing restructuring take more time to show through in the numbers given the near-term weak outlook for top-line growth.

Risks
Key risks to our recommendation include fluctuations in commodity prices, especially gold and crude oil, along with the GBPUSD, USDFJD & AUDUSD.

The bottleneck of money being forced into an ultra low supply of prime assets is spilling over into secondary stock, but drivers of low currency and bond yields are temporary side-effects of quantitative easing. Property needs debt and occupational demand to prosper and there is a shortage of both. The rental recovery for larger prime London offices is at risk, we think, from the UK exporting financial service jobs after the Pre-Budget Report’s (PBR) ‘City super tax’.

Post QE, a currency recovery may price out overseas buyers, and gilt yields rising to 5% would make 6% real estate look expensive, in our opinion. Real estate returns risk
hibernating until rents recover, with the next cycle defined by the behavior of the banks. A tighter regulatory framework and post bail-out sensitivity in an election year could see the disintermediation of banks from real estate pricing, with both debt and equity expensive and rationed.

Global REIT markets rose 50% in the six months from April. The UK majors, however, have given back a cycle’s growth with dilutive (to those that did not participate) right issues, degearing at the bottom of the cycle and missing the ‘QE boat’. Access to public equity defined the survivors, not REIT status, with the savvy companies broadening their sources of capital e.g. Simon Property Group and SEGRO unsecured bonds; Unibail convertible
bond.

The REIT ‘brain drain’ to start-ups continues. Big brand names: Mould & Vaughan; Brown & Leslau; Walton & Alford; Hugill & Butler; Hussey & Jones; Jones, Beresford & Stirling et al, specialise in making money, not benchmarking. We think business model specialisation will displace scale, which, after all, did not protect the sector ‘supertankers’ from the crash.

These now risk being demoted to sector ballast for long-only funds to reweight the sector around a central portfolio of real estate ‘alpha capture funds