Bought to open AV
Bought 1000 shares of Aviva (AV) at $11.84. Total cost including commission is $11847.99, or $11.84799/share.
I expect to wait for valuation to approach 1x BV, which implies about 40% upside from here, or $16 - $17. Coincidentally (?) this happens to be the range in which it has had the most volume during the past 2 years.
ATR(10) is $0.30, implying a stop around $11.50. But in this case, I feel comfortable giving the stock a fairly wide berth. I would accept a challenge of yesterday’s low ($11.11), and even a further drop to $10.30. Below that, the upside wouldn’t warrant further risk.
I expect to hold this position for at least 6 months, if not a year. My main concern is that it achieves full valuation. The obvious near-term potential catalyst would be a “remain” vote in the UK, which would likely propel the pound and this stock higher in the coming two weeks. Still, to achieve full value will take time. And if the UK vote is for “leave”, it might take several more months for bearishness to dissipate.
This is a top UK life insurance company with excellent operating performance, a 6% dividend yield and a very low 0.6x BV valuation. The stock has been on the defensive this year, as fear of “Brexit” is hurting in particular UK financial sector firms, and Sterling lost value vis-a-vis USD. I think this is an opportunity to buy into an excellent franschise at a deep discount to fundamental value.