Temasek’s investment in Barclays: A lesson in bad timing

Peter Stein
Wall Street Journal

How much did Singapore’s Temasek Holdings forgo by selling off its Barclays stake too early?

People familiar with the situation say the state-owned investment fund sold off its entire stake in the U.K. bank, booking a loss of about $850 million. Most of the sale apparently took place in December and January.

Since then, however, Barclays shares have been on a tear, jumping more than fivefold from the low point on Jan. 23 amid the global stock rally of the past few months.

That means Temasek almost certainly would have recorded a much smaller loss, at least on paper, had it sat on its stake a bit longer.

Just how much smaller is hard to pin down.

News that Abu Dhabi investors have sold down their stake in Barclays has sent the bank’s shares sharply lower in recent days. But the close of 259.75 pence at the end of Wednesday’s trading in London still would represent a 75% jump from the weighted average in December, and a jump of more than double the weighted average in January.

Even if Temasek was lucky and managed to sell all its shares on Jan. 12 at 184.60 pence, Barclays’ closing high for the months of December and January, it still would have lost out on the 40% rise in the share price since then. That is about 112.7 million British pounds, or $184.7 million, left on the table.

There still is much that is unclear about the deal. Based on those weighted averages for trading in December and January, Temasek’s loss on Barclays should have been much larger–as much as $450 million higher. Maybe Temasek managed to sell off enough shares at higher prices before and after the December-January period to mitigate its losses. More may be forthcoming in August, when Temasek is expected to release its results.

Temasek came under fire from a few Singapore lawmakers recently for offloading its stake in Bank of America at a loss of about $4.6 billion.

Given how well Barclays share have performed since Temasek decided to cut its losses, it will be interesting to see if this part of its portfolio rebalancing proves as controversial.

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