Although usually no divi for a year would often be taken badly by the market. It must be remembered that the divi cash is being used to buy property. Therefore an asset, which will save the company £200,000 in rent alone each year. More even, when the expansion is factored in. That's why I think the market will look more favourably on the idea. Any contracts signed in America could even make up for the divi.a lot here to look forward too. Hope you can still pick up a few cheapies.GL.
You may well be right re. funding from future profits. Any withdrawal of reduction in any dividend would not be viewed as good news by the market, usually that leads to a drop in the share price; but maybe I misunderstand you. I agree with your views regarding the Naked Trader. He has been and continues to be a very successful investor/trader and is book "How anyone can make money trading shares" is well worth a read. I have found that I have sold too many of my shares on what has turned out to be a temporary blip, but wasn't sure how big a blip it was going to be. It may be the case again having sold my main holding in ECK. I suppose I have been trying to find some middle ground between the Naked Trader and Jim Slater. Lets see what the future brings. ECK still on my radar to up my holding. Good luck and regards CM
I think with regards to funding. They may decide to fund it with future profits. Still 8 months away, so plenty of time. It could be funded from the 2015 dividend. Hence no dilution and i think the investors would appreciate and see the sense in that. Thats the route i would take. With regards to the naked traders advice. Selling once shares are 10% down. Buying in and spread costs can come close to that figure alone on aim. I much prefer jim slaters advice and principles. I think option two is more for capitol investors. While the naked traders option one is more for traders. I think its far easier to make profits for capitol investors rather than traders. Each to their own though. Main thing is that ECK continues to grow and it looks like that is going well, so the sp will continue to rise imho. Once the first American contracts start rolling in, the sp will rise significantly imho. Still looks a good buy, to me. Best wishes and good luck.
Good evening Agema. I was taken aback by the amount of todays rise. I had an opportunity to buy in at sub 39p early on but hesitated. I couldn't see how the RNS would have such an effect on the share price so have continued to sit on the sidelines. The RNS states: At the end of the current lease in March 2015, the freehold to the premises will be acquired for £2.9m. A deposit of £0.4m is payable immediately and will be funded from existing cash reserves with the remaining £2.5m to be paid upon completion in March 2015. Options for funding the remaining consideration are currently being explored. I am a little concerned about the final sentence, "options for funding the remaining consideration are currently being explored". Hmm. It sounds to me that ECK don't want to use further cash reserves which they may have reserved for any acquisition or investment in the U.S. Maybe they will approach their bank for a loan. More likely imo there will be a fund raising by way of the issue of shares, probably to existing institutional share holders. That may also cover further investment in the U.S at the same time. How much would they want to raise?. Lets say £10m, that would be the issue of 20,000,000 shares plus at todays value, around 10% of the shares in issue. That could possibly dilute the existing share price. But this is sheer speculation on my behalf and is based on just a feeling and nothing more, thinking out loud if you like. It is difficult to read the markets at present. I could see no reason for the fall in ECK share price last week or so. I have 2 conflicting opinions I am trying to work with. Opinion 1 is that of Robbie Burns, the Naked Trader, who would say that if the share price falls by 10% then sell regardless, although I believe he gives a little more lee way for the likes of AIM shares. Had I taken his advice I would have sold at around 43p. Opinion 2 is that of Jim Slater, author of the Zulu Principle who would say that if you have invested in a good company meeting most of his strict criteria, then stick with it whilst the story remains unchanged. That would have meant I would have held my shares in my main account and not sold. Generally I look to sell at around the 20% fall. I still have a (much) small(er) holding in ECK and will continue to monitor its progress or otherwise and keep my options open. Good luck and regards CM
ECK looking to buy their Hemel Hemstead head office for 2.9 million.
22 Jul '14
Thanks for the post LM. You can get a months free trial to growthcompanyinvestor if you go to their website, growthcompanyinvestor.co.uk. It enables you to look back at all their articles and recommendations etc. I have found it to be profitable over the last 2 or 3 years or so. Regards CM
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