I am well aware that I am likely to be blogging to an audience of one, that is, myself, but if any CEOs happen to be passing by and no longer want to be blind regarding their IM upcycles then all that needs to be done is for the CEO to register an interest with the nice people here at LSE via email@example.com and then they will forward that interest to myself.
Empyrean Energy (TIDM: EME) EME has reported a fresh reserves report for the year ending 31 December 2014 which has evaluated its main asset – Sugarloaf – in Texas and even with the recent decline in oil price, the reserves report still suggests that Sugarloaf has great future potential, with proven reserves (P1) having a net present value (at 10% discount) (NPV(10)) of ~12.8p per share.
Technology moves fast; for consumers and stock market scrutinizers it can be difficult to keep up. Experience over the past twenty years has taught investors to maintain a close eye on industry developments, company news and sentiment...
This morning's update showed 4.0% growth in retail sales compared to June 2014, but fell short of expectations. Economists had been predicting a number 0.6% higher. However the domestic consumer is starting to spend again - driven by lower prices (store prices, including petrol, down for the twelfth consecutive month and 2.9% lower on those assessed a year ago), rather than wage growth. Consumer confidence and spending is set to improve further over the next year as the domestic job market warms up and employment insecurity abates. Clearly the Bank of England's Monetary Policy Committee (MPC) is aware of this, and is making noises about the prospect of raising interest rates 'sooner rather than later' (perhaps in early 2016) to counter the anticipated rise in economic activity and inflation (given the lack of slack, or capacity in the system, and the 'lagged' effect or delay for inflation to emerge in the official statistics).
Following on from last week's article, which highlighted investors' use of high beta stocks (to play an expected rebound in markets, which appear oversold or undervalued) or low beta stocks (to provide insulation against an anticipated fall in markets, which appear overbought or overvalued), the prospect of using other financial instruments to capture wider market moves prompts this blog.
Against the backdrop of higher volatility, and a roller coaster ride, in the UK equity market over the past three weeks, a number of newspapers and financial commentators have highlighted the merits of 'defensive' shares. These are typically companies who operate in non-cyclical industries, where demand for their product or services is typically stable and inelastic, like the electricity and water utilities, pharmaceuticals and tobacco. However, such businesses tend to be priced at a premium to the overall market, and appear rich especially compared to more economically sensitive stocks, because of their perceived resilience to a downturn. Certainly, if one believes that we are about to experience another recession in the near future, then paying up for such firms can make sense.
Genel is an upstream oil and gas business, owning significant resources in the Kurdistan region of Iraq. Coming to the market 4 years ago at £10, followed by 24 brokers hoping for further corporate action (overwhelmingly positive, 22 are Buyers and only 1 says Sell), the company has made impressive operational progress under ex-BP CEO Tony Hayward. Today, as he steps up to chairman, the company announces a trading update which emphasises the difficulties posed by a lower oil price and a difficult, ISIS-impacted, geo-political landscape.
'Proclaimed as the most radical, political budget in recent memory, today's announcement was also significant for investors in property and company shares. The Chancellor sought to raise more tax from a number of areas which had not already been flagged by the Conservatives as 'being safe from further hikes' in the recent election campaign. So, while the front page of tomorrow's newspapers are likely to feature the introduction of a £9 per hour living wage by 2020 and personal money columns might focus on higher household and motor insurance premiums - a relatively soft target, as IPT rises from 6% to 9.5% - this article is more interested in the proposed (have to be ratified in a Finance Act) changes impacting dividends and mortgage relief on Buy to Let property.
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