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Yes, all you say makes good sense .. I am eagerly awaiting the release of the half year results so that I can scrutinise them and make a decision then... We have had no update or information since August and the release to be made on Thursday will be able to take into accounts all trends and events 2 months into the THIRD quarter , so we should be given a more reliable picture of the overall situation as it now stands..
Some of your conspiracy theories of what is taking place in the background at this time, may well be true but it's also likely that we will never know for sure..
I can see why JB isn't on the board...with a 61% holding he can dictate events in the background without legal accountability ...particularly if he can unilaterally decide whether or not to reappoint directors ??
I think we have exhausted all possible agendas and potential outcomes and we now just have to wait until Thursday...I think though it's fair to say that you are more optimistic about the declared half year position than I am...I hope you are right..
I think the answer comes on two parts aw, if an offer is made then we have to hope that larger players go into bat to make sure it is as good as can be and we will be in their hands. The more difficult question is without any offer at what price would I sell in the normal course of events? I suppose that would be depending upon the rest of the market, the dividend offered here and the news flow/reporting from AMGO, why sell a good share if you have nothing pressing to do with the cash and have not spotted another opportunity? I suppose I will feel that I have done very well at anything over £1.50, I will review my expectations depending upon events here and elsewhere but for the moment I am happy to hold.
Yes it's difficult to see why those events, however unfortunate , could bring about such a huge drop in the share price. .The 50% drop on the 27/8 August was when the share came onto my radar because all other things remaining equal, the market reaction was surely overdone based on the 1st quarter results, but the slant on the figures within the commentary, combined with a declaration of the deteriorating outlook, I feel , caused the level of pessimism (whether orchestrated or not ) that occurred at the time
I bought at 74.5 pence expecting a bounce which didn't come...a ripple upwards to 80 pence brought me some optimism but subsequent drops to 56 pence made me desspondent, causing me ro conclude that there were other factors in play. .The lack of liquidity combined with selling dominance was sufficient to keep the price falling...this does seem to have gone into reverse now so will wait until Thursday results. Your speculation regarding behind the scenes events might well be true but I guess we will never find out .
I am not sure JB will want to join the board himself, owning 61% of the shares and voting power will give him all the leverage he needs to get his own way which includes deciding on the re-election of directors, but at the same time without being exposed to any legal accountability...
I am just hoping that all these factors will provide us with an escape route and an exit price of £1.10 would give me my target 50% gain, but under the circumstances with this share, I may run for the door if the price reaches £1.00, although if in the meantime a take over offer of more than these amounts materialise then I will joyfully take it...do you have a target price which will make you exit, bearing in mind your high numbers of shares held...?
Aw, I was thinking more of actions taken from over £2.50. Either a very unfortunate sequence of events something like:-
1. JB resign as Director
2. JB indicates the the market that he is inclined to sell - price eases off.
3. BoD suddenly decide to review business model and change the focus of the business - price crashes.
4. Various funds start to sell - price falls again.
5. JB decides to get back on the board.
6. Activist investor takes a 3% holding.
For the big crash at 3 surely a lot of shares would have had to be sold - the market unlikely to have just decided to mark it down so significantly on update but no RNS’s showing change of holding. Speculate that a major investor could potentially have sold substantially into the market from £2.50 and bought back at 70p ish - creating a pile of cash to then use to buy up the shares that they did not own. This would be generally against the rules but could work especially if it was all orchestrated over a short period. Or of course perhaps just a very unfortunate sequence of events that cost one guy £600 million? I am sure I don’t know.
Yes I do BB and it was this post which alerted me to that possible agenda, a theory which seemed to become more plausible with each sell off in the final twenty minutes of daily trading, causing a steady downward trend from 80p to 56p in just a few weeks...at one stage , I myself thought about liquidating , thinking there was some leaked story yet to emerge which would cause the share price to crash after the release of the half year results. . The last three days, however, have ended the day in positive territory ...hardly a confirmatory trend reversal but bringing an as yet brief respite of the previous steady declines....I think we just all have to wait until Thursday now to see what the half year results bring ..
Or of course aw, the drop and the takeover by the largest shareholder has always been the plan - you will remember my first comment about major shareholders using all means possible to bring the price down so that they can buy the co on the cheap - only a conspiracy theory but something to mull over - will not stop me holding or adding but as you say we await the half year accounts with interest.
Thanks BB for a comprehensive reply to all of my points and I fully understood all of it and concur consequently with the vast majority of it...
The only part that I have slight problem with is the price we are likely to be offered for our shares.. 39% of the shares or 185 million of them are held by minority parties (including ourselves) and a price of £2 per share would cost him £370 million to acquire these ....where would he find the resources to do that ..? His £1 billion wealth was mainly paper wealth based on the flotation price and we have already established that he has lost £600 million plus (again on paper) of that ...based on the current share price of 60 pence , I could see him being successful with an offer price of 90 pence per share which is still a 50% premium of where we are now. If the half year results aren't as bad as we fear and the share price leaps, then maybe an offer price could be increased to between maybe £1.00 to £1.20 max..due to the hinderance of likely future regulation...unless as you say, the company was taken offshore with activities continuing largely unimpeded..
Would be good to hear other people's perspectives, I am not sure we can take this any further now until the half year accounts along with outlook and future dividend intentions are published...Being a qualified accountant I am looking forward to reading these accounts and in particular establishing the positive or negative nature of the spin accompanying the figures, because this will be a major determinant of the direction of the share price following their release ..lots of different agendas on the slant that will be made .
I agree, we sit tight and hold or even as you say add more, based on the current 60 pence share price ..but as always DYOR..
Quite a bit there Aw but most of the answers come to the same thing. As small shareholders we will have little say in what happens next so don’t worry about it. I gave various scenarios of how things might turn out but each would first require JB or those working in concert with him to take up our shares - I think the activist shareholder spotted the opportunity and took a position for a swift return. They cannot be paid more than we are so our interests are almost certainly aligned. Remember that if JB tries to take over then he will not be able to vote on the deal providing the rest of us with more power - a lot will also depend on if the Directors (at the time of the bid) are in favour which reduces the % required to accept. I think the push will be towards £2. If our shares are bought out we have no further interest and will be free to invest elsewhere and whatever happens with AMGO will be nothing to do with us. I think the chances of the status quo remaining are slight but JB could replace the BoD and bring in a new team to get the SP back up and recoup his £600 million - I think we have to assume he is not happy with the turn of events. At this stage in the game our quickest route to profit is with a buyout but as I noted we are little more than spectators. I anticipated that the figures will be OK and progress will be confirmed in attracting new business but generally down on what was reported last year - I think JB has left it too late to launch an attack before then but it will be interesting to see if he votes against the reelection of any Directors who are up for renewal although if he is planning a buyout the rules may work against him. Look out for more RNS’s of people taking larger positions - I see no reason to be concerned or to sell - hold or add.
Thanks BB for your various scenarios...there are a couple of areas where I am unclear so perhaps you could help clarify them .
1..you refer to the worse case scenario, where we would be bought out and the company administered offshore to the detriment of existing borrowers....where would that leave us. ?? forcibly bought out ? and if so at what region of individual share price. ?
2..What do you think is the motivation of the new entrant and how do you think that will affect us ?
3..What do you think the chances are of the status quo remaining and the shares going back to their fair value and if so what do you estimate a fair value to be...what range ?
4...What outcome would you like to see happening ?
5...Finally, what are you expecting to see revealed in the half year accounts to be released next Thursday ?
Cheers..
Thanks for the comprehensive reply aw. The Woodford thing was a (failed) cut and paste it should have shown JB’s holding at 61 ish then Woodford at about 5 just for info.
Worst case, If the company were to go private particularly if its major shareholders were offshore then the regulator would be hampered in its control. The borrowers would potentially be exploited to just this side of what is legal - the company would in many ways have no one to answer to other than its principals - that is not strictly correct but I guess that would be the result. It would make a lot of profit before someone else came along to provide the service. We would all be out so we have no position or comment. Best case it goes private and everyone works to build the business back to the best it can be to resist at some point.
JB has lost £600 million - let that figure sink in - I would bet that he regrets his decision to have relinquished whatever control he had and all that is about to change. Activist Investors (offshore) either potentially willing to work with him or at the very least make a chunk of money have taken a position they may be working with other players that between them took up the other shares (below the notifiable 3%) that we know were recently disposed of by Invesco, we can also speculate that those still owned by Woodford are available - watch this space.
Putting all judgement aside I would prefer the new entrants to be determined to maximise the sale price - this is the most likely point to their involvement. If I was JB I would probably be pressing for a special or big dividend - shareholders will hardly complain but this has the other effect of leaving AMGO strapped for cash, with less options to defend itself (potential buybacks) and therefore more vulnerable to a bid. He could also vote against and therefore remove the board (remember the £600 million loss) and replace them with a team that are inclined to his view ( this would be my play). At the end of the day with his holding JB has all the cards, the new shareholders will try and leverage their position which is to our advantage and a deal will happen - I doubt that we will get over £2 but I am hopeful we may be close. Whatever happens next and these things rarely go in a straight line or along a predicted route I think for us as shareholders who have purchased following the drop, this is good news. All entirely my own speculation and of course something entirely different could be happening. ATB
Sorry...I pressed the post message button by mistake..
I will resume.......'an appropriate PE ratio of 12 or 13'. giving a prospective share price of around £1.80 to £1.95..
3...If, however, Amigo was still deemed to be in a growth sector (like eg Unilever) , then with realigned values and supporting actions , their share price could attract a PE ratio of around 22, placing an approx value on the share of around £3.30...
The actual share offer price in any sale, however, would be a different matter.
The current PE ratio is 4 indicating imminent demise, and the current yield of 15% supports that , with the majority of its earnings being returned to shareholders.
Yes lots of things going on in the background and hopefully the release of the half year accounts will turn speculation into more clarity..
The emergence of this active investor has lit a touch paper, no doubt seeking to benefit from the fire sale of Invesco's stake as their entry point..
I am found asking myself where does all this leave us. ?
Adding to your position at this time BigB may well prove to be a smart move...
BigB..re the 2 RNS's thanks, I hadn't spotted the RNS of the 21st..
I think the first thing that needs to be cleared up is the major shareholders...to my knowledge TRG owned 61.8% and institutional shareholders held around 20% and ourselves the P.I.'s held around 20% with an extension given to next October to raise this to 25%
Then with the sale of the Invesco stake the I.I's only held 10.72% of which Woodford held 4.99% of that..the emergence of a new active investor has raised the I.I. shareholding to 13.72% including Woodford, so that along with TRG holding of 61.8% comes to the 75% holding that you refer to , but I am not sure how you reached your holding of 75% for TRG and Woodford ??
These figures can be obtained if you Google major shareholders of Amigo and click on the FT tab where it lists them all as at 12th November, after the Invesco sale..
If we assume that the PI's still own around 20% then there is a 5% black hole..( of where the other investors are?) board members perhaps ?
The other point to clear up is that TRG no longer had representation on the board, I think this was announced around the time that they announced an intention to sell a 5% share...(at the date of this announcement I think the share price was actually £2.86). JB announced that he had made the decision to stand down from the Amigo board to pursue his other interests....after subsequently suffering a paper loss of circa £650m , I suspect he has subsequently regretted that decision , and as you say , is now seeking to recoup as much of this as he can...JB was actually once on that secret millionaire programme...He became a billionaire on the flotation of Amigo which propelled him into the top 100 wealthiest people of Great Britain ..if only for a matter of months..!! Don't know where he will stand now ...
The final thing to clarify my position on is the strategy of the Board and Amigos value in any sale...I read the actions of the BOD as simply trying to pause growth and steady the ship and take positive steps to avoid any punitive action by the regulators...the points I made about complaints and the implications of this are all evidence of the problems they were tackling..their actions in my view are neutral and designed to leave all options on the table for its future strategic direction ..
Finally what would be a fundamental share price value for Amigo in any subsequent sale ..?
Well to me it is dependent on how any prospective purchaser perceives Amigo's future ..
I estimate that the current EPS is around 15p per share..
1. If Amigo is seen as now in decline due to the nature and direction of future regulation , like eg Imperial Brands tobacco...then a discounted PE ratio of around 6 would be appropriate, valuing each share at around
90 pence..
2..If Amigo was deemed to be a steady state cash cow proposition , such as eg BP..(once the irresponsible lending had been ended) then an appropriate PE ratio would be around 12 or 13 giving a share price
BB I couldn't find much about this new investor MIC?
Ok, this has my attention now. It is unclear if TRG had any current representation on the board, if anyone knows for sure then please let us know. If he didn’t and indeed neither James Benamor or TRG are listed as insiders which could mean that he/they were not consulted concerning the actions and proposals of the board. For someone that has seen his wealth drop about £600 million (assuming £2 per share drop) then I can understand that would be ‘troubling’. The majority holding is listed as 61.36% so short of the 75% we have been using. If I were in his position I would be getting heavily involved here, the fall in the SP happened because the board determined if it wanted to keep on the right side of the regulator it would need to change the business model and put aside growth and profit. The market did not like this and the SP dropped by 75% costing JB £600 million - they must believe this to be a short term over reaction - he may feel differently especially as when the co was trading at £2.50 he had suggested that he would be prepared to sell ie take his money out of the market. He will not be happy and must be considering all his options to achieve the value he had only months ago. There is an awful lot riding on the BoD having made the right call. As a small investor who took advantage of the drop, I can see the logic behind their actions for the long term security of the business and of course of their presumably well paid jobs - you could argue that this has been at the expense of JB. I have already stated that for me I would prefer that AMGO realign and grow back into the 250 maintaining a strong dividend, I believe other short term action is now more likely and I expect that what I will end up with is a reasonably short term capital gain as the business is sold/taken private - now that activist investors have raised their heads I would guess £1 as an absolute minimum and £2 not that unlikely - but of course I am just guessing based on no more information that is available to you. Less than a week to the results should be very interesting to say the least - in the meantime I have taken my holding back to 160k shares and will probably add more. ATB
James Benamor Richmond Group Ltd Woodford Investment Management LLP Total 61.36%
I choose to look at the notification of an activist shareholder taking a position as positive. We cannot know their intention but we could speculate so I will. Activist Investors take a stake in the hope that they can maximise short term value of the SP normally via sale of the company or a radical change of direction. The Richmond Group (TRG) own 75% so whatever happens would have to involve their approval or be at their instigation. If we accept that as a given then in any deal offered to shareholders they would not be able to vote meaning the other 25% of the stock becomes the relevant shareholding or because of the way the rules work 25% of that figure which is actually a holding of 6.25% of the total. This figure is important as it means anyone holding 6.25% either as an individual shareholding or in concert with others can block proposed action from the 75% shareholder and puts them in a very strong position for a seat at the table. Still speculating of course but such a position would help to ensure that we (and of course those that have recently joined us at a very compelling price) get the best deal.
Time will tell but if my speculation is right or wrong the emergence of a new significant shareholder cannot be a bad thing, especially if we see then adding further, at the very least it will help us to understand why the SP may have been driven down whilst the market was filling this order. ATB