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If you look at other defence eg avon, serco, you will see they all spiked in the afternoon. Sometimes it takes an hour or so for the market to react.
We actually dropped below 13p just after 2pm so don't think it could be that imho
Capita spiked after 4pm so don't think that's the reason imho
Https://www.ft.com/content/a6f7fcb6-5580-4fa7-b16b-f7fc8bc650e4
Pretty certain defence spend announced today. All defence stocks spiked about 14 00. Capita does some defence.
OK, something seemed to get buyers excited. I've not gone overboard, but I've bought a few back
@Stumpy
My guess is RNS in the morning - this has looked a leaky ship for some time and exaggerated price action is usually followed, the following day, by an RNS.
Will be interesting to see what 0700 tomorrow brings (if anything)
No AimMaster, I have mentioned losing on that investment several times over the last few months (they are there for everyone to read, it they are that interested). Yesterday was the latest mention, that’s all. It represents about 0.3% of my portfolio. Of course it’s annoying, but also a reminder to spread your risk across a range of sectors and companies - and not to go chasing your loses in a failing business.
I bought a few back.
Price jumping? What's happening? Anyone know?
@rogueriver 'I’m 82% down on this train wreck of a company' that wasn't few weeks ago. It was posted yesterday 22nd April 2024 so it isn't 'old news'. Lol. imho
Not really, just accumulating! If your strategy is to put fix amount in what I called a dud stock and lose 82%. I guess any person on the street could adapt the sake strategy and hope it sinks or swims. No brain cells required, just a dart board with stocks dotted all over and buy in eh? Imho
Old news, AimMaster. I mentioned taking a huge hit on Mobico on these very pages a few weeks ago. What I haven’t done is to keep ploughing money into a loser. I generally put a fixed sum into a holding and then leave it to sink or swim. I’m sure many Capita investors wish they had done the same.
🫷defo not taking any investment tips of you rogueriver lol imho
Rogueriver is taking out his frustration having encountered 82% loss on investment elsewhere. Allow rogueriver to vent it out imho
RogueRiver - right now, under a Tory Gov, CPI is around 12.9p... Are you suggesting you're pleased with the current situation and fearful of that changing?
I don’t think there is any relief to be taken here at the prospect of a Labour government. Indeed, it would seem to be another risk factor. It is Labour Party policy to reduce reliance on outsourcing in local government. They would rather see councils following the example of the best in-house service providers and rolling these out wider. Of course, this may not happen when policy meets reality, but there are certainly no votes to be lost in ditching Capita. A Labour government might even see it as a vote winner toward the end of its first term.
Governments spend money based on needs of the public and or to maintain their standing globally. And they will find money in various ways. The services provided by Capita are essential and necessary and therefore the demand is very inelastic imo. Same applies to funding Ukraine war - tens of billions - because govt thinks it is necessary.
That said , there may be cuts possible , but not to the extent of derailing Capita, because of the importance.
Then again we are talking subjectively. Because Capita does not provide services just only to UK govt but also to other govts as well. Not only that, their customers include private sector businesses as well. if anyone has information of its revenue split between , UK Govt , Other Govts and the private sector it would be more useful.
Having a CEO of AH caliber, I will assume they would foresee these headwinds and endeavor to shift the revenue mix between govt and private, more towards the later. All IMO. GLA
This has been repeated for at least 4 years and if anything it keeps going down. It now seems to be pretty much as low as it can but it also does seem like backing a dead horse at times. Putting shares on Capita now is like gambling
Quite the opposite - the whole concept behind outsourcing is that it can be delivered cheaper. The economics stack up and rather than a reduction in the possibile opportunities, they will increase if anything.
I don't really get the long discussion here about labour government reducing profits. It cuts both ways. I don't think the government is currently being ripped off, so I don't see scope for them to reduce costs To me , the focus is the balance sheet and the debt. If this is manageable and the company doesn't go bust, which seems unlikely given the orders already booked, then the scale and spread of activities gives great upside medium term
Thanks both for taking time to post your thoughts, and I'm curious to read/learn more... hopefully some others on here will post their take/viewpoints too.
Assuming there are public spending cuts (this is not a given due to Labour's track record of tax/borrow and spend spend spend, also don't forget the new £800m AI/drone slush fund that's floating around and should still be there next parliament to fund things), then how would this work in practice?
Does the government refuse to honour existing contracts and demand suppliers renegotiate? That's possible but would be tricky legally and there's a risk CPI could just say "OK, cancel the contract we're withdrawing all our staff from site" with complete loss of service followed by redundancy which is tricky politically. Or would Labour just go straight to playing the nationalisation card? That's very risky for the UK PLC reputation and Starmer isn't Corbyn. Therefore, I don't see in-flight contracts as being at significant risk because of any government budget constraints.
For new contracts/renewals there will however obviously be pressure to reduce the price. If CPI was still run by JL then I would say there's a big risk here as he'd bid with no thought for the company long-term health, but AH knows how to run a company and he will only bid if he can still make a tidy return. This means CPI may lose some of their low margin contracts (assuming cost is the customer's only decision metric), but their competitors will then be at risk of running a loss-making service as they will inherit all the problems CPI had. Don't forget, those same competitors will also be feeling the pinch and will be under pressure so may just decide taking on an ex-CPI contract is not a sensible idea. Other competitors such as Fujitsu also have other problems to worry about.
From a CPI point of view, losing contracts can also be revenue positive - a) you TUPE all the staff costs (including pensions) off your books onto the new supplier, b) depending on office ownership there may be a debt/liability reduction or chance to generate rental revenue, and c) the new supplier pays you "handover" fees for knowledge transfer etc. I've worked on several contracts like this, and the final year profits from the transfer fees alone often exceeded the actual normal profit for the contract.
My view is that losing contracts only really becomes a problem if a) you are still stuck with all the costs, and b) your reputation is in tatters such that you can't win any new business.
As I mentioned above, the key here is that AH is in charge and not JL. I am sure AH knows how to run CPI much more effectively than JL ever pretended to. Or at least that's what I hope as I'm long on CPI - 1.4m shares at just over 17p which I stupidly didn't sell at 22p when I had the chance as I believed all the BS that JL was peddling.
At the end of the day you need to ask yourself which company is the market going to like more: The 3 billion revenue org making 1%, or the 2 billion revenue org making 10%?
@Savage
Certainly not too big to fail .....if it can't turn a profit (soon) then it's almost certain to fail ... as you can't keep losing money forever!
It's more that we don't need to win NEW contracts to survive (in a downturn) because we have a lot of business already contracted and being delivered! But is it profitable? Who knows? I hope it's profitable business but the market is expressing doubt!
Most companies live (or die) by the need to achieve short term sales forecasts (usually quarter on quarter) but the very nature of our signed, long term, contracts give us an element of stability (in a volatile world).
I just think the amount of signed contracts being delivered should protect us from short term volatilities.
"a lot of the stuff done by Capita has got to be done by someone / something " - aka the too big / too important to fail argument... wonder where we've heard that one before?... If cuts are demanded, then cuts there will be, all said imo of course and DYOR.