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“I think that is such an odd statement... the market values the company...”
Possibly poor wording on my part chips. If you include the sentences that followed in the paragraph however, I think I’m pretty much in agreement with you.
I was just trying to make the obvious point that the open market price at a given point in time does not necessarily truly reflect the underlying value of the business. Which is basically the reason why a lot of us are here I guess, we think this share is currently undervalued given the fundamentals.
RH
'' very much look forward to your thoughts!''
No need to look forward, as I can tell you my thoughts now.
They are that Saga currently has a Market cap of about £200 million and that in the past it has been a great deal higher. All crystal clear to me.
I think that you are all discussing the old chestnut of the circular square differential.
Price, value, worth, and cost can all result in differing figures to differing people at differing times.
I'm looking forward to Rox's chart, since he produced a valuable, often referred to, table over on Aston Martin after all their shenanigans.
Beware Rox, within a day of you pushing it out on here, you'll have 17 differing opinions. Just from 5 people!!
"I also don't disagree that the market currently values the company at 146p per share."
Poker - I don’t think that statement is odd at all (at least in relation to stocks which don't have a pitifully low share turnover). I think the MARKET itself is odd at times, often irrational, generally not well-informed – otherwise you wouldn’t get so much share price volatility.
You mention the, perhaps, 99% of Saga holders who aren’t trading their shares because they think they’re worth more than 146p.
But what about the even larger number of POTENTIAL holders, who currently think they’re worth less than 146p, and are therefore sitting on the sidelines for the time being?
It’s the actions or inactions of the totality of these players and potential players that make the market what it is.
Existing shareholders can sit on their shares as long as they like, but if there’s no one out there who wants to buy them, their belief that their true value is greater than the current market price will prove to be misplaced.
I don't believe that is the case with Saga. I genuinely believe the shares are currently undervalued by an irrational and ill-informed market, but will be in increasing demand over the coming months as the market wakes up to their true value.
"I also don't disagree that the market currently values the company at 146 p per share."
I think that is such an odd statement..."the market values the company... " ...it is all rubbish really.....IMO
The " market" is merely the tiny % of shareholders who are deciding to buy and sell the shares at the current time, for which an agreed trading price currently stands at 146p ...the remainder of holders (a high %) believe the company to be worth much more than that....hence they are not trading their shares...)..
146p is merely a trading price at present ..at one brief moment in time... and let's face it...the current buyers and sellers are more or less just following each other lead and direction , whether buying or selling...they arent doing so based on any preceived belief of the "value of the company" ...
Hi everybody I’m new to this share and very much looking forward to getting to know you all better.
My take on this is that the money raised in this particular case is to pay off some of the debt and keep the Company afloat so is not to be used directly to calculate the share price. We can argue all day about this because of course Saga is worth more with an extra £150 Million in the coffers but it also has almost twice as many shares now than it had previously. All we have to work with is the share price and the number of shares to draw any sort of comparisons between now and before dilution.
I am busy producing a table that will hopefully help makes things clearer.
I will try and get it ready for you to look at tonight and very much look forward to your thoughts!
LTI - yes I don't disagree that the 495 p claim doesn't stack up based on the numbers. I'm just trying to understand the effect of the dilution and cash raise myself, as I'm invested here.
Smorty - I also don't disagree that the market currently values the company at 146 p per share. However, I think the wider point is that the market doesn't always assign the correct value to a company. From my perspective, based on the numbers and the pre covid profitability of the company, this is good potential recovery play.
Does this include the £150 million raised in the consolidation?
Yes, minus £10m costs.
SumOverHistories, it's all academic now, however the market cap is only c£200m ATM.
LTI, I guess most private investors who had a previous interest here have taken advantage of recent events. I've made a few bob here in the past.
This intervention by Hann has hopefully done us all a favour. Onwards and upwards.
Saga is currently worth just over £200 million, 146p per share to a shareholder.
Does this include the £150 million raised in the consolidation?
I think its all acedemic and pretty abstract but if pre cosolidation Saga was worth 33p with 1122m shares £370m. All things equal the net assets are now £140m higher so its worth £510m but dilututed by more shares at 12p and rdhs average of 18.1p so 2100 shares divided by £510 = 24p a share. All acedemic completely. The 33p has been and gone and we were not privy to the conditional or speculative terms. This is a play on covid and imho a steal for newbies. Manged to masively average down but need 19.4p old money £2.92 to break even. That gets me back 21k a lot for me and i do think its doable as not much more than RdH needs £2.71 to break even
SOM
373p is not 495p which was the figure that was being questioned resulting in a number of posts.
Saga is currently worth just over £200 million, 146p per share to a shareholder.
tfe
Yes, some people get carried away about valuations.
I thought that the open offer shares represented good value and obviously any further share purchases I have made since along with some SB's, but the realism is that the market currently only values Saga at 146p per share. I am optimistic though that cruising can get underway considering that a 15 minute C19 is supposed to be available.
Thanks, TFE. The before and after issued share numbers are exactly what I was looking for. I concur with your 86% increase calculation.
Obviously, as has been previously pointed out, a company is only worth what someone is willing to pay for it and the previous 33 p offer is now essentially irrelevant. However, just for the sake of argument, if you accept my logic of adding the £150 million raised to the £370 million valuation at the time of the offer, then you have a market value of £520 million.
If you then divide the £520 million by the post rights issue number of shares - 2,093,921,536, I think you are looking at approximately 25 p per share old money and 373 p per share new money (the 25 p multiplied by 15). The 25 p is a good number really, because it is very similar to the 27 p that Mr Haan Man paid for his premium allocation. Perhaps he was thinking along similar lines to this with his valuation?
I can hear the calculators going :-)
LTI, I know you are better with figures than me, I'm just trying to put some realism into some of the comments on here.
TFE
I also have previously pointed out that a previous offer cannot be equated to 495p per share.
As I have said, that offer is completely irrelevant anyway.
I am sure Saga would be worth a lot more to a new bidder if there was a guarantee that cruising could get under way in several months time as opposed to being told that it won't happen for the foreseeable.
I've only ever questioned the constant posting of the 33p offer is now 495p, which takes the value of the offer from £370m to £693m.
I've said nothing about the perceived value of the company post the cash raise.
SumOverHistories, figures used.
Issued shares before capital raise 1,122,000,000
Issued shares after capital raise 2,093,921,536
Additional shares issued
971,921,536
Issued shares after consolidation 140,000,000
All approximate.
As far as the previous offer for saga is concerned, that was made at £X.
That offer is of no relevance today.
You would only know what a new offer would look like if it came about.
5 for 9
SOM
I haven't looked into the increase in share count, but the open offer was a 3 for 9 existing but the placing of new shares was not entirely made up of the open offer. For a start Den Hann purchased new shares for 27p?
Not when the £1 mil goes into the abyss that is saga.
If a company is worth £370 million and then raises £150 million in cash, then surely it logically follows that the value of the company has increased to £520 million. 370 + 150. The cash raise is of course good for the balance sheet of the company, but at the expense of existing equity holders who see their holding diluted.
Quick one for you TheFarEnd - you say the rights issue added 86% more shares. Is that correct? I've been trying to understand the extent of the dilution myself, and I was under the impression that it was a 5 to 9 issue. In other words, 5 new shares issued for every 9 existing shares, which I don't think adds up to 86%. If anyone can clarify this, it would be much appreciated.
MC 204 SP 146 204/146 = 139
MC 370 / 139 = SP 2.66
First prize goes to TheFarEND for paying attention in class.
If someone was willing to purchase a company for £1 million but it was rejected and subsequently new cash was put into the business totalling £1 million you would expect that the previous willing purchaser would have to offer in excess of £2 million to have any chance of making the acquisition.
An explanation would help Pianista.