The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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further insight to the Square -Afterpay acquisition
https://mtcapital.substack.com/p/square-sq-x-afterpay-asxapt
''..Afterpay acquisition has a twofold effect on Square as a whole. First, they will be able to leverage the strong Network Effects of Afterpay to gorilla glue their two business segments together. Second, they will be able to expedite International Expansion while also increasing the distance between competitors, both within the BNPL space and beyond within the US.
9.0 Conclusion
In summary, Square is a behemoth of a business that has only been made stronger with the addition of Afterpay into its ecosystem. With a Seller-focused segment that has yet to experience serious competition, Cash App bolstering strong customer adoption and sticky associated use-cases (P2P money transfer, investing and spending) and Afterpay cementing Square as a bank of the future with its exposure to a fast-moving payment method that is taking the world by storm, it is quite easy to be a Square shareholder.
https://twitter.com/surprised_trade/status/1474143028604542982
Research points and an in depth view of Square, that provide an insight for all TSL holders...
https://mtcapital.substack.com/p/square-inc-sq
''....Cash App Pay will allow consumers to pay with their Cash App accounts at participating Square Sellers. Though reliant on the extent to which consumers are willing to forego their credit cards, debit cards etc. to use the cash app ecosystem instead, this poses a very interesting opportunity for Square. When combined with the Afterpay efforts, this proposition is only further strengthened...
...Square’s undeniable value to sellers, the series of efforts they have embarked on in order to continuously spur growth in both of their main business segments and the attempts they are making to benefit from closed-loop payments. It is an exciting time to be part of everything Square is doing.
Square is at the top of the Fintech industry for a reason. With two strong business segments growing larger by the minute, there is a lot to like. In addition, with the Afterpay acquisition in mind, my opinion and conviction is only strengthened. ''
That's what has been bugging me. The valuation of 125, as per current market values becomes 82 or thereabouts. The current market valuation of 56 is a deep discount to NAV. There are now some risks in recent posts which folk have kindly posted. So becomes a judgement call on whether the risks outweigh the discount.
My take on it for what it's worth: folk are upset that TSL are not getting 125 in cash, they are getting the 82 in Afterpay shares. But if one thought the current sell off in BNPL is overdone then it makes sense to take the shares - particularly if you thought the BNPL market is going to grow (pretty strong growth to date from what I can tell). So thinly traded stock like TSL - some will have sold as they cannot bear the 'pain' of losing anymore money. When all the 'upset' folk with holdings have sold out then seems reasonable to expect price to go back up. Course the other view is the board are a bunch of crooks and want to run off with all the loot into the sunset - but what's that opinion based on - I cannot see any facts that suggest that. I think it was interesting the MMs narrowed the spread recently ie suggesting the bears are probably about done. Anyway time will tell, but when there's blood in the streets and all that ... tends to pay off if you can handle it. So personally I am going to hold and see what happens. If the SP goes below 45p and shows continued weakness that would make no sense both fundamentally (based on info I have now) and also technically. At that point I'd need to reconsider.
Hi Redeye, I think you'll find Julie asks a member of the board to answer her question. So I just assume Surprised isn't a member of TSL's Board?
The disparity of peoples' expectation "valuation of £125m" and reality (of the market) is of course the answer to her question. It doesn't need a member of TSL's Board to answer that. *All* BNPL listed companies have suffered a drop in sentiment - and price. This isn't just a drop in TSL, pro rata it is moving with the market. But... demand for BNPL continues to grow and I see it as having a bright future. People have got emotional about TSL (evidenced here by disappointment and anger on this message board) and sold up - ignoring the bright fundamentals and valuation disparity that I, and others, have recognised (TSL is way to buy SQ at a 30%+ discount to current market price)
Secondly I agree with Julie that TSL will not hold SQ long term. Either we will see a sale and return of cash to s/h or possibly some sort of transfer of those shares pro rata to shareholders (I see rounding as being problematic to doing this?). But the wind down will take 2 years as we are continuing to earn profits on the wind down...... the attractive buy price based on the fundamentals is the key point here.
GLA and a happy new year to fellow holders who, literally, think smart.
Regarding them de-listing, this would require 75% approval. Cant see that being voted for if the deal is poor as suggested. There is also currently 14% held by funds, which would most likely vote no to a bad deal.
Interesting! The remco (remuneration cttee) is comprised of two independent non-executive directors. So there is some governance in place to guard against overly generous remuneration, and of course the legal basis.
25. Related Party Disclosures of the results to 30.6.21 state that remuneration for all key personnel was GBP 423k. So if 50p became 30p that would mean their remuneration would need to jump to about GBP 20m. Given the governance in place, legislation etc that seems quite unlikely to be approved (and if it did, would carry reputational risk for the independents?). Admittedly I have an unwise amount of knowledge in this area so could be absolutely mis-reading the risk. If so (again!) where am I going wrong?
Hi Redye , I see you stated you had sold out at 58p, time will tell us all and good luck.... I stand to be corrected but I dont think Rosy has asked a question...... I think you may mean it the other way around as I posted below - ''hi Rosy895....and what are you doing with your shares ?''......no answer yet as you state :-)
Why not just answer Rosy’s question,Surprised?
Succinctly put Barnet...
Why anyone would trust this board now is bewildering!
What you are missing? The mkt has lost confidence in the BoD and now worries about whether share holders will be stitched up and end up with something like 30p. The rest of the money being kept in the company which then delists. The directors then increase their remuneration etc. the mkt is looking at the rns in early December that suggested the fall to 80p was overdone when it is now 52p. The expected pay out was over 110p minimum. No explanation why the directors agreed to a cut price deal or whether they have been offered a new position in the buyer. No clarity as to whether the directors will vote themselves a substantial cash bonus and so on. So the mkt is nervy and is not impressed. Buyers, even at 50 pence, could end up with significant losses. Directors of a company that will soon be gone or delisted …..esp where they intend to retire….can lose interest in shareholders. Not saying this will happen at all of course but it will not be the first time by a long shot and they will be nothing whatsoever you can do. An accountant/ solicitor will sign off the deal as reasonable and you will get what you are given. I saw this as being very low risk but now? The risk is much higher and all these discounts being mentioned are just guesses in a situation where we all think the deal done was not great. The current price looks cheap if the directors can still be trusted.
Thanks - where does the Bank of Spain come into it?
With Montarello owning about 30%, he has quite a vested interest in getting a reasonable deal.
There are never any guarantees, but this seems like a reasonable risk/return play to me. Probably with hindsight I will wish I had put in 10x as much, but in my view risk management comes first - I don't know what I don't know!
" what am I missing?" That's what have been asking myself for days now!
some discount for the APT/TSL deal not completing
some discount for the Bank of Spain not playing along
some discount for the Block/APT deal not completing
some discount for TSL illiquidity
some discount for the time value
some discount for not knowing 'precisely' what TSL will do post receipt of Block shares (Yes, I know they have said they will return excess cash to shareholders but we don't know how much that will be and when)
But now standing at 40% discount to potential NAV seems somewhat excessive...
Put simply, the deal price values TSL at about 85m GBP, the current market cap today is 56m GBP. The deal is pretty much all of the value of the TSL. So even if Block falls by 30% (say) from now until deal done, this (what am I missing?) would all be headroom due to the bit selloff of TSL.
For technical folk, there is support at about 50p on the chart. Could it be that's why the SP seems to have sold off more than it should?
Anyway I just loaded up on 25k of shares, with a spread of about 1.5% (I think it was 3%+ a week or two ago). Seems a no brainer - what am I missing?
Hard to see where another surprise comes from now. At this level, surely an easy 20-50% upside to be had? Downside risk from this valuation seems minimal? ????I’m back in.
hi Rosy895, ...and what are you doing with your shares ?
BTC up 2% today - $47500, heading back toward $50k and the 50MA, which most are saying will be very bullish.
Block out of the Blocks also up 3% today still trading near to the TSL deal price, currently $166.
From Block Q3 Shareholder letter:
In the fourth quarter of 2020 and first quarter of
2021, we invested $50 million and $170 million,
respectively, in bitcoin. As an indefinite-lived
intangible asset, bitcoin is subject to impairment
losses if the fair value of bitcoin decreases below
the carrying value during the assessed period. In the
third quarter, we recognized a bitcoin impairment
loss of $6 million on our bitcoin investment.
As of September 30, 2021, the fair value of our
investment in bitcoin was $352 million based on
observable market prices, which is $203 million
greater than the carrying value of the investment.
The accounting rules for
bitcoin will require us to
recognize any decreases in
market price below carrying
value as an impairment
charge, with no upward
revisions recognized when
the market price increases
until the sale of that bitcoin.
30th Sept, BTC was trading at $43800, so up around 10% at todays prices.
TSL - Let it low, let it low, let it load up.
In June 2021 tsl had a valuation of clearpay as £125 million. 6.5 cash and other assets were not included in that calculation therefore 70 odd million is way off. Secondly there is absolutely no evidence that the board of tsl will hold the block shares for any length of time to make up shortfall. Tsl are winding down operations. I would like someone from the board of tsl to clarify these two issues. History and state of company doesn’t suggest anything positive in this regard . I would be more than happy to be wrong and if I am why has share price plummeted . The share price explains it all. If people thought it was good news they wouldn’t be selling.
IMO, the shares in Block have a lot of upside, so its not hard to see the total TSL assets here north of 100m fairly quickly. If things go well this year, a SP target of £1.00 is not unreasonable. This is my only Fintech and Crypto exposure, happy to buy at a discount with little downside. I dont think there is much to discuss about Ned or TSL anymore, I think the discussion should be all about Block.
The average broker consensus for Block is $290. Even the lowest target is above the current SP.
https://www.wsj.com/market-data/quotes/SQ/research-ratings
Q3 Financials for Block
https://investors.block.xyz/financials/quarterly-results/default.aspx
' the Consideration Shares equate to a value of ?78.1m which, together with the ?6.5m of cash and other assets equates to ?84.6m '' ...that equates to around 75p as it stands....current mcap is just ?55m at 52p
Hi Rosy...with respect, are you holding your shares through the transfer to Block shares or selling your holding ?
....the figures are clear re value as per rns ----'' the Consideration Shares equate to a value of £78.1m which, together with the £6.5m of cash and other assets equates to £84.6m '' ...that equates to around 75 as it stands....current mcap is just £55m at 52p !
...and if as you repeatedly post the bod sell at a low price that would be contray to the rns as per----- ''We believe this outcome provides our shareholders with an opportunity to continue the exciting Afterpay journey now directly with Block and we as a Board see continued long term value accretion with this outcome."
maybe the bod will keep the Square shares, add value as the rns suggests over time and clearly there appears to be a value gap from current figures of 53p to 75p .....add in the potential for a forward look and increasingfurther value in fintech, bnpl and square's ambition to develop there may be some substantial upside ahead as per the rns
Tsl sold 90% of clearpay for 1million afterpay shares on 23aug 2018. On 24 aug 2018 they sold 750 afterpay shares for 20aud . Feb 2019 sold remains . How short sighted this was! They are now underselling the remaining holding in clearpay with no indication how quickly they will sell block shares.
Carcosa61 Thankyou for clarifying the Ned position. I had read the presentation and not realised that it is only from Clearpay.
Had it been from TSL that would have been quite troubling. Much happier. Will re-read later. Is this every one else's understanding too?
https://twitter.com/surprised_trade/status/1474143028604542982
56p..current sp equates to mcap of just £59m....the Square/Block deal translates on current prices to #TSL mcap of £85m, sp approx 75p+ ...looks like a value gap to me
The NED resignation is from Clearpay, not TSL
'They'.. TSL (?) have never owned a single share of AfterPay so they never had any opportunity to sell anything since they never owned a share.
'...why sell afterpay holding so quickly'. I think you mean ClearPay. Because they had little choice, The Put/Call option was not that far away and a change in ownership of AfterPay opened the door to an immediate sale. The deal is sweeter now that the ESOP shares are being fulfilled by further AfterPay shares. If you did mean AfterPay shares, well TSL have yet to receive them; but they have already inferred they will await receipt of the subsequent Block shares
TSL have already indicated under what broad criteria the they will sell the Block shares. (See the original RNS deal announcement)
interesting couple of weeks upcoming....some will sell like Rosy895 and others will add/buy...it's what makes a market ;-)