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Just catching up on todays RNS’s I see NFC have paid 10 x annual profits for M&C saatchi. A near 50% premium to the closing SP!
We get 36% premium. You can forget the VWAP as the sp has been distorted by the Ukrainian war.
So a 70.2p premium to the close. How long does it take to get that premium back?
Well if you just use the divi. In one year it pays 16.05p. In 4 years the divi hear based on the 10% year on year compounding as per policy is 74.49p!
So the divi pays the premium back in less than 4 years!
Then you factor in that the divi is 2.8x covered by cash! So that is under 2 years!
Ebitda was up 17% to $842m with a solid 52% cash conversion ratio! And we are/were valued at 1/3rd of EV!
Then you add in the 33m (from memory) for the Brazilian assset disposal!
And then factor in the energy macro!
This company is pretty much a cash printing machine!
It has been bought for a song! It’s an immediate ROI given it’s assets!
The biggest problem is Reservoir our biggest shareholder who clearly want a quick sale and the BoD that are around their finger! But you have to ask why.
It’s clearly back to private ownership because our UK markets refuse to attribute appropriate value to these companies. The BoD have tried and no matter what the SP languished as cheap!
They have obviously been under pressure to get value back for the major shareholder.
I have no immediate answer for it. That’s the job of the LSE but then it’s has to be a free market.
Not getting political as I have voted for them all at some point but I do think a UK sovereign wealth fund would help.
I am not a fan of windfall taxes on investors, like the muted energy tax, but I do think the government should buy strategic long term investments in companies, take an arms length position and distribute the dividends back to the country through in country investment. That reduces taxes and creates a better business infrastructure.
You look at the trillions in QE that have basically ended up as share buy backs or filtered to junk bonds and currency depreciation . That money could have had a meaningful home and the income used to build hospitals, refit schools etc.
Anyways, it’s my own a political view and another huge missed opportunity as our leaders of whatever colour seem to just have a short term view based on self.
And yes I guess by trading I probably don’t help. But I am self funded from pretty much zilch and the trading, which incidentally pays a lot in tax is a symptom not the cause.
A thought for the weekend!
Usual caveats
Trek
You're right about being sold cheap....can only hope someone puts a counter bid in.....still gutted about the sale but £3 a share bid would make it a little bit better......
Noted. Market just took the divi off of 4p.
Built myself a little excel to factor in the changes. Could be a well timed ‘9 dart finish’ here to make a few bob ahead of closure.
Those that follow the story will understand what I am saying.
Usual caveats.
Trek
Hi Trek, looking to perhaps buy some more of these. 9p a share more in November for any bought now. There seems to be some confusion over the Sept 9 dividend. Surely one will get this as well ? and then the 263 in November ? Some are saying a dividend is going to be deducted from the 263 ? Grateful for your thoughts as always. Best regards Sam
In the RNS dated 17th May 2022, shareholders who receive the 4pps dividend on the 10th June will receive a 1.59pps pay out and not 1.63pps. The next quarters dividend if paid will also be deducted from the price. So as a long term holder I will either receive 1.59pps or 1.55pps depending on timing?
Once this has been put to bed and I receive the cash into my account I will be putting the lot into LGEN for the 7% dividend, just a pity the dividends are nott paid quarterly!
Yep that’s correct. Furthermore, there may be a chance to add or buy back in to get any difference prior to completion.
Obviously you have to factor in spread and costs but there is decent discount atm.
Usual caveats
Trek
Thanks Trek, will be keeping a very close eye for the right entry point. Perhaps coming if 54 votes in ? !!
Phoenix i have held LGEN for a while now has been one of best holdings excellent divi even paid during the pandemic when everyone else was running for the hills....don't think you can go wrong putting you earnings from GLO there in my opinion of course....
Hi trek, would you take the dividend as cash or in extra shares ? I am down to a few thousand now but not quite sure what to do ? Most grateful .Sam ps loving phoenix !
I always take cash for any divi. So if you sell you don’t have a small position.
With cash you can top up your divi if you wish to reinvest and pick your price.
That’s just my preference not necessarily the best for all as I am an active investor.
Good luck with your investments
Trek
Appreciate that trek . Thank you. Have a great evening .Sam
Up to 2015 I used to take my dividends in cash and then look for opportunities elsewhere, however I then read the Intelligent investor by Benjamin Graham and changed to automatically reinvesting the dividends.
My ISA now consists 18 dividend paying shares, 14 of which are in the FTSE 100, I quite like waking up in the morning and there is more money in my ISA than when I went to bed followed by more shares in my stocks.
I am disappointed that GLO has been snapped up as it was a quarterly dividend payer, still I did make a realised profit of +49% in the 12 months I held them for. I sold out of GLO yesterday & bought into LGEN as I said I would in an earlier post, the reason being LGEN's price had dropped 8p from £2.64 to £2.56 so it wasn't worth waiting for another potential 4p divi from GLO. I still have the last GLO dividend to come on Friday which I will then reinvest in LGEN.
I can say in the last 6 years I have made more money sitting on my hands, drip feeding my existing equities and letting the dividend snowball effect take place than I ever did in the previous 10 years when I was stressing about daily price movements and the effect on my P&L.
Good luck all with investing your GLO cash!
All differing views help make a market.
I like quarterly payers as they tend to smooth out the divi, and often the SP doesn’t even discount it but those stocks are few.
I don’t like trusts, ETF’s etc as the costs eat into profit and I notice that the punters that push them on the likes of ii seldom account for the fees!
For bi-annually divi stocks it depends when you bought. Many have been flat at best over 5 years. Most have actually declined.
So if the charts are flat why keep your money invested for a whole year when it only needs to be in the market for two key periods of time.
You can buy ahead and time your exit after using the same cash to grab other divi’s through the year.
Also stocks are seasonal so why be in the whole summer when you can sell in March/April and buy back Aug for the majority of ftse100 interim divi’s you get the gist
That’s where my excel comes in.
With macro like it is, war, inflation, pandemics etc you don’t have to add in risk.
That said I trade higher risk AIM stocks in between.
I don’t trade everything some I hold a core and trade, some I just hold.
I certainly don’t buy the theory that time in the market is the best way!
But I do appreciate everyone’s circumstances and skills are different.
Good luck with your investments
Trek