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Thanks for the short analysis. I don’t see Ashcroft’s vehicle buying. The only time he has bought was as a subscription to support a placing in Sept 16, when the business was starting to acquire. Like you say, I see this as a 3-4x return once markets recover and given mgt share options mature at £11.50+ in 2026. A 12x PE or 8x Ebitda has to be cyclically low, so just sit and wait I would say….
They (Blackrock and JPM) must think that an offer is unlikely, or they wouldn't take the risk. Guessing most big holders underwater here, so a low offer would not be accepted. If anything, it would be nice to see Ashcroft buy some cheap stock. I guess that is the shorters biggest risk, as it would be their stock getting bought! I think with computer algo's they would know pretty quick if the stock started getting bought in volume. My own theory is that short sellers sell and buy at the same time. i.e. sell for £5.40 and buy at £5.50. So it is costing them 10p per round trip per share. Probably only takes 100k shares per day to drop the price, so 100k * 10p = £10000 cost. However they taper off what they buy, so only buy back 80%, causing excess supply. (£8000 cost). After a few days all the appetite has been over come, and then once the bid is much lower they can then taper up to say 120%, and recover stock at a cheaper price. But there isnt really loads of stock available. So If Ashcroft started buying, they would know very quick, and react accordingly. Not sure now it works with 2 shorters, because really short 2 is helping short 1 close out risk free, and short 2 is taking the risk for short 1 and 2.
Having read up on this stuff a lot, I am afraid that the shorters are experts when it comes to fundamentals, and will have determined that this stock is over valued. Which it is given that the risk free rate of return is about 5%. I shall buy back my stock as long term the opportunity here is probably several 100%. Hedge funds are not long term investors however. This has to go below £5 IMO.
Lord Michael Ashcroft – 11,877,361 12.39%
Octopus Investments 7,095,362 7.40%
Capital Research Global Investors 6,747,178 7.04%
Slater Investments 6,034,759 6.29%
Abrdn (Standard Life) 5,238,816 5.46%
Mr Alexander Peter Dacre 4,683,846 4.89%
AEGON Asset Mgt 4,409,488 4.60%
Canaccord Genuity Wealth Mgt 4,321,740 4.51%
Fair enough. I also sold some at a similar level just to derisk but I still hold the bulk
JPM short starter pre Christmas. They just seem to top up at start of April
Do we think PE will ride to our aid here?
Thanks for the link. I sold my MRL shares around 570 due to the short. I see JPM have joined in now.
Will buy back, but this is going lower first.
Concerning to see a short increase last week. I had hoped that the rise in share price was due to one closing
Interestingly the recent acquisition was a competitive process so must have been a good target as Marlowe felt compelled to do it in a competitive setting (vs an off market deal they could delay)
https://www.hurst.co.uk/news-and-events/latest-news/hurst-advises-pcs-asbestos-consultants-on-sale-to-aim-listed-marlowe
Ok, thanks both. Are you able to share some of the names re the recent deals please?
I didnt realise this was shorted in December. After you mentioned the new short this week, I noticed.
I wonder if that is an old short covering, at Blackrocks expense. I am keeping a tight stop loss here, it could plummet next week. Sometimes, Shorts start by creating buying interest, that way they get a better price when they sell short.
I don’t follow or understand charting so I can’t help. All I’ll add is that it’s positive to see the share price go up
£40m of FCF for FY24 is compelling and shows we can delever the business (I just wish they would for 12 months)
Interesting to see a tonne of PE deals across all Marlowe verticals in the last two weeks. All at the smaller end but it’s testament to the attractiveness of these markets
Clearly a good reaction from the market, which is very positive. From a technical view, has broken through 50 and 100 moving averages and momentum now pushing upwards. If can go through £5.80 (support on the way down in November) then the 200 day running at £6.30 area is next target. RSI at 76 is showing as overbought territory, so could well get a pull back soon, before hopefully testing the 200 MA thereafter. Anyone have any more insight from the charts?
Not a fan… too much adjustments
Ha! Well I didn’t want to sound presumptuous by suggesting it was you!
That was me! Ha the debtors question and also the one about prioritising deleveraging vs hitting the target
I did ask a few others but they weren’t picked
Yes agreed. I know you have previously said that a P2P was an opportunity given how the market is currently valuing the business, so was interesting to hear someone ask in the Q&A whether AIM was the best place for the company. Was reassuring to have confirmation of this by the CEO.
I thought the presentation was good. Looks like there’s quite a bit in the tank in terms of cost savings and synergies
I was glad to hear on debtors and that there isn’t a huge issue there
Price recovered well during the presentation but the short linger
A good trading update and very assured presentation. Like you say, Goldenyears, future cash flow looks strong and excellent to see organic growth is accelerating, whilst working capital dynamics are steady. Very pleased with today, all told
Is up to £170m but we ended last period at £156m. This takes into account the £18m deferred consideration and £9m for the “small bolt-on” so strip those two things out and we produced £13m of FCF
I know some of this was NWC unwind but I think this does start to show the cash generation potential
We were also told at the last update there was £8m for restructuring costs in H2 so that would make FCF £21m
Not what we wanted to see at all
Really hoping there is some positive news on net debt and cashflow tomorrow
Pretty big volume today, in an otherwise weak market. UT at £4.85 today and looking positive as we go in to results week….
I agree re net debt. Consensus seems to be c£155m One point to add is that leverage should have fallen by virtue of ebitda run rate say c£88m - so 1.8x, falling to 1.4x mar 24. I don’t see capex much lower - surely they’ll keep their foot on the gas to drive future roce in this regard?
Overall I don't think we will see net debt down by a huge amount
From the investor call it was stated that there was another £8m of restructuring costs to go in H2 so even if we unwind the NWC outflow from H1 that is neutral
EBITDA should then contribute but interest has increased (analysts have interest rate at 3.5% so the diff not as large as i said below) but then we know we've done a few small bolt-ons (which I'd rather they hadn't atm - not saying they are bad businesses)
I wonder if capex will come in a bit less?
One item I will be watching will be debtors to see what impact we are seeing there and hopefully this balance hasn't increased (excluding M&A)
Agree with you Golden years. Actually, this has held its price quite well last couple of weeks.
Hope so! On a revenue and EBITDA basis we were ahead at H1 and management said they expected to be above expectations (only marginally though)
Obviously it’s the net profit that will be the factor here and interest rates at 4% are above the analysts notes which have 3%. While the market hopefully factors this we need to see debt coming down
If BoE hold rates next week that’s a positive for Marlowe. Really hoping bank debt is down
So with only a week to go before the trading update and 4 months since any newsflow, feels like even an ‘in line’ statement next week will see a positive move in the shares, from these levels?
?? so that’s what the software developers have been building!
Did the machine patrol dog Marlowe have built? ha
https://marlowefireandsecurity.com/meet-spot-the-robot-dog-at-the-carlisle-support-services-innovation-lab-event-at-manchester-central/?utm_source=rss&utm_medium=rss&utm_campaign=meet-spot-the-robot-dog-at-the-carlisle-support-services-innovation-lab-event-at-manchester-central