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Both BEG and RFX are in the UK Shares “beaten up over the last couple of years” large bucket - far, far wider reaching obvious reasons than the ringfenced performance of individual stocks.
Topped up here today.
Encouraging to note todays RNS for Begbies Traynor which fleshes out the impact that interest rates have for business insolvency. The share price in BEG fell but it rose for RFX. Possibly because one if corporate facing but the other consumer.
Both SHOULD be thriving in these difficult days. After all, business failures are up (at my last research point in the summer) by 13% and there has been another couple of interest rate rises since that time. Shares have been slow to rise in both companies.
Comment in the IC this week.
“Although Ramsdens continues to outperform analysts’ earnings expectations, prompting another round of upgrades post results last summer, the shares are only priced on a forward PE ratio of nine and offer an attractive prospective dividend yield of 4.9 per cent. A price-to-book value of 1.3 times is modest for a cash-rich company generating a post-tax return on equity of 17 per cent and one that is performing well during a cost-of-living crisis. Liberum’s target of 290p is more than a third higher than Ramsden’s current share price.”
In todays business section on the BBC, the lead article comments on the report by Begbies Trayner, (I do own a few shares in BEG still) of company failures rising. With the price of gold rising in response to Middle East, it mitigates any slowdown in foreign exchange over winter months. The cost of living for many remains problematic.
Rich62
I have found it interesting in the last week or two asking my stockbroker what the price and most especially the size the market makers were prepared to deal at because as you know this is not a company where you can usually do a deal in more than ten thousand shares with in being a small cap Aim stock. If the price remains this low I will add to my holding as funds allow.
Hi SheffieldOwls - I think you are right.
It looks like Otus have simply sold shares in order to return monies to private investors who have withdrawn from their funds. The haphazard nature of their selling suggests this - if they simply planned to "trim" their investment in RFX (as it had become too large in value for the fund size, with the share price increasing over the years), they would have sold one big block of shares in the summer at the highest price and when liquidity was better following H1 interim results RNS.
By selling in smaller batches as the share price fell, ironically Otus have actually significantly reduced the value of their current 9.61% holding. Like shooting yourself in the foot...
I would imagine the fund manager must be frustrated with the private investor withdrawals forcing his hand to make these sales.
I have benefited in the last week or two from an institution selling shares in Ramsdens hence I have been able to buy Ramsdens shares in size so I now own over 2.1% of the company. In recent days. Several people on this board have recently speculated why an institution has been selling shares at such a low price. I have been in contact with several people about this matter and I have been advised that sometimes fund managers on AIM have fund liquidity issues and sometimes they sell performing shares as they are easier to sell. Another reason why some institutions may sell Ramsdens shares is because of overweighting in a fund because in the last two or three years Ramsdens shares have increased in price while many shares of companies on AIM have fallen.
Rich62
Thank you for posting this interesting information about the share dealing of Otus Capital.
Had a quick look at Otus Capital's holdings of Ramsden shares;
- First declared RNS was a 6.19% share block added on 8/12/17, as part of a 9.5m share placing at 165p.
- Increased holding 9/7/21 to 10.07% - share price at this time was around 181p.
- Further added 24/1/22 to 11.38% at around 175p.
-Finally added 10/2/22 to 12.31% at around 178p
Started to reduce holdings after June 23 interims:
13/6/23 - sold approximately 120,516 shares to take holding to 11.93%. Share price at this time around 257p
Sold 2nd batch before pre-close trading update.
1/9/23 sold approx. 313,978 shares to take holding to 10.94%. Share price around 220p.
Sold 3rd batch following pre-close trading update.
18/10/23 sold approx. 421,809 shares to take holding to 9.61%, share price around 200p.
Probably not much to conclude, other than they haven't bought at the bottom (IPO was at 100p, CV19 lowest I recall was 70p) and not sold that many at top of the market either (272p in the Summer), which is strange if they planned to reduce?
Certainly they have taken some profit on the share sales and also some decent dividends along the way.
However can't see them selling at much less than 200p when their average purchase price must be around 175p, so that would put a base on the share price.
But why reduce now?
+ Ramsdens are on for record turnover and profit this year, so its hard to see why they have reduced their position in the last 5 months. Unless its concern over a slowdown in sales on watches / jewellery or FX for travel. Not much else surely?
+ Pawnbroking side should be growing significantly in current macro climate i.e. cost of living crisis and we know Ramsdens used the lockdown period to move shops to better positions in towns with more footfall and have recently opened more stores, including in the South.
When Otus first bought RFX company shares at 165p, company was turning over £40m with pre-tax profit at £6.31m. Despite the CV19 lockdown and other stumbling blocks along the way, revenue this year should be over £80m (H1 was £38.99m) and last RNS told us that they would make more than £10m profit. So in essence business is now twice the size it was when they first invested at 165p, but share price is only 25% higher...
Perhaps I'm overthinking it and they are just trimming their position and need to money elsewhere for another opportunity??
It does look like this fund manager has not finished reducing its shareholding in Ramsdens because I was speaking to my stockbroker this morning and the market maker I have been dealing with in recent days is still quoting a price to buy further Ramsdens shares in a size of 50000 shares on the touch screen which is quite unusual in terms of the size. It is my understanding that the seller is offering shares to the market maker in tranches of 50000 shares. I agree with Rich62 that it makes no sense to be selling Ramsdens shares at such a low price.
Rich62
I totally agree with you but I am pleased about it as it allowed me to purchase a further 100000 shares from the market maker early this morning actually too early in the morning for me as I am enjoying the sun here in Florida.
RNS = Otus Capital reduce holding to 9.61%.
Truly bizarre reduction. Would love to speak with the Fund Manager and understand his reasoning for this?
In common with you, sheffieldowls, I too am rather bewildered that the market cap in this, and for that matter in BEG has declined during what has all the hallmark makings of a bumper time for each business. My holding has been considerably reduced in BEG but I have added a few shares in RFX over the last week. Not, I hasten, to the exposure that you have but nevertheless have added.
RFX does pay a dividend, but my portfolio is structured for capital growth and any dividend thrown off is a bonus. Always better to buy on statue days and sell on pigeon ones.
Rich62
As I see it private investors are not under the same time pressure as some institutional investors if it does not move much in price in the next year or so its fine by me as we are going to receive a decent dividend. It also gives us the opportunity to buy further shares at these low prices when our funds allow us to do so.
Thanks for information SO - that's a great haul of RFX shares you've got there!
Also at a fabulous price.
I started to buy again for my ISA when they dropped back from 272p in June following results. Thought I'd done well getting in around 228p average..doh!!
Since then I've added more from 190-200p in my trading fund. However if I had more funds, I'd add even more at the level you've been buying at.
I really don't understand the funds trimming positions here in the last 6 months; unless its purely to cash in to pay back private investors withdrawing from funds due to general market fear / needing cash for day to day expenses / just wanting to put in bank and get 4% interest??
Whatever reason, RFX pricing is clearly an anomaly and the guys running this business are shrewd operators. I have emailed queries before and got answers back within 24 hours and also watched presentations etc.
Very comfortable sitting on a decent sized holding (for me!) here.
Rich 62
I was amazed this afternoon that there was a big seller of these shares so I stepped in and purchased over 156,000 shares. I cannot understand why any institution would want to be unloading Ramsdens shares at below 210p a share. I spoke at length last week with Peter Kenyon because my dividend arrived in the post ten days late. He is speaking to the registrar with a view to holders of the shares in Crest receiving the dividends electronically rather than relying on the post to receive them on time. Peter is very shareholder friendly by the way as he has answered a number of my E mails since I became a shareholder a couple of years ago.
Great work SheffieldOwls on the buy!
I know having read posts here before. that you know this business well and obviously spot the value here.
Its just a waiting game. Eventually tide will turn and I think there will be a bull run into Xmas on most UK shares. Some of the AIM shares are currently at daft prices / earnings multiples like RFX. The City boys know this and keep shaking the tree and / or supressing share prices to add more quantity. Value will come out here, its just a matter of time.
I just find the irony that private investors generally wait till others buy and pay much higher prices; rather than seeing clear value / a bargain when its in plain sight!
Rich62
Sadly that somebody is only me as I recognise that the price is a steal at these levels so I could not resist increasing my holding. I would have preferred to have paid just two pounds a share as Karen paid last week but as you know the price has moved up this week.
Someone is buying 10k blocks at 208-209p. Hopefully the overhang will be cleared soon ready for price to start moving up again.
Agreed Rich62. Soooo undervalued and I'm sure others on here noticed the article on the BBC website last week of the increase in the use of pawnbrokers. A sad story but a positive one for those invested here.
7500 shares bought at 200p = a bargain for an astute NED
Nice summary and agree on all points Rich.
If you don’t mind, I believe it’s also worth bolting on the managements forward looking statement from the RNS.
“While the economic backdrop is challenging and Ramsdens is not immune to inflationary cost pressures, particularly energy and payroll, the Board remains confident that Ramsdens is in a good position to continue its positive momentum into the new financial year underpinned by the Group's proven and diversified business model, strong brand and clear growth strategy."
So also some confidence from the top, going forward.
Just a summary of this week's Year End (to end Sept) trading update:
+ FX revenue up 8% v last year.
+Jewellery revenue up 20% v last year.
+ Pawnbroking loan book up 20% v last year. This part of business up to record revenue of £10.3m
+Precious metal buying up 50% v last year.
+ Opened 8 new stores and acquired a pawnbroker in Bexleyheath.
+ Profit before tax to be more than £10.0m (last year was £8.4m, so 19% increase in profits)
Now here's the weird thing - the business is worth just £64.0m (31.7m shares at £2.02/price per share)
That's with no debt and in the summer they declared £5.5m net cash holding.
Having made more than £10.0m profit in the year to end Sept 23, surely this is hugely undervalued??
p/e around 6x
Paid out 9.6p total dividend per share in last year (so that a return of 4.75% at share price 202p)
A screaming BUY, surely!!
Not my post on gold, but agree with you!