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Questor Trust Bargains by Richard Evans in the Daily Telegraph - suggests share price is at a 90% discount under one metric.
Anyone aware of any reasons apart from the fact that there is a such a massive disconnect between the share price and the net asset valuation?
Posts made here are well out of date. Centennial in the portfolio has been on an uptrend. Energy up. Strong buy today.
RSE is the biggest shareholder in Centennial (25% of the company), which has dropped 45% from the peak and still going down. Unfortunately, that's going to be reflected in NAV at some point, along with the other holdings.
We've had the biggest drop in oil and gas for a long time over recession fears. Hugely frustrating for new investors into any O&G. When these new investors and seasoned speculators are done selling (including RSE holders) the share price here and in the sector will drift from oversold to fairer value. Tremendous value with RSE but the conditions need to be right for shareholders to benefit... so we wait and hold, sell or buy more. If things don't improve I don't know if we have the votes to liquidate the holdings and cash in on the discount.
RSE has also stopped buying back its own shares over the last few days as well.
One theory is that the listed energy companies have suffered lately; that's going to cause a drop in NAV.
Anyone any idea?
The latest NAV update to £11.40 and news around the Fertiliser investment tempted me back in here. The discount of 41% remains very large and the continued buy backs should eventually dent this. To be fair the uplift of NAV has widened the discount so I expect the market will eventually realise and catch up.
I expect that the rise is being being driven by the buyback - which has a long time to run yet!
doesn't appear to be any stop to the continual rise. "China’s Worsening Virus Threatens Commodities Supply and Demand."
"There’s also a flow-on risk for other commodities markets. Coal is China’s mainstay fuel and a key determinant of metals prices, which will only strengthen if the cost of production rises because of scarcity of the fuel".
Sale of Pipestone (which enjoyed an 80% uplift between September 21 and Jan 22) from $2.50 CAD to $4.50, means that £40m will be available for buy backs (£36m+£4m). At the current market cap (£289m) will buy back around 15% of current shares.
Net assets £512m - £40m = £472m. Assume shares decrease from 55m to 47.5m shares at a constant £5.34/share.
Based on current NAV £9.31 that will further boost future NAV (assuming price remains around £5 a share) to around £9.93
(i.e. £472m/47.5m shares).
That places today's share price on a 46.2% discount to future NAV (£9.93-£5.34/£9.93)*100
Astonishing discount, considering this has been tipped by Questor and has had a nibble of interest but as RussellSprout said people bought on the rumour and sold on the news..... so no wonder RSE have decided to continue buy backs. I've averaged up again today. Averaging up is a new habit of mine - if the fundamentals are there then back the winners rather than cut the winners and support the losers. It's a lesson hard won, but if you take emotion out of the trade then it's often the right decision to make.
GLA
Buy on rumour sell on news, perhaps.
Have to say, on the back of the rise over the last few days I fully expected this to go over £6.
Await results and news on the next buyback plans.
Market reaction is to stretch the discount to NAV back to over 43% (£9.31 cf current £5.26)
Bit of short term profit taking going on.
Quite hard to decipher the RNS but taking NAV of $682m / 549m shares = $12.41 ~ £9.31 NAV so an uplift of around 12% in 1 quarter.
Very positive aspects I'm taking from it is the "green" investments (i.e. the future) are paying off richly. Great result and oil has moved even higher since Dec 2021 - see my previous post on this - so extrapolating the NAV it is likely to be approaching £10/share.
A 30% share buyback is phenomenal!!!! I wish some other investment trusts would do this!!!!
RSE have 2 listed oil investments:
Pipestone - 30/9 $2.50 CAD - 27/1 $4.50 = 80% uplift of NAV component
Centennial - 30/9 $6.80 USD - 27/1 $8.07 = 18.5% uplift of NAV component
Meanwhile SLDP - Solid Power battery investment bought December 2021 at possibly $11ish dollars - 27/1 $6.75 so a 40% reduction of NAV component. That could be off putting but my thinking is this. This drop is in line with UK Ilika and other green stocks right now and perhaps they'll increase their holding to this or other beaten down green stocks as they have a large cash holding. They have invested in "green" for many years. Many green stocks are getting kicked due to the "bubble in growth stocks" yet have near term revenue - Ilika being a great example with its forecast Stearex revenues for 2022 - so the argument about discounting future growth doesn't really hold ..... in many cases "the future" is actually this year. Baby and the bathwater - it will revert in my opinion.
Believe other holdings are unlisted.
Profit takers already taking their 10%ish......
Yes, a very well analysed piece, supporting the buy recommendation... Atb
Please see recommendation in Questor column in Telegraph. I'm not a shareholder but I wish I had bought yesterday!
Interesting 8% bounce this morning
To rise much further over the coming months, should see £6-7 imo
GLA LTH The cash should be building up within its portfolio
You may have noticed this share on a "top performers" list for Investment Trusts for 2021. So does this have more stored energy in its battery for progress in 2022?
I am a PI who invested into this mid year so haven't benefited from the bounce earlier in 2021, but I have faith in this going forwards and these are my thoughts and thinking.
1. The discount to NAV remains quite big (circa 43% to NAV) albeit less than 12 months ago as the discount has closed (from over 60% - it was a 2021 top performer after all). The reason for this continued discount seems to be a lack of volume/interest.
2. RSE are actively buying back shares at a rate of about £0.5m/day during open periods to close that discount to NAV.
3. Around 80% of the portfolio is oil/gas investments, in the US. Some of these have been heavily written off and others are subject to partial hedged pricing so there's some cleaning up that needs to happen... and is happening from what I can see.
4. RSE use an ROI measure for each of their investments. Many of their oil are less than 1. But are increasing under the current high price environment. Given the current $70-$75 prices that some further upgrades are achievable short term.
5. Around 20% of the portfolio is in "exciting" ESG investments into energy efficiency, EV technology and renewables. These have achieved significant uplifts maybe 400% return on average and the proportion of ESG-friendlies is increasing month-by-month. Typically these sort of investments and ROI would be on a premium to NAV yet are on a 40%+ discount - tarred with the same brush. Also I'd say the investment managers appear to have a talent to get involved in value adding renewables projects and achieve upgrade multiples in their picks.
6. Of particular note is RSE's involvement in Solid Power's float. This has been brought to market via a SPAC. It's very (very) hard to ascertain RSE's holding, and potential but I believe it is (as a minimum) 1.66m shares @ $10/share (current price 22/12/2021) = £12m - in an exciting Solid State battery business also backed by BMW and Ford.
Look at this presentation:
https://ir.solidpowerbattery.com/static-files/11d0e8d6-2fd0-43a2-9169-f02d0bebe801
Overall this IT has "treaded water" for 6 months, but I believe it has potential. A growing ESG portfolio is undervalued and underappreciated. There certainly seems to be a talent behind RSE to pick good opportunities in new energy..... and have inherited some "stinkers" in old energy but they are working to make use of that legacy to move the 20% of the portfolio progressively higher towards making this more of an 100% ESG stock. Once it gets recognised as such then that should help it rate upwards.... most of its ESG peers are valued on a premium to NAV - and not a discount.
You are quite right Opulentia. Have to say I was expecting more of an uplift in the sp.
Onwards and upwards, its been a long time coming.
Today nice to see them getting back to a decent Sp level , with the price of oil and the renewable energy sector doing well I think this is a long term growth story , a decent uplift in the NAV too
GLA LTH let the buybacks begin !!!! Maybe future Divis too?