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FWIW, I also get the discount to around 50% given yesterdays net asset value. However, these are unaudited and I would take with a pinch of salt. Maybe liquidation would bring around $400m, which is around £285m given todays market cap of around £180m. Not sure the risk reward metrics make this compelling
Another telling quote, explicitly mentioning the trading price of the fund: "The Board is supportive of the continuation of the Investment Manager's modified investment strategy for the immediate future. However, the Board does propose to monitor the Investment Manager's success in repositioning the Company's existing investment policy through the modified investment strategy over the next twenty-four months. In the absence of a significant improvement in the performance of the Company, taking into account, among other factors, the trading price of the Ordinary Shares and portfolio performance over that period, the Board will seek Shareholder approval before 31 December 2022 to amend the Company's investment policy to provide for the managed wind-down of the Company."
I've been doing some further work and thought I'd share. Some current valuations which are known because they're publicly traded:
Centennial: $88.17M, CNOR: $16.66M, Enviva: $31.55M
= $136.38M
Since the quarter end they've invested in Loanpal: $25M, Freewire: $10M, DCRB: $10M, DCRN: 0.6M I'm assuming those valuations are flat.
Cash adjusted for those investments = $49.4M
They also own: Onyx: $53M.
So far, we're at 53+49.4+25+10+10+0.6+136.38=$284.38M. The current market cap is $252.38M
Now we have the "wild cards": ILX 3, Carrier 2 and Hammerhead Resources.
Bad news on ILX 3. They've hedged 60% of expected production out to October 2024 at $44 per barrel. If those hedges are still on then we've probably really lost out.
Bad news on hammerhead: They issued further equity in 2020 and REL didn't participate. That stopped Hammerhead from going bankrupt but diluted our share of the company and reduces our upside.
Carrier 2 seems fairly trouble free, albeit they're reducing debt rather than paying dividends as they have in previous years and they've hedged 45% of 2021 gas.
I'm pencelling in: $150M for ILX 3 (that's +15M since 2020 end), $30M for Carrier 2 (that's 2x since 2020 end) and $44M for Hammerhead (that's 2x since 2020 end).
284.38+150+30+44=508.38M NAV. 252.38/508.38 = 0.496 of NAV.
So it's trading at just under 50% of NAV. Seems attractive. But there's more. Quoting from the annual report: "The Company's independent directors are supportive of the continuation of the Investment Manager's modified investment strategy for the immediate future. The independent directors will continue to monitor the Investment Manager's success in repositioning the Company's existing investment policy through the modified investment strategy. At the EGM, the Board committed to review the Investment Manager's performance and, before 31 December 2022, decide whether or not it would be in the best interests of all shareholders to request an EGM to vote on a run-off of its portfolio."
In other words, if this thing doesn't pick up sharpish we're probably going to liquidate this sucker. Oil prices could fall sharply. Or the company's discount to NAV could get even wider! Ultimately though, I think this thing is a safe bet. It either starts rallying or it's going to liquidate and shareholders should get back at least £5.50 per share. Probably more given what oil is doing. This kind of discount is untenable. It'll close one way or the other.
By my calculations, the value of REL's holding of Centennial Resource Development has increased by about $65 million since the last valuation was published at the end of December. The stock is up 280%.
If we assume the valuations of Carrier II, CNOR and Hammerhead Resources have doubled (quite conservative IMO) then Centennial+carrier2+CNOR+Hammerhead+cash = greater than current market cap.
That's without including ILX III in Gulf of Mexico ($135M at end of December) or their two ESGish investments in onyx (53M) and Enviva (29M).
This thing has been a catastrophic disaster for investors and it's extremely unfortunate some of their holdings were marked to zero (went bust). They've also somewhat pivoted to ESG at exactly the wrong time but it's still got monster upside at these oil prices IMO. These holdings which are down 90% can double and double again.
Sort of depends how they handle their large stake in Hammerhead, sell off for what they can get and take a write down or persevere. However, it's hard to see how Hammerhead can exploit its assets given the Canadian Governments embargo on further development, or Biden's block on Canadian to US pipelines infrastructure.
Tones
This is a lonely board.
I share your thoughts, built a decent position a few months back myself, but nothing seems to move this share except share buy backs. I will hold for some action in the future. I like the fact that the big players here elected not to wind up and pay-out a few months back, so they clearly see something going forward. And most of them coughed up £10+ per share at the outset.
Russell.
should pop over £3 today the last few weeks the $50 Brent price has helped out immensely the assets are making revenue , NAV price will have increased
GLA LTH £4 target not too far away
Pushing ahead should see this push to £3
GLA LTH
Finish to the end of the week
Finally looks like it’s heading back above £3
GLA LTH have a great weekend everyone
late rise today, could soon be back above £3, which of course is still miles under the NAV
GLA LTH More tomorrow please
are the buyers returning??, cheap as chips
GLA LTH
this is massively undervalued , £4.46p NAV,
GLA LTH lets hope the share buyback kicks in again
looking like a move onwards to £350 could be a great time to add a few more
GLA LTH
250,000 shares Cancelled now were talking could be a bust week if this continues
GLA LTH £3.50 INBOUND!!!!
Slow is one way of saying it. £3k ! thats PI numbers
and so it begins, slowly slowly does it
GLA LTH
Share buy back should see this recover to around 350 over the next couple of months, still way short of the NAV at 4.25, with current oil prices, any improvement on the oil price will see it going much higher.
GLA LTH Very interesting !!!
Fingers crossed the NAV is far in excess of current SP. A further £19M of share buy backs should then push the SP over the previous recent highs
From RNS:
REL will release its Interim Report for the 6 month period from 1 January 2020 to 30 June 2020 on 19 August 2020. The Interim Report will include the NAV of REL as well as updates on the portfolio.
Will be interesting to see there calculated NAV and the plan going forwards
We should also get the quarterly update on Monday. Looking good here for a rise over the next three weeks at least back to the £3.60 level which was hit recently
Re rns about interim report (30th June) state that they had the intention to continue share rebuy scheme after the publishing of interim report. See as the sp as been on a downward trend whether it could cause a readjustment as previous seen?
I suspect people maybe suspecting that the reason that the buyback has been suspended is that the company has an inkling that the share price is close to NAV. If we are close to NAV that would be disapointing.
Why the fall? All due to the pausing of the share buyback programme? Are people concerned as to the reason?
share price looks to have steadied again after dropping around 15% ,some share buys and currently less selling