Member Info for 1GW_

Decided to bank the profit on one of the Crest purchases at 529p, but can't bring myself to buy back the Tef side of the trade just yet.

And on the other hand, I might prefer to have a more balanced Crest-Tef split going into the budget in case one wins relative to the other in any changes. At the moment I'm very skewed towards Crest so there's an argument for unwinding at least some of the Crest-Tef trade before the budget and perhaps putting it back on afterwards and before the Tef results.

Seriously thinking about it. Both sides of both Crest-Tef trades in the money, however briefly and for whatever reason. But as with my Tef sale before a sudden drop a while ago, when I failed to buy back in before the climb back, I find it quite hard to reverse a winning trade when it pays off very quickly. In this situation I think part of that is, notwithstanding all the signposting that Tef have tried to do, I have some concerns that the market could react badly to the YoY comparisons in the 1H results.

Sorry, having read Josh's post and looked again at my analysis I think I have to withdraw most of my post. I was misunderstanding what strictly was doing with book value.

"Instead, I go from balance sheet to balance sheet, taking the book value per share each time, and adjust for dividends paid - this in my view gives the real EPS and everything else is just a sales pitch." Strictly - so presumably the main difference between your "real EPS" and the reported EPS last year was due to hpi? So the revenue shows "windfall" gains due to achieving sales prices ahead of book value plus "normal" margin? And this "windfall" feeds into eps of course. So your measure ("real" eps) tries to adjust for windfall gains and losses, presumably on the basis that they will even out over time? But if you take the view that instead of evening out over time there is an underlying trend of house price appreciation isn't some of the "windfall" effectively real sustainable earnings? And it will tend to be realised more by those companies who leave sales to later in the cycle (and so capture the hpi) rather than those which derisk and sell earlier in the cycle? I wonder if there is an element of mix/volume as well. Crest has consciously increased volumes and moved up the asp scale in the last few years (more family homes, fewer flats). I wonder if this might produce some "genuine" earnings not captured by your divi + book value delta measure - although not 100% certain about this without further thought. There is one "funny" in the case of Crest which is that it was forced to take a fair value provision on its book value in FY2009, the depths of the crisis. What this meant was that in the following years Crest's book value was effectively much lower than its competitors post the provision and this then showed up in relatively higher margins and (reported) earnings. This impact has been running off over the years as the land on its books in FY09 has moved through to sales. By FY16 of the 26.7% gross margin, only 2.0% was still due to the fair value provision, according to Crest's full year results presentation. This compares with 17.7% of the 27.5% gross margin in FY10.

Some you win, some you lose. I actually felt encouraged by the Crest update when I saw it (and before I saw the market reaction), so I've doubled up and sold more Tef to buy more Crest. Down to a pretty small holding in Tef now.

ArthurTurner - I presume your post relates to shares "promised" to R1 under the tender and support agreements? On 14th September, R1 made a 13D filing acknowledging that it might be deemed to have beneficial ownership of 31.9% of YuMe shares as a result of these agreements. They footnoted it with the following statement: "Beneficial ownership of 31.9% of outstanding YuMe Stock (as defined herein) is being reported hereunder solely because RhythmOne (as defined herein) may be deemed to have beneficial ownership of such YuMe Stock as a result of certain provisions contained in the Tender and Support Agreements (as defined herein) described in this Schedule 13D. Pursuant to Rule 13d-4, neither the filing of this Schedule 13D nor any of its contents shall be deemed to constitute an admission by RhythmOne that it is the beneficial owner of any YuMe Stock for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the �Exchange Act�), or for any other purpose, and such beneficial ownership is hereby expressly disclaimed. The calculation of the 31.9% beneficial ownership is based on (i) 11,189,230 YuMe Stock beneficially owned by the Subject Shareholders (as defined herein) that are parties to the Tender and Support Agreement, dated as of September 4, 2017 and (ii) 34,696,961 YuMe Stock reported outstanding as of August 31, 2017 (as set forth in the Merger Agreement referred to in this Schedule 13D) plus certain restricted stock units and options of the Issuer vesting or accelerating, as applicable, in connection with the Transactions (as defined below) for an aggregate of 35,039,976 YuMe Stock issued and outstanding for the purposes of this Schedule 13D. "

I've sold some more to fund a purchase of more Crest Nicholson ahead of their TU on Wednesday.

stt - aren't there fairly strict rules around making profit forecasts and projections during takeover periods? Do you think it would be ok for them to put an analyst "consensus" number in an SEC filing just ahead (hopefully) of launching a formal tender offer? Especially when they made a point at the General Meeting to say that they did not provide "guidance" to analysts in terms of the numbers. And indeed, is there indeed a current analyst "consensus" number for R1? In the full year results presentation they were using the Bloomberg consensus estimates as of May 2017. Is there an updated number in Bloomberg?

Nothing to do with forgetting stt. I was pointing out that there was actually some news (at least to me) in last night's SEC filing. That filing doesn't quote any Quantcast numbers does it and in any case Quantcast numbers are publicly available on a daily basis. I could also have mentioned that they give the detail of the Pixalate rankings as well. So for anyone who hasn't been able to (or hasn't been bothered) to ask Pixalate for the detail, they can see it on slide 13 of last night's filing. It seems to me the invalid traffic metrics (GIVT and SIVT) are looking better these days.

Forgot to quote the source given by R1: Source for Rankings: comScore US Display Ad Ecosystem, Media Metrix, September, 2017. Link to filing presentation: http://d18rn0p25nwr6d.cloudfront.net/CIK-0001415624/25ba086d-3588-4cc5-b600-0b0f8408810c.pdf

In apparently trying to score points on here with a bit of a throwaway comment I made about the financials slide, STT has forgotten to share with this board the more newsworthy (IMO) item from yesterday's R1 presentation filing. On slide 12 they quoted the September ComScore numbers: 1. 201m uniques, 91% reach: Google Ad Network 2. 190m uniques, 86% reach: Yahoo Audience Network 3. 174m uniques, 79% reach: Conversant 4. 166m uniques, 75% reach: RhythmOne 5. 162m uniques, 73% reach: RadiumOne This is the first time I have seen the details of ComScore since the June rankings (when R1 were 5th and RadiumOne were 4th). So personally I found it reassuring to see that R1 are in 4th position without apparently any contribution from RadiumOne which is separately in 5th. Even with the significant overlap that must exist between the 2 sets of uniques, I would have thought the combined R1+RadiumOne reach could easily be challenging for 3rd place.

STT - I think my 8th September posts in this thread still hold water in terms of a theory about why the price of YuMe is still falling don't they? i.e. there's still an arb there and so we still have the conditions for the vicious circle downwards that I suggested might happen then. But clearly there could be other theories, such as general lack of confidence in adtech following some poor results.

And for anyone wondering about the sequential fall in net income from 2Q actuals to 3Q guidance, YuMe explained it as: "As I mentioned a moment ago, our quarter two adjusted EBITDA outperformance is a result of some of our profitable accounts increasing investment in quarter two. While we expect this dynamic will result in a modest sequential adjusted EBITDA decline in quarter three, we believe that measuring the combination of quarter two and quarter three adjusted EBITDA on a year-over-year basis is the best analogue for comparison." Extract from SeekingAlpha transcript: https://seekingalpha.com/article/4097329-yumes-yume-ceo-paul-porrini-q2-2017-results-earnings-call-transcript?part=single So I guess the more optimistic of us might hope that that 2Q outperformance actually carries through into 3Q rather than being compensated for, or at least isn't fully compensated for in 3Q.

"Despite the arb (short 1R, long Yume) Yume sp is still falling, now at $3.86 and looks like lowest sp for 6months... even allowing for divi, given the growth and profits announced previous qtrs, it's still surprising to see the Yume sp dropping so much, isn't it?" STT Although I have been buying YuMe principally as a "cheap" way of buying R1, provided the merger goes through, I do think it is an interesting recovery play in its own right. It has had a change of management following the proxy fight and has produced 2 quarters of bottom line profit (US GAAP Net Income) with a forecast of 2 more quarters to come: 1Q: 3.5c/share (US GAAP net income per share, diluted) 2Q: 12.5c/share 3Q: 0.6c-4.5c/share estimated* 4Q: best quarter of year ** * based on guidance of $0.2m-$1.6m net income for 3Q and assuming 35.3m weighted average (diluted) shares ** "We continue to anticipate positive net income for each quarter this year, with the largest contribution coming from the fourth quarter" from 2Q results webcast So if I take 2.5c as a mid-point estimate of 3Q and 13c for 4Q, that would give a total of 31.5c earnings per share for 2017. And that is bottom-line profit and on a diluted basis. $3.86 share price vs 31.5c eps would put it on a p/e of a bit over 12, which seems to me not bad for a recovery/growth play on an unadjusted diluted basis. Against that you have their risk statements, and in particular I noted in their 2Q report the statement that "Our operating results are difficult to predict, particularly because we generally do not have long-term arrangements with our customers, and have historically fluctuated. Our future operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond our control." But if YuMe can come out on Tuesday and meet or exceed their guidance for 3Q while continuing to guide to 4Q as the best quarter of the year, then I would hope that would provide some strong support for their share price and, because of the arb linkage, hopefully the R1 share price as well.

The increase in shares on loan is consistent with merger arbitrage activity (shorting R1 and going long YuMe), although I accept other interpretations are possible. The increase from September to October could just be a run-rate effect - that "professional" merger arbitrage activity happened mainly in September in the relatively high volume days following the announcement of the proposed deal, which meant that the September daily average SoL was lower than the end-September SoL. If there was relatively little net arbitrage activity in October then the October average would still be higher than the September average because of the relatively low early-September SoL position and the ramp up post-announcement.

Should have done the YuMe side at $4.14 while I had the chance as it turns out. Instead I have just had to pay around $4.18. But that's still about a 5% arb. Or put another way, I think I've effectively paid about 260p for the R1 shares I sold earlier at 277p, provided the deal completes. As well as that I have the cash element (the $1.70) tied up until completion and exposed to forex risk. Errors excepted. No advice intended.

"The Acquisition is conditional on YuMe Stockholders tendering at least a majority of the issued and outstanding YuMe Shares..." (from the R1 rns on 5th September) So they need to get over 50% and they already have 31.6% banked by the tender and support agreements. Difficult to see that failing with a board recommendation unless there is some serious campaigning by a credible big investor such as Edenbrook.

what discontent stt? I'm not aware of a single institutional YuMe shareholder who is objecting to the deal. Of course there are some lawyers trying their luck with class actions and doubtless some disgruntled private investors who thought they were going to get $7, but is there any evidence of meaningful discontent? The current management have rescued the company haven't they? Won a proxy fight, got rid of the old management, cut out costs, paid a special dividend, started producing profits. I would be surprised if many institutions are unhappy with the current management. But as a non-committed (at least as far as I know) activist investor Edenbrook may still want to try to leverage up the R1 offer I suspect if the R1 shareprice doesn't recover meaningfully before the tender offer starts.

If Yume shareholders simply reject the deal it's just a nominal "expenses" payment due to R1, capped at $0.5m from memory. The bigger break fee is when they want to accept (or they solicit) a higher offer from someone else I think. I honestly don't know what the pass mark is - what % of the shares have to be tendered for the deal to go through.