Member Info for AceofClubs

Buried at the end of "2022 Financial Highlights":
Assets under management declined by 16.5% to £259B - not a good look for an asset management business, that purchased SunLife (£10B of assets) in the year.
"IFRS loss after tax of £(1,762)m reflects significant adverse investment variances due to the accounting volatility from our hedging approach and an accounting mismatch from our own pension schemes that have been subject to a buy-in"
How do you generate such a loss when as recently as December 2021 base rate was 0.25%? When hedging couldn't they work out in which direction interest rates were headed?
The much proclaimed surplus cash generation is only 0.55% of assets under management. It does pay a dividend, consistently declining in real terms, which is all most holders seem to aspire to. I have held for 10+ years hoping for a performance sea change or a takeover. Hope springs eternal - and one of those perpetual "too cheap to sell" holdings.
AceofClubs

All main players in the US are currently losing money and those losses will continue in 2023. At the moment the fight is all about buying market share: Flutter is winning that fight, particularly in the Sportsbook trade.
From your Irish Times link: "The annual report’s figures show that Flutter’s target for non-US earnings before interest and tax was £1.146 billion, while it actually achieved £1 billion. Had it hit the target the top executives’ 2022 pay would have been similar to the level received in 2021."
Note the reference to non-US earnings missing the target.
Just look at the numbers ashton: then decide which has been the best investment.
AceofClubs

Jatw; your outlook for JUST must depend on whether you are a believer or not. Rebuild the Balance Sheet? Take a look at the NAV per share over the past few years. Richardson was justifying the firesales with a "what if the housing market declined 10%"? The answer is; it might take 18 months to recover: but all those equity release holders were not going to die in 18 months! Others have lapped up the value and JUST holders are left with crumbs. The DB annuity market is far more risky than the equity release market in my opinion and the average equity release customer is older than most with a DB pension entitlement.
Pleased to be out, but a takeover would wrong foot me.
AceofClubs

Flutter (Fan Duel) is crushing BetMGM in the States. Fan Duel is extending its lead continuously and now looks untouchable.
MGM Resorts is now increasing its competition with Entain outside of the US - it just cannot make for harmonious relationships. I the past 5 years Flutter share price +84%, Entain +48%; in the past year Flutter +84%, Entain -5%.
Market capitalisation: Flutter $29.4M, Entain $9.7M - only one winner here and it isn't Entain.
My money's been on the wrong horse.
AceofClubs

A solid set of results with no obvious weakness. Still delivering value to shareholders - they can't be expected to break records every year. Management focused across the business and no bullsh*t or management speak. Worthy of continuing support.
AceofClubs

Richardson has trashed this business since taking the deputy CEO and then CEO role.
In Y/e 2017 JUST paid a 3.72p dividend and made a profit before tax of £181.3M.
The value in JUST has largely been sold to others at giveaway prices.
"Cumulatively since 2018, we have incurred a net loss of £226m (pre-tax) on interest rate hedging " - clowns, that should not be allowed to play with such dangerous products; they clearly do not understand the downside risks.
I bought in at 90p expecting realisation of value for shareholders - it has been squandered by the directors, not least on the directors.
I have exited at 90p, pleased to be out relatively unscathed.
AceofClubs

Hhaigh1 : You should appreciate the reply - it appears flippant (no pun intended) but it is just as likely to give you a winning result than any other "not advice" you will read on here. You will learn that with experience.
AceofClubs

Toss a coin.

Large tranfers of assets and liabilities stretching decades into the future are impossible to value or cost accurately. Acturies will tell you otherwise; but they are all dead or retired by the time their predictions are put to the test.
I am always sceptical with purely financial transactions where both parties declare it's profitable business. In transfers of funded Defined Benefit schemes there is yet another party with apparent cause to celebrate; the members of the scheme. Peter Jennings, head of DB sales at Just Group, added: “This was a textbook example of how stakeholders should collaborate to deliver a very efficient and well executed transaction to achieve excellent outcomes for the trustees and their members.” So it's win, win, win.
When reality bites (Equitable Life?) nobody, but nobody, is held to account.
Not a concern today and too far in the future for anybody to be too bothered, the constant flow of schemes into the "Pensions Lifeboat" costs only one party after all: the pension scheme members.
AceofClubs

"Berkshire Hathaway pays no dividend but has achieved a 20% compounded return for many decades."
The only true part of that statement that is the "no dividend" part - "the "20% compounded return for many decades" is an oft repeated fallacy. BH did return a stellar performance in an underinformed market decades ago. In a much better informed market BH total compounded return has failed to beat the S&P500 over the past 5,10 & 15 years (source Morningstar). Media portrayal of Warren Buffet as a liberal, avuncular, friend to all, is also an urban myth; a more rapacious individual would be hard to find.
AceofClubs

Balta has 532,000 sq metres of production/office space in Belgium across three sites and is closing the smallest one ~ 18% of the total. Business is clearly poor but it appears to be a cost rationalisation rather than a total collapse. It is going to be more difficult to close another of the two remaining because one produces components the other the finished tufted carpet.
I still rate this as a sell.
AceofClubs

I try to keep a sense of proportion. It's six months figures and one of the biggest impacts is the drop in the PGM basket price - outside of Leon's remit.
Mining and ore processing is a dangerous process - accidents happen and will continue to happen in the safest environments; South Africa and Zambia are not that.
Electricity power outages: both South Africa and Zambia are dominated by corrupt regimes that use state owned utilities to reward their supporters. For decades there has been a complete lack of investment, endemic theft of power transmission cable (they sell it for scrap metal!) and illegal "hook-ups" to the power grid. Diesel powered generators are a very expensive option for energy intensive processes.
Water supply infrastructure is equally underinvested, prone to unauthorised "tapping" and not surprisingly subject to weather conditions.
Keep plugging away Leon, the lady at the corner shop doesn't want your job.
AceofClubs

Entain could find itself in the unenvious position of having MGM as a partner in the US and a competitor everywhere else (see my post of 29 Jan 2022).
A 50% share in BetMGM is not a controlling stake; how Entain must be wishing they had held out for 51%. Of course MGM would wish to take over Entain, but not at the price Entain demanded. US companies play rough and partnerships are only worth having with willing partners; it could get ugly going forward.
AceofClubs

Plenty of shares available at about 2p above the placing price - and 2p should not be a factor in anybodys' investment decisions.
More informative is the 26 page document issued by DEC in support of the acquistion and share placing.

Page 6: "The wells included within the Proposed Acquisition have a simple-average well age of 13 years (with a production-weighted average well age and estimated remaining well life is 3 years and 45 years, respectively) and are estimated to have a one-year production decline rate of approximately 32%, a third-year decline rate of approximately 23%, and terminal decline rate of approximately 9%, based on Company estimates and represent anticipated PDP production declines for the 12 month periods ended 31 January 2024 and 31 January 2026, respectively."
"On a pro-forma basis, the Company expects to have a company-wide average decline rate of approximately 11% following the Proposed Acquisition, below its peer group."
"With a long life of productive capacity remaining in the acquired wells, at 17 years on average, the Company does not expect any significant near-term cash requirements in relation to plugging and abandonment (“P&A”) activities. "The Company estimates costs for P&A activities to be approximately $40,000 –$60,000 per well."

I am becoming afraid that DEC falls into that category of companies that have to run hard just for returns to shareholders to stand still.
AceofClubs

The misreprentation of DEC as being a 50 year annuity paying 12% is just plain wrong.
Most of us have a problem with forecasting next week, let alone 10, 20 or 50 years ahead. In my case, what happens in 50 years time is unlikely to trouble me!
I have DEC as a weak buy/hold for 2023 and will take the 12%: it's too far ahead to say what 2024 will bring, I keep an open mind and try to follow the numbers.
AceofClubs
Thank you to damofarl for some kind words. Kindness: now that's a commodity in short supply in the world at the moment - and you can't put a price on it.

Malcy refers to The Money Slide as "containg the chart in the current presentation to my eyes says it all" and "demonstrates DEC has the ability to pay the target base dividend for over 50 years AND still have ~$2bn of cash left over that can also be paid to shareholders." Wow!
"It really does come back to FCF generation as that is ~7X the current market cap."
I am afraid Malcy it doesn't. What it does come down to is a list of assumptions, all made by DEC, over a 50 year time scale, over things they have no direct control.
DEC's assumptions are all to the positive.
NYMEX 10 year strip is assumed at $4.66MMBtu - $4.91 thereafter. - When has DEC ever achieved a single year of sales at an average above $4? - and it certainly won't in 2023 or 2024. There hedging history of picking the peaks and avoiding the troughs is very poor.
Plugging costs are calculated at $21,000 per well, total $1.6B, "assuming no further efficiencies" The possibility that plugging costs may rise over the next 50 years is ignored - and 34,000 wells are assumed to be plugged after year 30.
The real killer is the assumed 4.5% production decline rate. DEC already claims "an industry leading 8.5% decline rate." The difference this assumption makes is huge. A well starting at 100% year 1 will still be producing 26.3% of its original output at year 30 with a 4.5% decline rate. With a 8.5% decline rate the figure is 7.6%. Total output over the 30 years is 1,664 v 1,094. Assuming the 4.5% decline rate gives production a 52% boost over the known 8.5% rate.
Sorry Malcy, there is no Money Tree and there is no Money Slide.
AceofClubs
The DEC Presentation is on their website; the Money Slide is slide 32; Malcy's Blog is on his website, dated 9 January.

Dear BlackBoulder,
FYI: I have no short or long position - and never have had.
I do have a healthy scepticism for companies that:
Produce heavily "adjusted" opaque accounts
Revenue increases by acquisitions but never profitability
Cash generation from operations is very poor - everything is funded by increasing levels of debt and preferred shares
Consistently has a negative return on capital emplyed
The Balance Sheet is a confection of Goodwill and other Intangible assets supporting a growing pile of debt
The BoD is beholding to one dominant character with a dubious history - who despite his large shareholding has already taken his fortune out of Victoria in the form of cash.

The Koch family and Spruce House are indeed sophisticated investors; who prey on the weak and needy. While not officially a concert party I would not be surprised if conversations have already taken place.
The end game will be the sophisticated investors picking up the business cheaply and the poor old PI's losing out.
I might be hopelessly misjudging the situation but the numbers don't lie. Unless you are a speculator there are many better places to risk your money - in my opinion - other opinions are available.
I wish you luck with your long position.
AceofClubs

From the interim statement issued 29 November: "The Board believes cash flow, after exceptional costs relating to the integration projects, will be in excess of £100 million in H2."
This company never makes a profit and I am on record as valuing the common equity at zero.
However, Wilding has nailed his colours to the mast with the above statement. This will only be achieved by liquidating a lot of inventory at any cost; so goodbye gross margin.
Please bear in mind the "trick" of turning inventory into cash can only be done once.
AceofClubs

Highlights:
Net trading revenue increased 5% to £494.9 million
Net interest income of £24.2 million (H1 FY22: £(0.4) million)
Active clients reduced to 312,000 (H1 FY22: 320,400)
New clients acquired reduced to 37,500 (H1 FY22: 53,600)
Total operating costs increased 25% to £279.9 million (H1 FY22: £223.3 million)
Profit before tax decreased by 2% to £240.5 million
Profit before tax: margins of 46.3% (H1 FY22: 52.0%)
EPS was 45.8 pence (H1 FY22: 48.1 pence)
Bought back £114.1 million shares in the half under the £150 million share buyback scheme
Extending the share buyback by £50 million, to a total of £200 million
Increased the interim cash dividend to 13.26 pence per share (H1 FY22: 12.96 pence per share)
Finally, the company we wish she'd never heard of: On a constant currency basis, pro forma tastytrade total revenue growth was 8%. It is never mentioned, but I have a suspicion that tastytrade is loss-making.
Sometimes a bit of humility means the reality can be objectively assessed.
AceofClubs

Two days running the SP has run up after the Americans have got out of bed. THe MGM Resorts noise is public knowledge in the US so perhaps some taking a punt it's true?
AceofClubs