Member Info for AdamAnt

Helpful comments, all. But I had expected clarity today on the identity of the seller to Ashley, yet unless I am very much mistaken, this is still shrouded in mystery. I find this surprising, because the answer to this question should have a material effect on the share price, short term and long term. I am happy with today’s 14% increase in the share price, but would not add at these levels unless there was more transparency, or at least solid clues, about exactly what is going on.

Beechhurst, you must be smoking some pretty good stuff in your metaphorical pipe – good enough to convince me that you’re right to suggest that it’s implausible that Schroders are the seller. We have all the pieces of the jigsaw on the table in front of us, but they don’t fit together because we have been arranging them in the wrong way. You give some good reasons why David Alliance must be the seller and I would agree and surmise that, like a good chess player, he has sacrificed material – selling one third of his shares cheaply – in order to open up the game. Perhaps the offer price has already been settled between the main parties; or perhaps there is still much to win and lose. Either way, tomorrow looks interesting for all shareholders.

If it is indeed Schroders who are the seller (and we should know very soon), there must be some logical reason for them to do so. Barring some quid pro quo or other factors of which we are unaware, the only rationale for them to sell out at these relatively low levels is that they have calculated – rightly or wrongly - that a bid by Mike Ashley, even if it materializes, will not be successful; that Ashley would then cash in all or part of his chips; and that the share price would then consolidate at a level not very far from where it is now.

From what little I know of Ashley, he is a clever man who will want to emerge from this a winner whatever happens: Plan A, get the company on the cheap; Plan B, nice trade.

The Alliance family, if they act in concert, can block a bid. We cannot of course be sure that they would, in all circumstances, act in concert. But blood is thicker than water, so it is a reasonable assumption that they would stick together, regardless of any private differences (which undoubtedly exist).

My gut feeling is that the largest shareholder does not want, under almost any circumstances, to see the company fall into the hands of Ashley, and absolutely not on the cheap. Lord Alliance is a remarkably resourceful, intelligent and determined man, whose motto is “There is no such thing as ‘can’t be done’”. As long as he is in command of his faculties, he remains a formidable adversary. That tips the scales heavily in favour of the status quo, for the time being.

It’s probably unwise for me to opine when everything is in such a state of flux. Like everyone else I am intrigued and excited by the latest turn of events, but am trying to remain cool and analytical!

Beechhurst, I’ve much appreciated the clear-headedness you bring to the discussion: reading your posts, though, is rather like sucking a whole tube of triple strength mints in one go!

I have noted, as I am sure you will have done, that Schroders’ almost 15% shareholding, if added to the family’s 60%, would bring them to within spitting distance of the required 75%. No need, perhaps, to worry too much about the other turkeys, when the time comes.

I am with you, Brighty and others in assuming that the move to AIM was for IHT purposes and that nothing will happen unless and until there is a material change affecting the situation of the largest shareholder. But I am intrigued by the confluence of recent events: (1) the unexplained resignation of the CFO in November after barely 2 years in the job; (2) the early settlement of the Allianz case for a surprisingly large sum, suggesting “deck-clearing”; and (3) share purchases, almost certainly defensive as you suggest, by the largest shareholder’s ex-wife, with Schroders’ cooperation. All in the space of 9 weeks. Although it would be unseemly to speculate over matters about which we know nothing, I sense that more news may be expected in the coming months. Given that the recovery of BWNG and its share price is still at a very early stage, I’m afraid that taking the company private soon would not fully reward shareholders for the patience and endurance they have shown up to now. All the more reason, therefore, to hope that the status quo continues for as long as possible.

Lucy: The problem with the bone which you and your new pals on the other site are still gnawing on is that it is devoid of meat, since the few morsels which it once had have long been consumed and are now being repeatedly regurgitated! Not a pretty sight!

I was also disappointed by the size of the settlement, as I had been assuming something in the low 30s. So it seems had the market, given the muted response of the share price to the news. And I had not expected a settlement until closer to June, the scheduled date of the court hearing. This does smack of clearing the decks ahead of some form of corporate action sooner rather than later. Or it could mean that the recent trading performance gives the management confidence that they have the headroom to settle at this level, rather than go down to the wire. Either way, there is room for cautious optimism ahead of the upcoming trading update and further into 2023.

I agree. The results are not good, obviously. But probably broadly in line with what the market expected. Hence a sense of relief. I wouldn't be surprised if, over the next few days, the share price clambers back to where it was before the results were announced. This would be in line with the pattern of other retailers such as BOO. I am well under water with this "dead money" share but will hold for long term recovery, which I believe is just beyond the horizon. I have neither the need nor the desire to crystallize a loss.

Lucy, what I actually wrote was “The IFRS valuation is lower than the portfolio (portfolio) valuation”. In the commentary accompanying the latest Quarterly Valuation dated 11th May 2022 (to be found on the company website under “Regulatory News”, Civitas draws a distinction between the IFRS valuation produced by JLL (NAV 110.3p) and the portfolio valuation (122.84p). According to Civitas’s commentary, “the portfolio, as a single entity (reflects) the enhanced value from the aggregation of individual properties into a single portfolio company and the positive effects of the stamp duty adjustment…” Civitas believe that, in addition to stamp duty savings, the value of the entire portfolio to a potential buyer would be greater than the sum of the individual properties.

Lucy: the valuations of the individual properties in the portfolio (which are determined by Jones Lang LaSalle and is known as the IFRS NAV) are based on several factors, including, but not limited to, the one you mention. The IFRS NAV also reflects assumptions about long term inflation and the contribution from the indexation of the leases. The IFRS valuation is lower than the portfolio valuation, although the IFRS valuation does assume that the properties, if sold, would be sold as an entire portfolio, not as individual properties (thereby reducing sales costs and enhancing net valuation).

Anyway, all UK REITS have been affected by the recent spike in gilt yields and expectations of higher rates, so this is not a factor specific to CSH. I see that the sector has a whole has rallied today, with CSH currently up over 5%. An exciting time to be holding these shares!

There’s a note on pages 115-116 of the 2022 Annual Report on interest rate risk. It states that each 1% increase in interest rates will reduce profits (after tax) by roughly £ 1 million. There is no detail about how this calculation is arrived at, but the note points out that interest rate fluctuation is managed in various ways, including interest rate swaps. So it would appear that the impact on post tax profits of a 3% increase in interest rates would be £ 3 million, not £ 5.4 million.

The loans are secured on various properties, according to a loan to value ratio. I suppose if the value of the properties falls, the loan to value ratio could be a problem when it comes to refinancing the loans.

There must be a risk that the NAV will fall if property prices generally fall. On the other hand, my understanding is that the valuations are based at least in part on rental income and the classification of the properties as special purpose homes. In any case, the substantial discount of the share price to NAV suggests that valuation risks have already been factored in.

The greatest risk, in my view, is that there could be more defaults on rent, whether or not it is inflation proofed, as the recession bites. But the counter argument is that much of the rent is paid by the government in the form of housing benefits.

I’m not trying to play down the risks and uncertainties, which undoubtedly exist. But I believe that these are more than reflected in the current share price. I added to my position at 68p and 62p and will be happy to hold for recovery and for the yield, which currently stands at 7.25% (net of tax) according to my calculation.

Many thanks, Ippolit, for your response and comment. I agree that the overwhelming likelihood is that the dividend will be maintained, although I am a bit surprised that you see the probability of an increase as zero, given that the consensus forecast (Source: Simply Wall Street) implies an increase of about 5% to 7.83p in 2023. Optimistic, but not to be ruled out entirely. Anyway, I have added at current prices and would add again in the event of further weakness (for dividend and recovery potential).

An Interim dividend is due to be declared on 3-Nov-22 and the Final in May 2023. On a scale of 1 to 10, what is the likelihood the dividend will be (a) maintained (b) increased (c) cut? (For reference, the 2022 figures are Interim 2.31p; Final 5.39; Total 7.7p. Current prospective yield if dividend maintained: 5.94%.)

Well, Longerguy, I suppose you may wish to withdraw, or at least modify, your expression of thanks to me for making you think twice about diving in at 157, given that 145 turned out to be a brief staging post to the mid-130s! I’m still trying to make sense of it all. I see that all REITS are more or less equally suffering, and the markets as a whole are having a bad day, so this is not specific to BBOX.

I wonder if the valuation of THRL’s specialist property portfolio tracks general house prices? Perhaps there is also a relationship with the income yield, which could support valuations. But the fact that the share price now trades at a discount to NAV suggests that the market may agree with you. THRL seems to be suffering less than other REITs, so the drop does not seem specific to concerns about what the budget may contain about healthcare costs.

It seems that all the REITs, including THRL, are being pummeled because of higher interest rates and the expectation of further rises. I personally think the reaction is a bit overdone, particularly in the case of THRL, and have therefore topped up at 100.60, as I see good value here.

I originally bought at 140, and held all the way up to the top, and have then been adding tranches all the way down to present levels. So a nice profit has turned into a nasty loss. Bought some more today at 157. I agree it could go lower (there is a 61.8% Fib retracement level at 145) but the share seems very good medium-term value, so am prepared to ride out any further short-term weakness.

It all depends on Tom Joules. What will it take to make him accept harsh realities in order to save the company he has nurtured and grown for over 30 years? Understandably, but probably unwisely, he wishes to avoid the inevitable dilution of his stake, believing (rightly) that the inherent value of the company is much greater than the market’s valuation, and pinning his hopes on long term recovery. But there is almost certainly no viable path from here to there, without a highly dilutive financial restructuring, to which he is naturally resistant. This, I suspect, is the main reason why the Next deal fell through: the price he wanted Next to pay for their stake was simply too high, or perhaps his heart was never in the deal.

I am annoyed with myself for repeatedly allowing hope to triumph over caution, and for failing to get out, or at least lighten my exposure, when the opportunity presented itself (at least twice in the past month). If there is an equity raise, I would participate, again allowing hope to triumph over caution, because I like the brand and believe that Joules deserves to survive and prosper. But these are dangerous times for the company and the management cannot afford to make any more mistakes and needs to get real.

I wish the new CEO the best of luck and hope that, as an outsider appointed on the basis of his track record and turnaround expertise, he will be able to inject a healthy dose of reality into the proceedings. The further deterioration of the share price today suggests that the market is increasingly skeptical and that time is running out. It's not yet too late, but tough decisions need to be made, and quickly.

I believe I hit the bullseye with my last comment, so no, I didn't miss. Did you forget to duck?

Thanks, Lucy: you're very kind. Buying on the dips at this point is likely to prove to be a profitable medium to long term strategy for those with the nerves to filter out the noise. Shadowfall gave up and bailed out of its short position on CSH around the end of last year. Not long afterwards, you disappeared off the radar. I see that all your 48 posts here, without exception, have been about CSH. Does your return mean that the shorts are back?!

Good question. I was wondering the same thing and came to this board in search of the answer. The SP spiked up above its previous all-time high and has fallen back slightly, but still looking strong.