Member Info for Agricore

Boyg, I don't wish to sound rude but you've pointed out before that (in your words) you're not a business person.

Your assertion that without news this will drop to high teens is extremely unlikely. Not to say fanciful and unhelpful.

BELL's share price is almost back down to where it was in May. But what's changed since May?:

-> X-Plor has been releasd to the market

-> NAV is up 1p a share. Do you really think this will drop to just 1 x book value (or lower) which is now at an estimated 19.58p share?!

-> Received an £8m shot in the arm - liquidity.

-> 2 new NEDs from TMTA who bring skills

-> A highly experienced Head of BD who's already more than proven his worth. Mr Bob Fary.

-> Unit selling price for X-Plor has been raised from $2500 to $2750+ i.e. net profit margin per item sold is up $250/unit or more and rev share with Innomax up a forecast $25/unit.

-> $15m of orders received including many for the (much) higher margin X-Plor

-> A $55m 10 year royalty agreement (plus profit share), with a $213bn turnover Chinese manufacturing giant who work with Apple.

-> Product launch in Hong Kong with an addressable market worth £75m in profit in royalty and rev share. That one territory alone is worth more than 2x today's market cap value of BELL.

-> Its ability to be a great option due to its inclusion for CMS E1390 (stationary) and E1392 (portable) reimbursement codes

-> It will also produce nearly three times as much oxygen by weight than its dual flow competitors.

-> Its distribution agreement with McKesson - Europe's largest and US's 3rd largest pharmaceutical distributor.

-> Survived a short sell attack from a popular website which earns a crust by promoting shorts (and some longs)

There may be some other points for the past 6 months but I think I've listed most of the progress.

Why would any of the above mean the company will be worth 25% less than today in the next few weeks?! I don't say fanciful and unhelpful for no reason, Boyg.

These articles provide further detail/substantiation to the above points too:

https://theoakbloke.substack.com/p/bell-onging-together

https://theoakbloke.substack.com/p/bell-issimo

https://theoakbloke.substack.com/p/bell-kong

https://theoakbloke.substack.com/p/bell-lunder

The fact it's even down at 25p is a minor miracle in my opinion. Completely overlooked by the market.

GLA

Beginer, Yes asset sales certainly can be.

But to be credible, you also need to analyse whether that's the case here rather than just make a short glib statement. Glib statements are just that. Kind of like a launching a sucker punch rather than proving yourself in the ring. You speak about keeping things quiet, but you're quiet on the analysis.

Where do you present the merits or demerits of the asset sale? Where do you consider the synergy and/or the anergy? The way the decision shapes the future, positive or otherwise? I'm sure you're well versed in business strategy so you would consider aspects like core strategy, whether an asset supports that, or is superfluous. You'd consider the cash impact and cost model - yes businesses do live within their means and sell assets to manage cash.

Every wise business leader spends every waking day with an eye on survival.

The doom narrative has gone Teits Up?

My perspective is the macro story is already nailed on. With large spikes from October 2022 dropping out and being replaced by October 2023's numbers tomorrow. Fish in a barrel!

For me the micro story is far more instructive for RGL.

As a further example, I see British Land reported yesterday: "The fact that BL is managing to let its ground at significantly above market prices may also be a sign that market rents, which underpin book value, will soon be revised. We can therefore expect book values to stabilise in H2 23 or H1 24, thanks to the stabilisation/increase in nominal (office) rents."

Do we know another REIT, maybe a Regional one, reporting similar upward rents?

Goat,

I can't speak for PDub's thesis.

But I struggle to understand what you mean when you say "sort quasi asset valuation" and what that might be?

When you say "assets seem to be being sold off... which isn’t the hallmark of attractive investment proposition" I'm not clear how or why the sale of an asset is a hallmark of anything, per se. Businesses sell assets all the time, that's normal, it's not a hallmark. It's usually based on a strategy - as it was for BMN.

You end with "I suspect we will shortly see another round of dilution." Is suspect the right word? Or did you read an RNS (as we all have) that BMN is currently refinancing its debt in the next few weeks and that convertible equity is part of this.

You ask for an investment thesis and a valuation model. I hope you find this useful:

1. BMN's clever restructuring that increases asset valuation and minimal dilution. Thesis here: https://theoakbloke.substack.com/p/bmn-eck

2. 5 drivers to value at BMN. Thesis here: https://theoakbloke.substack.com/p/bushveld-5-more-drivers-to-value

3. 9 more drivers to value at BMN. Thesis here: https://theoakbloke.substack.com/p/bushveld-minerals-value-trap-or-up

4. BMN's SPR deal. A specially pleasing result. Thesis here: https://theoakbloke.substack.com/p/spr-specially-pleasing-result.

Congratulations too on your 42% gain. On your punt. Clearly for all your apparent bearishness you seem to have followed some kind of investment thesis too. Why don't you share yours too? Or was it just a punt?

Mrozzy, same here! :)

Business savings accounts are for small business. Corporate accounts (as RGL would have) can tap into Securities and short term Bonds which are “cash like” and so I agree with Damofarl.

Cash gives optionality.

Meanwhile another positive update from LandSec today who were just interviewed on Bloomberg, sees a more positive 2024 for commercial property investment and office utilisation up 10% in past 6 months and lettings 3% ahead of valuations

The Doom narrative continues to unravel

The key phrase from the 19th October 2023 RNS update is:

"Once the RFT eDrive has been fully proven to fully meet the client's requirements, a minimum of 60,000 units sales are forecast over a five year period in addition to the 80,000 units detailed above for AFT eDrive solutions across two product lines."

Today it's been proven.

Assuming a £10m raise at 16p per share that will equate to a 38% dilution. £15m is a 50% dilution. SED has support from a large number of IIs so the problem may actually be whether PIs even get a look in. As a PI, I will certainly be participating in any rights issue if I can. Another route for finance are the very OEMs Saietta are working with. £15m is small change for them, and if £15m secures their required technology this seems a no brainer.

Assuming a PE of 15-20 and using the forecast PE from FY2026 then this values SED at £400m-£500m valuation or 9X - 12.5X its future ****DILUTED**** market price.

The analysis for that estimate is here:

https://theoakbloke.substack.com/p/sed-ition-part-1

https://theoakbloke.substack.com/p/sed-ition-part-2

Interesting you all speak to using "Socials" with Lucyds. I can't say I do that. Never used the Vyrb thing and possibly never will.

Speaking as to how I use the glasses, I admit a frustration for me is not having a "Chat GPT" capable of doing anything to do with the world since 2021. But that's a frustration with how Chat GPT works. The "ears free" part of the glasses is incredibly useful being able to listen out for traffic etc as I walk about. This bit is a bit of a no brainer versus using any other kind of headphones tbh.... On a busy road the audio isn't great but my partner said she's fine using them - hence me buying an XL pair. Listening to podcasts is probably the biggest part of my use, followed by phone calls. Thirdly having a serendipity question (relating to before 2021!) while I "switch off" from the world is actually nicer to be away from your phone, but still connected.

As for radiation I think bluetooth next to your skull is far less dangerous than having the phone itself at your ear, but I may be wrong on that.

The springy hinges thing is a big plus for me too, as I do worry about the conventional hinges. Looking forward to roadtesting my XL pair which arrive this week.

GLA

Hello TC and Badster

It's 2 months since there was a positive view set out for LUCY:

https://theoakbloke.substack.com/p/innovative-eyewearlucyd-part-of-tek

That article set out a more positive future based on learnings from a more negative past. I didn't ever see any cogent reason why that future is not possible. The argument "the share price is down therefore it's doomed narrative" doesn't wash.

Early next week the Q3 results from LUCY should be out and will either render that view vindicated or destroyed. A battle against general doom has been vindicated a number of times on other shares this week (and recently over at BELL) so perhaps luck, or perhaps deep analysis wins against the doom mantra, where the price is down so it must be doomed. The market knows. Does it 'eck!

Regarding family connections, Harrison can't do anything other than step up and find a way to make this work. I'm sure he's had some tough love lectures from Dad. Remember Frodo in Lothlorien, Harrison, if you can't find a way then no one can. It is your responsibility to make this work now, says Dad.

But regardless of financial analysis, and Dad, I return to the basic fact that, as a LUCY user (I've worn Lucyd sunglasses for some months now) and having "road tested" my purchase with quite a number of people I think LUCY might be on to something. Have you worn them? Used them too?

On order as well as their Q3 results, is a new pair of their XL glasses with upgraded speakers, larger fit, and springy better fit hinges arriving next week too. So the road test perhaps changes, and grows even more positive, once I've got those and use those. I've a big head and need those XLs after all, ha ha.

Badster you say its only escape route is a major partner, but LUCY is already going head to head with major competitors successfully, and gets considered as an option against those. I return to the idea that LUCY only needs to win even a tiny slice of the market to be successful. Based on this video - can it realistically win a tiny slice or more?

Source: https://www.youtube.com/watch?v=Q38z_VoGtEY

I think the answer is yes. Do you actually think the answer is a definitive no?

Remember too, selling Glasses generally is incredibly profitable. I got a discount buying my new LUCY glasses but even so I'm sure my purchase has added to their profitability.

The only reasons I've seen conveyed why LUCY will fail are:

a/ The share price is down. Yep. True. Past performance doesn't guarantee future results.

b/ They will delist. That's some months away and I don't see a fat lady singing just yet.

c/ They will run out of cash. But will they?

And that's the crucial question I will be poring over in the Q3 results next week. As will we all I'm sure.

Have a good weekend.

Thank you Gavster, much appreciated.

@Gavster @Damofarl

I ran my eye over TORO the other day and will certainly return for another look. Quite a number of my holdings have turned corners over the past fortnight so the difficult decision to average down into oversold positions (at deep value to their NAV) is bearing fruit. And even where it isn't yet, at DEC for example, I remain convinced that it is a matter of time. As someone posted at OakBloke what happens when Henry Hub hits $8 a MMBTU.

Today Volta shared their annual report and the news that Serge Demay has retired as of 31/10/23 was a negative (in that I have no idea to the quality of his replacement called The Duy), but the performance of VTA within the CLO space gives encouragement more widely to FAIR and TORO. Worth a read.

Here's a shortcut:

https://www.voltafinance.com/media/36601/20230731-vfl-v6-final-clean-.pdf

I would be interested in your views to China's extended and exacerbated weakness? And what, if any, knock on effect you believe this will have to CLOs? CLOs, at least FAIR's, are US and Europe only, but is there a contagion. I have watched videos from a Peter Zeihan about China's imminent demise over the past year - and it appears he is spot on. The 1 child policy coming home to roost and China is like Japan 1989 heading towards severe deflation. Perhaps for 20 years like Japan. The continued evidence appears to support this thesis. What do you think? Will China's exported deflation lead to a goldilocks soft landing and a bumper 2024? It's not a narrative I've read this anywhere (yet) but it appears we are emerging from a doom narrative, at least in the UK, where the soft landing appears positively feathered and memory foamed. Or am I being too optimistic? Of course assuming the Middle East settles - which it might not.

A good weekend to all.

The Molten Ventures 2023 Narrative between a pessimist and an optimist.

P: "We're doomed"

O: "But the discount is over 80% now including GROW's NAV contains its own discount to its NAV. Is it realistic that 4 out of 5 of these companies will go bust and be worth absolutely nothing and the other 1/5 only worth book?"

P: "The NAV means nothing. It is overstated"

O: "Where? Historically the NAV is UNDERSTATED and MOIC has been 3-4 times book"

P: "Not this time. The share price is down"

O: "You do realise the share price is not the NAV don't you?"

P: "Mutter mutter recession mutter mutter not a real NAV. The economy is tanking"

O: "Changing the topic are we? Ok well here's plenty of evidence to the contrary and the economy seems quite robust so that's inconclusive and even if it is true, these companies are growing and forecast to be increasingly cash generative and profitable - surely this is oversold?"

P: "Mutter mutter doom, recession, interest rates, mutter mutter what about Graphcore"

O: "Fine. Graphcore even written down is still on a MOIC of 1.5X. But ok let's pretend Graphcore goes bust 1200p goes to about 1175p. Are you happy now?"

P: "Never happy, we're doomed".

O: "Why?"

P: "Mutter mutter recession something or other. Cash."

O: "GROW has cash. So how would recession make this worth 80% below discount?"

P: "...."

O: "Here's more compelling evidence why things aren't as bad"

O: "Here's more compelling evidence why things aren't as bad"

O: "Here's more compelling evidence why things aren't as bad"

O: "Here's more compelling evidence why things aren't as bad"

O: "Here's more compelling evidence why things aren't as bad"

O: "Here's more compelling evidence why things aren't as bad"

O: "Here's more compelling evidence why things aren't as bad"

O: "Here's more compelling evidence why after 2009 things weren't as bad"

O: "Does that make you feel more optimistic?"

P: "No".

O: "Why".

P: "......."

O: "The trading update results are out"

O: "Hey excluding FX NAV is down just 2%, and they're speaking to stabilisation and improvement going forwards... what great news"

P: "......"

O: "Wow, so this doom trajectory wasn't real. And even if it were for the NAV per share to reach the market price at this rate it will take 19.5 years more of decline. This year has been full of doom narrative it's hard to think it could be worse"

P: "It's always worse"

O: "Is it? The market price of GROW is up 30% from its recent £2.02 low"

P: "It'll be 42p soon"

O: "How? I'm glad I averaged down at £2.10"

P: "Mutter mutter"

O: "I heard that"

Another share where the doom narrative has far exceeded the doom.

As someone who traded his way out of Eurasia without losing money (just), I don't think you can compare CTL with EUA. Very different for a number of reasons. The inate political and execution risk being at the core.

Do you not consider the current malaise in the CTL share price simply down to the malaise across all Lithium plays? Show me a single one who is not at 52 week lows? ATM, EMH, SAV, ALL, ASX:EG1, ASX:HAS all are on their rear ends. And so is CTL.

Do you not understand that Lithium is down 75% this year? The idea that board can "put out something" when this is the issue is absurd.

https://tradingeconomics.com/commodity/lithium

But if you flip over to forecast it's not forecast to stay that way in 2024:

https://tradingeconomics.com/commodity/lithium#forecast

So I'm delighted to be able to average down here at 28p. Incredibly good opportunity in my opinion.

GLA

Alessandro,

That's untrue. In Q3 Berkshire Hathaway reported zero derivative losses.

It suffered "paper losses" on investment holdings - which are reported on the same line as derivatives. But its operating profit of $10.8bn is a better measure of profit.... and is up year on year:

Source: https://www.berkshirehathaway.com/qtrly/3rdqtr23.pdf

Source: https://economictimes.indiatimes.com/news/international/us/warren-buffetts-berkshire-hathaway-reports-12-8-billion-loss-in-q3-as-investments-fall/articleshow/104972028.cms

Https://www.forbes.com/sites/davidmorel/2023/11/06/future-of-work-is-a-return-to-the-office-inevitable/

"there’s a clear drive to get people back to the office or enforce stricter hybrid arrangements. In the past, an employer might have asked staff to come into the office two or three days a week, but now many have started increasing or specifying those in-office days to introduce more structure and regain control."

"....it’s a gamble some larger employers, such as Goldman Sachs and JPMorgan, seem prepared to take, believing that the right employees will stay with the business even with return-to-office mandates..... Besides, current market conditions give employers more leverage than they had during the Great Resignation when there was a shortfall of quality talent and employees could make demands."

HG,

I'm looking forward to the Trading Update although I'm not expecting any kind of major positive news. A degree of stabilisation is what I'm expecting.

We know this week both the Fed and BoE have paused and the narrative is much more dovish - and the market is pricing in a permanent pause. If you fast forward to 19 mins and 10 seconds RGL is covered by Marten & Co - they also believe there's now a floor in the price for RGL. https://www.youtube.com/watch?v=yFlw8qbsx7g

I'm thinking ahead to 2024 and perhaps deflation will replace inflation as the Doom Society narrative. If you look at UK M1 and M2 money supply then M1, particularly, is dropping rapidly.

https://tradingeconomics.com/united-kingdom/money-supply-m1

In the US it's the same.

Https://www.wealthbriefing.com/html/article.php?id=198995

Appreciate this relates to London not the regions but it does illustrate the natural equilibrium - and mathematics - that support all 3 of our narratives

0715,

Leaving aside loans weren't £393m, your assumption is incorrect. Let me explain why. RGL charges rent on its properties. Rent generates Income. You can't assume the portfolio loses 4% a Qtr in a vacuum! Collections would have to suddenly drop to 0% or voids somehow rise to fit your narrative.

Cash flow Operating income was £17.5m in H1 23 and we know of 1 uplift of £0.6m post period (Norfolk House). So £9m a quarter. But let's go with a lower adjusted net profit of £6.5m. Dividend suspended, cash conservation until we hit this iceberg you believe lies inevitably ahead.......

In that scenario is it not 4 quarters it is 6 quarters before 60% LTV is reached. End of 2024 just like I said.

But it is 6 Quarters if every one of these 7 assumptions implied in your calculation also doesn't happen:

1. That's with ZERO realisations for the next 14 months (let's assume none have happened from July 1st till now)

2. That's with ZERO rent reviews and uplifts (+£2m/Qtr)

3. No further voids are filled (+£4m/Qtr)

4. The property portfolio by Q4 2024 at your unstoppable 4% decline scenario will be 20% cheaper than what is was worth during the height of the pandemic (in H1 2020)

5. It also assumes the £50m bond cannot be refinanced at a value greater than £50m (the bond is not part of the LTV covenant)

6. Also assumes no equity raise is possible even at terms detrimental and dilutive to us shareholders.

7. It assumes no predator meanwhile moves in to snap up a property portfolio which you believe will drop to just £613.3m which is 1/3 (£293m) below its FY2021 value.

That predator will do the following calculation:

RGL has Net Assets (after debt) would be in your fantasy future Q4 2024 now are only worth £613.3m, which according to the H1 2023 accounts can, when fully let, generate a rental income of £88.9m. Which is a 14.4% NIY.

Or assuming RGL's share price is still 28p in Q4 2024 (at it was 31/10 when you wrote your post) could be bought for £144.4m, and if the buyer then repays the £437m debt still has net assets worth £263m - so £144.4/£264 x 14.4% = a 26.3% yield. Very hard to think even if all other 6 don't happen that a predator doesn't swoop. It is too tempting. If the share price crashes to 14p for example due to the dividend being cancelled, and desperate selling to escape this iceberg that net yield would be over 50% - excluding capital gains - and these properties in your fantasy future can be bought at unheard of levels some 20% below their covid lockdown lows.

So what you are assuming will happen, just doesn't seem at all likely.

Https://theoakbloke.substack.com/p/should-you-say-nein-to-ix

Schwee

You are correct if the company has to borrow to fund buy backs. Borrowing has a cost that's true. But you're presumably making some sort of sweeping statement here, or otherwise you clearly don't understand AUGM as there are no borrowings. Some minor lease liabilities of sub >£0.5m if you are picky.

Idle cash has an opportunity cost too. Cash returned to shareholders via buy backs improves the share of assets so is largeness - not largesse - in AUGM's case.

You also don't appear to understand AUGM's incentive policy either - they don't get rewarded based on simple NAV accretion, which again is a way other companies' management can game the system. Sweeping statement - doesn't apply here.