Member Info for Alas_Smith

At the risk of being slated, I'm afraid that at the moment the incentive to follow the money is rather greater than placing money on bets that will probably pay off in time future. My interest in SAGA is entirely personal where I am very worried (hence posting - I have been worried for a long time) and, in part since I rather like underdogs. Saga and EasyJet are my smallest holdings and quite the most troubling.

The perspective I am using is as an investor with a broad portfolio with exposure to many sectors in international markets. No holding exceeds 4% portfolio wealth and I have with 52 equities / investment trusts plus a handful of gilts and commodities added to the mix that comprise my financial portfolio. For the record, cash is under 1% and typical daily movement is 0.75%. Sometimes up and sometimes, down.

My long term strategy is concerned only to beat the market; and this I have done every year for just over 40 years. At the point of writing my portfolio is up 6.37% but Saga remains down (average price around 38p) despite tranches bought this year.

A curious situation occurred. Although my portfolio was up almost 3% at the end of Feb with a wobble at the end, from late Feb to the 4th week in March, my portfolio mirorred markets and plummetted in value. Since then it has recovered and is in positive territory, again as a mirror for the first few months and is now starting to advance a little faster. Some holdings though, continued to fall and remain a long way under water, Saga being one of them.

With the DOW and the NASDAQ surging ahead leaving the FTSE looking pretty lame, the incentive to participate in the OPEN OFFER for me is slender as I cannot see a compelling case to own shares in a company that, although profitable marks itself down each year following results and further marked down with deeper analysis though probably as investors get bored and walk away.

Sure, we have the prospect to participate in an open offer, but we also have had hint of a bidder, albeit with caveat. Will this bring the momentum up to better the markets? I just don't know. I still want to know what the managers propose to do with new cash and why they have insufficient reserves from the past not to be able to service debts and maintain banking covenants form turnover and trading.

The commitment of a buyer of shares has been sufficient to propel the SP a few pennies, but we still do not know if de Haan holds shares in meaningful qty. Sure, if he has more than 100,000 shares he holds more than me, but at current levels that is domestic and small beer.

Transpires my association as a contributor with ADVFN was 19 years.

Many thanks FJ Gooner for correcting my mistake - made much more holpful for all of us from your background and direct connection with Saga.

For those that might not be aware, FJG has a long history of eloquence , well reasoned and authorative posts on another sit. Our paths generally crossed on the RDSB thread. After 19 years there, I have been excluded permanently.

Interesting article - what is also worth noting (again from the pessimist in me) is that having lots of money (consequential on fathers acumen) does not qualify de Haan as a competent manager. The role of Chairman is ensuring that the CEO is managing the company. More often than not, the Chairman is a "nodder" (see the American novels of P G Wodehouse) and appointed by the CEO.

His career moved him from taking over the reins of Saga after the death of his father with his brother Peter, to one as a property developer after the business was sold in 2004. With a HUGE cash reserve and property booming for the greater part of the following 14 years it does not take much nous to be a property developer or to know when the bubble has burst - Stamp Duty Land Tax was the big giveaway at the same point as the change in dividends for the BTL brigade.

Let's just see what the next few days has to offer, eh?

Well.... the cat is out of the bag. There is an awful lot that we know now but rather more that we don't.

We do not know if de Haan actually has bought any shares in the market or if he has a declarable interest as at today. We do know that he has the intention to buy a 20% (perhaps more) stake in the company PROVIDED that there is an enlarged quantity of shares. A placing will massively dilute shareholders UNLESS they participate on the terms of the offer. The terms have yet to be decided, and appear to be both capped yet seemingly underwritten by de Haan.

I am, in the cold light of day not prepared to do anything until I see the terms of the placing accompanied by a statement from the managers on their proposal to use the fresh cash AND accompanied by the accounts to bring the financial statement up to the SAME point that de Haan has as at last Friday.

There is a distraction with a conditional bid and the possibility of a raid to force a bid.

All in all, I do not believe that there is a decision to be made at the moment for existing shareholders to buy or sell. There is a compelling case for those that have sold short to close their position. I note my initial hunch that the shares would be suspended in auction and open 27p. I also note that I felt volume would be high and that dealings in the shares will be very volatile.

This volatility will continue until 10 September, I suspect. What will be worth looking at is the differential volume during the day and IF there is a spike (up or down) then attributing trades declared late for such action. It would also be worth considering that there MIGHT be a hidden buyer in the wings keen to build a stake either as an undisclosed interested party that walked away or a new bidder.

I just don't think that the decision is there for the taking at the moment with 6 full days trading ahead of us before the terms of the offer are disclosed.

Oh, and for the record, it is unlikely that I will take up the open offer as I am not at all confident in the calibre of manager appointed to the board OR the proposed Chairman. I might change my mind if the managers are prepared to dig very deeply into their pockets with real cash commensurate with their salary.

Sorry if this sounds negative. I try to be an optimist with an eye to the future tempered with realism.

On 10 September we will learn the details of the OPEN offer as well as progress that has been made in the last few months.

As it seems to be an open offer, there will be no cash payout so investors will have dilution of their holding, hence the price today. Sorry if I had misled anyone. It was not intentional and simply enthusiasm from the froth that the news gave.

It rather seems that de Haan is betting the the virus is beginning to fade and, from the John Hopkins data it does not seem to be quite as dangerous as it evolves to survive.

The role of Chairman is to ensure that the CEO does his/her job properly.

Anyway, rather than speculate on what might or might not happen, I'll prefer to wait until tomorrow morning to read the RNS and hopefully enjoy the reaction that it will have on the share price. It is quite possible that the trading statement is released at the same time. I am sure that the BoD are working quite hard behind the scenes over this Bank Holiday weekend.

It might be worth noting that whatever the opening SP on Tuesday, if it is at a 98% premium to that from Friday, there will be a huge number cashing their holding in and banking a healthy profit.

Nothing wrong with that as you don't get rich by not banking profits.

The article reads as follows:
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https://www.ft.com/content/e257d258-7dab-4fa3-9a91-2435c297fcac

Saga, the UK over-50s travel and insurance specialist, is planning to raise £150m in fresh capital and bring back its former chief executive and chairman Roger De Haan, as it seeks to shore up its badly bruised cruises and package holidays business.

Sir Roger will invest up to £100m as part of the equity raise and will also replace Patrick O’Sullivan as the company’s non-executive chairman, Saga said in a statement. It will seek to raise the remaining £50m from existing shareholders.

The amount being raised is almost equivalent to Saga's current market capitalisation, which has plunged to £153m. Saga’s shares have fallen 75 per cent since the beginning of 2020, after the coronavirus pandemic hit its travel division hard.

Sir Roger, the son of Saga’s founder Sidney De Haan, ran the business for 20 years before selling it to the private equity firm Charterhouse for £1.3bn in 2004. His stake, which under the plans would rise or fall depending on demand from existing shareholders, is likely to be between 20 and 30 per cent.

The plans come as the company said it had recently rejected an “unsolicited and highly conditional” 33p-a-share bid from a consortium of two US private equity groups, which have now walked away.

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https://www.ft.com/content/e257d258-7dab-4fa3-9a91-2435c297fcac

Raising new equity “is intended to strengthen the company’s financial position against the backdrop of the Covid-19 outbreak and the ongoing suspension of travel and to better position Saga for longer-term recovery and growth,” the company said in the statement.

In the early stages of the coronavirus pandemic Saga had to bring 3,000 customers back to the UK and cancel cruises but struck an optimistic tone about the longer-term impact of the virus. Chief executive Euan Sutherland said in April that many “stoic and determined” customers were delaying rather than cancelling travel plans.

However, the virus has struck what could be a crippling blow to the cruise ship industry, as governments have issued “no sail” edicts and ships have been docked. A rise in cases over the summer holiday season and recent government-ordered

Pianista, the SP may rise to 33p and quite possible to go higher than that with the twopenny-halfpenny punters closing their contracts for difference that have been short sold. I would not be in the least surprised if volumes were colossal on Tuesday with occasional breathers for auctions.

Some investors may choose to cash in their holding for an immediate gain, others buy in anticipation of a recovery in the full knowledge that there is a whopping cash pile for the company to rely on in a new Chairman that has a new, significant and a long personal history when his father was involved.

I will be waiting to learn what the company has to offer in its statement in September and to be honest am expecting the share price to behave like an elevator with a lunatic at the controls.

The article I posted is rather more specific. Transpires that the company recently rejected a 33p takeover from a consortium and plans to raise the capital around Sept 10 when it unveils its plans. Sir Roger will invest in his first tranche at 27p per share £60.6m. After that will participate in the rights issue but pay NO MORE than 15p per share a further £14.9m. He will backstop a further £24.5m.

This suggests to me an immediate rise in the SP to 27p on Tuesday and announcement of a rights issue in September at 15p per share.

Hopefully this will allow more accurate information to be shared. Sorry about my numbers plucked from the ether earlier. It is not possible to edit having pressed the enter key.

https://www.ft.com/content/e257d258-7dab-4fa3-9a91-2435c297fcac

A rights issue allows shareholders the RIGHT to participate in a fund raising but not the obligation. Fund raising can be at a discount or a premium to the share price. Shareholders have 4 options available to them: 1) Exercise their right to buy, either in part or in full . 2)Sell some or all of their rights. 3) Do nothing and allow the right to lapse. 4) Buy additional rights

For the most part, investors do not like rights issues as it potentially dilutes their shareholding but there are circumstances where it has great advantage. Saga has a new investor willing to buy 20% of the company in return for a number of things - first that he is the Chairman and (not factual but assumed) second that shareholders are able to participate in a rights issue at a price HIGHER than the current share price.

The maths provided by another contributor suggested that the SP is likely to be pretty perky on Tuesday. The inference in Press reports suggest that a rights issue will be made to further shore up the company with cash and the rights, if approved by shareholders will be at a premium to the share price.

Not all shareholders have spare cash to take full or even partial advantage of their rights but the option to sell rights in the market will generate cash as if they were shares. If your holding price is say 15p and you own 10,000 shares, your capital at risk is £1,500. If you are permitted to buy in the ratio 1:100 at 50p for instance, you have the RIGHT to buy a further 1,000 shares at 50p. So if you took the offer up, shell out £500, your capital invested rises to £2,000 and you have a total of 11,000 shares that are traded at 50p per share. Fine and dandy provided that the share price does not fall below 18p which is the point at which you break even (£2,000 / 11,000 shares = 18.18p).

The temptation if the SP rises substantially to sell immediately is high.

I spoke last week to Ruslan in AD*** (rival company) as I had not heard back from Mr Mullins in that company. Basically the account for Erogenous Jones despite having been a contributor for 19 years will NEVER be permitted to access that site again. And the reason was because I invoked a data subject access request consequential from cyber bullying that was not taken seriously enough to investigate.

My instruction to that company is to destroy all the data held about me and the pseudonym under which I contributed. EJ is dead.
Alas.
Smith.

:)

Some months ago I raised complaint of cyber bullying targetted with ADVFN and issued a Data Subject Access request. Despite having been a contributor for many years (roughly 10 - perhaps more) and a paying one for much of that time, my account was locked.

Erogenous Jones has now been permanently banned from that site.

As a company it seems to be going down a path of self destruction that began with trying to emulate Facetwit with likes and dislikes and then through endorsement of crypto-currency. With the central competence as the go-to resource for charts, news and data feeds constantly breaking, the need to accept or deny cookies an an almost weekly basis, it is hardly surprising that the share price is at current level. The consequence is that as a reliable source for core intelligence paying users are gradually either downgrading their premium or, as happenned to me with a complaint, are kicked out.

Oh and I remained fully invested during the nosedive in March 2020 and my portfolio has recovered those losses. Individual shares have performed differently with some still in the doldrums but others have sparkled.

News is coming through that the MoD have done basic testing on insect repellant that shows some promise as a barrier for Covid19. https://www.gov.uk/government/publications/experimental-survival-of-sars-cov-2-on-an-insect-repellent-treated-surface--3
It is not a vaccine, but it is additional protection to augment present guidence on face masks

Cunard have confirmed that all sailings have been postponed until March 2021

Time in the market tends to beat trying to time the market, if hackneyed expressions remain valid. And, of course, those of us that have bought shares in Saga at higher prices, despite averaging, we also have the opportunity cost to factor into our sums. Well, I am rather more optimistic now than I was a couple of months ago, despite the SP stobbornly remaining on the floor.

And this optimism is down to the licensing of a vaccine. Pfizer (US) and BioNTech (DE) have announced that they are on track to seek regulatory approval for their cononavirus candidate perhaps as early as October and intend to supply up to 100m doses worldwide by end of the year. Sure, quite a lot of that is already priced into the mkt cap for those companies, but once approval is granted and a vaccination program begins to roll out, then those companies that were in epicentre sectors will show an early recovery in their share price and translate to a recovery for their business as control measures to minimise infection transmission are eased.

There are many companies whose share price has mirrored the FTSE chart with a V recovery and are now at levels, close to the point immediately before the huge sell off. And some, of course, considerably higher. Saga has been trending sideways in channels for rather too long and each depressingly lower than in the past. Beginning in the range 185-225p and then 100-140p following news. In 2019 this was reviewed down (again - news based) 36-60p and now with Covid 19, in the range 14-16p. It is going to take time for profits to reflect in the share price, but a rise above 20p is going to have to be accompanied by a strong statement next month and continued control of cases in the UK so that a 2nd wave is avoided.

With a licensed vaccine, I am sure we will see an immediate pickup in volume. It might bring out a predatory bid because as a company, has a long history, a defined niche and solid insurance profits. Substantial turnover contribution from cruise division with recently launched and shortly to launch ships.

Typically it takes 10 to 15 years to approve a vaccine but International leaders are chucking colossal sums into research to fast track one or more potential vaccines that are in development. Fortunately following from SARS and MERS, the current Coronavirus, SARS-CoV-2, laboratory research was sufficient to provide a genetic map from which to have a starting point. Pre-clinical, and phases 1-3 clinical trials have been completed for many contenders.

Phase 1 & 2 have been completed by some companies and Phase 3 trials are well advanced. I am expecting the first drugs to receive European Approval through the European Medicines Agency (EMA) in 2021 and although it would be a great relief if one or more are rolled out in 2020, the doses might not be available until 2021.

So yes, we will need to continue to sweat things out, but suppose that the underwriting business were sold off? It should provide sufficient capital for the bulk of debt to be written off as it is that which is the drag on the balance sheet and P&L accounts. Titan Tours and destinology contribute little to turnover or balance sheet so are definitely not core competence and if they are not sold off, they could be shelved until they need to be revived.

Once the World Health Organisation, or closer to home, EMA have approved the first drugs, that will mark the game changing point and then it is down to rollout. Contingency must in the meanwhile, surely, be made for different scenaria and portfolio management however distasteful, is in there too.

The fast track process shortens the time between each developmental phase and permits aggregation of phases. Should US or China develop vaccine(s) earlier (quite possible), then it(they) might only need to be tested for elements that are specific to European standards.

The suspicion is that there will be no profit declared this year, and quite probably little profit next year either. Almost all the profits are attributed to the Insurance division and for as long as its cruise and river ships remain anchored up, then every penny of profit will be spent on the costs associated with ships.
From a simple overlay of the share price with Carnival Cruises, the pattern is, to all intents and purpose, a mirror of the other. The inference is that Saga is considered first and foremost to be a cruise operator and not an insurer. If a viable and tolerated vaccine is approved by the late autumn then Saga has a chance to survive intact, but it seems to me pretty inevitable that the company will be split up. And my back of a fag packet numbers suggest that shareholders would be financially better off if the company were broken up. Perhaps Mr Sutherland will hoist the forsale notice? I rather hope that to happen.