Member Info for asclypius

I have decided to quit my job and find out where the Riddler lives. Hopefully by camping outside of his house for long enough, I'll eventually learn the secrets of his success. I'll learn to be just as rich and successful as he. What a legend!!

That is a ridiculous thing to say. You've produced some shockingly poor arguments here, and I wouldn't be so rude about it except that you keep insisting that you've got everything figured out. Anybody with a bit of competence could tell that you're an amateur with a very superficial understanding of what's going on. For the avoidance of doubt: I have always maintained that the shares could be worthless and admitted that I don't know what the final outcome would be. I have repeatedly warned that these shares are not suitable for those who can't afford to take a loss of 100%. But my efforts are probably wasted here, especially dealing with the likes of the riddler, which is why I am likely to stay away and not bother.

Riddler's analysis is of extreme poor quality, e.g. below, failing to distinguish between market capitalisation and asset value. I've seen analysis slightly worse than his, but I haven't seen it repeated so insistently and so often.

The fat lady is clearing her throat, but she isn't singing yet :)

Management are under no obligation to agree to a pre-pack administration. Their duty remains to maximise value for shareholders, which may be achieved through opting for a normal administration procedure instead of giving in to demands for a cheap pre-pack. I trust that they will make the right decision. They should not accept a valuation of less than £65 million IMHO. As for investors - anybody who bought recently should have understood that they were buying an option on the company. Even after writing down my ABM shares to zero to allow for the worst-case scenario, my long-only accounts are breaking even against the market so far this year (after outperforming last year). If you can understand and control the risks you are taking, and your emotions too, then there is nothing wrong with entering into some high-risk situations such as this.

I will engage with you after you have gone to school and learned some finance.

The shares might be worthless, but let's wait and see what happens next. According to the material in the public domain concerning the company's financial position operations, in my opinion, it looks like it should have an enterprise value which is higher than the debt level of £50m. There are likely to be multiple potential buyers. Let's be patient and await the final outcome.

It looks like they might end up selling the business "at a level below the current level of financial indebtedness". Granted that I'm just an outsider and the current trading performance might be awful, but it seems to me that anybody who manages to buy this entire business including all of its obligations for less than £50m ought to do extraordinarily well in the long-term (which perhaps explain why two of the smartest distressed debt investor groups in the world have been rumoured to want to buy it). I haven't got any reason to change my £65-70m valuation for the underlying business. I hope management continue to hold their nerve for as long as possible and ensure that they get the highest possible bid.

I shorted this on Friday... good start but I'm in it for the long-term. I would have preferred to short Boohoo but nobody was willing to lend any of that stock out.

It's in auction after somebody was a bit aggressive on the buying front.

Decided to buy c. 0.4% of the company at 8p.

Somebody else wants to buy the debt. The company still wants to implement a restructuring/turnaround plan. I still perceive the possibility of residual equity value here, but I could be wrong. I need them to return value of £12m to shareholders to make a profit It all comes down to whether you think the company is worth more than the debt they are carrying of c. £51m. I think they are worth more than that, but then again maybe not. H&T (which is a large component of my portfolio) currently has a market cap of £65.5m, while carrying net debt of £20.7m as of December. So enterprise value is £86.2m there (and for what it's worth, I think that will prove to be an undervaluation). So ABM shares are worthless if Albemarle is worth less than 59% of H&T (i.e. less than £51m, or 60% of £86.2m), despite being approximately the same size and doing approximately the same thing. On the same basis, I will lose money if Albemarle is worth less than 73% of H&T (this assumes that H&T is not undervalued at current levels and in particular that the H&T valuation is not pricing in too many benefits from a potentially shrinking Albemarle). The distress of this situation, with associated exceptional costs for restructuring, advisory fees, etc., means that Albemarle's valuation is certainly facing some serious headwinds. But let's not forget that there is still a £37 million pledge book on which an 8-9% pawn charge is being received every month. The company made an operating profit of £11.3m last year before the exceptional costs. Those who can see past the pain of short-term restructuring costs and industry consolidation could see a lot of long-term value here. In the short-term, my research suggests that they are being more careful with the loans which they are extending now. Additionally, their gold assets should be getting a nice boost from a recovering metal price. They are hitting against earnings-related covenants but haven't actually defaulted on any interest payments or breached the ceiling on the constrained overdraft facility. This remains only a share for those who have the stomach to lose 100% of their investment and/or to sit through potentially painful legal procedures, given the risk of a disorderly liquidation on behalf of a creditor. It remains a distinct possibility that the shares are worthless (but as a shareholder, on the basis of the information available to us, I don't think I would vote for any procedure which gave the company an enterprise value of less than £65-70m). Do your own research. This is just my humble opinion and is probably full of errors. I could change my mind and buy or sell at any time.

Very sorry to hear about your loss. Were you diversified? Hopefully you will make the money back again in due course.

I promised to ignore you - will try to keep to my word. So long.

An unrealised share price deterioration is not a loss, unless you capitulate. I have had large unrealised losses before, but I refused to capitulate and was eventually proven right. This is the difference between investing and trading/speculating (nothing wrong with trading, but it's not the same as investing). The value of Albemarle shares may or may not be zero. Nobody knows for sure yet.

The directors and staff have granted themselves up to c. 3% of the company through the grant of 2,550,000 share options with strike price at the current level. One third of the shares vest immediately, one third a year from now, and one third a year after that. The CEO has half a million of these options while officers and employees have 1,250,000. Dilution is never a wonderful thing but I think this may improve the return outlook, particularly for those who buy at the current level: management, board and staff are further aligned with shareholders. If the share price rises to 30p, for example, the CEO's share options would be worth around £90,000. If the share price goes nowhere from here, they are worthless. The value of the share options at 30p SP is about two thirds of what I understand his basic salary to be.

Thanks for your opinion. I'm more of a buy-and-hold guy than a sell-and-buy-back-lower sort of guy, but thanks for your advice anyway. If the dividend is counted in, my average entry price at H&T is 139p and I intend to hold until they prove that they can earn £10m per annum again and this figure has a fair multiple attached to it. The current market capitalisation is £65m and so I am not selling. Good luck.

Correct, they did factor in the problems at Albemarle in their recommendation. I merely point out that the buying pressure came from a single, public tip-off to the PI community, not as a result of anything more sophisticated or meaningful. kline - what's your long-term earning projection for H&T? I think they should be able to earn around £10m Net Income p/a again in a couple of years. Your 135p values them at less than £50m. They earned £3.3m in the 6 months to June 2013! I'm still expecting a debt-for-equity solution to Albemarle. I just hope that management make the case for a reasonable enterprise value for the company. It doesn't look to me like it should be a difficult argument.

H&T has jumped purely because it was tipped in the Investors Chronicle (although I agree that it is undervalued - I own it). As for Albemarle... I would continue to challenge people to think about it in terms of enterprise value (the value of the debt and the equity combined). It's the right way to think about it and it makes the current share price attractive, in my humble opinion, for those who can stomach a high-risk situation. The range of possible outcomes is very large and includes an unusually large possibility of shareholders being left with zero. Most private investors would be better off not getting involved, because of this possibility.

Good luck kline. I still think the risk-reward possibilities are ok here, for those who can stomach the possibility of losing 100% of their investment. Nothing further to add to what I have already written on this board. Sitting tight now. All the best.