Member Info for asclypius

bankster - what you say is true at first glance, but the truth of the matter is that it doesn't enrich shareholders as a whole when the company issues more shares and receives nothing from any shareholders in return. It's just the creation of more notional pieces of paper. The only sense in which the company benefits is that it did not need to pay out cash dividends to those shareholders who elected to receive the scrip instead. But, particularly in the case of Naibu, it is the company's core ability & willingness to pay cash to shareholders in the long-term which is at the heart of the questions surrounding the company's valuation. The scrip does not help to reassure that the company is currently undervalued. As I said however, the fact that most of the scrip is accounted for by the Chairman, who expresses his commitment to the company by taking the scrip instead of cash, and who probably finds it simpler from a practical point of view to accept the scrip instead of taking a GBP dividend, does help to reassure. I'm long of this stock, might change my mind at any time, might buy or sell at any time, do your own research, etc.

The value of the trades on the TSX so far today is £13,000. Bad news might be coming but this is not strong evidence of such... this thing moves +- 20% all the time :)

Nothing visible this morning... maybe next week then.

I am under the impression that Q2 fiscal results are due tomorrow.

You are correct sir (IMHO). Welcome aboard. And nice timing with quarterly results due imminently.

My investment in H&T is larger than my investment in Albemarle. H&T is a very well run company, and is hopefully going to hedge out my risky Albemarle investment: a loss of shareholder value in Albemarle is only likely to happen (in my humble opinion) if there is a reckless firesale by administrators of Albemarle's profitable units and its loan book - with H&T the most likely bidder. Although I still think an outcome which prevents administration is more probable. I might change my mind at any time, might buy or sell at any time, do your own research, etc.

Soleman: I am a very reluctant investor in mining companies, and I tend to treat exploration assets as worthless - if you scroll back a few pages you'll see I put a conservative fair value on Orosur at c. £16m. It could be worth less than that, but I think it's more likely that it could prove to be worth significantly more - depending on the price of gold, exploration results, and the execution of strategy over the next couple of years. However, I don't like to bet on too many things I can't control. So I would probably start to sell some of my shares if the market cap was at a premium to my valuation, c. 24-26p. I might hold on to a few in anticipation of very bullish prices like 40p, 50p, etc. Below 24-26p I will just keep monitoring the situation, checking my valuation, and waiting for management to provide long-suffering OMI investors with dividends. PS: There is no "e" in my name. Regards & GL.

I bought some more here today. I propose the following possible explanations for why this might be undervalued: 1) Macro reasons: Gold is down, junior mining companies are down, and Orosur is being given the same treatment by the investment community as the most speculative explorer, despite the fact that it is primarily a producer. 2) Management: The previous management team failed to achieve any value for shareholders. The share price has not been re-rated yet to reflect the new strategy (an improved technical team focusing on costs and cash generation rather than on ounces of production). 3) Earnings: the company has been writing down the value of its assets, so that even though it is generating cash it is still showing accounting losses. Most investors want to see a P/E ratio and positive Net Income, and don't bother with cash flow numbers. Remember that one of the major company objectives is: "To the extent available, pay dividends to shareholders of at least one-third of the Company’s free cash flow from January 2014". Let's hope that they follow through on this, and declare a dividend on Friday.

This share has been attracting interest from Dutch value investors. OVMK Vermogensbeheer announced that they owned 1.68% of the shares as of Dec 13th, while Stichting Value Partners announced that they owned 2.43% of the shares as of Dec 18th.

...would have been warning people not to buy Raymarine when it was at 2p.

British company Raymarine broke its banking covenants in 2010. After a drawn-out process over several months, the company finally entered a pre-pack administration in May 2010. The banking syndicate demanded immediate repayment of the company's debt and then the company was immediately sold out of administration to a US company (FLIR Systems). The administration procedure had the result that the company's bank loans were repaid in full while shareholders received a payment of 19.5p per share. Raymarine shares could have been bought for as little as 1.3p in early 2010. During more than two entire months (Jan - Feb 2010), the shares could have been bought for less than 5p, for a return of >300% less than three months later. The point for ABM investors and analysts, especially the Riddler, is that an administration procedure, broken banking covenants, and failure as a going concern do NOT imply that the value to shareholders is worthless. The value might indeed be zero, but those situations in themselves do not prove it.

I'm fully prepared for the possibiliy of a return of a return of -100%. But if it happens, it will be for actual reasons as to why the residual equity value is zero - reasons which Riddler isn't giving us.

And you have to prove why we should expect that there is no surplus after everybody else has beed paid, for a company with a net current asset value of £30 million six months ago and with most of its units enjoying long-term profitability. But you seemingly don't want to bother actually doing that. Most firms entering administration don't have a mountain of salable assets like Albemarle does.

That's exactly what I'm talking about - and I would prefer to enter administration than to accept a derisory buyout bid. TBH I don't think you understand how administration works.

You didn't my question as to whether you accept that administrators are legally obliged to pass any surplus to shareholders. You also didn't make any attempt to show why that surplus will necessarily be zero. Have a good day Sir!

What do you mean by meaningless? This is not a serious argument you're making... I'm inclined to withdraw from the conversation.

Needing cash to implement a turnaround plan does not imply that the NAV is zero!

Going into administration after Feb 3rd (which itself might not happen) does not necessarily lead to a zero return for shareholders. Administrators are legally obliged to provide shareholders with any surplus after creditors have been paid. Do you agree with that fact? Then, would the surplus be zero? It might be. It might not be. I've been trying to figure out what the surplus would be. You seem to be certain that it is zero, but I don't see why that should necessarily be the case. We are talking about a company with £94 million in CURRENT assets as at the end of June this year, soon-to-be-broken covenants relating to bank debt of c. £50m, and total liabilities c. £64m. If you don't want to do the calculations yourself, look at the ones I've provided already on this board and show me where I am likely to be wrong. If fresh equity capital was raised (not a scenario which I am expecting by the way), that could also lead to a satisfactory outcome for shareholders from current levels. A share price of 20p values the existing equity at £11m. Equity raising could lead to a dilution so that the currently existing equity only owns 20% of the company, for example, but then the freshly recapitalised company ought to be worth in excess of £50m, assuming that the distress was resolved and earnings stabilised, and buyers at 20p would make a fair return. It's highly uncertain/risky but I simply don't understand your apparent confidence in a likely outcome of zero return for shareholders. I don't think you've presented an argument or much evidence to back up your claims here. And if it is true that a highly successful distressed investor is circling for the debt, hoping to buy it at a discount, it only helps to prove the tangible asset base controlled by this company. It seems to me from the limited information which is available in the public domain that the distressed investor ought to be confident of getting most or all of the loan repaid. If it does get all of it repaid, then every single excess penny is owed to the shareholders.

They have to report trades by any of their clients. 2,000 shares used to be worth a more considerable amount!

To remind ourselves, June 2013 figures: Current Assets £94m Liabilities £64m Leases £38m Implying that liquidation value is something like £30m minus operating losses since June, advisory fees and the fraction of the leases which will be broken. I would be very disappointed if this was less than £20m, although I accept that this is possible. Based on H&T's valuation, I believe that ABM's going concern value should be something like £45 million minus the above-mentioned costs. The extra factor is that the debt holder has the option to pull the value down to liquidation value when the amount become repayable on demand. For that reason, if there is really only one entity (EZCORP) which has the ability and willingness to deal with the debt holders, then it seems to me that it will be able to buy the company as a going concern, while paying only fractionally more in the auction than other shareholders perceive that they are likely to receive in liquidation. I still expect to receive a return on this which is significantly higher than the current share price, so I'm holding on. But it's a scary ride and I don't blame anybody else for jumping off.