George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
Disappointing update I felt. My take on it was that the Board miss priced risk in the past and made a distinct mess forcing Accredited sale (we knew this). But yesterday's RNS told us that the Board have had to sacrifice a further $100M in value over and above what was expected, to sort it out. I view as the lenders are now the people with significant control, not the Board. I suspect there will be further downside, not upside.
And in addition, as time continues, an ever increasing proportion of the intrinsic value of each share is backed up with cash. Not client cash...but owners' cash. With £1.23 = £1 yesterday, the cash pile must be currently worth a solid £10 per share.
Calculations:
Approx 77.78M shares outstanding at close of business today, assuming about 30,000 purchased today. (see RNS tomorrow)
Approx $1Bn cash held (it was $985M at 31 March). See RNS of first quarter trading update.
Assume £1=$1.25 and the $1Bn translates into £800M today.
That's more than £10 per share as a margin of safety when buying Plus.
I am a holder.
That's a fair challenge gglvr. I thi k we are on the same page. My aim is not to precisely value the business but to fotm a firm view as to whether buying at today's price offers a margin of safety. I think so.
I calculate that share owners cash per share as at 31.3.24 is £9.68 using £1=$1.30 as an approximation. So the business, in my view, is valued by the market at £10.50 a share if you put the cash to one side. What terrific value. Only employs 565 people at the end of Dec 23, so turnover is more than $1M per employee. I never worked for a company that could achieve that leverage from its employees.
Sorry, the column headings are:
Date (yymmdd)
Shares outstanding in M
Cash in bank $M (that's owners cash, not client cash)
Cash at $1.30 = £1 in £M
Cash per share on balance sheet (owners cash) in £
Happy to be led to believe I am not right but as far as I read the announcements and RNS, doing some maths with cash on the balance sheet (that's owners' cash, not clients cash I think), and the buy backs this is a larger set of calls which I think shows a lot of value here:
Date Shares Cash in Cash a Cash per share
yymmdd O/S (M) in bank $M $1.30=£1 on bal sheet
190701 113.310 $327 251.5 £2.22
191001 111.650 $297 £228.5 £2.05
200101 108.973 $292 £224.6 £2.06
200401 107.045 $515 £396.2 £3.70
200701 105.975 $587 £451.5 £4.26
201001 105.050 $723 £556.2 £5.29
210101 103.416 $593 £456.2 £4.41
210401 101.901 $675 £519.2 £5.10
210701 101.331 $721 £554.6 £5.47
211001 100.926 $767 £590.0 £5.85
220101 100.212 $749 £576.2 £5.75
220401 99.435 $866 £666.2 £6.70
220701 97.568 $995 £765.4 £7.84
221001 95.382 $950 £730.8 £7.66
230101 93.296 $930 £715.4 £7.67
230401 91.510 $950 £730.8 £7.99
230701 82.303 $849 £653.1 £7.94
231001 80.664 $875 £673.1 £8.34
240101 78.932 $906 £696.9 £8.83
240401 78.266 ?? £9.42 TBC
The only bit of poetic licence above is just using £1=$1.30 all the time, which is an approximation.
Anyone concur that cash value per share is ramping up and that therefore the true value of the underlying business is not only not recognised, but the degree to which is it not recognised is accelerating ? Hence, I think there is value, even though the share price is currently at highest ever as I write (I think).
I did some calculations about how much cash on the balance sheet was attributable to outstanding shares (which are diminishing) quarter by quarter to
£2.22
£2.05
£2.06
£3.70
£4.26
£5.29
£4.41
£5.10
£5.47
£5.85
£5.75
£6.70
£7.84
£7.66
£7.67
£7.99
£7.94
£8.34
£8.83 (31 Dec 2023)
With fewer shares than has been the habit having been bought back during calendar Q1 (about 666,000 rather than 1.5-2M per quarter in past 2 years), I think the cash per share at 30 March could be at least £9.24.
For me that means that this highly cash generative business (after setting the cash aside) is worth just about £10 a share based on Mr Market's efficient market hypothesis.
I think it's worth more myself. The cash on the balance sheet in the trading update will be very interesting - hoping to see above £9.24.
All my calls are based on RNS statements.
My view is that management could have made a better effort to be clear.
London & Amsterdam Trust Company 85,100,257 26.34%
Pension Protection Fund 73,966,672 22.90%
Goodweather Holdings Limited 45,500,000 14.08%
Schroder Investment Management 15,618,416 4.83%
Janus Henderson Investors 10,606,920 3.28%
Which one of these is another name for Peel Holdings ? Goodweather ?
The summary results look very encouraging. 2p is still a small dividend though. If new business strain is so low at 0.9% and cash generation is good, cash will just pile up unless it is somehow spent. Such an interesting proposition.
As Warren Buffett and Charlie Munger have practiced and advised for decades...'be greedy when others are fearful and fearful when others are greedy'. They advise investors to buy shares that you would be comfortable owning for a very long time and not to worry about short term volatility. That's what I am trying to do...
I wonder, could the state of RQIH be a 'cigar butt' of the type that Buffett liked to identify and get control of 60 years ago - because the sum of the parts has a greater value than the market cap, albeit, there is a lot of awkwardness to work through on the way to a sunny outcome ?