Member Info for BillBursio

Share dilution. You know, doubling the number of shares issued, with over half in treasury, like an AIM share.

I thought I might find some interesting analysis of HBR on this chat board. In particular, I was hoping to find some light cast on the extraordinary share dilution exhibited by this company. It seems to me unusual for a $2.6b market cap firm to have engaged recently in a share dilution spree of over 100%. I see also a massive decline in working capital, -$3.7 billion and an even more unusual negative book value of $800m. To me it looks as though what you buy with this share is a huge pile of debt. Even if they make some profit, most of it will be taken in tax. If someone could contradict me, I would be most grateful.

Simply Wall Street (for what it's worth) has a fair value estimate of 62 GBX, describing it as having a, " Flawless balance sheet with proven track record." However, it does forecast a 9% decline in earnings over the next three years. However, there is no doubt in my mind that the offer price is much too low. Their methodology is explained:
https://support.simplywall.st/hc/en-us/articles/360001741016-How-is-fair-value-calculated

https://www.mining.com/web/global-copper-market-to-see-155000-tonne-surplus-in-2023-says-icsg/

The above forecast suggests a fall in the price of copper due to global recessionary trends. The consensus forecast for average copper prices in 2023 is below current levels at around $7,660 per tonne, according to FocusEconomics with the lowest prediction at just $5,430 per tonne and the top end at an uninspiring $8,775 per tonne.
Doesn't look good for miners with high AISC, like ATYM, but CAML has very low costs and should weather the storm. better than others. That's my hope, anyway.

@Bowlers12: The Kaz government called on Putin for help to subdue political unrest only last January. Kaz is part of the Russian equivalent of NATO, so not as independent as all that. Within hours, Russian forces were all over Almaty and over 100 troublemakers were shot. Kazakhstan has been lucky to avoid sanctions.

The share has traded between 25 and 50p for most of its listed life. Obviously, its better to buy it during its dips and sell it without bothering too much about the irregular divvy. I would describe it as the perfect speculative penny stock. Don't get me wrong. I'm a big fan, though not holding just now. It's almost certain that I'll buy it again, but here is no such thing as a "keep forever" share. It goes without saying that I expect the SP to fall a bit more.

STCM has been high on Stocko's ranks, particularly since the recent momentum surge. It didn't look so good back in March, when the tenge collapsed. However, this was a big opportunity for those in a position to top up (or enter). It's all come good now, but the political cloud still hangs over this former soviet republic. It makes Steppe look a bit like Ferroxpo, or Enwell. It seems unlikely that the company can grow, having flatlined since 2007, which no doubt explains the generous, though sporadic dividend. Given that a slight decline in future earnings is forecast and dividends are not well covered, it seems unlikely that the share can hold it's current, probably fair, price. I'm sure everything will be fine, unless Mr Putin and his siloviki mates don't invade Kazakhstan ;-)

Simply Wall Street has a fair value estimate of £4.80 and is generally optimistic about the future of AAF. However, the SP has been falling since the end of July and entered a "Death Cross" around the start of this October. I think the main cause for concern is the effect of higher interest rates on servicing its debt, as its net gearing is high at around 70%. Also, much of its revenue is in currencies that have lower resilience to the surging USD, adding to liquidity worries. I think that so much is right about this company that, so long as it can stay above water and keep paying down the debt, it will come good. As to how low it can go, I think 100p will be a psychological barrier. So some time during the next couple of weeks looks like an opportunity. I don't hold any AAF, but have been watching it for some time. I may even have convinced myself just by writing this to spend a bag on it right now.

The overvalued USD is to blame for the depressed prices of all commodities, including gold. I quote from a recent FT article.
"... the dollar remains at irrational highs — by one measure nearly 40 per cent more expensive than at any point since 1980 — and a further rise could trigger a global recession."
https://www.ft.com/content/38ca6bdd-068e-4fe2-a684-484a5725ad8d

Well, here's another, more compelling graph of the inverse relationship between the USD and gold:
https://img.capital.com/imgs/articles/750xx/Gold-forecast-2_-MCT---7326_EN.png

There seems to be more pessimism about the gold price. This is linked to the strength of the dollar index. If the USD continues to strengthen, then the price of gold must fall. I have seen some forecasts of $1650 for 2024:
https://thedocs.worldbank.org/en/doc/24e8d315b8229b791ea61e0fa09b28d0-0350012022/related/CMO-April-2022-forecasts.pdf
At that price, many diggers will be struggling, including PAF. Should I dump this now?

We are still living in the shadow of the 2008 credit crunch, Gordon Brown's doubling of the running cost of the British state, the subsequent low interest rates and the consequential asset bubbles. These problems are likely to persist beyond the lives of several parliaments, regardless of which set of economically illiterate politicians claim to be running the government. Britain has been living beyond its means for a long time. Now all the chickens are flying back in ever greater numbers. A combination of growth, higher productivity and tighter money is the only solution. Sadly, it is likely to be politically unpalatable to the majority of voters who will continue to consume today the prosperity of future generations. The only ray of schadenfreude is that the Eurozone is actually in a worse place on all metrics.

lordloadsoflolly - Very true, I should have hung on. But I'm unhappy with a P/E of over 15 for small firms and want a ROE better than currently available with HAT (not hard to find). However, I notice that the CEO draws a salary that consumes about 10% of FY21 net profit. Now that's what I call a good return. Many thanks for your robust challenge. I don't get out much and it's quite possible that I'm too bearish about everything. If you don't think the tide is going out, that's fine, but I can't see anything other than the danger of too much momentum. On most metrics, it looked a better company in 2020 than it does today.

I'm sorry if my earlier post sounded harsh. It was not my intention to offend or enflame. However, I am sincere in my belief that the share is underweight. My not entirely random figure of 320p was based on the 200 week MA, and a number of others things. By "poor quality earnings", I was referring to the ROCE, ROE and ROA, all of which have declined a bit since 2020. I also don't like its Debtor’s Turnover Ratio compared to others. As for being an AIM share, I note only that over 90% of its shares are already on the market, just like a grown-up, main market company. I bought a small number back in April 2020, in anticipation of the recession, kept them through some bad times and sold them in May this year , a gain of about 20%. It seemed a long wait. So, I was surprised to see it go as high as it has recently, devouring the already slim divvies on the way, but now look what happens; the company cashes in on the elevated share price.
I've got nothing against HAT, it's on my watch list and I'd buy it again if the price were right. I'm just not sure it is.

The share price is above all rational expectations, given poor quality of earnings, rising debt and unexciting divvy. A fair price for this AIM share is in the region of 320p (on a good day).

I managed to avoid this company, in spite of quite tempting SP gains over the last few years. Looking at my notes, dated 01/01/20, I see that I wrote, "negative equity and falling eps" and that probably put me off. It's been on my long watch list ever since because IOM companies are often quite interesting ;-) The other thing I wrote was, "funny place to make thermostats." Looking further back, I see they were quite prosperous before going public and taking on too much debt.
A lesson for us all, perhaps :-)

The thing that bothers me most about this venerable company is the valuation of its large portfolio of patents on the balance sheet, without which its gearing would be over 130%. Intangibles are hard to value accurately and, when tested in the market, often fall short.
Second, I see that there has been little progress in the SP for many years. In fact, it was higher in 2007 than it is today. Given that it's been around for such a long time and listed since 1946, it qualifies as a sort of dividend dog. It seems cheapish at the moment, but might look cheaper before the end of the month.

I looked at the filings at Co.House, hoping to find some money or evidence of growth. I looked at the company website to find out what products they list and got this:
"This site can’t provide a secure connection
zamaz.co.uk sent an invalid response."
Clearly they have some snags to sort out ;-)

We live on the side of a hill with a 70 yard driveway. It amuses me to see posties reversing their vans up the drive just to deliver a few scraps of flyers. The odd thing is that the women posties (is it permitted to call them that?) all walk or, more usually run all the way up - and down. I am told posties were on strike yesterday, but I didn't notice. We still received deliveries, cat food, I think. Clearly, it would be more productive to employ women posties, as their diesel costs are much lower and they look fit ;-) The rest of you need to wake up and pay attention. Letters are finished, junk mail is done for, and somebody else is going to be delivering parcels ... Oh! they are already.

I can't believe I am still holding these since 2019, during which time I could have got out with a modest profit on several occasions. I've more or less written the money off now and no longer believe anything this company says. When I bought in, I was surprised to be charged stamp duty and phoned my broker, only to be told that Serabi hadn't applied for the AIM exemption and that I should complain to the company about it. I did, and was shocked to be told that they weren't even aware of this issue. Recent quotes show they have sorted that out now ... but I haven't bought any since. Do they really know what they're doing?