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Good luck to all LTH’s here that have today seen the start of a possible turn around for PFC.
It’s all very well for newbies or people like me who have just returned in order to make a fast buck, but I do know how crushing a massive drop in sp can be.
Despite the baggage and the doubts I have about it, I’ve decided to stay in for a while - although 60% gain by the close was a tempting proposition after just two days (it was 85% at the peak). Not that I’m suggesting that investment decisions should be based on sentiment - I'm here to make my investments work.
Let's see what the next phase brings.
'This is a market, a company goes bust, up front payments are seized …'
Guarantees will be in place to protect the client and those will depend on the financial stability of the contractor.
There is a cash flow issue affecting the balance sheet this affects the guarantees causing a delay which affects the balance sheet which affects the guarantees ...... etc etc
Sure they added. Check a trading chart for yesterday and this morning - a couple of shorting runs to drive the price from 20.87 down to 20.00. and then re-load. Shorting isn't magic - - or invisible.
AND watch the after-hours buying tonight that's been going on at the closing price of 22.36 .
Innocent buys anticipating a rise or shorters re-charging in order to go in the morning?
https://invst.ly/12q6wx
I genuinely don't know but, as I said in a thread earlier, shorting doesn't affect fundamentals and - unless you are day trading - it's a distraction.
Temple of Doom: The kind of contracts here are of a scale that has different kinds of guarantees associated with them. This isn't a local builder or handyman. Those guarantees are one of the reasons the cash flow needs to be flowing more smoothly than it is currently - much of the problem is a matter of timing. Chillax and keep scalping - your activity, along with the rest, helps fill the dips, even if you are also tending to blunt the peaks .
The sp is making a step in the right direction so far today, especially if it closes above the three month red trend here: https://invst.ly/12q0np
PFC’s current problems lie within the balance sheet, pure and simple. They’ll either fix them or they won’t - and the sp will eventually move accordingly. Shorters have no control over the fundamentals, LTH's should not be distracted by the current emotive noise but focus on how the company deals with its cash flows. Don't expect too much tomorrow, either.
As there seems to be some anxiety and confusion here about short positions this link to Castellain Capital short tracker might help those who want to keep an eye on the position, it’s updated every day after the close and gives the dates of changes;
https://shorttracker.co.uk/company/GB00B0H2K534/
My understanding is that the shares on loan can be traded flexibly.
Looking at volume of transactions, Dec 4th, date of the last RNS and business update, recorded the highest volume in over two years and was over twice the volume of any other day during the period, thus establishing something of a reference price level. Today’s volume was about 15% as much:
https://invst.ly/12pks9
Closing price that day was 20.82p, up 3.81 (22%) from the previous close of 17.01
Since the 4th, sp activity has been mainly above 20p as it approaches the two and a half month downward red trend which it does need to break in the next two days in order to stay level or push upwards:
https://invst.ly/12pl6d
Given that, it seems unlikely that Wednesday's statement will contain anything to undermine that of the 4th, in which case I think downward pressure on the sp should be lifting by the weekend.
In view of this, I bought a few today during the afternoon dip.
Closing above 25 would be good: https://invst.ly/12p6at
……Averaging up doesn't mean selling as the price rises, it means buying more on anticipation of continued recovery / rises.
I agree Petrosaga but all sp’s cycle as they follow a much longer up or down trend. My approach to averaging up is to sell some as close to the peaks as possible and then add as near as possible to the lows. Averaging down, in its simplest form, is a mugs game: where investors just end up accumulating more as the price goes down in the vain expectation that it must turn at some point. The truth is that no individual share realises a profit until it is sold for more than the price at which it was bought, even if the average book value obscures this obvious fact.
…..over 6 billion awarded in contracts in one year really is terrible isn’t it?
No eurofil, indeed it isn’t, and that’s my point.
As ten years of history show, PFC has been in similar ‘good order book’ positions time and again yet the business has continued to decline. 2021 was supposed to draw a line under PFC’s decline, as was 2018 before that. So I’m asking what has fundamentally changed that will make 2024 any different? It just looks like Groundhog Day again to me.
I’ve been on the outside looking in at PFC several times before, although today the position looks perilously dire and I’m hesitant about taking another punt.
As has happened before, after taking a dive, the sp looks like a bargain as the order book looks good but cash flow is a major issue and assets have to be sold to cover ongoing costs in the interim. Since 2017 this familiar cycle has never quite led to a full recovery and the net effect has been another step downwards for the sp where, over the last nine years, the baseline has moved from roughly 650 to 380 to 100 and now 17p, leaving gaps that will probably never be filled.
When I took my third or fourth punt at PFC, after the SFO case was settled two years ago, I was again careful to take profits as it rose and to exit when it fell: I’ve learned that trading and averaging up as a share rises is much smarter than averaging down as it falls.
In August 2018 the company had made a convincing comeback: there seemed to be general acceptance regarding an SFO fine and this was baked into the sp at that point. A cautious article at the time spelt out the position
https://www.investorschronicle.co.uk/shares/2018/08/29/growth-eludes-petrofac/
The article basically says: ‘The company's shares have been in recovery, but are not yet supported by the backlog. Shareholders were presented with a new strategic goal: a book-to-bill ratio of at least one. In other words, the group wants to reverse its current trajectory and grow the top line [ie revenue].’
It strikes me that today’s position is due to a failure, for whatever reasons, to achieve that aim. So what, after all this time, has changed to end this ever diminishing spiral?
A cynic might observe that PFC's best years were when corruption was apparently a key part of doing business and, perhaps because it has been sanitised, it can no longer compete as effectively as it once did in certain markets.
The collapse of PFC’s sp over the last ten years, and more particularly since May 2017 is a sad picture. No green lines to challenge the downward reds since the SFO case began:
https://invst.ly/12o64i
And, two years on from resolution of the case and a 'new beginning', there has been no encouraging sign of recovery in the meantime:
https://invst.ly/12o6ct
Is the failure to build the business back over the last two years due to poor management? Did the SFO story simply mask more fundamental problems with the business? Having got burned in 2017, it is hard to imagine how I could be persuaded to reinvest in PFC, even as a penny share.
I don’t recall saying that the long term trends would necessarily be strong - they are significant indicators rather than points of resistance, although they have the potential to delay progress as could be seen this morning: https://invst.ly/12nyg6
750 remains my target as a baseline to attack higher levels.
All fairly bizarre as I actually think OCDO is overpriced but I’ll make money if the market is determined to push it up until the next results come in.
In the context of long term recovery, 750 is now a key marker in my view and OCDO is on track currently:
https://invst.ly/12mx56
It does, of course, have to smash through the two significant red trends that stand in its way.
There's patience and there's common sense.
An sp may fall and, if it does so, there are simple tools to indicate when the price is recovering or if the slide is continuing. If CWR is ultimately to be a success then there'll be a turnaround and there'll be plenty of opportunity to get on board- it isn't going to Berenberg's target of 925 overnight and it's firstly got to escape from the last three years of decline, shown by the main red trend here: https://invst.ly/12mwlw
If it gets back above 300 by 1st March '24 (ie back above all the red and green trends shown) then it may be worth considering but until then the brutal truth is that Ceres looks like a busted flush: it had its window of opportunity but has failed to convince energy majors or, perhaps, been surpassed by other technology which looks more promising. Hydrogen was always going to be a challenge and maybe Ceres isn't the one that's destined to crack it.
An interesting time in terms of Shel's sp:
https://invst.ly/12mkh4
Red, Green or Blue? They can't all remain intact into the New Year.
I’m not sure it would fuel inflation Getafgrip but I’m not too familiar with the bond market. I’ve always simplistically inked inflation with money supply - so, for example, when the UK started chucking extra money into the economy during COVID it wasn't too surprising for me when inflation came later down the line after about 18 months. It suited the central banks and others to blame high fuel costs, of course. But the simple fact is that money that isn't earned is surplus and fuels higher prices, which only the rich can afford, whilst the poor have to go without.
Isn’t the problem with low coupon bonds that they give a poor return (yield) for the capital originally invested in them compared to newer higher coupon bonds. Selling them off doesn’t change the coupon - which is fixed - so they can only be sold cheaply in order to attract a buyer that then gets a more attractive yield in line with the current market? The loser in this situation is the seller which, in your scenario, would be the current Chinese holders who would receive fewer dollars per bond than they bought them for. When the bonds mature the new holder gets more than they paid for them and that gain matches the loss of the previous holder(s). No extra cash is created so there's no inflationary effect (unless I've missed something - which is quite possible!).