Member Info for candidinvestor

Hey HH...I have found a way of articulating the point I am making in one sentence ( plus a useful footnote )

" there is no such thing as a free lunch , ultimately somebody has to pay for it "

Footnote : unless you are Scottish and run off before the bill arrives ! ( sorry , my best friend is Scottish )

My question is who settled the bill, even though no food arrived ?

Here's hopin ..yes I understand that , but who is paying the price for keeping YOUR existing rights , and giving Synthomer more money to pay off part of their debts ?

(Incidentally , reducing debt covenant from 5.5 EBITDA to 3.8 is hardly a game changer )

Let me put it another way .

1 Will the end result of all of this lead to a doubling of the PE ratio , which takes into account both earnings and revised share base ?

2. High PE ratios are not good for future dividend affordability , and hence presumably the resulting like for like share price

Here's hopin...I am not explaining myself well , but raising new equity to the equivalent value of today's equity , MUST result in a dilution of equity for somebody

SO :

Who pays for the additional equity and what's in it for them ?

Here's hopin ..I respect and accept in good faith your logic re protecting current shareholders

My problem is with the bigger picture . .the only way to receive an extra £280 million is to get new shareholders to pay more for the shares today than they were yesterday , for the same piece of the cake ..if they didn't want to pay 60p yesterday , why would they want to pay more today ?

Here's hopin....not sure I follow your calculations

..however this is my take on the situation

1. Yesterday the market value of the total shares held was £280 million

2. Today they want to raise an additional £280 million ...based on yesterday's values then somehow shareholders ( new and existing ) have to stump up an extra £276 million .. I e. double their existing stake ..this is aided by selling you new shares albeit at a discount ..which can only mean a 50% dilution for existing shareholders less whatever discount they end up receiving ..and whatever discount they are receiving has to be stumped up by new investors at an inflated stakeholding cost

My point is why would new shar holders be prepared to do this today , when they wouldn't buy the existing shares at 60 pence yesterday ..

But at the end of the day , have they not in effect , just asked shareholders to pay off £276k of their existing £800k debt , to transfer more of the risk onto equity shareholders , on the prospects of better times ahead

It might take the scenic route to get there , but either way I am glad that I waited on the sidelines..

What is wrong with my logic ?

I agree , it does need to be positive ...I am not one for technicals , because they are no better than guessing the side of a coin , but for some time now , since the beginning of the year , the share price has progressed on a downward trajectory with lower highs and lower lows .

What I do remember from their update was that demand was falling whilst competition was increasing ..worst possible combination ..at the moment we only have blind faith to go on , let's hope something tangible is presented at the next update , or 50p will be the next bottom .

Part of me is saying to wait until the end of October which historically tends to be the worst month for the stock market in general , and then reassess..I accept it could be too late then

I think my earlier post might have disappeared.

Thanks for your kind remarks Wigwammer , as with everyone else , some investments have done well , and other not so ..

With regard to Synthomer , I called out a bottom of 60 pence on here when it was at 90 p ..at some point there will be a correction , and I will likely eventually nvest for many of the reasons you and Josey W have pointed out , at the end of the day , the only difference is the share price entry point

Josey, I take your point about the debt , however like I have said previously, the sign of a healthy company is one which repays it's debt out of profits ( after dividends) in Synthomers case it is selling its assets ( whether non core or not ) and they aren't even paying a dividend

The other factor that is causing me to sit on the sidelines for now , is the lack of visibility regarding its outlook .. management have been not very forthcoming on this , when they have made a statement , it's usually a negative one , but backed up by them saying that it's confident about the medium term , or put another way jam tomorrow .

There will though be good news at some point , and when that happens , the share price will fly ..I just hope I time the move correctly ...right now , for me though at least , the risks outweigh the rewards , and there are other less risky shares which offer a dividend

As always ...MYOMU

Regards

Candid

I am down 15% on this share , and I don't really know why ...at the time an 8% dividend yield on a discount to NAV of approaching 50% felt like an attractive proposition. ..

Reading many of the contributions on here , particularly regarding the index rate increases , I would have expected a steady increase in SP rather than the reverse

Debt isn't really too high , prudent move to reduce it , although funded by revenue earning asset sales rather than surplus profits plus the reduction in NAV narrowing the discount , doesn't help the situation , but even allowing for this, the downward direction of the share price remains a mystery to me.

I do wonder if the additional Grinrod acquisition had a negative effect on the market confidence surrounding the share, but even this doesn't explain a halving of the share price of 12 months ago .

Do others on here feel the same as I do , or is there an elephant in the room which I don't know about ?

Candid ..

In my view the logic for the drop cab be summarised as follows :

1. Too much debt

2. Less demand

3. More competition

4. Inept ego driven senior management

5 Enforced Tracker Fund SELLS due to exit from FTSE250

6. Resulting negative sentiment amongst investors both institutional and retail alike

7. Ongoing backdrop of FTSE sell off accelerating falls

I agree with you there wigwammer it is all about timing on entry and exit. My strategy is stealth moves in and out as quickly as I can and make as much money as I can during it ..and then move on to the next share

I am fully aware of the swings this stock has had in the past and might have again in the future .,that was why I was careful with my terminology . I said that anyone who bought the stock at the beginning have lost money which is true . It was a point about the folly of a "buy and hold forever" investment strategy , especially in the UK . Haven't checked , but I wouldn't mind betting that 80 % of FTSE 10O companies have lost money on their stock price over the last 5 years .

Turning back to Synthomer .I am not sure it has a future and remain independent. It may receive an approach for a take over but with debts of £1 billion the share price will have to drop more to make the acquisition . Yes another outbreak of COVID would be a massive boost , but I don't think anyone would want that .

By the way , describing buying low and selling high , is a contrarian strategy , not a " consensual " one as you call it

I might buy shares in Synthomer , but not now , there are more attractive companies around, to invest in , with less risk and which pay a dividend. Synthomer is not one of those companies ...not at 65p anyway.

Oh my dear Wigwam ..you must be one of the directors !

.

The shares opened for trading in 1988 at 80 pence ..it's now ( 35 years later ) less than 67 pence ..everyone who bought share in this company and held them since the beginning has lost money , apart from dividends , which don't cover inflation , so they have all lost money in " real " teens

Synthomer's problensmight be something to do with :

1. Disastrous acquisition of Eastman , seriously undermining the competence of management ..

2. Massive debts a la disastrous acquisition of Eastman .

3. Requirement for income accretive assets at fire sale prices a la servicing debt taken on due to acquisition of Eastman

4. Interest rates trebled since acquisition and still rising

5. Demand has fallen through the floor

6. Possibly the worst ...more intense competition , what little demand there is out there is being contested by more and more suppliers, leading to a price war ...

.You could say it's the perfect storm ......thank goodness for unconditional support from shareholders like yourself ... God bless you sir

I have spotted a gap in the market for diesel cars ..nobody is making them any more ...the fools ! I am thinking of opening a factory which only sells cars fuelled by diesel ..I have a feeling in the pit of my stomach it will make a lot of money

Can I rely on you for financial support Wigwam ..

Read my name wigwammer " candid " candid investors DON'T short stocks, it's the gambling equivalent of putting everything on red in the casino .

My investment strategy is to buy to the sound of the sirens , and sell to the fanfare of the trumpets. At the moment there is smoke coming from the kitchen , I will wait until the house is on fire , and Synthomer isn't there yet , and I don't know if the house will burn down before the fire engines arrive ..time will tell

Your comparison of Synthomer being valued at £1 billion in 2018 is a naive one . Back then it had cash in the bank right now it has £1 billion in debt , interest rates have spiralled and still increasing. Hedging interest rates will help but it won't repay the principle ..it has no alternative other than to sell off it's other holdings , which means less revenue coming in , to fund huge extra debt ..you do the maths.

It's the equivalent of moving from a 3 bed semi to a 4 bed detached, to impress your family and friends ...but then , interest rate spiralled and you couldn't afford to keep up the mortgage repayments . You are left with having to sell off the land that came with the house , just to keep the repayments up on the mortgage

Mummy and daddy should have been happy with their 3 bed semi and not buy a 4 bed house to impress their friends and family ..likewise Synthomer shouldn't have acquired Eastman to impress their share holders, that didn't work either , the shareholders weren't impressed and sold their shares as soon as they could .

Credit due, your point about COVID is a relevant one and might prove its saviour..

Yes oilpeak ...on the face of it they have made huge mistakes ..as an outsider we don't know if they were justified at the time , but the market makes up its own mind as it has with Synthomer .

Wigwammer get real , it's share price has fallen by 18% in the past week alone . In comparison the FTSE has fallen by 3.5 ,%

I agree with you Alas Smith ..this is a company which flatters only to deceive ...I have a long held view it will fall to 60p maybe lower if October turns out to be a watershed month for the markets ..October often is

Might make a good trading play in November if it's goes below 60p

This is not a buy and hold stock ..as soon as they show signs of recovery the BOD will make an idiotic vanity purchase like they did with Eastman . Instead at the moment they are having to fund the Eastman disaster with items of family silver which will permanently reduce revenue...I think the same should happen to their remunerations , but of course it won't

A good starting point to look at is EPS , ultimately that finances the dividend and hopefully generates a healthy surplus beyond that , to grow the business and fund future dividend increases

EPS has almost halved from last year's EPS and barely covers the dividend ...

How can that be interpreted as good news ?

On the face of it ,Strictly Zinc is right in what he says however I will need to take a closer look at the alternative performance measures before I affirm my view..

Good luck all

Triple whammy of bad news

1. Assets under management reduced to £29 billion from £40 billion last year

2. Investors not investing in active funds ..Liontrust is a hopeless performer in active funds anyway

3. GAM are losing too much money to turn around..this is a vanity acquisition from a team desperate to show investors they are doing something which they are, they are destroying shareholder value..AVOID..

DYOR

Hi thanks for your reply ..very interesting and time will tell ..for the proceeds of the sale I am temporarily in cash in my Sipp earning 3.45% p.a. with no risk , and awaiting any further opportunities to arise ..might leave it there until early November , given that October is a popular month for significant falls in stock markets around the world ..

Lile..you mentioned that nobody goes to trust pilot , and those who do just complain , well have you checked trust pilot for solovair . Their rating is 4.1 in comparison to Dr Martens so on a like for like basis Solovair steal it ...from the reviews I read on Solovair , there were several converts from Doc Martens. If this kind of experience gets out on social media , then you can see what I mean when I talk about the brand's gradual demise..

Incidentally , and this is important , Solovair respond to all negative reviews on trustpilot, backed up by a promise of a refund ...

Conversely , Doc Martens don't even bother to reply to their negative reviews...that says it all , and the contempt they have for their customers. .

From a management and financial perspective , I don't like companies who get their operations wrong , especially when it comes to having to spend £15 million to put it right , with no guarantee of fixing the problem ..if they were capable of fixing it , then they wouldn't have screwed up in the first place ..

For me it has become clear that Doc Martens is a stereotype of other privately owned companies seized by asset strippers, who bleed the company dry by stripping away the company's infrastructure (like customer services , and manufacturing assets , and offer it to the market at inflated prices

I invested in their shares because of the brand and because of the size of the drop after the profit warning

Once I discovered that the shoes have become cheap in quality , the brand will follow ...

For those reasons , I actually decided to sell at £1.56 on the day I wrote my last message on here..it might well turn out to be a mistake , but I am happy with my reasoned and candid research to support the decision I made .

Good luck to all ..

Greetings everyone ...first of all I have had £10k invested here for a while ..I am still down , but less than 5% after today's leap

Yes it is all good news on the face of it and I am holding tight for now ..however I won't be hanging around for long after I have made my money back and perhaps got a reasonable return

My reasoning is very simple , I have discovered that their footwear has become crap quality ...check out their reviews on trust pilot ..barely 2.5 out of 5

Only a matter of time before it's demise as an iconic shoe maker begins ..

Get out before that happens

Good Luck ..