Member Info for CaneToad

But what if the coal price falls back to the $50-$100 range?

Re: Keystones, they're in a totally different league to Knights, with an impeccable balance sheet and amazing growth. Knights is more like Ince... though I take my hat off to the exceptional ability that DB had in offloading such a huge block of shares right at the top. It looks as though the tide might have turned now, but who knows?

Yeah maybe it's the bottom; if so, I missed it. The volume yesterday was good, but I'm cautious as there still seems to be a big background seller. The setup looked more attractive in reward vs risk when sp around the recent low of 67p.

One more thing @Tony. Get a life!

Tony/Stas, how in any way are my figures incorrect or misleading?

You guys are simply promoting your own position rather than wanting to give a balanced view point. You immediately insult people that have an opinion different to your own.

I stated quite clearly that the target price was from a House Broker (WH Ireland) on 27 Feb 2023 (31.6p) vs the view from the same House Broker on 12 Sep 2022 (66p). It has been drifting down for months as has the price itself.

Clearly the target from 12 Sep was their highest, but that is important, because the price has been in decline roughly since 6 Jun 2022.

The fundamentals of the company are good, but they are inextricably linked to the price of oil/gas and so any adjustment to fair value is important.

As I have mentioned here many times. I have a long position in I3E, which I have held for a long time. I welcome hearing opinions different to my own, including those of short-sellers. I have absolutely no interest in hearing your opinions, which border on obsession.

Solid results; good company, but significant downgrade in I3E price target to @31.6p from 66p on 12 Sep 2022. That's less than half of the existing target and this is the house broker who is being paid to help sell the shares... Sorry, this needs to be mentioned for a balanced view, which people here have edited out of their cut & paste jobs.

Anyway - I still think this is an interesting company. The vast majority of listed law firms make their partners rich - not the investors rich. BUT, I think there's a good trade to be had here at some stage. All it takes is for DB to start buying again and/or for an institution to buy. The sector as a whole is struggling at the moment, but that will eventually change.

@Dartron: "Says the guy quoting Stockopedia and misunderstanding the debt."

Nope. There was no misunderstanding at all. The Net Gearing figure that I quoted (94.3%) is correct. That represents their true liability, including all their leases and is a reliable and consistent indicator across companies. That gearing is high. I went on to explain that the lower figure in their RNS is the pre-IFRS figure.

@Dartron: "Does it matter Its only a statistic."

Yes, it does matter if you make a false claim, without checking it, because somebody might actually believe it!

Just to repeat. There is no truth whatsoever that Knights are anywhere remotely like the biggest UK law firm. Have you heard of Clifford Chance, Allen & Overy, Linklaters,..... They are in a totally different league to these tiny AIM-listed law firms.

@Dartron: regarding your comment that Knights is "Currently the largest UK law firm."

That is not even remotely correct. If you look up the league tables, Knights Group is the 62'nd largest UK law firm by revenue. i.e. they are a *tiny* firm compared to any of the big City law firms. They are an AIM-listed company.

@EdwardSeaton: "These endless tiny transactions are nothing to do with 'city folks', Beza."

You sure? Several platforms break up a big sale into seemingly random, small chunks, based on the current volume. e.g. Interactive Brokers does this. It's common. Makes it look like there are lots of small PIs selling, but it's not always the case.

"Thanks Canetoad, fascinating that US investors aren't interested in high div returns (10%) whilst there's high demand for US bonds offering half the return..."

Berkshire Hathaway pays no dividend but has achieved a 20% compounded return for many decades. The attraction of DEC is a high dividend, but it's a mirage, because it's using dilution to achieve it. Have a look at the share count and the book value per share over the past 5y.

Then there's the issue with future hedges being at very low gas prices which might be uneconomic, meaning that the dividend could dry up completely in the future. Yes, DEC will be OK for the next year, but the valuation depends on not just this year and with current gas prices, it's hard to see where the dividend will come from.

@Clued: "Canetoad, why do US investors hate small-cap oil/gas shares ? If sp falls to 90p and div is maintained because profitability doesn't fall, we're looking at a 15% Div...!!"

Who knows? It is what it is. You need to appreciate that there are LOTS of US stocks yielding 10% pa, which have been consistent with their dividends for many years, but even they are not vey popular. Few US investors are interested in companies paying big dividends. And fossil fuel companies are about as popular as tobacco companies. If huge dividends were all it took to bring in investors, then companies like TGA would be sky-rocketing.

@unvrkw: "you’d think Americans would buy US gas shares."

US investors hate small-cap oil/gas shares. Have a look at the likes of SBOW. They've been smashed and are a target for algos.

I had another look at the balance sheet this morning + the recent performance of other listed law firms. I found the following:

- Net Debt is less than I thought @£35.6m, with headroom of £24.4m in £60m RCF. The higher Net Gearing figure of 94.3% in Stockopedia is due to lease liabilities (IFRS accounting). So Net Gearing is not too bad pre-IFRS.

- I looked at peers: MANO, BEG, BUR, GTLY, KEYS, NAHL, KGH, DWF, INCE as a group. With the exception of KEYS, the share prices of all are performing poorly, deteriorating significantly relative to the All Share since mid January. i.e. it's a bad time to for the shares of listed law firms.

Has KGH bottomed? Who knows, but unless I see Director buying, I'll continue to wait until the sector as a whole improves.

In terms of fundamentals, the red flag is the Net Gearing, which is 94.30% (e.g. in Stockopedia). That is high. But overall, I think it's a reasonable stock at an unusually low valuation and a CEO with very deep pockets who has bought and sold large blocks of shares in the past, the last such purchase being @83.9p and his last big sale being @390p. That's interesting!

de-ramper? - year right... I have a long position here. I'll add more once the freefall drops.

Ince is relevant here, because it's a listed law firm with a nearly identical strategy. It's quite possible that there are small-time shorters of KGH, as there were for INCE, but that's a dangerous game and there's zero evidence of it happening here. There's not a single short position big enough to declare - so the simplest explanation is that there are none...

All it would need is for DB to start buying an you'd be toast. You guys need to do some homework before trying to 'educate' the rest of us about KGH...

@Dartron: "This story about selling an audio company to a Swedish buyer demonstrates that the model is valid..."

I don't think it does. The only thing that's important is how much of the revenue is being translated into profit and how the debt pile is being managed. It does look as though Knights are falling into the same trap that Ince found itself in.

(obvious correction: £70.875m)

From a few days ago:

"On 1 December 2022, it agreed a $70.875m senior secured guaranteed note with an institutional investor. The facility comes with a 5.69% fixed coupon and is due in February 2028. The transaction is expected to close in mid-February 2023, subject to certain conditions. The company intends to utilise the facility to redeem the existing Lloyds Bank loan, as well as providing additional liquidity."

I could be mistaken, but that looks to be exactly what they have said/done today.