Member Info for CaneToad

@Baoxiou: have a look at page 20 of the Quoted Data paper from a few days ago. Unless I am mistaken, the new facility is 5.69%. From what I gather, this facility is not from a bank.

@Baoxiou: "This means they are drawing down debt to fund a dividend - doesn't sound healthy."

NO... All REITs have to return 90% of the cashflow so there's limited chance to pay down debt; instead, they roll the debt over and/or eventually issue more shares. That's not a bad thing when inflation is reducing the debt by 10% a year. Nothin unusual. What it means is that the risk of not being able to roll the dbt is gone. This is as expected. If you were expectign the debt to be paid down, don't invest in a REIT!

I see no significant (declared) short positions; perhaps it could still be manipulated, given how low the volume is, but I think it's more likely a large holder offloading their shares. It reminds me of Ince, where the selling took many months.

The question is whether or not DB buys any more. He sold £61m worth @390p/share in Jan 2021. He has no bought many back since.

(Correction. the fwd pe is 3.7. But that's still low)

@Yuri: You could be right, but I don't think it's that grim. It's difficult to argue that a forward pe of 2.9x is super expensive. I do share your concerns about the debt situation though. But the CEO has a history of making major purchases here. I'm sitting on the sideline with a tiny position, but will dip my toe in if/when I see any evidence of the freefall slowing down.

The facts are nothing but good here lately and in view of that I'm adding. Investment grade rating reaffirmed + the recent 2 RNS reduce a lot of risk here.

I'm undecided if the deal is good or bad as I don't have a crystal ball. If it uses a lot of our cash, buying an asset that nobody except people HERE value highly, then it worries me it's a bad deal. Coal could easily drop significantly from here and any arguments about net cash would evaporate. What if coal drops to $50-$75?

I'm undecided if the deal is good or bad as I don't have a crystal ball. If it uses a lot of our cash, buying an asset that nobody except people HERE

If there's so much buying, why is the price continuing to drop? Perhaps it's shorters, but I expect it's more likely an institutional seller. I'm watching for a bounce around the vicinity of 68-70p.

While I like the company, I am not in love with it. In terms of fundamentals, the company is currently rated as a 'Value Trap' in Stockopedia. Whether or not you believe or like Stockopedia is unimportant, but it is a fact that many UK investors, including some fund managers use it and that is another reason why I am positive, but cautious.

@Stas: Regarding the dividend - I was clearly wrong. I am often wrong in investing and am happy to accept and adapt, once that becomes clear. I welcome the increase.

One more thing @Stas, how I have been wrong? I have remained invested here the entire time. In fact, I started a new small tranche yesterday. It's just that I have not jumped in and madly bought up loads more of the stock as it dropped from 30p to 20p a share, preferring to see a sustained energy bull market develop, rather than a single day jump, which is completely meaningless. Investment Banks don't have any more of an idea where the oil price is headed than anybody else, or they would have made a fortune back in 2020.

Unlike you, I don't mind reading negative comments, nor do I mind hearing from short sellers. This board is totally useless if it's just a chorus of good news.

Re: dividend sustainability. It's very simple. If oil/gas drops substantially, the dividend will eventually be cut. As mentioned, I don't think that's going to happen, but these things are not binary. It is a possibility. That possibility is one of the reasons the share price is dropping.

@PanamaPete: Canetoad, may I recommend the film Melancholia (2011). Think this would fit with your doom monger outlook.

Some of us try and avoid buying loads of stock when it's in a downtrend and ending up with a huge overweight and undewater position. Good luck to the 'buying because it's rude not to crowd' - everybody is free to follow their own strategy.

@HotChip: "But I do wonder if this is sustainable with reducing commodity prices, certainly in the short-term"

In my experience, it's not sustainable - at least, it's not for commodity companies. How many energy/mining companies do you know that have paid a 10% dividend for more than a couple of years? High dividends are usually a sign that the share price has fallen significantly rather than the earnings increasing. There are some counterexamples outside of the energy sector, e.g. some of the non-bank lending companies: BlackRock TCP Capital (TCP) have paid that level for many years but they are totally different companies in a totally different industry, where most pay that level of yield.

I'm a holder here, but am waiting to see what happens to oil/gas before adding at these levels as the benefit of the 10%/12 monthly dividend can be wiped out in a single day. If oil was to crash, there's no reason at all why the I3E sp could not retrace to 10p, though I think that's unlikely.

Good luck.

@Danger_Mouse: "Thronegames, I have bought in today and many other income seekers will do too. The share is attractive for the dividend and hedging and so was the acquisition."

That assumes that they'll be able to continue to lock-in sufficiently high prices; unless prices begin to recover, the strip prices will decay away and future hedges will be at much lower levels, necessitating a much lower dividend. If that was to happen, we'd be left holding a near-zero-growth company paying a mediocre dividend, which is something that would be punished severely in the market or in the best case, would only ever maintain a very low PE.

@HumpyDumpy: One key difference is that DB seems to have some focus on the market and actively buys/sells large chunks of the stock. I can't see any fundamental reason why (in the right market) this could not return to the April 22 level. My interest is in a micro holding as it would be with any listed law firm...

@HumpyDumpy: "CaneToad, what are you thinking?!"

I think it's a similar company to INCE. I don't like the debt level, but on the basis that DB bought at 83.9p and the current valuation, I'm interested around that level.

What is INCE? He he... They're a similar, UK-listed law firm with a similar business model to KGH. Long-story-short, they're currently suspended from trading due to lateness with accounts. They became unstuck when they bought their own NOMAD, who then lost their NOMAD status and everything unwound from there. CEO of INCE also had a huge holding in the company, though granted, DB might be shrewder. The debt trap is a repeat of the INCE story and I think KGH could face similar problems if there's any business hiccup.

The recent KGH price action is very similar. It could be shorting, but also could just be an institution exiting. I'll hang back until I at least see attractive technicals as such selling can take months due to the tiny daily volume.