Member Info for Couerdelion

Looking to be a solid rebound from the HY results . I think the market only took the "soft market" message so hopefully we are seeing a little correction going on here.

One more for the filter.

You're going to have to elaborate. From what I can see this looks like the best trade deal we have struck this year. Obviously the Tories and Reform would try to pick holes in it - the conservatives even marked their territory before it was announced so that they could justify their response - but if the key criticism is a fishing deal (not dissimilar to one agreed by Bojo the clown) they are losing an argument that only their most ardent supporters could imagine winnable.

And yes, the defence deal is the icing on the cake here.

I'd imagine the lawsuit would relate to data protection law which doesn't require a tangible financial loss, though whether or not the plaintiffs will gain anything is another matter.

For me this is a no-brainer for dividend reinvestment.

Something in the price moves in the last couple of weeks suggest investors are buying on the rumour. Fingers crossed that they can get the ball over the line

Thanks for letting me know. I guess Nick will be busy working on the response to the impending offer and I suspect my time would also be better used following the live story rather than sitting through 2:30hrs of presentations.

The dividend cut is old news. If you were buying this share for the dividend in the last few months, you would have factored this into your calculations.

I don't think the market has fully appreciated the value of deal. Redaptive provide the funding and the new business and EAAS install the products and earn the annual service margins. With NatWest providing the same in the public sector, EAAS will have all the financing it needs to get itself a secure income stream.

Don't forget they have another c£6m coming to them from the 2024 sale.

All looks good. Anything I missed?

Lorenzo,

I took a look at the cashflow and don't see too much to worry about. YoY comparisons show an improvement and the large reduction you see in the Oct-Mar period is more a reflection of the nature of the business which involves customer money held in trust for holidays to be taken over H2 period. The cash will then be released from the trust and the net cash position will move back into positive territory ready to be recycled into the next year.

I'd be happy to take a closer look if there is something that you think I have missed.

This is all quite instructive. Dividend yield is a modest c5.5% which will pay a little but hardly knocks the doors off. But if we assume this is secure enough now, that's better than cash and with potential for upside or YoY increases.

I've marked this as a dividend stock (ie a dividend stream rather than a capitalised value) which allows me to ignore in large part what happens to the SP. Easier perhaps to compare with the likes of NG than other telcos maybe but with more growth potential in telecoms.

In the case of MKS, I'd argue that the PE ratio is a very useful metric/comparator.

You can read what you will into the trading. Could be a trading opportunity of it could be as a longer term investment. The traders will take profits at some point so I doubt they will provide serious resistance to the continued upwards drift of the SP - which would still be cheap if it were 6p.

Here's a decent entry point. Normally after these sorts of dips, you might wait until the third day to find a good price but these are levels that are hard to resist.

The new price target from Peel Hunt (from 300p to 400p) tells you how the SP was supposed to have moved after results.

I couldn't resist taking a little more profit today. Having recouped all my original investment I probably want to take some care in how I rationalise events and I see plenty of upside in the SP. But for me the price was looking a bit full so I took the opportunity to slice of 1/6th of my holding which works out at a little more than the gain over the last week - easy money if you like but it only goes to show how wrong the market was at the end of March and I'm not going to suddenly believe it has changed its mind.

I'd be very happy if I it turns out that I sold too early.

I like to see today as a positive. Lost more on my holding than I gained on my top-up but I can't see this hanging around at these prices for too long. Unless there are different concerns about this showing a potentially high PE ratio but currently I think this is looking at a forward PE ratio of 12-12.5x which just feels wrong.

HeinzM,

You are correct that a higher expected return discounted at 7% which is then converted into a cash return with an IRR of 40%+ will involve plusses and minuses that might balance out at point of realisation. Say we had invested £10m in a case expected to realise a 25% return in 2 years (£15.6m), then the fair value calculation at the start would give £13.6m. You give yourself a 40% IRR settled after 7.5 months and receive £12.4m by which time the fair value has increased to £14.2m, illustrating how it is possible to generate a fair value loss of £1.8m. Here the valuation is recast at the point of deployment. We "instantly" make £3.6m and another £0.6m of "unwind of discount" but then give up £1.8m for a quick settlement.

However the accounting works, there has to be a point at which we generate the value, which will be a combination of "at deployment", "judicial milestone revaluations" or "settlement". Those are the activities of Burford that generate value and the unwind of interest is can be seen as a sort of minimum threshold to surpass in order to be generating true value. It's why the $1m modelling figure looks a little disappointing even if they are recycling investments faster with a higher IRR but lower ROIC.

Fwiw, I don't measure this company on quarterly performance. But the key here is growing the fair valuation calculation which is 6.7%(?) unwind plus investment/legal performance. Fair value is only low if performance generates a higher return.

Instead of topping up, I should have gone all in here once I knew the score. Instead, I'll probably end up with a free dividend of 1% once I rebalance over the next couple of days. It's still profit though and happy to let the balance of my holding roll until to £12+.

The market wanted to offer me another buying opportunity.