Member Info for Dartron

I received a letter through the post today urging me to vote. I was very impressed that they had gone to this trouble.

Unfortunately I sold out, as my experience of how share holders usually do not bother to vote persuaded me.

I left a few pennies on the table by the looks of it, as I sold in the 8's. However I did make good money here.

I think its crappy that Milkwood are doing this, but they will certainly vote, so DSM will need many many PI's to vote against them.

An interesting development for sure. I am buying a few other trusts that have continuation votes (unlikely to pass) Its a nice side line to my trading / investing. Though of course you cant rule out similar activists. Its just shows that Milkwood were able to buy most of the stake here without raising the price as the sell off of UK equities continues. I think 2 big holders sold them their positions.

The options are ambitious, these run from Jan 2024 to Dec 2026.

at least 23% per annum cumulative TSR growth up to a maximum of 39% for full vesting

a minimum of a 60% increase in EBITDA per share in 2026 in comparison to the 2023 value

2023 Adjusted EBITDA £8.1m , so that would be approx. £13M. Not sure that will drive a 23% PA TSR growth.

Does anybody want to volunteer a share price (factoring in dividends) to meet the TSR above?

Might we see a special dividend.

I am still sceptical.

Frankly I was expecting a bit more growth here. Its all very well (other posters on other boards) talking about the FCF, or the balance sheet, but I can invest in various bond proxies on similar or better terms. With an investment in a company what I am really looking for is growth in earnings, so that it can feed through to my investment and assist that to grow. Being clear, the dividend is neither here nor there, I can get that anywhere from an investment trust.

My worry here is that this business has hit the ceiling of what is possible. I expect the only way to improve things is via an acquisition. Here comes the concern when you have a new CEO, who I do not think has a track record of M&A. The new CEO has just sold a previous CEO's acquisition, and you could just end up with a revolving door here while the money and the company decline or tread water. I think what I am saying is that I am not aware of any strategy here or targets for growth in the underlying. I think that explains the share price stagnation. Another company that has over stayed its welcome on the junior market. No need to raise capital, but cant provide a meaningful growth backed return.

I had forgotten about Eckoh (as have most people!!), though I thought PCI Pal was the new darling in that space, both could go on the list. Thanks.

My other tips that I hold would be GHH, FRAN & YOU they all do significant work in the US and all are cheap historically.

I think my point about Harwood holding 29% is a good point here, it is making me question whether this is worth holding. We need II buying to move the share price, but will others bother if Harwood has this cornered. I will see how the enzyme business looks on results, but this could be too slow to move IMO.

1GW_ well said, negative cashflow. They wont agree, your just another troll mate.

My reply:

I disagree. If you want to focus on Ebitda, then you are ignoring the interest due on the finance, which is £0.4M. That is a real payment that went out the door. You are also ignoring the cost of replacing the items which have depreciated, such as the motor vehicles, property and computer equipment mentioned in the RNS. I couldnt care less about them amortising the 44M of intangible assets, I seriously doubt they could realise that money anyway.

Even someone buying in today is not getting a good deal at a EV/Ebitda multiple of 7* (since you like Ebitda so much).

Ev/Ebitda of 7 in this market is poor. You could easily find a multiple closer to 3 in many other companies, especially around the 20M / high risk mark.

You did not answer the question about fixed costs, which as I said is nonsense for this type of business.

IWantThatOne, you must be the illiterate, please see the fourth bullet point down on the results:

Loss before tax of £3.9 million (2023: profit of £1.8 million).

I have read several RNS here and followed this company, I have not seen anything about "how net margins will improve in line with extra new business, given that fixed costs are covered" which sounds complete nonsense for a business that has costs proportional to the revenue it Perseus. However, I would be interested to read about this, if you could provide a link. I am happy to change my opinion if there are facts that have been missed, but I have to ask, why have they not already done this. The business is not new, and suffers from low margins since it began? Wendy has had 10 years to get her act together here?

Any stocks spring to mind? I hold AMS which I think could fit the bill. The issue here is that Harwood owns enough to block any offer, or win any vote so it could make it expensive for an acquirer. I think their 29% holding is a detractor here. Other takeout companies I own have far more fragmented registers so would be easier for PE to poach. Liontrust and Gresham both over 10%, but still cant beat Harwood.

Company now expects revenues for the year ending 31 March 2025 to be c. £85 million and EBITDA to be not less than £3.5 million. The forecast revenue is nearly 50% reduction from 2023 year end (135M) I would say that it is almost certain that the company will make another loss before tax next year. Just look at what is left from the gross profit after admin expenses this year - 1.9M. The interest on the loan is 0.4M, I'm sure there will be further issues/restructuring/desperation that will consume the other 1.5M. Not sure if the 24M trade payables should be a concern!!? There is no way this company is worth 16M mcap. You cant value it as a growth company, as clearly there is no growth in such wafer thin margins - and has proven negative growth over 3 years. Doesnt matter how much work they take on, it costs them more to do it. Typical AIM co, run like a charity. I have always thought Wendy is way out of her depth, but to be honest I doubt anybody could make a go of this. She has been CEO for over 10 years - presiding over a 94% decrease in share price! When is enough going to be enough? "Wendy ran her own business, working with US-based healthcare organisations and BUPA, before joining Totally as CEO in 2013." Why did they even pay that dividend last year? Reckless. No wonder the CFO left, after a while it just gets embarrassing, expect she has dumped her shares if she has any sense, not that there worth a great deal. Have to say, I am amazed this held 8p today. Id be amazed if it doesn't half again. We will see in a weeks time. Even 8M mcap sounds expensive for this near certain loss making venture.

Wasatch Advisors, LP reducing their holding. (See RNS)

Ceres Power Holdings Plc

CWR : Panmure Liberum raises target price to 650p from 610p

Chart looking good too IMO, wouldn't want to be short here ;)

July 2023

https://youtu.be/rdTW1jfeMMs?t=1933

July 2023

https://youtu.be/S60iH3ZlL6Y?t=554

Jan2024 - Best summary IMO -

https://youtu.be/Vb6KlSsMf5w?t=401

April 2024

https://youtu.be/Lu3W95SxVYQ?t=1491

I do see this as a turn around story, but the question is, has it started to turn yet? Will we see further weakness, very difficult to fathom from the trading statements.

Finally, what do PE look for when taking over a company. GHH does not have the high margin, but I think PE could improve the fundamentals here fairly quickly, which is the route the current CEO is taking also by divesting. Probably be more effective with some ruthless PE to wield the axe however.

https://youtu.be/e2m_oEtyhSM?t=3440

I think you are underestimating the shorts here. They will close this out no problem. I expect they probably have most of it covered, even if they have not changed the declaration. Price is doing exactly what is should, with no news. Even strong stocks were down today. I have sold a few times here now. Done buying/trading them, I just have a position to exit now, which is still rather large.

Re combined, Other fund is open ended. Didn't look earlier. But they have been saying for nearly 6 months on that pod cast I linked to, that 600M mcap is the minimum size to be viable (for large funds), so this could wind up or be eaten up as it is only 330M. More upside IMO...

Yes the options trading has been increased, I read that the income was over 100% more than previously. I don't have that to hand now, but I did see that today when replying to you (If i find it again ill post it). He is also using it as a way to sell stuff he doesn't want which is clever I thought.

I am not saying there is no risk, but I don't expect a cut to the dividend. From the several interviews and Edison research note, I am comfortable with the issues that you raise.

Another thing that caught my eye, is that the manager also managed another similar Henderson fund, it could end up combined rather than a dividend cut - though to be clear I think the fund will do well on its own:

https://www.janushenderson.com/en-gb/investor/bio/sat-duhra/

My 10% yields are not equity funds, they are NESF (Solar) and AIRE (REIT) and MNG (Ftse100). If you use the AIC tool, you can order all trusts in terms of yield if you want. There are plenty with high yields. I agree normally this a red flag. Hence why I checked so much here. I can only go by the story that Henderson's want to tell me, but for now I believe them.

You might like this weekly pod cast about latest investment trust developments, I linked to the part about Gore street. Worth a punt IMO, though not high up my list.

https://youtu.be/FTVRxeDAupk?t=2263

Question for you - Why stay invested if you think the income could reduce? There are so many other ways to get the same return. Do you need income? (I dont, I want growth more, which I think will come here too).

Many income plays are paying this level of dividend, I dont think there is anything unusual about about HEFL compared to others. The sell off in risk assets, and money leaving London has a lot to do with it.

https://youtu.be/kVgqJeI2ChM?t=1299

In this interview (linked to the relevant part), the fund manager actually says the yield is a function of the share price (obvious) but echo's my point above. He then goes on to talk about the yields in of the top 10 holdings, which are 7,8,9% yield - one having been 20%. I guess this agrees with your point that it is 'ok for now'. He also talks about the generation of income from options trading, which I think is very interesting, and actually is a smart way to reposition the portfolio away from the cyclicals he mentions at the very beginning of the clip. So the dividend is covered for now, and the 'new' manager has repositioned the portfolio to a far more growth oriented approach, targeting the likes of India, where dividends are expected to grow in the long term.

I wouldn't want to discourage anybody offering an opinion on a chat board, who's purpose is for discussing the equity it represents. I would however caution that past performance is no reflection of future performance, and that although there is seldom anything new in capital markets, I do think the macro is what is different, both from the London perspective (sell off) and the opportunities offered by India, and other places, as China's impact reduces. I think the strategy here can provide growth and income. My original reply offered a 1 sentence opinion, that was actually extremely washy and sitting on the fence! I hope I have expanded sufficiently.

I think they would be very reluctant to cut the dividend. The research below boasts of increasing dividends.

https://www.edisongroup.com/equity/henderson-far-east-income/

HFEL has consistently met its objective of providing a growing total annual dividend; the dividend has increased for 16 consecutive years. The total dividend of 24.2p paid for the financial year ending 31 August 2023 (FY23) was 1.7% higher than the FY22 dividend. This represents a very attractive dividend yield of more than 10.0% (as of 17 May 2024) – well above the average dividend yield of the company’s peer group.

HFEL’s manager is positive about the portfolio’s revenue prospects, as the dividend culture in South Korea, India, Indonesia and other Asian markets is improving, and dividend payouts are rising accordingly. This trend should be supported over the medium term by Asia’s superior growth prospects, compared to other regions.

Henderson Far East Income (HFEL) has consistently delivered on its objective to provide a rising dividend. However, like many investors, HFEL’s managers overestimated the potential for a post-pandemic rebound in China. The trust’s resultant overweight to Chinese consumer and other cyclicals led to a fall in portfolio revenues and underperformance in the financial year ended 31 August 2023 (FY23). With a view to improving future returns, HFEL’s board has since indicated an increased willingness to use reserves when necessary to support dividend payments, which it did in FY23. This reduces the requirement to focus primarily on high income names to fund dividend payments, giving lead manager Sat Duhra scope to move into other areas of the market where he can acquire well-priced value names offering performance and yield, or the prospect of dividend growth over time. Duhra has been quick to reduce the trust’s exposure to China and increase positions into well-priced value names in India and Indonesia. Early signs suggest this repositioning is paying off – HFEL outperformed the market in the six months to end March 2024.

Very happy to be a buyer today.

I am happy to buy some and get it.

Https://www.londonstockexchange.com/news-article/EKF/upgraded-product-launch-and-contract-wins/16573969

Way I see it, is that Schroders have around £200M of AUM to generate a return from, and you can buy a slice for 40 or 50% discount. Even the buy backs are highly NAV accretive here. My understanding is that Schroder's restructured the portfolio to improve liquidity and reduce risk etc. (unfortunate if they sold the wrong stuff, but we have all done that...). Seems a very safe bet to me. I would rather bet on this due to the margin of safety rather than their track record, though I think this will also turn round. Even rates and the general Macro will boost this. I have a lot of PE by the way, it is my largest theme in my pension. I do agree there are better picks, if you only have small PE exposure, but going heavier on it, I need to spread my risk, and this seems very low risk starting from here.

Do you have any good PE picks for me to look at please?

Have you seen these pieces?

https://www.trustintelligence.co.uk/investor/articles/fund-research-investor-schroders-capital-global-innovation-retail-jun-2023

https://citywire.com/investment-trust-insider/news/schroders-capital-finally-the-tide-is-turning-for-former-patient-capital/a2439323