Why Pharos Energy could be well placed to recover from volatility08 Jul 2020 09:28
Why Pharos Energy could be well placed to recover from volatility
Quality and value are two of the most powerful drivers of stock market profits. After the economic turmoil and market volatility we've seen in 2020, it's possible that these two factors could have a major influence on the Pharos Energy (LON:PHAR) share price.
For contrarian investors looking for shares that are overlooked by the market, quality and value are vital clues. Research shows that good quality, cheaply priced shares can deliver stunning returns over time.
So it's no surprise that these rules are used by some of the world's most respected investors - from Joel Greenblatt to Warren Buffett.
Lets see how this goes now over the next few weeks. Formalities done £105m of new cash and moving forward to generate an extra £72m from a building sale, total £177m cash. Will be virtually debt free, turn in a profit, new senior team, transformation plan.
Tosca Fund on 26% now the largest shareholder, run by Martin “the Rottweiler” Hughes (for the aggressive nature), this fund obviously see a good investment return potential here.
Pharos Energy have a Good history of returning cash to shareholders, over $500m, Pharos will be back on dividends next year imo, and at this level is potentially a very good forward yield to tuck away in the portfolio.
If its a committed huge cash injection then may be very good and give the market confidence. These institutions will not part unless they are confident of a return.
If they do raise £80m and on top of £72m net building sale, that would be around £152m. This will help pay down debt and then the yearly cost of finance associated with it and set up the transformation plan.
By the news this has been run by and approved by the large shareholders, founder and tosca own 49.5% and if they are happy and see a return then we might also be pleased.
I guess the share issue will need to go before a GM with the building sale in June and notice will be given. MMs will hold price above any placing to see the GM through firstly.
Profit is expected to come in £5-£10m29 May 2020 13:37
Profit is expected to come in £5-£10m, that puts this on a p/e of around 10. The transformation plan will be key, so far some good hints including £5.7m saving on wages, which helps the numbers. The Proposed sale of a building for £76m a huge premium to the book value by the new mgt team is a good start for these chaps.
Sub £2 (at £2 it is still only £90m cap) is good value imo.
Look at Aston Martin, good brands have huge value, at this price Ted Baker is attractive.
These strategic priorities will form the basis of a broad Transformation programme at Ted Baker, the first phase of which is focussed on profitability, cost and the effective use of capital. Further details of the Group's strategic priorities and Transformation programme will be detailed in full at Ted Baker's Full Year Results which are expected to be announced in May.