Member Info for ElProfessor

Hi Ping Pong, I was sorely tempted but the spare cash I had to hand in the various accounts was minimum so was not really worth the bother, combined with the fact I would not rule out a further fall to just above 125p tomorrow before a recovery next week. If we do see close to 125p tomorrow I will probably buy in then, notwithstanding what I said in the first sentence as it would be too good an opportunity to miss. If the MM keep swinging this share price like this then there is a good opportunity to make money provided I am disciplined enough to sell into the rises. Good luck for a quick and tidy return on today's punt.

This has nothing to do with either the economy or the company fundamentals but is simply about the market makers playing with the share price to accumulate a position ahead of the mid year annoucement on Wednesday. The volume today, like yesterday is tiny so would not create any significant movement even if they were all sells; as it is we actually have more buys than sells going on. The fact that the CFO bought a slug a few weeks ago at 134 suggest we are seeing an underpriced share at present.

This has nothing to do with either the economy or the company fundamentals but is simply about the market makers playing with the share price to accumulate a position ahead of the mid year annoucement on Wednesday. The volume today, like yesterday is tiny so would not create any significant movement even if they were all sells; as it is we actually have more buys than sells going on. The fact that the CFO bought a slug a few weeks ago at 134 suggest we are seeing an underpriced share at present, I would anticipate a strong upward movement over the next ten days.

Spindok, Many thanks. Out of interest what is your target and what are you basing this on? ElProf

Ping pong, I agree with pretty much all you write, particularly the bit about making money off the short term swings. The trouble I have is I keep buying on the lows but then miss the highs by holding too long (the exception being this last time) and so I end up with more and more of the company. Do you share my view that the mid year will see a reiteration of full year guidance and that will be seen as good news after the loss of LME thereby driving another share price spike?

Spindok, Can you say a bit more, it sounds interesting but I don't fully understand what you are saying, thanks.

Go figure. This being a low volume share, in the short term the fundamentals are of limited relevance in driving the price although obviously in the mid to long term they will. I dumped a good load of these a couple of weeks ago, at 1.36, as I needed the cash, shame cos I would have happily bought back in earlier this week in the mid to late 1.20s had I had the money to hand. Having been closely following this share since IPO the pattern that I notice over the past couple of years is a strong rise either before or after results followed by a slow decline to slightly above where is was before yet with significant swings up and down along the way. We are due mid year results in a couple of weeks (31 Jul if my memory is correct), I would expect them to be predominantly a re-iteration of the FY position given in March perhaps even with a little upside guidance. If this were to be the case then I think we could see a good move up, perhaps even touching the early 160s, as people got spooked by the loss of the London Metal Exchange contact. I would then anticipate the share price falling back to late 140s early 150s before a further climb in spring next year on good full year results. As I have said before we have two (very good) accountants at the helm. The balance sheet is going to be so full of provisions that they will hit their numbers with ease.

David Bauernfeind, CFO, bought c 40,000 shares for himself and family at £1.335 taking his total share holding to 200,000 (obviously shed loads of share options as well subject to performance). A great vote of confidence by the man who is probably in the best position to know what the numbers will do for the next few years. Only slight downer is it means Xch is not in a lock down period so there is no imminent takeover however I feel the plus of this vote of confidence heavily outweighs this.

Langy, It is not so much the one off large trade of £430k that interests me but the fact that there are c30 times as many shares bought as sold. I was impressed by the ratio of 11 to 1 last week but 30 to 1 is enormous. I can't claim to have ever understood how with such a ratio there can be virtually no share price movement but I presume it can only be good news.

With 11 times as many buys as sells it was a popular share today. Strange how it often behaves inversely to the FTSE. If you take today and yesterday both Xch are broadly flat but went in different direction to each other on both days. Let's hope the massive bias to buys over sells that we saw today continues.

PingPong, Thanks for positing that, I had quite forgotten that today was the day dividends were paid out. Admittedly 1p per share is not exactly high yield on a £1.38 share however it is better than last year's dividend and it is particularly nice to go an look in my account and see the money there when I had forgotten it was coming today.

Fernbank, Thanks for your kind words. Glad to hear that you are already showing some profit here. What are you aiming for as an exit price?

...albeit only reversing the falls of the last couple of days. The director buy I take with a pinch of salt, after all Bill Thomas bought less than 15,000 shares and I suspect this is driven by his contract which is likely to say he has to accumulate a certain number over the first x years of his tenure as a director. Ping Pong you are right that the broker recommendations are generally well above where we are at present but then again given I regularly posted that brokers were idiots when they were valuing the company at 40p it would a little disingenuous of me to suddenly give credence to the numbers that they are now plucking out of the air. As I said before it seems to me they extrapolate the current trend and hey presto they have a value. How some can be claiming that Xch is worth 4 times what they were claiming it was worth 2 years ago is beyond me. All that said all that valuing companies is not an exact science so with them calling that kind of range it is not significantly different from how I value the company.

I doubt many CEOs do post on these boards, I was just using them as an example of someone very informed about a stock. It is good indeed to find someone else posting on this share as the BB has been dead for some time. That in itself tells you something about the share, namely that it is being poorly followed and so could see big swings and big interest in terms of posts as was the case here back in Feb 11 when the previous CEO resigned/ was pushed and the massive goodwill write off happened. Today in fact the share was very subdued in terms of volume which means we have probably seen the bottoming out of the current decline with hopefully some renewed increases now over the next week or so. Interestingly two lots of analysts, Liberum Capital and Espirito Santo have reiterated their buy recommendation on Xch at respectively 165p and 160p. My only nervousness around Xch at present is the fact that the FTSE is at a five year high so a retrace is a significant possibility and that could carry Xch down with it. Then again Xch has quite often behaved inversely to the FTSE 100 and 250 indexes.

Apologies for the pile of typos in the previous post, I was rushing and did not get the chance to reread and correct for posting.

Ping Pong, Thank you for your very generous words. Do however be careful as to what you believe on this bbs. You don't know whether the person posting is the CEO i.e. very well informed but with a definite angle to push, some weirdo with unthought out views or someone genuine and informed (rare but obviously worth listening too). I would obviously put myself in the last category but as the two previous ones would do the same that doesn't help you so you should treat what I write with the cautious scepticism. Xch has still some up side (as per my valuation of 150 fair value at present and more with either new contracts or a takeover) but it is not the 2 to 3 time bagger it what 18months ago. For me the question now is whether it is the best opportunity in town or is the better risk reward elsewhere and I don't know the answer to that one yet. If the sp gets back up to 145-150 I will probably sell 25-50% of my holding and then reduce to around 25% of my current holding at 165-175 and hold the rest longer term. I do day short term trade it or at least I do the first part of that which is to buy more on the dips but am lousy in discipline in selling after a significant rise so then tend to just keep holding them when they inevitably fall back again. Perhaps that is why I have so many of them.

Yes I have been invested here for a while, having bought a lot when they were in the 50s and kept buying as they have risen and any risk of financial collapse has disappeared. You are right that they are prone to large swings; they are a reasonably untraded share, other than when major news comes out, which means if anyone wants to accumulate or unwind a significant position it tends to move the price. The sale of XTB appears to have unsettled a few people so we could see a few days of decline before a renewed drift up. This is what we saw after the announcement of the termination of the LME contract. Actually the two are quite different events in that LME was purely bad news as £25m p.a of revenue was being lost, whereas this is neutral to good news. Neutral in that all the future profits for the remainder of the contract are being paid to Xchanging and good news in that the simplification of the Xchanging structure both organisational and financial, which was a really complex thing in the David Andrews days, makes it easier for a potential acquirer to see what they are getting. Furthermore for a company like Capita the interest will be in the Uk end of the business not the German end. In short the sale of XTB makes an acquisition more likely albeit I would not like to quote any odds on it happening or a time frame.

'Issue' may have been a loaded word as you are right it makes it sound like a bad thing. Ultimately whether a bid is good or bad depends on at what level it is at. Even a low level bid can be good if rejected by the board because it tends to drive up the share price as the market increasingly sees the company as an acquisition target. I would say the current share price is undervalued by c 5-10%. If you take fair value therefore at being around 150p and accept that there would a bid premium of around 20% then you could be looking at 180p a share. Yes i would take that however whether Xch could climb to more under its own steam over the next 12mths or so depends on whether they can announce any sizeable deals or a significant number of smaller deals.

'bid' not 'bit'

Given the mess Xch got into a couple of years back with the debt post the Cambridge acquisition and the market's fear that they would breach their banking covenants their desire to have their debt under control is fully understandable. One issue with debt free companies that generate lots of free cash flow, as Xchanging now does, is that they can be a very tempting acquisition target. It is still in my mind that an IBM, a Capita or possible even a Serco could put a bit in for them.