Member Info for GSmiley

I continue to add. There is a pretty steady stream of evidence from my large extended family of 18-35-year-olds that RBG bars all over are full to bursting. Here are the pointers from the last update (1st July) that I think are significant/have changed for the good:
"This strong performance has continued since 17 May when indoor trading was permitted ... albeit with continuing significant restrictions such as seated table service and the wearing of masks when guests are not at table."

"Despite the restrictions in place since 17 May when seated capacity in our bars represented only 28% of total capacity... , trading since that date has improved to 86% against the same period in 2019 when there were no Covid restrictions..."

"the Board is confident that significant further pent up demand exists and therefore further strong trading is anticipated... as restrictions fall away and we fully open up the estate. "

Trading at 86% of 2019 on 26% of the capacity BEFORE the remaining restrictions were removed on 19th July suggests the next TU will be another "significantly ahead".

This is not a long term hold for me, but I would not be surprised if the sp hit 30p in the next few weeks.
GLA
GS

From their site. "The Voleon Group is committed to the development and deployment of cutting-edge technologies in investment management. We specialize in the application of rigorous data-driven techniques to financial markets, driven by our own innovations in machine learning."

They might be right, of course, but RCH would probably pop up on almost any screen of shares that have risen a long way, very fast and are in industries in decline. And if you believe all that, then shorting looks like a good strategy.

Voleon's only other published UK short is Metro Bank where they are doing OK without the sp being totally destroyed; down from 118 to about 90p since March.

I am expecting a market crash at some stage in the not too distant future and have moved some of my pf to cash. No final decision yet, but RCH is not a sell for me at present since I think the share is rerating. That is a process that continues even when markets are falling. If so the sp will be protected a bit and the bounce will be very fast. Plus, I am certain it is worth a lot more than the sp is today. Fits "Price is what you pay, value is what you get."
GLA
GS

@surprised - excellent post. Contains most of the reasons I bought about 1m shares last week. Market response to the fundraise is positive as well and David Newlands - who is no mug - holds 2-3% .

My only reservation is that the (unchanged) management team has signally failed to deliver over a period of years. There is surely another capital raise not far away and promises will have been made relating to performance between now and then. I doubt there will be any more ii money unless those promises/targets are met. If that happens CPX will be sold. For me, the insurance policy is there will be a number of people interested and the end price may well be higher than the present market cap. Not a lot of downside, huge upside, so one of those bets I'll take all day long.
GLA
GS

The two biggest FTSE250 trackers are Vanguard and HSBC with a combined value/fund size of £4.5Bn.
Their approximate allocation to RCH will be about 0.24% at an sp of £4. That translates into about 2.5 million shares. As pure trackers, they can't buy before 6th Aug. I have not looked at their rules, but they will need to buy very quickly after that otherwise they are not pure trackers (doh)...
GLA
GS

Just in case anyone thinks @HS is premature, FTSE Russell announced the following this pm.

"Subject to court sanctioning the scheme of arrangement in relation to the cash offer for St.Modwen Properties (UK, constituent) by Brighton Bidco Limited (non constituent), please see details of affected indexes and effective dates below:
St.Modwen Properties (UK, 0729101) will be deleted from the FTSE 250 Index.
Reach (UK, 0903994) will be added to the FTSE 250 Index and deleted from the FTSE SmallCap Index.
All changes are effective from 06 August 2021. "

Trackers in action on Friday.
GLA
GS

@HS - :-)))) Lol
I know I am bullish, but 700 seems perfectly reasonable. I think FCF is the most reliable value indicator (I did a post a few days back on this where I got a number of about 850p) so, unless my nerve goes, I am waiting for 800-900p. Hopefully within the next 24 months.

I was bothered about inflation, but the 1/2 year presentation made it clear management expected to be able to defend print earnings with cover price increases. Plus digital revenues should be inflation-proof and (big plus) the pension deficit will reduce with inflation. It might even - witness AIEA go to a surplus as discount rates increase. The RCH pension documentation I have seen all says pension surpluses belong to RCH... just dreaming.
GLA
GS

@HS - I doubt they will worry as it is good advertising and ii send it to everyone who is subscribed. However, not sure it is the best bit of analysis. At a glance the reduction in pension deficit 6 months out of date. The article says it is £255m but in the half year report "The IAS 19 pension deficit (net of deferred tax) in respect of the Group's six defined benefit pension schemes decreased by £136.8m from £255.5m to £118.7m".

Presumably, this makes RCH an even better hold?
GLA
GS

Still looking strong. KAPE has been trading in a rising range since the first week of June and it now looks as if it is trying to break out of that on the upside. If it does my 380p target is not far away. Speaks volumes for sitting on a share - I have been here for 3.5 years at an average of 89p.
GLA
GS

@MMA - I am adding on the dips the sells cause. All I hear from our kids and their friends (all uni age and all over the country) is that they have been making up for lost time since "freedom day". Bars and clubs are heaving etc.

We had an "ahead" RNS on 1st July and it is hard to believe that trading has not improved a lot since then. A little patience here should be well rewarded - all IMHO of course.
GLA
GS

According to Twitter today, Simon Fuller - our Finance Director who was nearly as impressive as his boss in the 1/2 yr results update - is looking forward to celebrating with a "glass of Prosecco when this enters the FTSE250". The "when" is very strong for a careful accountant.
GLA
GS

@HS - Re RCH. (Which is my biggest holding). I would be nervous about entering right now - OK for me to be as I am 300+% up and I agree with your long term trend thought.

However, SP is at an all-time high, RSI is over 70%, we are not ex div until mid-August and there is no real expected newsflow for at least a couple of months. It might go straight up from here - I think it is work 600-700p a share - but don't be surprised if it takes a step back before going up again.

Happy to continue over on RCH. Apologies everyone for being off-topic.
GLA
GS

Jane:
Interesting. I think the answer is yes but only a bit. Some of the pension scheme rules of engagement are easier to find than others. The MGN scheme Statement of Investment Principles 2019 (https://www.reachplc.com/static-files/224ae298-e61b-4890-8216-9476a386744b_ says the following :
"Self-investment is only permitted insofar as it would occur through the holdings of a collective investment vehicle. The Trustee monitors the level of self-investment via these pooled vehicles periodically to ensure the total level of investment in employer-related entities remains below 5% of Scheme assets." So that is possibly a positive.

However the Statement of Investment Principles January 2020 for the Midland Independent Newspapers scheme is less pro:
"Self-investment is not permitted, but small amounts of self-investment may occur from time to time through the holdings of a collective investment vehicle."

So there may be some, but it won't be a lot. However markets in general are rising most of the schemes have 10%+ of their money directly in equities with an assumed annual rate of increase of about 5% better than gilts. Including dividends, that is not hard to beat at present, so I am sure there is more pension deficit good news to come.

Also, although the valuations are triennial, each scheme has a sort of superprofits pressure valve whereby if fund performance is significantly better than the actuaries predict, the suplus can be cashed in and applied to the remaining deficit annually. The trigger points are different, but there is a table detailing them in each set of pension scheme rules.

GS

@O_I - a piece of friendly advice. Don't. You are trying to catch a falling knife. At least wait until you can see an upward trend.
GL
GS

MM's get blamed for a lot. All I know is that the Rev Bar down the road from us has been solid since Freedom Day.
GLA
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Panmure note just out. 700p target. Must have read my earlier post :-))
GLA
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This is just a bet, but the odds look pretty good. Downside? maybe 2p a share. Upside 10-15p maybe but I reckon there is a better than even money bet that the sp will be higher in 3 months than it is now. Certainly worth a flutter especially as if the target upside is hit then I suspect the sp might take on a life of its own. If the IP holds (Maxwell?) then there is a lot more to play for. 10-15% of my portfolio is in random, ultra high-risk speculations. This is one of those. £5k might lose £2k but probably makes £500, might make £10k with a tiny chance of double that. I will take a bet like that all day long.
GLA
GS

@janebolacha -
Thank you very much indeed. Definitely NOT a "muppet" reply :-))) - Really interesting stuff and hugely helpful.

What I am focussing on is the Singer research note published yesterday where the last sentence reads " Our numbers generate FY’22e Adj FCF of £133m, an 11% yield at current valuation. Putting Reach on an 8% FCF yield (in-line with peers) generates a 465p/share valuation."

My question is "is that all?". Note 14 in the 1/2 year RNS deals with the pension deficit. It takes quite a bit of reading, but it oozes conservative assumptions. The overall (substantial) reduction in the deficit speaks to that. With rising inflation and asset vaulations - and on about the fourth re-reading - I would not be surprised if the deficit did not disappear in the next 12-18 months. That frees £54m pa of cash flow plus £9m pa of pensin admin costs. Even after tax that is hugely significant both in terms of valuation and potential dividend increases. Assuming 25% tax the net is about £45m. Even using the 11% (more at 8%) in Singer's note that corresponds to an increasein market cap of c.£400m. At 8% it is c.£550m.

I try to sanity check this sort of stuff with a version of Mr Buffet's valuation formula (find it at http://www.moneychimp.com/articles/valuation/buffett_calc.htm although there are others out there). It is a sort of DCF calculation and so pays more attention to longer term future performance than a FCF valuation. We can all argue about assumptions, but the ones I am using suggest RCH is worth about double Singer's estimate.

All of which means I bought back in on the dips yesterday and this morning. The sum total of my sell off loss prevention exercise was a net gain of 11 shares. Not a lot really, on nearly 200k... however I know a great deal more now than I did on 26th July and my confidence levels are hugely increased when looking at the next 6-12 months.
GLA
GS

Sorry - should be @janebolacha

@janebolocha or anyone else with pension knowledge. The RNS said:
"The IAS 19 pension deficit (net of deferred tax) in respect of the Group's six defined benefit pension schemes decreased by £136.8m from £255.5m to £118.7m. The decrease was driven by an increase in the discount rate and as a result of Group contributions. Changes in the accounting pension deficit do not have an immediate impact on the agreed funding commitments. The triennial valuation for funding of the defined benefit pension schemes as at 31 December 2019 would usually be completed by 31 March 2021."

To me the headline is that if nothing else changes, at its present rate of pension deficit funding (c£54m p.a.), RCH will have removed the deficit in just over 2 years from now. If discount rates increase (and surely they will) that time span reduces.

Questions:
1. If there is no deficit, will a specialist like Rothesay Life simply take the pension fund over without additional payment?
2. The implication of the triennial valuation statement in the RNS is that it has not been finalised. Are they seriously going to value as at 31st December 2019 over 18 months later, or will they bring the valuation up to date? What is usual practice?
Thanks for any input
GS

Underwhelmed. At a time when there is the opportunity for a land grab, the order book is declining and the highlight seems to be progress with a Chinese partner. All at a time when business with China looks as if it will get more fraught. e.g. Telegraph headline today "Hinkley Point C at risk from China crackdown".

Disappointing trading, partner risk, premium valuation,, competitive entrants. I suspect the sp will fall from here.
No regrets I sold out when the sp was a lot higher than this. Good luck to anyone still in here but I have taken CWR off my watch list.
GS