Member Info for Guvvi

Giving advice is so hard on here its not very personal and it can be easily misconstrued but i wouldn't do what your suggesting.

Only because i think you're not approaching it right. Sylvania is a great investment for a period of time until maybe you think it becomes overvalued or close to value or whatever. But you can't approach holding shares like this with stop losses etc.

Imagine if the recent temporary ( hopefully ) plunge had triggered your stop loss and your average buy in was somewhere slightly higher or close to that.

If you invest in single shares i think you need to have a rough value in your head and revise this maybe as news is announced etc.

I know many people do what you're talking about but you risk being knocked out of a good business by some random selling or panic and missing out on one of the great AIM opportunities of which there are not many.

I'm not saying stop losses are bad, of course they arn't. But i don't get why you would hold shares in an AIM company which are inherently volatile sometimes but also have the conviction this is a really good investment which time will show.

Your safety margin isn't in the price its in the value as Velo said.

What is the likely value of this company roughly for you compared to the 89p?

Don't think of it as a trade. You are investing in a chunk of a business and that business has risks sure but you're getting a lot for your money right.

You're not leveraged so just invest and keep an eye on the business and it's products/news etc.

The mental challenge of investing in businesses you don't work at every day is difficult so don't do anything you arn't comfortable with that's the worst advice around.

But someone once said ' don't put all your eggs in one basket ' and someone replied.... ' no, this is fine put your eggs in one basket but watch that basket! '.

Chatmandu if you're not using leverage ( not clear how you hold your positions given you mention stop losses ) i think you can weight fairly heavily here without too much concern for a while to come at these levels and make good returns.

I've no idea what sort of returns and wouldn't dare predict such a thing but if you had a large position here and wern't meaningfully ahead in 6 months or so i'd be very surprised.

Your downside is surely protected somewhat by the huge margin of safety from their current cash holding ( tbc shortly ) as well as those massive debtor amounts coming in over the next 4 months.

People overlook the fact you've got huge debtors collected 4 months behind the sale and that the highest revenues were only relatively recently.

So if the cash balance is building on the one we hear about shortly and they have part paid the tax already on this ( i'm 50/50 whether i've understood that this is what they've done in the last rns ) the cash balance is gonna be stupid vs this market cap regardless of anything going forward.

I personally would be happy with a lower basket price too vs this current market cap so yeah the margin of safety even at today's price is massive.

We shall see !

regarding weightings of holdings remember mr.buffett saying what is the point of finding incredible opportunities to avoid concentrating in them.
I honestly find myself concentrating in the best opportunities i can find to the degrees i understand them ( or think i do ). I'm really stupidly invested now in sylvania - maybe 40% of a pretty large sum of money. But then it's just such a rare find if you ask me around this price point.

Obviously i may be wrong but show me better is the question i ask myself. And i can't find much better !

I think you have to be very careful with screens and divi yields. I'd rather look to invest in a sensibly priced business with good prospects than one with questionable prospects but a lower price.

I've seen a good few of these myself and the losses are very big if you're wrong, risk/reward not in your favour often!

Fair play to you for taking us through your investing history and mistakes, commendable. Not many do that but we've all been there in one shape or form.

I find this forum if filtered properly can give you more confidence about a holding or check your workings even if only rough.
After that all that is needed is a strong stomach.

I think a cautious tone as an investor is perfectly fine. I could list some negatives on SLP as a business too but they are massively outweighed by the positives in my view. But if i listed some negatives would i be labelled some sort of hedge fund puppet?

For me once again i will state that this business is available for under 300m pounds. It will surely post a net profit for the year of over 100m. EBITDA much higher. But the SA tax rate is 27% atm so do your own rough calculations i guess.

Oh and I also think it has a bank balance of around 100m dollars at next update. so the EV might be around £220m if i turn the 100m dollars into pounds which could make the EV/EBITDA 2x or maybe even less. EV/FCF wont be bad either maybe 4x or so. These are crazy figures if you believe that the basket price might be relatively stable or even slightly depressed for years to come - either are fine.

looking forward to Q4 sales adjustment i.e what stuff actually sold for post period end, cash balance, maybe dividend talk and outlook for PGMs from their point of view.

Well it's kind of hard to tell who is aiming what at who nor why to be honest. Actually i'm an exception last night 100% aimed at me...

I've disagreed with Chatmandu on his notion that the share price reflects market expectations of risk to the business itself - i still believe this to be wrong and would say that this is a mixture of misguided risk ( but risk none the less i accept ) and just general panic/negative sentiment across the board.

I don't think Chatmandu has any issue with me disagreeing with him, at least the arguements are understood and that's half the fun of this.

I also don't subscribe to charts and do not believe that ' intrinsic value can change overnight ' as someone else stated but that's fine. I haven't abused anyone and i certainly don't believe i'm always right. But i'm always learning ( hopefully ).

I don't know where the 2 recent posts from Velo have come from to be honest but maybe we can just get back to anticipating some lovely news in q4 results !

I'm not a huge fan of DCF calculations unless they are very conservative and still show a margin of safety. Often they can give wildly different results over long periods and predicting the next 15 years or so is very hard!

Just my 2 cents this morning...

Wow that’s some strong feelings right there.

I use the PgM table to keep track of prices that’s all. Otherwise I’m not into charts as a means of working out a securities worth that’s all. I wasn’t trying to coerce anyone else into discarding their own methods just asked for a show of hands from those who are valuing it’s likely cash flows rather than predicting anything based on shapes on a board.

I’ll leave you guys to it then just find some - not all - of what’s written on here useful.

Yeah that's the chart i use, you can add all the PGM metals together over any time range. It's pretty neat.

Quiggers I just need to check you meant “ intrinsic value CANT change overnight “?

Its still very cheap at 120p don't worry.

EV/EBITDA is probably 2x or 3x is my guess.

Yep prices have changed a lot this week, business has not.

The board have said before in some of the investor presentations that they are reluctant to make large dividend payments i.e huge chunks of the cash in bank. The CEO has a memory long enough to recall miners who paid out during the good times but were bankrupt 2 years later like 10-11 years ago.

The price of the business became cheaper that's all, sometimes we use phrases like ' share price weakness ' and people still associate that with business weakness. The whole thing is quite funny really.

By all means point out that there are more issues this month in parts of SA than last month but i'm entirely unconvinced that what is reported in the news is bad for this business long term.

All i would say is that arguments about the share price weakness should be weighed up against the likely long term value creation for any company and on this basis Sylvania is 15%/20% cheaper than it was last month which seems to be an even better buying opportunity.

Looking forward to results, hopefully some sort of year end dividend guidance, plans for next year ( maybe another windfall divi guidance ) and how the recent rhodium drop has affected the current basket price ( i suspect not significantly like Tharisa ).

And btw Chatmandu i really don't consider you a troll or deramper or whatever just that people should focus on the long term prospects and value for this business at this price. Sentiment dragged Sylvania down last year then earnings propelled it up 4x which will always be how our investments function over the long term.

Chatmandu i really do understand what you're getting at and psychologically you're spot on.

However we/I stay invested for long periods ( years ) here because i would happily buy this stock or stay invested in it while it is performing over the long term as it has and we expect it will. There is a huge margin of safety here buying this.

Every week there is a scare story out somewhere but this is a sudden story of unrest which may well destroy the economy in SA i suppose, the risk is pretty small but it is a risk none the less.

However last year supply constraints didn't harm the PGm market at all - quite the opposite. No reason to expect this would be any different this time.

So is Sylvania's long term value and cashflow likely to be affected? If you think it's future as a viable business is in doubt then sell. This week's news have not made me think that our business is going to become less valuable over the long run and that should be all that is important to serious holders. The rest is just pricing opportunity.

As you will no doubt say maybe i'm wrong but i am aware you could be right and maybe i'm biased etc. But the stock market permanently climbs a wall of fear and you need to be an optimist essentially to invest anywhere at any time.

So here we are and there is a balanced view on what holders should focus on - the long term value creation possible. For me unrest will not be a long term value destroyer for the South African economy.

Arguments to the contrary should just focus on why this unrest may not impact Sylvania directly but impact all of SA and our business for a long period. ( as noone is suggesting Sylvania would be affected in isolation here i presume ).