Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Strong call buying in MGM in last two days. Expecting something positive for ENT next week.
At this price level, its an asymmetric bet. Downside to pre-bid is 11-12% whereas upside to £28 and potentially £30 is 25% to 30% and possibly more. Long-term holder and accumulating at this level.
Equates to around £24/ share. Let the bidding war begin.
Would have preferred if the board accepted due to easy 33% upside from here. Some of the reasoning by management makes sense that it is undervalued. If bidder is paying £2 per share today, it means they value it at 3 to £3.5 in two years from now for them to make their ££. Instead of taking 33% now, I am happy to wait 1.5 to 2 years for 80 to 100% further upside. That is if another bidder doesn't step in. Melrose has cash and might be a good strategic buyer, come on Melrose lets go for £2.4
Whats common between Morrisons, Senior plc, Entain, William Hill and other British firms that attracted bids from mainly U.S. private equity/ other U.S. firms:
1. Stable revenue and free cash flow (demand for their products/ services can be predicted with confidence)/ Sticky customer base
2. Renowned brand
3. Strong assets on balance sheet.
NEX has all three + trading at cheap valuation. Any PE fund interested, £4 to £4.5 may do it.
Time in the market > Timing the market. Stay invested in this gem
"In the short run, market is like a voting machine. In the long run, it is a weighing machine" (Ben Graham). Short run blood bath in NASDAQ and U.S. in general will subside and common sense will prevail. NEX is well-positioned to benefit from domestic tourism in UK and return to normalcy. I was lucky enough to buy in £1.26-£1.5 region. Never selling these. Divi once resumes would be cherry on top of share price recovery. Patience my fellow investors.
P.S. I am not a financial advisor, please don’t listen to me. I am just saying what I am doing. Please do your own research. Safe investing.
NEX is my top 3 holdings in a diversified portfolio. It started by being top 10 holding (in terms of funds invested) but as it has doubled since then, its weight in my portfolio has increased. NEX remains my top three conviction trades for the next 12-18 months along with Google and Palantir (other top 3). NEX is my only UK holding, all other are American (and 3 Chinese). I will list a few reasons why NEX is my highest conviction buy, even at the current price:
- 71% institutional ownership, love the steady free cash flow, income and div (obviously cash flow and div an issue since last year) but markets are looking beyond short-term.
- Downside is limited from here, of course it could decrease in the short-run due to Covid related scare but long-term business prospects remain strong. I believe it can 2x in the next 2-3 years (return of 33% to 50% per annum) and that’s without including div. Reason being they are the strongest company in the industry to benefit from post covid recovery
- Geographically well-diversified, which is overlooked by the market as it gets punished for UK lockdown related news
- Proven track record, confirmed through steady growth in revenue, profit and EPS pre Covid. This will return and so will the share price
- If bought at current price and assuming NEX pays 11p per share div (which is 40% less than what it paid in 2019), it’s a healthy 4.4% yield. I will take that any day over saving in a bank
- Strong brand name, reliable service and government guaranteed contracts in several countries (including the U.S.) means NEX enjoys best of both worlds- growth prospects and sticky customer base. This equates to steady cash flow, making it attractive for a larger company or a PE fund. I am not speculating that it will get taken over, merely my opinion on what the acquiring firms look for, as we saw with William Hill, Entain lately.
- Low short interest meaning funds expect it to increase, otherwise good short squeeze candidate LOL
- Govts want to promote operators like NEX because of electrification and the positive impact on roads/environment through lesser congestion. Look at what favourable govt policy did to EV stocks. While I don’t expect growth to be as explosive as EV space as NEX is a transportation play, I am confident of steady cash
- My investment horizon is FOREVER because of future div yield and steady capital appreciation. I don’t trade it, just don’t want the pressure of trading it for sake of getting few more shares. Sometimes, the most difficult thing is to literally DO NOTHING, just buy and HOLD. This turned out to be the best thing for me on NEX in 2020.
I am sorry for the long message. In the age of internet and information sharing, retail investors (us little guys) should make informed decisions and take care of our families, and not only the people in suits. Any thoughts or comments are welcome.
P.S. I am not a financial advisor, please don’t listen to me. I am just saying what I am