RE: 'How about this, when I bank £10mil plus from RRR, I will leave you to it?'27 Jun 2024 16:00
News, it comes down to the EBITDA multiple that the market applies to revenue from places like Burkina Faso, Cote d'Ivoire and so on. The trolls and investors not professionally trained struggle with some of these issues. The trolls because the just have an agenda, as well as being a bit slow.
There used to be a company on the stock market called Hanson (around the time GEC was active). It was called a conglomerate and there were a few of them (conglomerates). The big thing that were known for was growing the EPS (earnings per share). In effect what they were doing was a form of arbitrage. So they would go to private companies with earnings and pay them maybe 3xEPS, they would issue shares for the purchase, they would sell the bits that didn't produce the earnings and keep the rest. Now the market valued Hanson shares at 20xEPS because it kept growing its earnings. So it made sense for for Hanson to keep issuing shares valued at 20xEPS for a deal where it paid 3xEPS and recouped a fair chunk of the deal cost via asset sales. There was a big fuss about them, they were called asset strippers by the left. The core of it was that the management of Hanson was valued highly and so they could even do it to listed companies where the management was valued less highly.
In effect, the Hanson management team was bringing two things to the table, willingness to break up companies and sell non-core assets at good prices. If the market hadn't valued their shares at 20xEPS then Hanson would not have been able to pull this trick. The assets didn't change in the deal but how they were valued changed.
At the moment, all of RRR's assets (and it is a lot) are valued at pretty much zero. A typical shell listed on AIM is valued at £1/£1.5mil. So the assets and tax losses of RRR are valued, lets say at £0.5m by the market. The tax losses are about £60mil.
All that has to change for us to make good money is for the valuation applied by the market to change. Substantive changes at the asset level help and we have had two in the last week or so.
https://www.theguardian.com/business/2004/nov/03/politics.politicalnews
I will follow this up with a separate post about the opportunities for RRR was cashflow has started from BF.
DYOR
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