The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Lotm, I bought some trading batches at 160, 145 and 130….not sure I will buy more as decent movement has also ceased. Hopefully it’s not bad news around company fundamentals but it appears for now it’s just a waiting game.
…or there is simply a game being played. I bought some more, missed the low but 130 seemed ok. You in LOTM?
Down to 70p is a joke. You have to thank the market for being able to buy at that price! Report really was nothing less than expected.
Not a day to switch the computer on.
The cash is only needed for collateral to secure the bank guarantees required for new contracts. So worst case is they lose business momentum as a result of not being able to support the guarantee. Really a short 3 year asset backed loan of $200m would likely do the trick and the issue is agreeing an assets value which is why they probably indicated a divestment.
I confess to being a complete opportunist in terms of having some share here. Was never on my radar until December. I therefore have little experience of the past but I guess when they were trading at the highs they were paying out healthy dividends without a decent eye on risk / future proofing the balance sheet.
The shorts, (particularly the likes of GLG/MW) spend a lot of money with research companies which contact current and past employees to gather data. It's applicable to investment institutions in general and these 'research' companies can be huge in size/scale/reach. I am sure right now they are being paid overtime to get as much information they can through this avenue.
Then these companies may have relationships with the lending institutions (often clients themselves) through which they can get limited info and at least a heads up in terms of when announcements could be made.
Bottom line is they have more info than any PIs. The choice as a PI investor is simply do you believe they are swamping the free float to generate fear/dread of a massive dilution or at least an avenue for them to eventually exit relatively clean because of the PI 'relief' sell off on a climb even to 40p.
Or....could PFC genuinely need a mass dilution or even fail. The update left doors open to pretty much everything but failure and if anything hinted that a solution with the banks and customers could be achieved.
In this period where there is no news flow, it's clear the shorts will get their way and simply have a much bigger stick than PIs going on about burning them and the like. If you look at their entry points and factor in that these are always 'net shorts', you'll work out failure is very unlikely for them as well.
I don't particularly like the fact this has been taken below 26p with extreme ease but it is what it is. Hopefully we get news within the next month or so, but it does not look like there was any intense urgency to that update in December.
Good luck everyone but I think this is one to stick in the back of an ISA right now and leave. If you've bet red and it lands right, quite a lot of money to be made here without too much outlay.
Yes the RI was a killer.
Good luck on the flutter. At the end of the day a 20% reduction in broker forecast has been pretty much mirrored in the SP. If that's simply all it is, you could be onto a winner!
Its too complicated but I'll have a go ....
If you bought at 60p and took up the rights at 1.97, you'd have needed to fork out another £10K. Your 20K would have bought you a post rights position of about 5833 shares worth about 7.5K or so at today's price.
Alternatively you could have sold your rights on the 5000 shares for about 1.30ish. So you'd have got 7.5K back of your 10K and have 833 shares worth about £1200.
Don't take this as being 100% correct ... I think I have it right but it was complicated enough at the time let alone a few months later.
Makes me laugh that the SP is about where you could have sold the rights for right now!!
It looks tempting but I know the minute I buy a tranche it will just drop another 10p. Early days of someone selling or a hedge fund playing with it in my opinion so not worth the risk of playing. Will keep the several K I bought in the 150's to trade but fancy that red number will grow before any recovery.
LOTM I hope you're doing ok and hope this gets back to a sensible window for you soon.
At this level you just need to look at what you are risking. If it's an RI, you'll get out selling the rights or whatever and maybe lose 25-30% from here. Ditto if there is some other kind of raise.
If there is a solution with lenders/suppliers, you double your money and then some.
The shorts can't keep adding every day for too much longer. Funny thing is, they are probably borrowing the very same shares that PI's are buying via the various platform providers! Can't make it up really.
I guess it all goes back to investment in the UK exchange. Simply not enough participation in it leaving a whole raft of companies seemingly undervalued significantly. It’s not a particularly new dynamic of last 20yrs but brexit and covid seem to have exacerbated it over that time.
US data not great … might be a while till money gets cheaper again.
Market has been kicking companies which push through intangible write downs. Has no impact on cash generation, just reported profit. That's why they confirmed it would not impact return to shareholders. Load of fuss about very little. They bought companies and now they are not worth what they paid/put on the balance sheet .... wow ... hardly unique.
#Hateintangibles
Well I would not describe it as banking it. Got put into other stocks where I can lose it all just as easily as grow it!
My concern would be that you have a short in here realising that the SP can be taken down with relative ease and low volume. It might actually be a smart way to not only cover the short but build a long.
I'm surprised this stock does not get more attention. I can't remember the numbers exactly but I think the EBIT number was forecast at about 150m (I need to be corrected if that is an EBITDA number). Lets assume the RI money was used to reduce debt to 500m the debt (post IFRS) and the rest absorbed by capex/restructuring projects.
Conservatively it should be a 1bn company (on debt free basis) which would pitch price at the high £2s/low 3s.....
To be honest I sold half just now at 364 ... moving into some stocks which will fair very well if US inflation reading affirms rate reduction likely. I'm sure it will go higher but I went rather big in the 320s and can spread it again.
LOTM ... do you reckon this seller has a floor like 150 or similar. I'm not a chartist or anything but can see from the trades that something is still going on.
It was positive ARR growth and outlook. Not blowing the doors off but steady and reassuring. To be in the 320's was ridiculous. A bit like this here in 150s.
Update dropped on dark today WT. Should get your 350 and then some…if Uncle market plays fair of course!
You’re right LotM. Makes little sense on Mcap vs RI here. Mind you, just look at what Schroeder’s just did at PFC….if a fund needs to sell I guess they just have to and take what they can get.
I've grabbed a few K LOTM. No idea what the game is but I'd rather be here at this price than CPI for the time being.
Frustratingly I'm still sat on my hands. Hope you do well LOTM and with a following wind I might get to buy some in a while.
He could have simply heard mumbles in the insurance sector. Assurion would be a good fit after all. I just wonder if the price management probably want to settle for (outside of MBO) could be hit. They hold a lot and might even have some personal debt assigned against that early post IPO valuation muddying the waters.
I guess my point is the SP has significantly bridged the point at which an RI would be acceptable. So those holding short are pitching for company failure as opposed to an ability to sort the liquidity issue out. Also, it really sounds like you are talking $100-150m to sort the short term.
I personally think they will get headroom from current lenders at a cost. I've always messed about with HTWS. Whilst it has a very different margin stack it has a ludicrous debt figure and somehow they manage to get financing albeit at a premium.