Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
That's what has been bugging me. The valuation of 125, as per current market values becomes 82 or thereabouts. The current market valuation of 56 is a deep discount to NAV. There are now some risks in recent posts which folk have kindly posted. So becomes a judgement call on whether the risks outweigh the discount.
My take on it for what it's worth: folk are upset that TSL are not getting 125 in cash, they are getting the 82 in Afterpay shares. But if one thought the current sell off in BNPL is overdone then it makes sense to take the shares - particularly if you thought the BNPL market is going to grow (pretty strong growth to date from what I can tell). So thinly traded stock like TSL - some will have sold as they cannot bear the 'pain' of losing anymore money. When all the 'upset' folk with holdings have sold out then seems reasonable to expect price to go back up. Course the other view is the board are a bunch of crooks and want to run off with all the loot into the sunset - but what's that opinion based on - I cannot see any facts that suggest that. I think it was interesting the MMs narrowed the spread recently ie suggesting the bears are probably about done. Anyway time will tell, but when there's blood in the streets and all that ... tends to pay off if you can handle it. So personally I am going to hold and see what happens. If the SP goes below 45p and shows continued weakness that would make no sense both fundamentally (based on info I have now) and also technically. At that point I'd need to reconsider.
Interesting! The remco (remuneration cttee) is comprised of two independent non-executive directors. So there is some governance in place to guard against overly generous remuneration, and of course the legal basis.
25. Related Party Disclosures of the results to 30.6.21 state that remuneration for all key personnel was GBP 423k. So if 50p became 30p that would mean their remuneration would need to jump to about GBP 20m. Given the governance in place, legislation etc that seems quite unlikely to be approved (and if it did, would carry reputational risk for the independents?). Admittedly I have an unwise amount of knowledge in this area so could be absolutely mis-reading the risk. If so (again!) where am I going wrong?
Thanks - where does the Bank of Spain come into it?
With Montarello owning about 30%, he has quite a vested interest in getting a reasonable deal.
There are never any guarantees, but this seems like a reasonable risk/return play to me. Probably with hindsight I will wish I had put in 10x as much, but in my view risk management comes first - I don't know what I don't know!
Put simply, the deal price values TSL at about 85m GBP, the current market cap today is 56m GBP. The deal is pretty much all of the value of the TSL. So even if Block falls by 30% (say) from now until deal done, this (what am I missing?) would all be headroom due to the bit selloff of TSL.
For technical folk, there is support at about 50p on the chart. Could it be that's why the SP seems to have sold off more than it should?
Anyway I just loaded up on 25k of shares, with a spread of about 1.5% (I think it was 3%+ a week or two ago). Seems a no brainer - what am I missing?
It's good to have the transparency. It didn't all make sense to me though for example why are they not hedging the exchange rate to remove fx volatility? Why give no numbers ie of x% in the bank, Y% is allocated to ... But reading between the lines, I think we may be due for a 'metal price windfall divi':
That said, the Directors have decided to examine the possibility of payment of a ‘metal price windfall dividend’ to be paid in HY2 FY2021, to be based on any excess cashflow generated from palladium and rhodium prices achieved above long-term broker consensus prices for these metals for the 2020 calendar year.
http://www.sylvaniaplatinum.com/component/jdownloads/send/76-2020/496-2020-annual-report-20201102
@artrader fair point - the intrinsic (fundamental) value v value based on what people will pay at any particular point of time will never be settled!
This is a very cash generative business with no debt - fantastic. But (and I am happy to be corrected) I have it in mind they hold onto more cash than perhaps as shareholders we would want. It just sits on the books and even some of it is held in rand rather than USD. Any knowledge on this you'd be willing to share?
Thanks
@Chatmandu we are at (pre Mon open) a price that has been touched many times before going back to Jan so I think folk think it is a reasonable price. So you could get profit taking after the last four days up, or folk will hold hoping for more. We also have a trading update this week which could be a catalyst for price movement. In my view, it's one of those times where you have to decide whether to de-risk and take some profit off the table as the probability of us having a strong week is a bit lower. Or continue to hold with a longer term timeframe in mind.
But as I always point out - anything can happen. This is why you have to manage your risk.
@velo to add to what you have said, usually when you get a surprise strong bull bar as we did on Weds, there is likely to be follow through. Anyone who sold in the three days prior is now seeing they sold at a lower price than yesterday's close. They may even have sold at a loss that will mess with their minds. So in my humble view we should expect follow through on Thurs but there is a lot of overhead resistance not too far above.
But (and I always say this to help keep myself wedded to a belief when the price action is telling me something different) anything can happen!
@Chatmandu the craziest single holding I ever ended up with was worth about 5 years gross pay (and I am pretty well paid). I remember one time in particular when i checked the price, worked for 45 minutes, went for a coffee and I'd just made a month's salary. That was far too much for me as the swings in value were difficult to handle. I ended up scaling out of it as it was starting to visit me at night. That's one of the reasons that now I don't buy more than 5% in one stock maximum - then if that goes to 7% or so I'll take some profits off the table to readjust. Nice 'problem' to have though, although it doesn't always go that way. I might add to a position if it pulls back on me. I tend to have a 10% rule on stocks ie if they go down 10% (from when I buy) I just cut them. But if the spread is 4% say to start with this doesn't give it much room.
I think the key is to be clear what you are going to do before the price moves - figuring it out 'on the cuff' is not optimal.
@Chatmandu I think you're getting at the fact that SLP has lots of cash and is a great business. So unlikely to lose 95%. But the main thing here is unlikely - not impossible. It'a about spreading risk. Why put a lot in one company when you can spread it around. But you got to make your own mind up.
A SL at 80p should cap your losses. I say 'should' on the basis
1) the SL is triggered - so is it automated or will you do it yourself? If the latter, then unlikely you will get it exactly at 80p.
2) price not gapping through the stop order - and watch out for spreads especially on market open or around results etc time.
Obviously I don't know you and vice versa. I don't gain anything here. And you should ignore what I am saying - all completely your decision - if you disagree.
I'll add that when the SP was at 39.5p I really wanted to buy a lot more of SLP on the basis it was great price. As I write of course it was. But save for only a couple of £k due to portfolio growth I was at my max portfolio risk for one company - so I didn't buy any more beyond my risk parameters.
As Warren Buffett famously said: Rule Number One: Never Lose Money. Rule Number Two: Never Forget Rule Number One
Good luck - if you don't put as much in, and SP goes to £2+ remember all your decision!
@Chatmandu just read this. Please keep your risk managed. I know so many who have failed at this aspect. Remember, a 50% fall requires a 100% gain to get back to where you started. This is so important! Wow and you are talking about your pension - not a bunch of cash sitting around looking for a home.
Chatmandu a decent chunk of my investing (not trading) is in blue chips with decent yield. Given where interest rates in my view annuities are prohibitively expensive to use pension funds to purchase. With the freedoms introduced a few years ago why do that when can use drawdown/flexi-access etc. Obviously the reduced LTA and AA thresholds mean that pensions are only tax efficient to a limited extent now.
One thing I wantto get to grips with is using options in conjunction with decent blue chip yielders to increase return. But I'm not at retirement age yet so don't need any income - but I do view investments not just in return metrics but also how much risk I take.
Funny you mention BDEV - really loaded up on that about a year ago now including kids JISAs. The investment case was quite compelling. BP. too went sub 200p. In fact there were several!
@velo that's probably very wise - ignore the noise. My brother's strategy is buy a decent divi yielding stock, when doubled sell half so get money back - then just leave it forever and take the divis. He's excellent for times like March 2020 to get some perspective! That said his Northern Rock shares went to zero (but then he got them for free so in his head he has lost nothing).
Have a great trip.
I agree with your second sentence 'the aim is to make money not be right'. That's why I stated my opinion and followed up with 'anything can happen'. Unfortunately I don't have the ability to predict the future. So basically with 30 mins to go today I am bullish on SLP. If by the end of the day the price has closed below yesterday's low clearly my view is negated. Then if I continue to hold and it drops further I accept the consequences. Or if I sell, price strongly reverses and I buy back in, again I accept the consequences.
What's your game plan?
@CHATMANDU just that today and yesterday, price went down, then bulls bought it back up happened twice (see the chart i posted). So once the SP gets to that level (bottom of the days' ranges) buyers/bulls are stepping in. Anyone shorting there (not sure there are many shorters on this stock, so more likely retail getting scared out of their positions) is going to feel pain because they sell only to watch the price go back up. So they buy again, down goes price, again they sell, again price goes back up. Now they are really feeling the pain. They buy again, but wont sell so the price has to go up. Meanwhile the pros are now buying in at a great price (basically they sold to retail much higher up, retail are getting spooked out of their positions, pros figure that most have now sold out, so in they step to buy back the shares much lower than they sold to retail at.
That's how I see it. But anything can happen. It's just usually when the bulls step in as they have today/yesterday, the bears are not going to be out in force.
This is why I love this game - to me it's a market place with buyers and sellers, hope, fear, greed etc - albeit within a fundamental framework ie a value. To me there is no one fixed value but a range. We've had a few days selling off (media says covid, i think overbought and profit taking) and today bulls stepped back in (in the wider markets). I'll shut up as I could go on and on!
@Velo I'm going to disagree with you there. In my humble view, we don't need precise patterns - rather what's the price action saying? At the bottom of the range, bears have sold down and bears bought back again, then this happened the next days. So strong bull action. Bears give up and so .... up we go. Obviously anything can happen, but the probability is for this. https://www.tradingview.com/x/TMVSCZhC/
@LuckyLuciano SP has rejected at the weekly 50SMA (at least so far - the week is not over). If using pure TA, then would want to see 1 or 2 consecutive decent bull bars after that before going long, stop below low of this week.
Whatever happens in the next week or two - it will be interesting!
Quiggers thanks for the math. Of course xchange rate assumptions in there etc but even so. And turnover is projected to (USDm): 213.2, 233.9, 236.6 for years ending 2021/22/23. Lat year ending 31.12.2020 turnover was 140.3 (post tax profit of 57.6, 79.7 pre tax).
I guess there is a lot of political uncertainty, and they do hold onto a lot of cash which I don't understand (may be wrong, but i think they hold a lot in rand too). Seems a good investment to me, on the basis that holding as % of portfolio is sensible.
Looking forward to the trading update which i think is due next week (always struggled to find an exact date).