The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Jeremy Grimes. (Previous small cap fund manager.)
Valuation
The December 2018 NAV was £3.82bn and the market cap with the shares at 93p is £1.27bn. That is a 67%
discount to the net asset value indicating the market doesn’t believe the valuation of the properties. It was
only in October last year the company received a bid at £2.8bn which fell away to cries of “Macro
uncertainty”. This followed a failed bid from Hammerson in April last year at £3.4bn.
Conclusion
It seems likely that the industry players believe the asset value to be significantly above the current level.
We Work is coming to market at a valuation said to be in the region of $20bn which is 8X last years
revenue. Intu trades at 2.2X last year’s revenues. Let’s hope that Intu can sell some shopping centres to
We Company. This looks like an arbitrage where the valuation gap is too wide between the unicorn and the
old-world stock.
Lucky if get there without being bankrupt by GR extortionate expenses and pay.
Circum will never come to fruition
RHA not commercially viable, only at a level to provide a slow death to prem ... maybe squeeze a few more trips in for GR first class.
A small aim company, extracting oil, a type of energy which is limited in quantity and destroying the planet. A barbaric and medieval method on its way out, as the trend of the 21st century is green and renewable.
Is hardly going to save the world, or the uk.
Qwerty
If you have been following a board on LSE for an AIM share closely, and reading all the posts of the crazy rampers, which all shares have. (A modern phenomenon of manipulation of uneducated "investors" via the internet).
Then before buying a share ask yourself, if the forum/board didn't exist, (eg what you have been reading from the general public, which you have no idea of their motive or who they are)
Would you still buy this stock based on publicly available information and charts only?
Then you are buying on your own accord and not allowing yourself to be "brainwashed".
Investing should be done rationally .... but its mostly done irrationally because of the psychology involved and weak / easily lead human mind. (confirmation bias for example).
When it was 30m i said it could easily go to 10m, obviously the people who have lost money and are trying to maintain a positive board in the most desperate hope of getting it back shouted that down.
We now are at 10 mill. But i am downgrading after the way this has been handled this year.
The borderline senile / loon that is George Roach has pretty much guaranteed this going to zero. Soi am predicting a <5mill mcap next year if there is a failure on any of the last strings of hope that holders are clinging onto.
No that just puts you in category 2. Horribly overweight in micro caps with huge % chance of going to zero. MOST aim companies don't make it, a small percentage do. (As you must know). What's worse is you could have been in big blue chips, Nvidia, amazon, Visa, Boeing. And made 1000% since the sub prime mortgage crash. I just don't get it. Well I do, most ppl on AIM are low income gamblers. Don't hate the messenger.
Here* hear is to do with sound.
Ironic comment when I put forward and intellectual and informed point about the stock valuation and have retired after working in a professional job which requires a degree. And you clearly get maximum minimum wage.
first issue is the company’s valuation. Placing a value on undeveloped oil assets is notoriously tricky. Even though these assets may eventually produce oil, in reality they’re only worth as much as other parties are willing to pay for them. UKOG’s Horse Hill-1 well was tested at 1,688 barrels per day (bbl/d), the highest initial production rate of any UK onshore discovery well, but other company assets have struggled to produce a similar positive result.
Despite spending months (and a small fortune) trying to get oil from Broadford Bridge’s six Kimmeridge horizons, there’s been no sign of black gold in this region.
With so much uncertainty hanging over the company and its prospects, it’s almost impossible to try and value the business and its current state, which means it’s difficult to tell if the current price is attractive.
Money, money, money
The second issue to consider is UKOG’s funding. The company is generating virtually no revenue and, therefore, almost no cash to fund development costs.
The majority of development work and acquisitions have been funded by the issue of new shares. The latest deal involves the issuance of nearly 250m new shares to increase UKOG’s stake in Horse Hill Developments Ltd.
Tapping investors to keep the lights on is nothing new — it’s an easy way to access cheap financing. However, this method of fundraising also has a dark side.
Dilution
Over the past five years, UKOG’s number of shares outstanding has increased from 83m to somewhere in the region of 4bn, according to my figures. By issuing shares, the company has been able to remain afloat, although it has diluted existing shareholders.
Put simply, by issuing so many new shares, UKOG has been able to transfer tens of millions of pounds in wealth from shareholders’ pockets to itself. The dilution means each shareholder is likely to get back significantly less than they’ve invested, even if the company does strike black gold.
Thanks for the considered reply life. I would of uses the same argument if presenting your side of the coin. It's really becoming pivotal from here, and really it's now down to if believe the board can take the right actions from here. It will either go into oblivion (95% chance) or make it to FTSE there's really no in-between.
I don't think expect an intelligent response GE as most ppl on the AIM forums are surprisingly uneducated in finance markets. Where AIM should be maximum 5% of even a very experienced inveators portfolio. Unfortunately it usually is 100% of many people's portfolio and they are usually the most uneducated and should be taking the LEAST risk in markets. One day after you have flamed this post as a natural response to being publicly humiliated, you will think "shit now I know what that guy was talking about".
I'm interested in all shares and markets. Mostly in human psychology and how it effects markets and share price. This share is notorious for group confirmation bias and blind faith, exclusion of alternative views and ignoring of facts such as 4 billion shares in circulation and spiralling costs. The market as a whole is suffering overvaluation in technology stocks especially the FANG stocks, which is a surprising continuing trend after the inversion of the yield curve earlier this year and the fed signalling continued rate hikes. This is like a microchosm of the market as a whole. That answers your question as I why someone would be interested.
Not disputing that jiffy, thanks for your rational post. But it's getting critical now and if they continue on this path that goes out of the window. Just posting the other side as board getting out of control rampy with the 10p stuff. It's not so easy now with 4 billion shares. Market cap would be huge at that price now.