The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
hedged... your portfolio must be in good health with all of your correct market predictions which makes me wonder why you sit in this chat predicting the bottom price for Amigo all the time :)
come on we cant all be right all the time... sayingh that if im not right ill just lower my price target each time and then say im right :)
hedged... come on mate the other week you was suggesting to buy in below 6p now are you saying below 5p? 4p? 3p? or did you follow your advice and buy below 6p?
I do think some of what you say is good certainly to have a balance (as its typically negative) but to then just throw out this has further to go... dead cat bounce and double bottom its just throwing catchphrases out especially as you know that the new lending RNS is due... if you are out after that then you are likely to miss getting in at the low prices... a RI is needed yes but to support that the BOD need the SP to rise to support this and potential IIs to buy in... if and that is an IF this happens then the SP wont be 5p in my view...
RI to raise £15m = SP of 3p
to raise £70m = SP of 14.78p
otherwise they are raising at premiums or diluting greater than 19:1
the current SP is based on creditor issues being solved but no understanding of future business... this will be next on the RNSs as the company will now turn its attention and focus to shareholders
Can i ask how you come to that figure?
Just out of interest this share hit 30p when SOA 1 was going to court... even Gary said during court that a RI would be required to support new lending and after the court date and before the ruling the SP hit 18-20p
The point that is different in SOA 2 is RI 19:1 and £15m to creditors...
19:1 is almost irrelevant if you are taking the RI up... 19:1 is to tick the FCA stance that shareholders are being hit
£15m on todays share structure = 3.15p
So to me the SP fair value has to be around the 15p which also ties in with the required value to do a RI and raise £70m to support new lending.
Only my views/thoughts and definitely do your own research :)
Argyle, I agree with your point the SP wont be near what it is today after the RI because even though the RI will generate cash in the balance sheet the business wouldn't be valued at £1.20 per share in old value shareholding (475m shares) that would give a market cap of £570m... so absolutely no chance the SP will be this afterwards
Hence you will need to take part in the RI not to be diluted/in loss
After the RI i would expect:
A sell off as you mention - Profit seeking always happens after a RI
A share consolidation - which will support the SP to get stronger based on the performance of the business
BFC, I agree with what you are saying and personally im working on the basis they want to raise £70m of which £15m will go to the Creditors this then means SP to merit the raise without being at a premium would need to be 14.78p (ish) this would be based on a pretty standard RI which we all know Amigos RI is not standard :)
I know people will say they can raise £180m at 2p... but that is a huge huge ask for a company with no current IIs onboard and is valuing the business at a current SP of 38p... i could well be wrong but id say that is too big a step when they can raise funds like previously through bonds etc
Ultimately everyone needs to do their own research work to their own plans... personally i think with positive RNSs listed below we could see the SP get near the required 14.78p... that for me shows merit in the share now...
Amigo to lend again
New products
potential profit/Risk of product sets
Thats just too difficult to answer... ultimately a business SP is valued on potential value...
We need to understand the following:
Structure of the new products
How will these be sold? Human interaction versus internet (less risk of bad practices for internet sales)
What are the potential Profit Margins/Rates/Impairments
When can Amigo start lending
Will IIs get involved? - If IIs come in this will increase the SP without a doubt and help Amigo in achieving the RI
We know the following:
there is a demand lending now more than ever
They will be able to lend to £35m
Director structure is now in place
Personal opinion - 5.8p is cheap particularly if those questions are answered with positive outlooks...
BFC - that purchase by the director is a share purchase plan... its taken out of his monthly pay but has to be notified to the market... I really wouldnt take anything from this at all it occurs every month... The RNS needed is that the FCA approve Amigo to set up lending again get the launch of the products, Potential Profit Margins etc etc 5.8p is still cheap in context to the business but still has risks although they are reducing at each hurdle...
hedged... in all fairness you said plenty of opportunities to buy under 6p... now your saying under 5p... when it hits 4.9p youll probably say under 4p... then when the price rises youll say i just got in at x before the rise...
surely you took your own advice and bought at the buy under 6p i guess :)
Sorry Bankrupty i dont understand your point regarding 80% of market cap?
Any RNS that states any of the following will create movement
positive statements about the future: FCA approval to lending, new products, expectations of profit anything that states RI will not be for 9months + to allow to understand more of the new business model for investors etc not a full list but anything along those lines...
Bankrupty the RNSs do state its a min 19/1 so could be higher 100/1 anything but again thats just speculation...
ultimately Amigo now need to turn their attentions to Investors
(Shareholders and IIs as without them they cant raise any money let alone £15m for the SOA)
The RNS states on 6th Dec the following:
While details of an equity raise to partly fund a return to new lending have not yet been finalised, the £15m contribution to the Scheme is expected to be funded from an equity raise and new capital commitments of between £120m and £300m, of which it is hoped to raise a minimum of £70m in new equity. It is required that the new equity raise must be completed within a year of the sanction of the Scheme by the Court.
It doesnt mean that all of the funds will be raised purely from a RI
I agree the RI of some form will occur... but i dont believe £300m will be expected to be raised by a RI
the court outcome was almost expected, FCA wasnt objecting, Creditors voted in favour, Court had previously seen it and the complaints ombudsman FOS voted for it... it really would have been a shock for it to have failed.
every RNS quite rightly has been Creditor focused with doom and insolvency stamped all over it...
Now SOA is approved (awaiting full confirmation) Amigo need to turn to investors so i expect the RNSs to be coming out over the next 3 months heavily focused on the business going forward and expectations along with FCA approving lending
That will all see an up tick in SP... personally i would prefer a higher SP as this gives Amigo the opportunity to raise more funds potentially offer a discount on the RI... there are far more benefits for the higher SP from the BOD and shareholders perspective in my eyes
Burnsey the RI has a number of factors and to try and second guess it is very difficult almost pointless at present...
Facts that we know:
19/1 if a RI is done dilution will occur at 19/1 (i personally am working on the basis this will happen)
Amigo need to raise funds - at least £15m for SOA and potentially up to £300m (i dont believe that will all come from a RI)
Amigo can lend up to £35m within 9 months once FCA approve Amigo to commence lending
An equity raise will be needed within 12months of the SOA sanction (Likely RI)
If the RI price is low that in turn means the value they raise is less (min £15m is needed)
If the RI price is higher due to SP increase... this allows people to sell out, sell a portion and utilise the RI meaning they arent diluted
Ultimately the timeline looks something like: (Im sure you may be able to think of other points that will need to happen)
FCA to approve lending
Amigo to:
launch new products and start to lend generating new profit
Issue monthly/qtrly updates on new lending and profit potential
Initiate Equity raise (RI 19/1)
If it happens in that order and theres no guarantees that it will the SP would be higher than 6.6p meaning the RI would be higher and generate more than £15m
@truthfactory thats your opinion...
Mainstream banks wont lend to them because they have typically paid late or defaulted so as a business model a company taking on those types of clients will need to charge more to safeguard against bad debt to provide a service that is needed by millions...
you may say daylight robbery, immoral, scandalous etc but it is typically the customers that have put them in that situation not to be able to use mainstream banks.
Also more to the point you are complaining yet dont know what the new products are of Amigo... so why dont you just wait and find out instead of just spouting its not fair! be factual and fair in your views...
@truthfactory that is your opinion and everyone is entitled to theirs...
Wonga rates? 1509% Amigo offer rates at 49% youre comparing apples and pears
regarding litigation on this type of lending is endemic? Amigo is offering loans at a similar rate to most peoples overdraft charges... its not the lending product that was the issue it was the process that wasnt followed... we would expect Amigo to get that right going forward... but you never know and a process not being followed can happen in any business...
@truthfactory come on if you are going to throw out comparisons of Morses... share what the comparisons are? are they doing a RI and cant raise the fund? are they doing an SOA? is their business profitable or not if not why is that the same margins as Amigo etc... come on you have just thrown out a sub prime lender that has said they arent releasing their full year results in may and will now do so no later than 26th August hence they have dropped in SP by 30% today...
At least be factual if you are negative and the same for positive ramps :)
@craignews just check your understanding of JPM they dont own 15% if anything... have a look at the RNS dated: Thu, 9th Dec 2021 shows they are below the threshold.
currently no IIs invested in Amigo as we know it (for me there is a buyer for every seller 22m volume yesterday so 11m shares purchased thats a lot for retail investors speculation i know but look at the charts on a 5min breakdown with volume and youll see interesting buy patterns)