The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
"A dog with a bone!" Correct. And I'm just getting started.
Every major listed fraud ever exposed had institutional investors on the shareholder register. You see, it's because long only investors don't invest in the expertise to identify frauds. It's not their business model. They just diversify away the risk.
Are we not going to talk about the fact CSH is audited as well? Because, guess what: every major listed fraud is audited! Like long only investors, auditors as well are not there to identify fraud. Approximately 2% of exposed frauds are brought to light by the auditors.
You bagholders are ALWAYS the same. Not only do you play the person rather than the ball, but you also play the wrong person.
Every step can be seen in publicly available records, on Companies House and the Land Registry. What I'm describing is literally a matter of public record.
1. Buy a property for £X.
2. Sell it to csh for £3X.
3. Give some of the profit to csh customer to fund rent payments.
4. Pocket the difference.
5. Rinse & repeat.
That's the scheme.
The problems highlighted at Home echo the problems at CSH. It's the same pattern of NAV inflation through assets flips and related party deals. If anything CSH is much sketchier. This episode puts a spot-light on these dodgy practices.
Don't rely on institutional fund managers to do any real due diligence. They don't do it. They sit down with management, ask them some questions, read a couple of sell side reports, calculate the yield and maybe look at the industry trends. Maybe they build a spreadsheet. They do not do the type of work that would allow them to spot the problems at Home REIT. They make money by charging low percentage fees and accumulating big pots of assets. That model means it's simply not cost effective to monitor for fraud or other bad behaviour - that kind of work is very resource intensive. They take the view that they are better just diversifying away the risk and hoping they're no worse hit than any of their competitors.
Also, it's not their money! They have a LOT less at risk than the activist short sellers who are exposed to regulatory and legal risks, as well as a large short position which may go wrong. Viceroy have vastly more "skin in the game" than the people picking stocks at M&G.
You don't believe me? Keep holding that bag and see how it works out for you.
my apologies. I must get my eyes checked. I misread your prior post.
Exciting, indeed.
"The IFRS valuation is lower than the property valuation". What do you mean by that? Can you explain what you mean by "property valuation", in that sentence? Not being snarky - I just genuinely don't know what you mean. Are you referring to the valuation of the property on its own, assuming it had no lease?
"The Clause remains subject to approval by the Company's lenders and now that a settled form of the Clause has been agreed, this process will be commenced."
This was in a recent update. CSH have agreed with the Regulator to introduce a new clause to their leases. I don't think they have shared the clause with the market yet, but I understand it results in CSH sharing more risk with the RPs (its immediate customers). This new clause has to be approved by their lenders and they have said they have now engaged those lenders to seek this approval. I think in a normal market this would probably be ok, but given what's going on with rates, it might be rational for those lenders to extract some commercial value from all this. We'll see. In any event, the valuations of CSH's property portfolio will surely have to come down given the massive increase in rates.
The property valuations are heavily dependent on rates. Every single property valuation in CSH's portfolio is based on DCF calculation of the lease that's attached to that property. As rates go up, the DCF valuation falls. This is a separate issue to the interest rate sensitivity that you are describing, which I think is focused on the cost of the debt, not the value of the book. CSH have told us that they are now in negotiations with their banks because of the increased risk on the leases, owing to the amended terms. It must be an exciting time to be in negotiations with lenders.
Because this company's short history is mired by undisclosed related party transactions, circular transactions, and a spate of insolvent customers. And yet the credit worthiness of its existing customers (as questionable as they might be) is the sole argument underpinning the entirety of the reported NAV. When you are net debt, and growing that net debt to pay a dividend, then the sorts of risks we are talking about here cannot be "baked in". It's a 1 or 0 scenario.
no... I don't think the risks are priced in.
Did you miss me?
How you guys doing? Just thought i'd poke my nose in and make sure everyone's ok. Punter64 - still buying dips? xx
Interesting. Personally, I think it's more likely a function of weak equity markets and the spectre of rising rates, but it would certainly be far more interesting if it was Russians liquidating. CSH also has specific issues, although I think these are largely priced in for the time being. Did you see the most recent financial accounts filed by Falcon Housing Association? That's one of CSH's customers - quite a major one. Seems like it's in the process of being straightened out.
(PS. I am short the stock and have been critical of it for some time. So, feel free to ignore anything I tell you and please don't let my views upset you! It takes different views to make a market. Good luck.)
You think it's going down because of Russian shareholders selling out? What Russian shareholders? What are you basing this on? Genuinely interested. If CSH has/had a significant Russian shareholder(s), I'd love to hear about it.
I honestly don't know. Probably it's just some daft long only PM waking up to the situation:
"Hi, boss... yeah, it's James. Yeah, I just read this crazy stuff about Civitas... Yeah, that's the social housing thing we own. How much? We own about £10m. Well yeah, this guy called Matt Earl is highlighting some weird stuff.. Oh, ok... I didn't realise that about Matt. Ok, so should I tell Jeffery to sell it? 20% of volume? oooohhhkaayyy. Yah. See you at the golf club in about an hour. yaahhhh."
Hi there. No, not nervous yet, but you never know... Maybe I will be tomorrow! :)
Does anyone know if the Phase 2 study has been published anywhere?
Yes indeed. :)