Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
H2 powered fuel cells are certainly this years' buzzword. Unfortunately, this space is so immature that it is difficult to see where this is going or whether this is going to take off at all.
If it does however, then that would be a nice cherry on top of the cake.
Reminds me a bit of the investment I made in Apple in 2005....
Fuel cells have been around for a noticable amount of time (late Victorian). NASA is using them with great success since the 1980s. Previously, the high Platinum content made them not so practical to use in consumer-space, but recent developments by Siemens/Bosch led to designs that required substantially less Platinum than initially thought and made the proposition a viable alternative to EVS.
Arguably, they are amongst the leaders in that space
www.bosch.com/stories/fuel-cell-stack/
www.siemens-energy.com/uk/en/offerings-uk/hydrogen.html
Indeed, as these develop demand for Platinum would be expected to increase unless the solution for catalysts changes completely (rather unlikely in the near future).
It's not the reason why I'm in here though, but I would not mind that extra bump :)
The reason I started building a postions a few years ago is because I see a superbly run company at an incredibly low valuation. Situations like this don't come up too often.
CleverThoughts
Have a look at how well capex is managed over, say, the last 6 years.... It tells an interesting story and shows how well this company is run.
PGM prices weren't this high back then, and yet the Management still turned a handsome profit and growth.
Current valuation is ridiculously low, whichever way you look at it. For a company with an ROE of 30+% this screams undervalued.
Eventually the market will wake up to this.
abacus
I doubt they would accept an offer of £10.-
Also, some revenue from the Petersen case already materialized.
But there are far more pressing issues for Burford, namely what are their rather mediocre returns at present. Too early to call duev to the lumpy nature of the revenue stream. I'm prepared to give it a few years.
Hi Sirius
I am not using a DCF for my personal investment decisions. The method I employed (for decades) is from Benjamin Graham (and David Dodd).
Graham thought that since the investor had the choice between purchasing common stocks or bonds, it was appropriate to take into account the rate of interest paid on a high-grade bond - 4.6% in this case- in determining the intrinsic value of a stock.
That's where the 4.6% come from.
Situations like BUR are 'sleepers'. These can take quite a bit of time to develop, even when that means back to new highs. The good news is that it gives plenty of time to use it as a potential high interest savings account and build a meaningful position.
The bad news is that if one has a postion at the lofty valuation of times past, then the question of opportunitiy loss arises.
Hi Velo,
I don't use a DCF approach either. It's Graham and Dodd's formula (which I made a bit more pessimistic even). Very simple and a litmus test that served me well for decades... Ironically, a lot of DCF calculations often arrive in similar ballparks.
I do like the P/E comparision with industry averages. Also, nice and simple and ought to be totally sufficient for our puproses.
I'll give that a go as well :) Cheers!
This is one of the shares whose valuation I had to artificially throttle because I could not believe the results.
In those cases, I am using a growth rate equal to the growth of inflation over the last 30 years, which is 2.9%
Needless to say that the resulting figure still comes out way higher than what it currently is.
In case you are interested, using the TTM Eps of 23.10, a growth rate of a meager 2.9% and a 20Yr Bond rate of 4.60%, the resulting fair value is at 218.75 and a buy with a 50% Margin of Saftey at 109.37.
But that's just to ensure capital is safeguarded from inflation.
But what to estimate as growth value. If I use a CAGR of 98% over the last 5-6 years, it will be insanely high, and not sustainable. Let's use the CAGR in ROE of 12.7%, this gives a fair value of 435.28 with a buy under 217.64% using Graham and Dodd's litmus test (sufficient for my purposes).
Please do sell your positions in SLP since I have no clue what I am talking about! You will find a grateful buyer in me :P
N
Oh, I don't mind suggestions ;)
For those interested diversifying into law, I'm currently investigating the "Ince Group" as potential candidate.
Has nice ratios and balance sheet.
I don't have a position in this one (takes me a bit of time until I commit).
Hi Alavib.
It's always good to hear critical comments. Many thanks.
The figure of 1300-1400 would arrive by employing a (revised) Graham and Dodd method. This involves a 50% margin of error, thus the 650-700p purchase range.
It will be interesting to see what the effect of last year's results will be, and I'll patiently await.
I agree there are a lot of interesting plays out there and some if these have a substantial weight on the portfolio. I never thought that the US listing would suddenly produce more demand (a rather naive assumption), nor that it will suddenly recover to previous heights (where the company was hopelessly overvalued).
There is a very good reason I never took a position in MANO for eg, which is still overvalued despite a 40% haircut.
Everyone has to have their own framework on how to approach this. Within mine there is still room for a little patience with BUR, whose contributions to my performance were flat for the last year. It would take a bit longer for me to begin contemplating opportunity losses.
The hard, bottom line figures on the next return will decide a lot going forward. No matter how much their BOD is trying to ramp their results.
At present the returns don't look as good as they should be. An ROE of 8-9% is OK, but it's not the kind of return one would expect from a business with a distinct competitive advantage, or in a runaway growth period.
Nobody knows whether this represents a temporary setback (ie lumpy period) or a broken business model. For that it would need a bit more time (years) to establish. Unfortunately, that whole COVID thing skewed the picture enormously.
Did you value the company? What's your fair value? Mine still hovers around 1300 - 1400 with a resulting buy in the 650-700p range tops (which is why I'm in here in the first instance).
Situations like this can work out really well. I am not going as far as assume that their business is broken (for now). It doesn't take a huge amount of intelligence or digging to realise that Woodford's holdings would face enormous pressure given that his fund faced (industry leading) liquidity issues. I could have written a paper that I've shorted BUR because Bogard reversed his car over my cat, and be proven right given that the price tanked as any liquid positions had to be sold.
You only have two options. Either you see this as a business able to compound at above-average returns over the years (needs a bit more evidence in the coming years) and hold (or top-up on weakness), or you cut your losses and reduce or totally stop having a position here.
Complaining about the BOD won't help since if they could manipulate the share price they would face custodial sentences. In my opinion they reported way too frequently---which is a bit suspect in my books.
I am still long BUR but I am awaiting the coming result with disproportionate amounts of curiosity.
Best N
Apologies.
With "their performance is measured" I meant the pundits, not the company. To be clear.
Don't get spooked out of a good position. As more people want in, it is in their interest to do this as low as possible (as is mine).
mra1984
"(1) These twits from conker's corner - they keep tweeting out this rubbish without even fact checking, listening to there podcast where they think SLP is risky just because the share price has gone up a lot and then start talking about platinum a lot...ok weird, no knowledge or mention of Rh and Rh market deficit"
---
In principle, this is correct. As the price increases, especially like in this case, so does downside risk.
But that is not telling the whole story. Looks at the quality and value ratios and it's extraordinary. And now momentum comes into play as well? The valuation is ridiculously low. To keep it simple, the sector average is PE 15. Never mind any other objective measurement.
Their performance is not measured in the value of wealth they contribute to their readers, but as to how many people continue reading their musings. Not quite the same. And yes, there is a bit of a contrarian play with SLP, but that's exactly where the fun begins ;)
Happy holding.
So someone rains on the parade. And?
Seriously, so what? If that manages to convince people to part with their share in a fantastic business, then the opportunity we should welcome is to say thank you and purchase what they are so willing to part with.
People buy and sell for all sorts of reasons. I was never too bothered finding out why. But when the sell sentiment overweighs and they part with one of the best propositions I know, then the only thing I regret is that I never know who these anonymous entities are so I can express my gratitude.
So, everyone. please do sell your stakes in this company. You will have a grateful buyer waiting for your unwanted shares.
Whatever the 'conflicting views', taking a look at the fundamentals one sees exemplary ratios and returns. 30%+ ROE, negative debt, huge cashflows, a ridiculously low P/E and a PEG of 0.065 TTM and 0.2 forward. If this doesn't scream value, what then please does?
In the bigger picture there is a strong demand for Rhodium going forward for the next few years, Platinum demand is expected to grow due to the rollout of hydrogen cells (amongst others). Let's not forget about Palladium which is frequently used in organic chemistry due to high functional group tolerance.
And someone is covering their backs? Seriously?
Right now the case is so strong that I am treating SLP like a high interest savings account. Looking forward to the dips. Thank you Mr Market, I sincerely hope you panic more often.