The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Agreed which is why I was warning of how the company may be restructured over the coming months. To clarify I'm still long on these shares until further notice however, for anybody who has bought and sold company's before you will know that management buyouts are a real possibility in this instance. The deal can theoretically be structured using the tools they currently have to facilitate this.
https://www.constructionnews.co.uk/financial/sig-boss-set-for-375000-reward-after-four-months-work-22-06-2020/
More info above - The payment is conditional on £150k being invested into SIG shares as part of the deal.
To be fair to Motley Fool they're just fact stating why prices fall in line with open offers that's all.
"Because buyers and sellers on the open market are aware of the secondary offering, the price they're willing to pay for the shares usually falls in line with the amount of the discount"
@meaningful. Exactly but hope we're wrong in this instance.
I can see tyla has a smashing opinion after his £6.50 investment into SIG today.
He can always advise us all on company restructuring after he finishes his chicken nuggets and his mummy tucks him into bed with his Vtech tablet PC.
@Sandyman calm down I'm trying to help, not offend you in particular. You may want to read Barbarians at the Gate ref RJR Nabisco as a reference point.
Point being if Steve Francis has a personal deal with CD&R to dump their 25% stock over a period of 6 months the share price could be significantly lower leading to a good opportunity for a LBO by the new management team.
Philip Johns has also been reappointed with his experience in running a good sized merchant outfit (MKM building). Take it as you will but you may want to familiarize with Mergers and Acquisitions. When companies such as this are in need of a turnaround, the asset base often gets leveraged in order to facilitate a buyout by the management team. Meaning your shares get bought back at a lower price than what is deemed reasonable today.
I'm still long on this stock but as mentioned before it depends on what the new management team is actually intending to do, not what they say they are intending to do.
Reference IKO - Their cashflows from SIG will not be affected by any LBO or MBO scenario as they will still retain ownership
Firstly the below is from the Motleyfool.com. Pay attention to the last sentence if you're wondering why the price is at 30p.
"To entice buyers to participate in the secondary offering, companies typically offer to sell their shares at a discount to the current market value. Because buyers and sellers on the open market are aware of the secondary offering, the price they're willing to pay for the shares usually falls in line with the amount of the discount."
Personal opinion: Having worked closely with hundreds of SIG managers in the past (from an account management perspective) I can tell you that this company could go either way. The company hit a bad patch in 2010 and consequently lost market share however, the staff it retained are highly trained and highly skilled compared with the general roofing and insulation merchants. This will help to facilitate the new management teams sales plan.
LISTEN CAREFULLY: Everything depends on the intention of the new management team and whether they are genuine. Steve Frances appears highly skilled in Mergers and Acquisitions and I can tell you that there are some 165 Travis Perkins stores looking to close. You do the math on SIG's capital raise of £165m and it sounds like an even million a piece could be the message they're trying to portray.
On one hand there is the potential to expand and monopolise the roofing industry which could involve a heavy plan to pick up the 165 TP branches, as well as many of the independent merchants (who SIG and other groups sold to after 2008).
On the other hand CD&R could use their leverage to dump stock on the market to keep the price low and this could result in a potential MBO from the new SIG team later on.
Having missed out (and gained) from multiple 10x trades over the past 15 years, my advice is to get some kind of position open and buy the stock now at 30p. However don't be surprised if you lose 30-40% of your money in the case the company tries an MBO in 6 months time.
It's down to the management teams intentions here but I'd advise to buy it now if you can afford it.