focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
OK. Disclosure up front. I’ve just bought a lot of Cobham (COB) post it’s profit warning this morning. Why? I think it’s very likely to attract a bid from Honeywell (HON). Honeywell has been on the acquisition hunt for a long time (numerous press reports and CEO comments on the quarterly results). This “phoney war” where they kept talking about M&A but doing nothing ended with the announced talks with UTC. This has now ended. So why Cobham??? It (and Meggitt to be fair) fits HONs Aerospace division very well. There is strategic overlap in virtually everything they do: https://www.cobham.com/about-cobham/# - look through the divisions and compare to Honeywell’s aerospace division http://www.honeywell.com/industries/aerospace-and-defense The overla is all there…. And that means a lot of synergies. With top line being difficult, growth on the bottom line can come from strategically sensible (tick), financially accretive (tick tick) deals, especially if the target’s stock price is under pressure (tick, tick, tick). Including typical 30% premium the deal size is easily achievable (HON’s market cap is $86bn…)
Ex div today,...
the LBO maths don't stack up given the poor underlying free cashlow. Even if you assume change of use given on a large proportion of the stores, its very difficult to see how a PE firm will bid any sort of premium
FWIW I have just opened a short here - 1. unjustified 25% rise from December (+30% relative to FTSE250) 2. trading remaining under pressure from discounters 3. Analysts are now 3 Buys / 11 Neutrals / 9 sells (that's a very negative skew) 4. it is bouncing along the top of its RSI 5. The following hedge funds are short it in size (disclosed positions): That list contains some of the very best HFs I know and respect ie. the guys who do a huge amount of research on their shorts... Alken Luxembourg S.A. AQR Capital Management, LLC BlackRock Investment Management (UK) Limited Discovery Capital Management, LLC Emerging Sovereign Group, LLC Eminence Capital, LP FIL Fund Management Limited Lansdowne Partners (UK) LLP Marshall Wace LLP Pelham Long/Short Master Fund Limited Third Point LLC UBS Global Asset Management (UK) Ltd
Ive just increased my short position here.
1. This is a masssive contract. telegraph article on 10 sept 2013 estimated this to be worth £1bn. 2. Oberthur were also bidding for the contract. oberthur made an offer for De la rue in 2010 for 905p per share.... clearly there must be a lot of synergies!!! what would you do now, if you were Oberthur???
Show us the numbers caldy and dont aggregate cash payments with stock (which although passes through the p&l for accounting is not cash). Yes i agree he could/should buy more than a token but we do need a CEO -whuch means someone needs paying (unless youre offering your services for free).
Thats a bit better. He is facing the same way as us...he wants it to go up too...
This is up and down more times than a *****'s draws!
I misread it C$0.085...
Looks like 8.5p is the top.... announcement that Stephen Hughes sold his 190k shares. Faldi should step up to the plate and buy sone here.
the VSA nunber is so discounted as to be meaningless. $3 per pound = £1.85. 99pct discount to that = 1.85p (not the 1p they use) Ie they start at 99.5pct discount they then apply an arbitary 75pxt discount to get to a number similar to the market cap now. that isnt a valuation, thats a brokerage back solving the price to something that is credible ( ie not thousands of percent above the SP). As per my valuation methodology if you take the current market cap of $10m and divide by the 100% succeas value of $186m (derives from contained copperrl x wholesale price) you get the 'market implied chance of success' of just 5pct. That is way too low.
Capital markets of all types and of any point in human history have always been driven by fear and greed. Its human nature. What we - investors not day traders- need to do is to look dispassionately through the fog of name calling and insults (otherwise known as market noise) and ask ourselves one simple question: what is this company worth? this is ultimately where caldecott and i disagree. We all agree there is copper and gold in the plots. Look at the years of drilling. Metres of 'net pay' to use an oil and gas expression. I have always taken the approach that the plot has value and that the value is ascribed by taking the value of the contained copper and applying a 90pxt discount to equate to the equity. Ie net of capex and opex. One example ive seen of a greenfiled site was a nickel projext in canada that sold for 46pct of contained value... anyway 10pct gets us to $186m for one small part of the plot. You then have to discount that to reflect your estimated risk that either they are unable to find a partner/funding. My view on this ia that they will but thats just my view. The point is that market is over discounting the chance of sucess. At the current price the market cap is c.$10m. But "sucess" is (arguably very conservatively) $186m (a lot more if you value all the other prospects and jelai). Ie the 'market' is implying only a 5pct chance of success.. (arguably a lot less given the conservative 186m) Thats why i am bullish.
Welcome to Caldecott... Dear readers there is something you need to know. This board is one of the more querky. It contains it very own resident troll, who espouses to be a founder/long term shareholder of KLG. Unfortunately he spends his time trying to put down the company/management at every turn. I would say he’s not the type of guy that views the world in a glass half empty/half full perspective, rather he likes to persuade everyone/anyone that will listen that the glass is cracked. So lets turn to some of his points. 1. Tenure: yes, it is in suspension. When a new partner is found they will apply for the licence to be restarted. Oh, sorry did Caldy not explain, it is extendable.. Its clearly not in the company’s interest to have the clock running down whilst not drilling, hence the current stoppage. 2. Resources: $22m for 20 holes. You will not see that figure anywhere as it has come from Caldy as a made up number. $1m per hole. Utter rubbish. He has co-mingled the cost of a full blown bankable feasibility study with the cost of drilling to confuse you. The drilling is much less expensive, and you’ll get further confirmation of that reserve enabling you to fund the bankable feasibility study. Oh by the way under the current model that would all be borne by the JV partner.. 3. Options: Yes, management can either find another partner: the existing model is for the partner to fund 100% of the drilling in return for 75% of the economics, ie a free carry for KLG or 25%.. Alternatively KLG could riase money, or sell Jelai (the gold plot), which has had several expressions of interest in (See RNS). You see what Caldy doesn’t tell you are there are many ways to skin this particular rabbit. He unfortunately – for reasons I have never been able to find out – has a long standing vendetta against the management. Cue long winded response from him on why he’s right and the world is wrong (and about to end). I wont reply, as I have other things to do!
Canada +12.5% at $0.09... Thats 4.97p / share, a 15% premium to London's closing price.... Despite the noise we still finished +8.7%. The cumulative effect of a few more days like that will be good.... a tiny 10m market cap company.... now lets think. Thats just one of the target zones... if 47m tonne of orre has a contained value of 621m lbs then muktiply it up by the list of targets..... gotta to be worth a Major considering how to access these reserves!
Apologies for typos. Blinking phone. anyway the point stands. The sell off since midday is clearly 'day traders' bankibg their days profit. look beyond that to what the company should be WORTH. Onwards and upwards
Interesting to note the VSA valuation uses 1p per pound of copper (99pct discount) ...and then discounts by a further 75pct. seveal pointa to note. 1. I suspect the analysts took this approach to get a 'price target' credible (setting it more than 50pct above the SP looks dubious and an easier "sale" is made by setting a lower figure). This would explain the extra discount theyve arbitarily applied. 2. This 'valuation' only includes the top part of Beraung Kenan... they have ommitted to include: Baroi... incl. 9m at 14.03% Cu (off the scale) Tumbang Huoi Beruang Tengah Mamuring north Mansur all of those are BIG prospects... oh.. and theyve also forgotten to value the gold... bottom line .... forget "what is the market say this is worth" and ask "what is this company worth?" ! That very simple maxim is one Warren Buffet has long espoused.
If you landed from Mars what market cap would you expect a company with $1.8bn of contained copper just on one small part of its acerage to have?
People have been asking my view on this stock. My views are well known –I am extremely Bullish: the geology here is potentially world class, they have 100% of the plot areas, the political connections (see earlier post) and the cumulative data. Ideally they will be able replace Freeport with another JV partner (on either the Copper plot or the Gold one). As I have commented at length, the decision by Freeport to pull out of the KSK JV was driven by a corporate portfolio management decision – despite the best objections of the Freeport geologists. Put simply Freeport already own Grasberg in Indonesia; taking KSK to full production in a decade’s time would require a major doubling up of the exposure to one political difficult country. Grasberg, by itself accounts for 27% of Freeports worldwide Copper reserves. Corporates simply can’t leave themselves at risk by exposing themselves disproportionately to one country. So what would I say to the newbies…. Its definitely not too late to join the party. Don’t be put off by a 450% rise…. Check this out – the parallels are startling. Example: Look at Sirius Resources (SIR.AX) from when it produced its maiden resource statement. It broke the ASX record on day one… jumping 10x intraday . Its start point was 20 July 2012, was 0.057c per share (just like KLG it had been sitting like plankton on the bottom of the ASX…). Day 1 – it rose to A$0.45 per share, a 7x increase on 56m shares volume (sound familiar?)…. Oh but see how much the early sellers lost…. By the end of July 2012 it was at $2.50 per share (so Day 1 sellers lost out on a 5x bagger) And by March 2013 ie c.9 months, the stock was at $4.99 a share. So the Day 1 sellers lost out on 10x bagger….. (for the record it has subsequently given up a bit of that but its still $3.22 a share…) I BET THE PEOPLE WHO SOLD ON DAY 1 / DIDN’T FOLLOW IT ARE KICKING THEMESELVES NOW
http://www.kalimantan.com/s/PressReleases.asp?ReportID=465456&_Title=Kalimantan-Gold-Appoints-Commissioner-to-Subsidiary For those of you new to the stock, you should be aware that KLG is surprisingly well connected in Indonesia.... ;-) thats the sort of connection a multinational would love to have!!!!!!