The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
I think what a lot of PIs fail to grasp is that when SPs drop this low it isn't necessarily because the company is about to go bust or is in extreme distress or anything like that. It is because there is at present little or no reason to buy this .I am not referring here to us on this bb. We are minnows in a huge ocean & very few PIs have the financial clout to affect the SP on a large company's share. It is the large IIs; pension funds; asset management cos etc. These II investors have a completely different mindset to the small investor. They have no interest in 'catching the bottom!' They don't care about the bottom they care about the top. There is no reason for IIs to buy this atm. No dividend; dropped from FT250; loss making etc! Barring any T/O approach any future significant rises will need news which brings the funds back in here. Rolls Royce bumbled for best part of 3 years under £1 with a couple of spikes for similar reasons. the impetus the market got with that was the new CEO arrival &his bigger plan. The funds have driven that one right back up again. In the short term we have a new CFO coming. That could be a catalyst. Interest rates coming down etc etc. The point is when the funds are comfortable that the management can deliver what they say this will begin to rerate. All IMO.
Smokey, looking at the MC is always a dangerous thing. It is pretty irrelevant in terms of where the SP wil go to. Of course £300 odd mill is a silly number for this but it just doesn't matter. You have 3 active short positions in here this could go lower than 53 yes. It could go quite a bit lower. I don't see it as a worry. I've seen some mad short selling behaviour on shares but true value always ultimately comes out. It presents a great buying opportunity sometimes but the opportunity is always cloaked with the fear that the drops will never stop. They always stop at some point & usually reverse very sharply in the event of positive news!
JG, Hindsight is a wonderful thing. My holding is essentially in 2 chunks. A load bought mainly between 115-130 & another load between 56-85. I had a break from buying until it had dropped into the 80s. I should have sliced a good few at 90 but we can all say that after the event. I will buy another couple of chunks if it drops below the 50 but otherwise i'm well overweight now so once it starts rising i will start paring some of the holding down as admittedly i'm way over exposed on this investment. I agree with your sentiment. Possible danger of a CR but we're safe for a good while i think & i had convinced myself they were going to drop that clanger yesterday. If the macro improves we should see this steadily upturn. Look at how it went up again after the first dip to the 50s. Steadily back up to 90s. The 30 year chart is very telling on this share * i see no reason why we are not now at a similar position like it was in 2009 then steady growth YOY to 2020. Hopefully that will be replicated this time around!
JG, Most of us want jam tomorrow. It very rarely works like that in this game & i do believe the best investments are the ones held for long periods. In 2 years never mind 5 i would imagine very few of the commentators here now would be anywhere to be seen. For most weary longer term holders i suspect yesterday's stuff was a bit of a relief just to see where it's all at. As i see it this company has lots going for it. Strong brand; very little competition; price inelastic. The financing is all in place for the next 5 years so all that is needed is a prudent & responsible management to deliver what they need to. My view is this is one to accumulate at these silly prices with cash you don't need for a few years & just forget about it. When people bought Rolls Royce @40-50p you had the same people saying the same things about debt, bankruptcy etc & it's now £4. If people don't think the management here can turn this around they should sell what they have or don't invest in it & go to those 'better' investments which people hark on about!
Has the risk here doubled from when the SP was 110? i don't think a great deal has changed aside from a hit to earnings. Was it not more risky to buy this @200-250 in the middle of a pandemic with no end in sight & the operational business totally stagnant?
SM, Well the'extreme' risk is surely baked into this SP. Of course there are less risky stocks and you pay a price to buy stocks with rosy outlooks; dividends etc. It comes down to how much risk is palateable to each individual & that varies greatly. I'm not sure the risk is as extreme as you state though. This has an investment grade credit rating & support of lenders. The day to day operational business operational business seems to be running along fine. Are you a holder here?
Yes i was never too impressed with Stamp. Didn't seem right.Just pulling a huge salary & doing little IMO. I would have preferred Chris Davies the old CFO to have got the CEO position but they favoured Garat. Still not sure what to make of him but he's cost me a lot of money!
Jorge Cosmen wasn't buying loads of these shares @60s & 70s to flush his family's money down the toilet.He knows better than anyone the true picture here & that in itself is a reason to buy these & hold. I believe any further downside will be hoovered up very quickly indeed! tis will certainly not stay in the 50s for too long IMO!
Scavenger, i think the risks of this going bust are very minimal indeed. This is not an AIM share or anything like that although i know it sometimes feels that way. For me yesterday's stuff was quite reassuring from the going concern/liquidity perspective. I saw nothing there which concerned me at least for the next 2/3 years barring any major catastrophe. I'm really hopeful that Helen Cowing can shake up the show here. She has experience in turnarounds & this is probably one of the biggest recovery/turnaround stories out there potentially at least. It look like the 53 was a firm bottom but probably needs a few more days for confirmation. I'm up to my eyes in this one & down a small fortune but i really do see this one making a strong recovery once the management get their act together. Cowing will be looking to make her mark.Let's hope she can do what the new RR CEO did!
Need to look beyond the daily ticker price sometimes & realise what a bargain you hold if you can remain patient. This share listed in 1993. It has only dipped below £2 for about 3 years during all that time! & now here it is a sitting duck at near 50p. Time to thin about the pounds you'll potentially make, not the pennies you'll save!
So a 10% down day. Well if that's the bottom in then it's not too bad although i can see it dropping a bit more! On the positive side we could've woken up to: 'NA business has no interested buyers & our debt has gone up.We need £300m so 2 for 1 rights issue. 25p per rights share' The SP in that scenario would have been banged down to 30p. Thank God for small mercies.