Member Info for Peterson

Beautifully summed up HarChris. The main other positive I took away was the point posted down thread, namely that the identical machines ordered had been transformative at a competitor. Let's hope they can do the same for DKL. There is clearly some faint light at the end of tunnel. But as always it's a waiting game. Best case would perhaps be something along the lines of:

End 2024 - Cashews beginning to deliver (SP 2.5p)

End 2025 - Palm Oil Flat. Cashews contribute full year. Meaningful positive P&L and positive Cash flow. (SP 4.5p)

End 2026 - Further Cashew ramp. Meaningful Debt pay down (SP 6p)

Mid-term target. Debt essentially gone. Business generating €60m in revenues and 20% net profit margin, so €13m or 2p a share (assuming no further dilution). Even beaten up Anglo Eastern Plantations trades at 6x PE. So assume 5x. And you get to 10p. And that's without new revenue streams. Dreams are free... LOL

How about a holding statement ie don’t panic, results will be out Monday? Set an earlier deadline for the auditors. Replace the auditors if need be. I mean it’s a one country operation not Unilever. This should not require 6 months. It does again beg the question about the efficiency of the Directors, their PR nous, etc. Are they managing other businesses on the side and this is a side show?

It’s the last working day of June. 7am been and gone. Where are the FY results? Just so poor. Hard not to see it as anything but incompetence, or worse, and an utter contempt for shareholders

Your wish has been granted. Aristide Achybrou, Non-Executive Director, purchased 1,100,000 on Friday 12th April.

"As a result, Aristide Achybrou now has a total notifiable share interest in the Company of 24,924,324 ordinary shares, representing 4.5% of the Company's issued share capital." Personally I don't get too excited by these sorts of buys. At today's ultra depressed share price that's only about £15K. If he really believes in DKL he should be picking up a few million more. I mean why not. If Cashew finally comes good, debt continues to decline the gap you have a multi-bagger (on every incremental pound invested) in 3 years. I imagine he is a man of some means and therefore these sums are small beer. Ditto the rest of the board. Still, buying is better than selling I suppose. Would be nice to see a lot more...

New RNS today. A Nominee Co. (Nortrust Nominees Ltd) has lifted its stake from a previous 5.27% to 10.32%. Any ideas who might be behind this? When I look at DKL's website, and the list of major shareholders as at 28 September 2023, none of the larger shareholders seem to tally up with the original 5% stake. Also can't see a previous RNS from this entity, which would have been triggered when they originally crossed 3% on their way to 5%. All a bit odd. Presumably the incremental 5% has come in a block trade from an existing larger shareholder rather than in market purchases???

With all due respect who on earth cares about FTSE average when Diageo is better than 90%+ of other companies in the FTSE. The best spirits portfolio on earth. Optionality on EM growth. Look at its excellent ROCE, net income margin, cash conversion, etc, etc. Yes, they've taken a knock. And the market may well throw its toys out of the pram on Tuesday. But LT there are few other companies in the FTSE I would rather own. Diageo is anything but average. If the future is anything like the past the current valuation is a steal

Why not!? Perhaps they take inspiration from this thread? ;)

Although I hope they wouldn’t use it as excuse to sell too much of LTI Ltd. That cash cow is our dividend hero

@gotoutjustintime, you make a very good point. Even a limited buyback programme would surely go some way to closing the discount. They could always hold the bought back shares in Treasury and re-issue them at NAV or a small premium in better times. That would keep the share count at 200K in the mid-term (sorry, I mistakenly said 250K in my original post). I agree for your reasons that they probably wouldn't want it to go above 200K.

All that said I think there is a slight practical issue. Right now they pay a very generous dividend, which is in turn mostly funded by the super generous payout from Lindsell Train Limited. After running costs at LTI there is currently very little surplus cash left in the tank for buybacks. Assuming they can't or don't want to take on debt in such an esoteric trust, then any meaningful buybacks would require cutting the dividend. And the special component of the dividend is already gone and we have been told to expect a nominal fall this year. So all a bit difficult. Just to add though that Finsbury Growth & Income Trust has been an active buyback participant. So as a group they are not theoretically averse to them.

But then the cynic in me thinks that there is another point, and that is that Michael and Nick, who are known to have a very LT mindset might not be too upset at the discount - it allows them to keep mopping up shares in LTI on the cheap. On a much smaller scale I am sort of in the same boat. I am bemused by the discount but see it as a great opportunity to tuck away more shares in LTI, in the expectation that one day the discount closes and the NAV reflates.

As a further aside my more major concern is something else. And that's the decision by LTI to sell some of its shares in LTI Ltd in order to incentivise the younger team. You may have seen todays RNS flagging a further sale in LTI Ltd. Granted the sums involved are small for now. And I get the need to keep the younger team members on board. All that said for me the stake in LTI ltd is the trusts USP and raise d'être. I can and indeed do hold Diageo directly. But its LTI's strategy and amazing profitability, which is the real draw. So the LT dilution of that stake lessens the LT interest in the trust for me

He hasn't. LTI's shares are bit of an outlier in being priced at a relatively high face value (only 250,000 shares in issue) i.e. at today's close £836 or 83,600p. According to the RNS Michael Lindsell bought 34 shares today at 84,366.336p, so a bit above the closing price. Confusingly many of the reporting services e.g. Yahoo finance don't make it super clear that their quote is in pounds and not pence. So you just see 836. In the superscript it says Currency in GBP. For a company like Diageo todays closing is 2797.5 (which is in pence) and the superscript reads Currency in GBP (0.01GBP). I guess because most share prices have low face value its natural to assume that the figure quoted is in pence and not pounds

As an aside I can't understand the discount to NAV on this one. Almost 15%. I guess it is a pretty unique trust what with c. 40% of the value being ascribed to Lindsell Train itself. Still the implied value of this stake is less than 6x P/E. That is amazing value even by the derated standards of the fund management sector. And then you get some cracking blue chips thrown in, many, like Diageo also trading at a deep discount to intrinsic value. No wonder management continue to mop up shares here. On a Mid-term view the value on offer here looks super compelling. I am also adding when funds available

LT holder here. Don’t often get a chance to post. Thanks to those who follow the company more closely and report back on here. I share the frustration at the stubborn refusal of the SP to respond to the recent good news. Stepping back I think a large part is nervousness as regards leverage in a high interest rate environment. Net Debt at Interims was c. Euro 30m. Market cap is a paltry £15m in comparison. Whether using multiples of leverage as a % of mkt cap or net debt / ebitda it’s clear the picture does not look pretty. But start paying it down, as hopefully the company is about to start doing thanks to positive cash flow and you will get more than a 1 for 1 benefit. What I mean is that every £m of debt paid down has the potential to transform the high risk perception of the company and become more than £1m in mkt cap. I would argue that we are at the moment of capitulation around DKL. Mkt has given up. But actually there is really light at the end of tunnel. By end of 2025 with a meaningful chunk of that debt paid down there is no reason why this should not be closer to broker target rather than 3p ie don’t despair. And if you’ve come this far I definitely wouldn’t bail out now

According to press reports Morgan Stanley has been hired to undertake a strategic review of the business. Latter is M&A code for "we are wide open for (sensible) bids". Hence the jump. Given the recent margin compression I imagine management would be happy with anything north of £18. At £20+ it's a slam dunk. It's a shame as on a 5 year view this business should be worth a lot more, assuming continued revenue growth and margin recovery. Sadly in our short term world neither the management / nor shareholders think in years. People will take the 30% premium now. And the real money will be paid, as so often, off market...

I would argue it is a good sign (with a huge caveat). So on the positive side if the NED thought that there was no value in the shares he would take the cash. BUT. In terms of shareholder value the Board should not be using its deeply 'undervalued' equity currency, which just dilutes shareholders, to pay everyday bills. Instead they should insist on paying him the NED cash. And if he is indeed so bullish on the company he is most welcome to buy shares in the Secondary market. Not a good look to my mind. It suggests that the Company is either so cash constrained that if feels forced to do this. Or that it prefers to reward insiders at the expense of general Shareholders. As the big cashew capex phase ends and the associated cash flow (hopefully) begins to ramp up I would urge everyone to push management to end this practice of diluting shareholders to reward insiders (NED's, insider consultants, etc). Not a good look...

Games Workshop has no debt. It’s a cash machine. The current valuation is beyond comprehension. I think people will look back in 5 years time scratching their heads as to how this was on sale at these levels. I’ve just broken my own rules to take it above 10% of my portfolio, such is my conviction that this is completely mispriced at these levels

Fair enough. The problem is that there seems to be no end to the cost inflation. You would have hoped that there would have been a one off step change. Nope. The cost rise seems to be relentless. Another 10% cost growth forecast for the year ahead. At the same time as client growth has slowed to a relative trickle. And revenue is stagnant. The only bright spot in the next 12 months is the increased margin they will earn on client cash. But even that seems to be attracting ever greater press attention i.e. why isn't more of the margin being passed on. The dividend yield is generous but it's approaching 100% of earnings so little scope to grow from here. The one big hope would be a bid from a bigger financial institution hoping to diversify into the wealth management space and leverage scale. Not impossible. Personally I've sold out this morning on the bounce. I just don't feel that management have a handle on costs or future strategy. In this space I see more value in some of the bombed out asset managers (e.g. Liontrust)...

Sorry. And Rathbones group

I suspect that this is involuntary. LT have been hit by some chunky withdrawals on the back of a sustained period of disappointing performance. Recent market turmoil will surely have only increased the rush for the exits amongst their more nervous punters. From memory LT came in at a super low price in 2020. So even at today’s depressed price they can still book a gain on exit. For an ultra long term holder seems an unfortunate time to exit but they have to sell something to satisfy those nervous nellies. As an aside they have also slashed their position in Euromoney recently. Also fully exited Pearson. From what I understand all involuntary…

Just to add that MP Evans regularly trades on an EV/EBITDA multiple north of 15x. Based on today's share price and taking Arden's forecast '22 EBITDA figure would imply a forward EV/EBITDA figure of 6.5x for DKL. Safe to say that if prices stay high and they deliver on cashew then this share price should be going a lot higher. Arden are right. c. 10p on a 12 month view? Why not? In addition to the pure P&L figures there should be the added stimulus from the perceived decrease in risk around DKL i.e. they are finally delivering, they will no longer be reliant on one commodity, etc. And that's before any ability to pay down its not insubstantial debts is factored in. Right now half the Enterprise Value of c. EUR60m is made up of (relatively expensive) debt. To the extent that surplus cash flow could be used to pay this down I would argue it would give a more than 1 for 1 boost to market cap based on lower interest cost (higher EPS) and decreased risk (lower risk of financial stress). Personally I'm surprised that the share price has not gone up more taking all this into account. I guess just shows once lost how difficult Mr Market's trust is to regain. All that said it's hard not to be optimistic on a 12 month view

I just think we need the imminent Trading Update to be positively received by the market…

Correction. Sorry. It's even worse. It's 100p (2021) playing 140p (2020). So (40+25+35) vs (30+50+60)

Well at least the dividend piece of the puzzle has been answered. Another 35p to be paid in early January. Frankly the announcement is a tad disingenuous. "This will mean that total dividends declared so far in the 2021/22 financial year will be 100 pence per share (2020/21: 80 pence per share)". Well yes, except for the fact that the picture changes slightly when you note that in 2020 the equivalent dividend was only declared in mid-December with payment at end of Jan. Assuming no additional dividends are declared between now and the equivalent mid-Dec period the picture changes to 100p (2021) playing 130p (2020). At least we will know more with the trading update in early December. If I had to hazard a guess I would suspect that sales (despite all the talk of disgruntled fans) have actually held up quite well but costs continue to squeeze margin. At the very least supply chain difficulties are causing GAW to carry a higher level of stock into the key Xmas period, necessitating a higher level of working capital, which in turn explains the more stingy dividend pay outs versus 2020. So long as the problem is transitory and revenue momentum continues its not a LT problem. But I guess it explains why today's dividend has done nothing to boost the shares. All depends on the commentary in December. I remain a committed ultra LT holder and see current levels as an attractive price on an intrinsic basis. But am cognisant that the market may yet throw its toys out of the pram depending on what management announces in December. Will be interesting for sure