Member Info for ragnarlothbrok

I don't believe that accumulation argument. All the indicators point to every institutional holder reducing. Positive news brings in the buyers which is a chance for them to sell more. Cant see much accumulation from any company that is required to disclose, perhaps some hedge funds are getting involved though

Remarkable, buyers paying a few p off the all time high. Not many non covid stores that can boast that

FCF yield (FCF/Enterprise value) exceeds 30%. I challenge anyone to find a company out there that has a higher number than even 20%.

On an EPS payout of 33% we should be seeing a dividend yield of 10%

Nonegs I decided to throw it in on this one yesterday. Got pretty lucky I admit as I've been in this for 18 months but keeping some dry powder as it looks like we may be approaching another down period in the market and momentum on this has stalled.

I think its a good company with solid growth prospects but there are some heavily discounted valuations out there presenting much better 6-12 months upside. Like you said the valuation is looking pretty punchy and the limited investor engagement unsettles me.

All the best with this one, no doubt see you on the other boards.

This entire quandary would be sold if DGOC changed its name to DGC... Although thinking about it, the name doesn't make any sense. Where does the Diversified come from?

Diversified by product...nope - 99% gas/ NGL

Diversified by geography... nope - all located in the Appalachian basin of the US of A

Maybe its Rusty's vision of the future

Stoodio I check these periodically and each quarter calculate the difference between the JM market price and SLPs realised basket. They're good. I never use kitco for rhodium

Stoodio these are the advertised sources of rhodium price from the refiners. What SLP is realising is anyone's guess.

https://apps.catalysts.basf.com/apps/eibprices/mp/

http://www.platinum.matthey.com/prices/price-tables

Yes you could be right. I did some modelling and if growth was 10% YoY in the first 2 months this would imply 75% growth in the final 3 months of H1 to hit 40% growth for the half year. If they get anything close to the H1 monthly exit rate in H2 they'll blow the forecast out of the water. I think they will easily exceed 40% for the half year, the trend for April will continue into May and a lot of June. I'm looking to top up on any significant dips on this basis, I have released some capital this week just for this purpose.

Progressive released an updated note on Monday, a little more measured and thought out than the first one, where they explain a little better their assumptions. They have no idea, but neither does anyone else really. You can sign up for free and read it here

https://www.progressive-research.com/company-coverage/loopup-group-plc/

Liberum massively overstated the last dividend. They were expecting in their broker note 1.5c but we only got 1c, despite significantly beating their forecast. If we got 66% of their forecast this time I'd be happy.

TBTT yes I'm thinking more about the flow out of South Africa, I don't think Bermuda is an issue. I've heard recently that the SA government is thinking about relaxing its capital controls, currently you need approval to make overseas payments.

https://www.money-transfers.co.za/south-africa-exchange-control.php

Which ever way you look at it, South Africa is not an attractive destination for foreign capital: currency controls, infrastructure issues, junk rated debt, elevated sovereign risk and a highly unstable labour force. The market seems to be applying a higher discount than my 20% to account for this fact (or the PGM basket tanking).

Pleasing market reaction given no new info. Seems weird when a company doesn't mention "Covid" once in a financial report.
It looks like management will reinvest any additional revenue while preserving the full year consensus of $600k operating profit.

I also would have hoped for a statement saying that the current environment is presenting strong revenue opportunities. The overall tone of the release is fairly restrained. This is the most positive statement I could find:

"Recent global challenges have ensured that online education is a subject more in the public eye than ever before. Whilst there will be macro-economic factors in play for an extended period, more people are becoming aware that online education is a real possibility and that organisations cannot simply advise that materials are available online."

We agree that there is at least 50% upside at current prices. My main concern is that we are highly leveraged to the rhodium price, at current spot around 50% of revenue, and we can see how unstable it can be, tanking 15% in a few days and slicing off 10% of cash flow.

I think that our pathway to that valuation is via a huge dividend. As much a fan of free cash flow that I am, foreign investors don't want exposure to a ZAR cash box. A big dividend is a sign of confidence from management in the company.

One question for the board:

Is it possible that the South African currency controls may limit a dividend payment to foreign investors?

From Metal Bulletin

"UG2 chrome ore prices resumed their uptrend in the week to Monday May 11 with lingering concerns over intermittent supply from South Africa underpinning the market. Fastmarkets’ chrome ore South Africa UG2 concentrates index basis 42%, cif China rose to $152 per tonne on Monday, up by $5 per tonne (3.2%) from $147 per tonne on May 1. The index had experienced a three-week rally since the beginning of April following the supply interruptions caused by South Africa’s Covid-19 related lockdown, before it was capped after China’s major stainless steel mills increased their ferro-chrome tender prices for May deliveries but by a lower-than-expected amount."

Looked this up and here's the Twitter link. This company has been attacked many times in the past, there was the Muddy Waters wannabe looking for a job, Tom Winnifrith and now this guy.

If this company isn't really making money then its some monumental fraud to continually deceive big institutional investors and the various advisers time after time in the prospectuses accompanying the various capital raisings (included debt secured directly against the value of wells). You would assume that all these events would have required some kind of due diligence.

Or do we believe this anonymous Twitter persona who claims he has significant industry experience and he knows something that everyone else doesn't?

https://twitter.com/Oilman_Jim/status/1257212127795871744

Hi TBTT, I use a DCF to calculate fair value, my current assumptions are:

- Spot prices
- 8 year production at 75koz/pa with phased wind down over the last two years to recognise the end of dump life
- A full surplus cash/net working capital balance
- Discount rate of 20% (pretty high I know but its a risky jurisdiction).

There could be more production after year 8 from current arisings but on a discount rate of 20% it doesn't really affect the valuation.

My valuation is 73p or $250m. Anything higher than that recognises a lower discount rate, higher future prices or value from new projects/Volspruit. A 12% discount rate will get you to 85p. I guess you could get to 100p with some fairly aggressive assumptions.

Pretty good result, SP seems to have settled in at 110p and the placing provides good support for a consolidation of the recent gains. Interesting to see which US company is selling and the details of the transaction

I don't recall Rusty ever saying they wouldn't raise equity again. If they are to maintain conservative gearing of below 2.5x EBITDA then they will need to raise fresh equity on occasion. I think the deal fundamentals are pretty sound:

- Acquisition cost of $235m split between $85m equity and $150m debt at 6.5%. 6.5% is a little disappointing for an investment grade company however.
- $65m EBITDA, less interest on new debt (6.5% x 155m = $10m) delivers $55m cash flow from an $85m increase in equity. Thats a mighty fine return on new equity.

Given the number of acquisitions they have delivered I would say that the chance of successful integration is very high and I would expect an increase in the dividend next year by 15% reflecting the increase in cash flow and production.

A 10% yield growing at 20%? I'll take that thank you very much. You'd be mad to dump your stock at 94p

Its all happening! Didn't time that announcement for maximum impact though. Likely that the fundraising will be completed before the market opens tomorrow.

The last big raising was in March last year, conducted at 117p, to raise $225m buy HG Energy which I think was a discount of 5-10p. SP actually rose after the announcement from memory.

I think this time there will be hardly any discount at all and I'd be surprised to see this down tomorrow. Perhaps I have rose tinted glasses but could see this open around 115p tomorrow with a 105p issue price. Its relatively small amount, $87 million is around 10%, and DGOC has a fantastic institutional shareholder register who have always strongly supported each capital raise with minimal discount, who are no doubt desperate for income.

Share placing, 2 acquisitions, more debt securitisation and preparing the prospectus for the main market... management are certainly giving us value... go Rusty!!

Yep the crux of this how sustainable do you think the impact of these trends is. I'm reasonably happy with the £60m number for this year but whether this is a new base from which to grow in the future is another story. It all depends on how sticky the customers are.

The SP recovery has been remarkable from nearly £1 to back over £2. The valuation ain't cheap, at something like 15X EBITDA it really shows the quality of these business and the strategy to go with them that Sir Martin has put together

Where was this tipped? I haven't see this anywhere

Progressive seem to be modelling a relatively speedy return to normal. So I guess its a bet whether you think the bounce was a one off or something more structural to late in the year and even beyond. There are a lot of indications that life may change permanently as the working from home principle becomes accepted and then enshrined. There are people looking to move out of cities now that they can spend fewer days in the office and less time travelling there, reduced public transport capacity, at least for the next few months, countries like Germany making it law that you can work from home, plans to reduce office (and rent) footprints by many companies and huge reductions in corporate travel.

On the other hand the number of employees in professional services is likely to fall as the economy tanks and unemployment skyrockets this year, which will reduce demand for minutes.

Will be interesting to see how this plays out. Yesterday’s announcement by Boris with lack of certainty when life returns to normal really supports the thesis so I’m feeling pretty bullish about the prospects, though I’ve been very wrong before.