Member Info for Redtom

Hi Lucy,
Thanks for your response. I think you are right in saying that is a lack of further catalysts such that the downward momentum has ceased. SF have thrown all the mud they have and CSH is no longer engaging so I can't see much more negativity for the SP in the short term the NAV of 108p maybe an aggressive valuation but I don't see that changing for the next update. As you say, the lack of an insider braking ranks also limits the downside.
I see a drifting in the 90s for a while now. Nothing to drag it much lower but sufficient reservations to take it back to 110+.
My new average is 88.9p so I was partly out today at 90.45p and I will clear the rest towards 95p I hope.

The Cenkos report was written after Bloomberg as the page on 'Asset Stewardship' specifically makes reference to the Bloomberg article.

Lucy,
Genuine question - do you think there is much more scope for shorters to make much of a profit from here? It seems to me that the SP has settled after the run of disclosures and it is difficult to see it drifting much further given the dividend is secure and assuming that the next NAV update is consistent with the past, ie 108p+. Surely the likes of Shadowfall have made their money on the drop from 120p to 88p?

That wasn't a buy or sell necessarily. It was the UT.

No problem. It is what I did for a living for 30 years!

Thronegames,
Essentially Article 10 is about how dividends should be taxed.
3. Notwithstanding the provisions of paragraph 2 of this Article, dividends
shall not be taxed in the Contracting State of which the company paying the dividends
is a resident if the beneficial owner of the dividends is a resident of the other
Contracting State and either:

(b) a pension scheme, provided that such dividends are not derived
from the carrying on of a business, directly or indirectly, by such pension
scheme.

Thronegames, look up the double tax treaty between UK and US. Article 10, sub section 3 (b)

If those numbers are true, that is a bit alarming.

HR,
I think you could be surprised.
A lot of income funds have this share and others will want/need it to given their prime objective is income. They won't take big disclosable, high profile, stakes but it will be in demand all the same.

dusterinmong, yes the company made huge cash profits last year.

Oh dear, there's always one. Lucy, I'll leave this one to you!

riskingit,

But the NAV is often determined by the discounted cashflow of the future rental flows. This is often higher than a stand alone valuation of a building used for a different purpose.

Thronegames,
That's an impossible question to answer. There is the theoretical/mathematical impact to the SP and then there is shareholder and/or market reaction which can go either way.
But generally the SP should fall to a level that balances the pre-rights value with the additional capital raised.
So let's say there are 1bn DEC shares and the SP is 125p. This means that the market cap is 1.25bn.
Let's say they want to raise £500m by giving shareholders the right to buy 1 new share at 100p for every 2 shares they already own. So that means 500m new shares issued at 100p.
Assuming all rights are taken up immediately then there are 1.5bn shares and a total value of 1.75bn, ie 116.67p per share.
This is the theoretical amount. So if you had 1000 shares originally (ie £1250) and paid £500 for 500 shares you would have 1500 shares worth £1750 (ie 1.1667p each) which equates to your original £1250 plus your extra amount of £500.

But the rights are not taken up immediately and can be traded independently before the rights date so this means there are 2 prices as soon as a share has gone ex-rights - the price of the existing shares and the price of the right to buy a new share at 100p. Again, in theory, the SP should fall to 116.67p and the Rights should be worth 16.67p. So you would have 1000 shares at the reduced SP of 116.67p, ie £1166.70 and 500 Rights at 16.67p each, ie £83.33. The sum of these 2 amounts is where you started, ie £1250.
So if you don't want to stump up another £500, you can sell your rights to someone else.
The beauty of a RI verses a placement is that the 'discount' goes to existing shareholders.
Compared to placing where new shareholders get shares on the cheap at the expense of existing shareholders.

All of the above is mathematical theory.

A well received rights issue (ie for an accretive acquisition or to firm up a dodgy balance sheet) may mean that the SP and rights values are more that the existing investment.
Equally a surprise RI or an overly ambitious acquisition could cause SP to fall more than it mathematically should.

IMO the company would need to flag up a RI well in advance with full reasoning so that it is well received and EXPECTED by the market.

Hope this makes sense to someone!

Mando,
Thanks. That's a very kind thing to say but everyone's decisions are their own. I post as I see it, rightly or wrongly. People shouldn't buy/sell purely based on my opinion but in hindsight I'm glad you stayed with it and made some profit!

We can argue both ways but as you say, let's wait and see. Only then will we know who was more right than the other.

Rusty has stated that he want a $2bn+ market cap within 12 months in order to do a US listing. Unless we get a re-rating up to about 175p, then fund raising is required. At current SP DEC would need to raise £400m+. This is a big fund raise so I would imagine a RI rather than placing.

I agree that there will be another big acquisition. But I think it would have to be via a placing or rights issue. No other way to fund it imo.

adv11, thank you for your kind endorsement!
Obviously I could be wrong as we can all speculate. However, I will predict that the SP will be in the late 90s in a month's time, after the NAV update as of 30 Sept 2021. Let's see where we stand on 8th November to see who has the bragging rights!
I agree with Punter64 on 1 point, the Management are taking longer than they should in issuing the rebuttal. 2 weeks is plenty of time.

Punter64, I fear you have it wrong. The Management are working on the rebuttal and they do expect a bounce in the SP (possibly only modest towards 100p as opposed to the 120p prior to the short attack). I know someone who has been regularly meeting with CSH for a few years and are confident of a recovery, hence the value adding share buybacks. And no, the dividend is safe.
And when you say the SP continues to fall - not quite true. It is roughly unchanged over the last 5 days. It has found a floor.

Putting aside the 'Lucy' issue, I would have liked to have seen the full written rebuttal this week. The longer it takes the more concerning.