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A goodwill write-down of that magnitude is now priced in given £570m reduction in market cap since the 650p placing. If the extent of directors’ buying is yesterday’s purchase of 2,512 shares by an NED, that is a unconvincing vote of confidence.
Marley was not a well timed acquisition, the structure of the deal creates a potential share overhang and consumers are slashing discretionary spend, so nobody can have any confidence in forecasts right now. I’ll buy when the directors buy, not until.
Odd share price reaction. Highlighting EBIDTA is bigger than pre-covid is disingenuous because of large acquisitions in the meantime but EPS is higher than first 6 months of 2019 or 2020, and share price much lower. Market rightly squeamish about low net debt/EBITDA of 2.3x, why dividend is so miserly, but there is a hint of possible disposals in the statement. This is a quality business with high barriers to entry and a strangely low share price.
No I did not but, if correct, encouraging, particularly Chelverton who I rate highly. Where did you find out these holdings if they are sub 3% - they are not normally publicly disclosed ?
There is authoritative research suggesting that 90% of acquisitions destroy shareholder value in the acquirer. Buyers rarely fully understand why the business is being sold - the seller knows a lot more about it than the buyer, and due diligence therefore needs to be exhaustive. Synergies are over estimated and huge management bandwidth is consumed identifying targets, negotiating and integrating, i.e. there is a big opportunity cost of management time. The fact is you’re never quite sure in companies built mainly by acquisition what the underlying organic growth is and what the real underlying ROIC is given the accountancy professions’s difficulty with treatment of goodwill. Put bluntly, investors don’t fully understand what’s under the bonnet. The shares will be condemned to a low P/E going forward, for ever.
Agree BG joining the register is very positive news: they are a class outfit, will have done exhaustive DD and I suspect negotiated hard on the placing price as a price setter not a price taker. This may explain why the discount was so high, but it remains odd none of the NEDs participated alongside them. BG have deep enough pockets to participate in any further equity raises, if needed, so the possibility of that won’t faze them. Further long term institutional buyers would help: they will have noticed BG coming on board so this is a bullish flag of sorts. Also BG will be engaged with the Board and make sure the CEO’s feet are being held to the fire.
The fact that none of the NEDs participated in the placing is the other red flag on this one. They're insiders and shares were offered at a chunky discount: what do they know, or sense, we don't ?
Huge discount to average share price over the previous month and the previous day's closing price. A discount of that magnitude needed to attract investment is worrying. The question is why have the shares continued to fall since: my guess, and it is only a guess, is the stock market reckons they haven't raised enough. Fund managers buy on the last re-financing, not the penultimate.
I think the onus is on the company, not me, to give a detailed breakdown of its proposed investments, i.e. how much, in "multiple pathways to commercialisation" and its growing pharma services businesses. I just don't think £20m will go very far (or last long) in the US, i.e. they'll need another equity raise in 2023. Marketing to clinicians in the US is insanely expensive, although less expensive than it was, and even established big pharma baulks at the cost. If investors sense equity will be coming to them in future, they won't buy today. Make no mistake, parsortix potentially has huge potential and AN deserves credit for FDA endorsement - why I watch Angle's share price - but I remain sceptical on the company's expertise in monetising it. These are proven boffins, unproven businessmen.
FDA approval means nothing if the opportunities it presents cannot be monetised. A lot of “P+L investment” is necessary with a >12 month payback, never easy for listed companies, and that is money Angle does not have and is nowhere near having: raising £20m will not move the requisite needle. The company is now in a strategic doom loop which predators will recognise, having to do further equity raises at ever lower prices as a cheap share gets ever cheaper. Put bluntly, Angle is now an inappropriate parent for parsortix: its expertise is science, not commerce and it can add little value to a scientific breakthrough with FDA endorsement.
A combination of the directors’ CVs and the placing being priced at 80p, 50% down on share price one month earlier, suggest to me that Board is dysfunctional. Company is too financially fragile to commercialise (i.e. market) parsortix in the US. Like many British companies in this space, great at inventing things but not selling them, why they end up being taken over cheaply.
This is a disgrace. The FCA should demand the company either issues a further RNS clarifying why the delay or suspends trading in its shares until there is suitable clarification. The directors must know whether the delay is for substantive issues with the accounts or procedural, for instance an auditor staff shortage. In the meantime silence will be construed, rightly or wrongly, as bad news.
Worth adding that when since share price peaked at £24 in August 2019, AUM were £99bn. Since then, AUM have risen 42% and share price has dropped 54%. That divergence is not sustainable and reflects poor management of the company’s bottom line.
The big activist funds must be running their slide rules over HL at this price. A fundamentally good scaleable high margin business, poorly run. Otherwise, still on too high a P/E for earnings currently going backwards. An activist would think round corners on how things can be done differently and better.
Read the transcript of the Solvay Q3 results Q&A released on 28 Oct. They wax lyrical on Actizone. If this is worthy of mention given their market cap of EUR 11 billion it must be potentially significant to Byotrol, market cap £24m. Royalty receipts typically lag sales by 6 months so I don’t expect this to be obvious in the next TU but the direction of travel longer term appears encouraging. I assume the directors are currently in close period under the rules therefore cannot buy shares even if they wanted to.
Shares were 2420p in May 2019 when AUM were £99 billion, shares are 1470p today with AUM of £135 billion. OK deduct 30p for special dividends paid since May 2019 and the adjusted peak price is 2390p. I understand margins are under pressure and the jury’s out on the CEO but surely this is priced in. Shares down 39% from peak, AUM up 36% since then. US buyers routinely run their slide rules over any listed UK company which has a profits miss. This will be no exception.
Given the magnitude of the recent share price drop, much in the wake of a better than feared Q3 trading update, directors’ buying is conspicuous by its absence. This is a 31 March y/e company so the directors are not currently in close season and can buy if they want to. I’d wait until one or more directors buys a significant number of shares before buying any myself.
This is the 4th consecutive profits warning (Feb, July + Oct last year and now today) from Glaxo which is shocking mis-management of expectations for a company of this size and looks like the BoD is in semi-denial of its problems. On 73p of eps for 2021 (assuming no more downgrades), that's a forward P/E of 17.5x at 1284p - expensive for negative earnings momentum. Market will now adopt a "show me" approach to management who have lost credibility. Ergo, no hurry to buy.
Slightly surprised by today’s share price reaction. Jackson is a good and substantial business but unrelated to the rest of Pru’s operations and Pru has suffered from a conglomerate discount owning it, ergo right to de-merge it as two separate share prices added together should exceed current Pru price. I guess the market was expecting Pru to sell/float Jackson and part distribute the proceeds received to shareholders by way of a special dividend. Proposed de-merger of Jackson brings no cash inflow to the Pru so they need to raise equity in lieu. Pru, shorn of Jackson, becomes a much purer takeover target for somebody like AIA. Pru bid for AIA in 2010 wrongly believing AIA to be contemplating a bid for the Pru: Pru’s shareholders voted against the AIA bid. So there has been a previous attempt to amalgamate the two businesses. Pru is on a sky high P/E even after today’s fall so acquisitions funded by an equity raise should be eps enhancing.
battleja
IMHO there must be a possibility private equity is now looking at this - possibly different PE firms to the PE vendors still on the register. The underlying IRR on new cases is definitely there once the government ends protection from creditors for companies otherwise insolvent, and the lumpiness of the cash flow arguably makes the company inappropriate for a public listing as investors in public companies want smoothed profits. I just fear Manolete as currently structured is under-capitalised for the size of the opportunity available and private equity with plenty of dry powder might make a more logical parent away from the public gaze.