Member Info for TerryM1

If you mean 9 months in my SIPP (though I have held a smaller amount elsewhere for a few years), paid around 90p old money.

IMO this SP crash was mostly due to the drop in dividends, the Oaktree purchase would have taken a number of months when those in the loop would have known about the dividend drop. Leaked out and here we are. All while trusty Rusty is saying he does not know why the SP is dropping, nothing to see here, nothing has changed, not me (well seems that way). Bart man springs to mind.

"FCA more power to deal with poor practice"

The things the FCA do for me

Restrict retail investors by locking them out of placing, I am not allowed to buy a share in a placing at say 114p with no fees and stamp duty as I do not know enough and can't be trusted with my own money but I can but the same share on the market for 116p + fees and stamp duty

Make retail investors tick a lot of boxes. Cost me extra money (2 sets of fees) to transfer a share with a KID from IWEB share account to IWEB ISA as it can't be done in one transaction as I have to tick the KID box.

Make retail investors sit tests to invest their own money

Make companies produce ESG report just to list on the LSE even if they do no business in the UK

Push ESG agendas

Push Woke agendas

And you want to give them more power!

Just a pity they are so pathetic.

Same amount once a day (or it looks like it as they are always at the same price) if not blocked by some strange rule they set themselves. How much are we paying Peel Hunt for the genius strategy, another one of trusty Rusty's great ideas to save the SP and we get all this for just a 2/3 drop in the dividend.

Well done Rusty, for all your great work you have even detached the SP from HH prices.

I will try again

GdBy Stphn Brd gld y are ging

Or should it be

GdBy Stphn Brd gld yu are ging

GoodBy Stphn Brd gld yu are ging

Sav

For all our sakes give it a rest.

Or another way to look at this is the Latier curve. Once you go over the peak the more you increase tax the least you get.

Since we are at the highest tax rate for 70 years we are either at the top of the curve or falling down the too high tax side. I like a number of people I know retired early due to not being worth working because of tax and it has gone up a lot more since then.

This is a big problem for Labour as more and higher taxes less tax income but what do Labour stand for if it is not more spending and more tax take is out of the question so left with more borrowing but the the counties credit card has been maxed out. Then what is left is property and or wealth tax grab, then see the great exodus to be replaced by unskilled workers with no money to their name (bit like now but much worse).

As has been said after about 2 years of Labour the country will turn on them like they have the conservatives.

For the record we have at least 10 trillion of debt if you count the off balance sheet items, I once asked an economics professor about this as I thought this must be wrong, the answer was that it was probably more.

Here is an idea, instead of maximising the tax how about we maximise the average income, to do this we need to drop taxes off from the top of the curve, just a thought.

By the way it was not covid that caused the problem, it was the lockdowns done by the Conservatives with Labour shouting we should lock down sooner for longer. Great strategy, they knew the Conservatives would be in deep trouble trying to pay for this however this will soon be their problem.

Posted a joke and started SKR up again.

Perhaps we should get Nigel Farage onto this now a lot of us are being de-posted.

One for Kipper

"Well - it’s been a good while since I have been able to say that Capita is my top performing share today ….. who’d have thought it !"

Well mine has been DEC (CPI third), just as surprising but it is a US company so not affected by the political situation in the UK

"Savage_KeyboardR"

" I share the view shared by someone else (i forget who) that one can either read, or not read, another's comments."

For once I agree with you.

Https://www.solarpowerportal.co.uk/gore-streets-operational-bess-capacity-up-45/

" If Sav knocked my door i'd hit him with a shovel"

I hit him with my tax bill, be a lot worse.

"How my second comment seems to have disappeared. It had some relevance to this name !"#

I have had 2 removed today without any notification? what are the rules which have been broken? Is someone reporting post they don't like.

NY 1.3% up, London up 0.5%, looks like we go the dividend as a bonus at least for now. Also HH now at 2.9.

Thanks Trek for suggesting Brave, so much quicker and without all those annoying adverts.

Was not going to get involved again but could not resist

“Rishi is a good principled guy”

Do not agree with this, he stabbed Boris in the back who took him from nowhere to become Chancellor, lost to Liz Trust but somehow managed to manoeuvre his way to PM without a vote by the party members as in the rules (could not risk losing twice).

Supported the vaccine while making a fortune from Moderna shares through a hedge fund where he was co-founder and kept this very quite.

Then look at Infosys, his family company (once denied he had heard of Infosys on a Sky interview) which has gained a lot of large new government contacts while he has been PM. Gave grants to Indian IT people to come to the UK, made visa easier for Indian IT people as part of trade agreement all benefitting Infosys. Changed the IR35 rules to make it almost impossible to employ UK IT freelances clearing the path for more work for Infosys. Liz Truss changed these back but first thing he did as PM was revert to the rules he put in.

All perhaps a coincidence but has made the Sunak family a lot richer.

In balance look a Kier Stammer, got a special tax unregistered pension scheme when he stood down as Director of Public Prosecutions in 2013. This means he is exempt for pension lifetime allowance while criticising the removal of the life time allowance for everyone else stating he will put it back but of course not for him. We are all equal but some are more equal than others.

"you happily take, take, take and yet when it comes to putting a a little back in you resent every dime of it"

How do you know this?

Over my life time I have paid a lot of tax and still do in retirement and in no sense can be described as a little. In fact a lot more taxes than I have got back in services, I am happy to pay tax if I get a least a half decent public service. Not so long ago tried to get to the doctor for an urgent condition, nothing for at least 3 weeks, drop in community hospital can see me , told to go to A&E, waited all night (8 hours) for 3 minutes with doctor to be told I should not be there but at least then put into the system for treatment. Another time after a test needed to go for an urgent cancer check, Doctor said this should be within 2 weeks(recommend max wait time for this on NHS), Hospital kept messing about and took over 5 weeks (fortunately clear) but had I known this at the start would have gone private. Partners house burgled, police did nothing. I am not prepared to pay large tax bills for very poor service which can be life threatening. So I will go somewhere with either a better health service, lower crime etc (also a lot lower tax) or somewhere with very little or no tax low crime and pay healthcare myself, at least I will get to see a doctor and have treatment when needed.

My partner feels the same she is a fully qualified carer who works in social services and in the past managed a number of care homes (where she was appalling treated during lookdown). Where ever we go she wants to keep working, a gain for the new country and a loss to the UK along with my taxes, you can take so much but sooner or later it becomes too much. Both of us feel this country now has very little to offer for very high taxes, high crime, useless police etc.

You will understand this once you older and have grown up.

"it is the government you voted"

How do you know that, I did not vote for this shower.

As this is the CPI board this is the last reply I will make on this issue

Part 5

Risks

Given the historical acquisition spree the company has gone on, one has to be concerned if management takes a turn for the worse and makes poor decisions about future acquisitions. Goodwill impairments, asset write-downs, and other indicators of bad purchases could dent shareholders' equity and put the stock lower. Investors need to put some faith in management, as they seem eager and keen on making acquisitions to grow.

Environmental regulations could restrict the output of natural gas, as the country becomes more reliant on renewable energy instead of fossil fuels. In the long term, the company could face a secular headwind as the country shifts to solar and wind energy, and demand for fossil fuels wanes. Future regulations may restrict profitability and make it hard for management to expand operations.

Hedging may not always work, as past performance is no guarantee of future performance. If natural gas prices get super low, even the hedging can only do so much to protect cash flows. At a certain point, gravity takes over and extremely low natural gas prices may make it difficult to sustain cash flows despite smart hedging practices.

The company also has some leverage, coming in at over $1 billion. While not too worrisome, a slowdown in cash flows could lead to increased financial pressure on the balance sheet as management has to keep debt levels under control.

Buy Diversified Energy

Rarely have I seen a company with such good cash flows trading at such a low price. I'm rather impressed by the hedging, mature wells, and overall free cash flow the company generates. Management seems to be pretty smart about acquiring assets that fit the business model, so with over $2 billion in historical acquisitions, I think the market is severely underpricing the company today. Investors should look to Diversified Energy for its solid income and cheap assets at a bargain price.

Part 4

Valuation - $20+ Fair Value

I will base my valuation on the cash flows of the company because I think they are predictably stable and also resilient to natural gas price fluctuations. For 2024, I expect the company to be able to earn at least $200 million in free cash flow, by taking $50 million of free cash flow in the first quarter and multiplying it by 4 to annualize it out. Given the free cash flow came in at $74 million for Q1, I think $200 million in FCF for 2024 is reasonable as $74 million actual for Q1 2024 is much higher than my projected $50 million of FCF a quarter. Also, FCF for 2023 was $219 million according to their presentation, so assuming it can hold at around $200 million seems reasonable as the hedges do their work in keeping cash flows stable.

Divide $200 million in FCF by shares outstanding of ~50 million gets me around $4 FCF per share. Multiply FCF by a below-average P/FCF of 5 gets me $20 per share fair value, with what looks to me incredibly conservative assumptions. Ultimately, the free cash flow is all that matters to me and I see it staying at the very minimum flat for the next year or two due to smart hedging and mature wells that don't deteriorate that quickly.

I also find it unusual for a company that has historical acquisitions exceeding $2 billion to somehow have a market cap of below $700 million today. Those acquisitions seem to be value-add, as they increased the production capacity and cash flows of the company since they occurred. If I bought $2 billion of wells, oil producing assets and infrastructure, hedging contracts, and suddenly, it's selling on the market for $700 million today, I'd think the market is severely undervaluing my assets. That's exactly what, I think, is happening to Diversified Energy at this price, and thus believe the stock is probably undervalued.