The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
I hear you Alex, but I'm firmly in the camp that says the 'dark arts' of MM/shorters cannot explain share price performance over the long-term. Remember, many shorters are shorting simply because they see a deterioration in intrinsic or fundamental value not yet reflected in the sp... and, let's face it, they haven't been entirely wrong in that assessment over the past 2 years.
Alex, you're mixing things up. People saying suppression is a figment of the imagination are not necessarily saying that the low sp reflects intrinsic value. That is something quite different - the sp can (and may well be) below intrinsic or 'true' value due to a myriad of factors including general sentiment, macro factors, reputational concerns, etc., nothing to do with suppression by MM/shorters, which is what they are referring to.
I do like the straightforward and transparent way CMCL report their results, including the failings. I'm prepared to hang on for the better times they are promising.
Don't hold yr breath Lincoln...
T4G, I agree there is bickering on all sides. You are - all of you - quite capable of making useful points when yr not indulging in a bicker. For instance, I enjoy your posts on the detail of the company and it's operations (not much the MM/shorts stuff), because you've clearly done yr research and I learn things from you. When the bickering kicks off one learns to just skim over it. If one struggles to do that, there's always the filter button.
T4G, do you really think these boards influence the share price? That explains some things.
I think the attacking of Pedro betrays a defensive mindset and a lack of confidence in the attackers' views. Although I'm an unhappy LTH hanging on in hope, Pedro's posts don't bother me at all - in fact I find them funny. He has a way with words and a way of driving home his points relentlessly... but his comments don't influence me. That said, I wish they had 2 years ago!
Share price performance not good enough for the previous LTIP from 2021 to work out, but don't worry, we'll devise a new one with easier metrics. Classic!
Doesn't make it a smart decision though. Also, they added a shed load ( about £1.5m worth) in a POLX capital raise between Jan and July 2021, when the price was, it would appear, massively higher. We can surmise that that top-up was a big, fat whoops!
I also don't think Amati are in the business of buying and selling shares to teach management lessons, they do it to make money... or not!
Anyway, maybe they stop selling at 10.9%... but today's drop makes me wonder.
Brutal indeed. If it is Amati causing this fall, they are mad bailing out at these levels and at this time, having held so long.
I look at the RNSs and see nothing but good news! OK, perhaps the market is slightly spooked by the company feeling the need to RNS every sale of a single cylinder (as it kind of implies sales aren't booming), but I nonetheless considered that Philips collaboration news, which came out on 2/6/23, to be very material indeed. Besides, as has been said here, sales don't necessarily take off the very moment FDA approval is granted... it can take time... and POLX had $16.2m in the bank as at 31/12/23.
With investment decisions like this, no wonder the Amati VCT is at the very bottom of my UK Small Cap league table for 2023 , at -21% over the 8 months.
All of this should be good news for the company, yet the market studiously ignores it and seems to have concluded that TLY is a value trap. I accept, there are pitfalls in taking on these govt contracts - some of these staffing and cost efficiency issues that have beset the NHS, will also, inevitably, affect the private providers... but I still think the company is well managed and I continue to have faith in Chairman Holt to get things back on track. First and foremost, they need to carefully pick & choose their contracts from all this govt work apparently becoming available and price them correctly. Why shouldn't they be able to do that? Anyway, the market disagrees with me and this share has become hated.
Actually the share price in March 2022 went below the covid lows. However, we've now gone below that, so we're at multi-year (or at least 10-year) lows today.
A credible recovery story or a value trap from here? I can't decide, so I'm not selling but I can't bring myself to average down either.
The article appears to be outside the paywall, of you google it directly:
"Outsourcing has not been the panacea that many had expected as tougher market conditions, chronically underperforming contracts and higher costs combined to undercut the investment case for the sector. Against that backdrop, it has often seemed the sole reason for Capita (CPI) to stay in business simply to pay off its debts and plug the yawning gap in its defined benefit pension scheme.
On the evidence of these results, these minimalist goals have been achieved with a measure of success; the company has paid off £1.7bn of debt to date since 2018, based on flogging off most of its saleable assets. There were five more business either sold, or put up for sale as the half ended, whose results were included in the current trading figures for the group due to their formal status at the end of the half.
The sale of businesses triggered extra payments in the pension scheme, which is why these contributions doubled in the half to £30mn. However, there should be a steady reduction in net contributions for now on as part of the actuarial agreement reached in 2020 with the scheme’s trustees; this preceded the scheme moving into reported surplus on the back of higher interest rates. Combined, this should ease the burden on cash flow as the year progresses. Indeed, management spoke of a return to dividends over the medium term if the improvement continues.
Capita deserves kudos for surviving a combined debt and pension squeeze, even if it is left in a much-diminished state. Now really a penny share, and with assets sales ongoing, shareholder value will not be rebuilt quickly. Sell."
Last IC View: Sell, 36.5p 6 Aug 2021
Hold your nerve for what? The company has already lost half its valuation since early March!
I know turnaround journeys can take time with many pitfalls along the way, but CPI does seem particularly accident prone.
On the macro: wage costs remain elevated and the UK govt. is on a tight spending leash, so it's unclear to me where the catalysts are.