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They are all paid for by local depts of education but its obviously better for NEX when they are delivering a service rather than taking a holding fee
Just had notice that the schools are returning in person Oct 12. Had feared it wouldn't be until the new year. Bas service returning too.
I think the next catalysts will be 1. CEO appointment 2. complete update on US school reopenings (curiously I think this will be a huge positive and that the contract base will emerge bigger and more profitable - in our own school district (I'm US based) the superintendent was very complementary about how the Petermann team supported her in planning for this year - and, probably most importantly, the read through from the bidding war (it is red hot) for FGP's school bus assets..KKR, Apollo etc etc etc
I think the best thing about todays Update is they didn't promise anything that isn't visible to them and there was a general confidence to the RNS that indicated to me that they are back on the front foot. Dean's departure is behind them.
AHL is a pure quant manager. They have no fundamental view. This will be part of a thematic basket and expresses no opinion on valuation, catalysts, CEO or anything else stock specific. It will also have tight stops. Should NEX catch a bid for any reason then this short will morph into a algo driven buyer
This is interesting and valuable anecdotal information. Thank you for posting
I think you will be pleasantly surprised at the premiums being offered for FGPs US assets and the read through to NEX. If the share price doesn’t respond you will see pressure for NEX to break itself up too. Nothing is sacrosanct and without a CEO and with the sp materially below the June cap increase major shareholders are open to offers I can assure you
As the feeding frenzy gets going ( see Sunday’s Telegraph) it will occur to everyone that NEXs US assets are even more valuable than FGPs. If the market doesn’t want to pay fair value for these excellent assets then private equity will. You can be sure that Armitt’s phone is ringing
HEDGEYE - an high quality investment research house in the USA (most of the analysts used to work at Div 1 Hedge Funds and are very well respected) just launched coverage with a 1600p price target. 60 page deck sent to institutional clients. Now on their best ideas list. You should try to get the research. Very unusual for them to recommend non-US equities.
Does anyone here collect HFD of UK bus travel or public transport usage generally? Does TFL publish congestion charge data?
Finch left because after 10 years he was offered a bigger job. The last 2 CEOs of PSN have made 10s of millions. It's a very lucrative job. You really can't blame the guy after a lifetime of running buses to follow the $$. The timing a month after the cap raise and mid Pandemic was unfortunate and certainly upset a couple of institutions. He was regarded as a good CEO.
I think the board has been a little slow replacing him but it's an important decision and demands a considered process. I gather there is a very strong internal candidate who Finch hired from FGP around 10 years ago and also a handful of good external people (no idea who) under consideration. Sir John is highly competent and will make a good decision.
The other really good thing is that the CFO (Davies) is really strong.
It would have been better to have the new guy anointed for the last results as they had to remain very conservative in all commentary. If they had given any vision it would have been unfair on the incoming guy.
My money is on the internal who has VERY good reviews from those who have met him and if it's an external I would expect him to be OUTSTANDING to have secured the job.
It's just life. Nothing is ever perfect unless you are Apple (joke)
and - as an after thought, have a few shorts in case the fed turns the tap off or an exogenous surprise causes the market to correct again. You know in your hearts its just the fear of missing out that has kept the indices ticking. Plenty of expensive stocks with challenges to chose from.
I'm new to this chat but it's fascinating. So much hand wringing!
Most people posting seem to agree that NEX is inexpensive and somewhat of a "coiled spring" into a normalization of travel habits. This will come and the market will discount rising confidence / visibility ahead of the curve. There are potential catalysts including a new CEO, US school reopenings, treatments / vaccines, M&A across the sector (FGP is actively marketing its US assets) all of which could result in a rapid revaluation.
This stock is perfectly capable of a 20% daily move at which point if you don't own it you may feel you missed it. In reality there is substantial value, in my opinion, above that.
So either own a comfortable position, suck up any vol and add on any weakness or wait for a bounce, miss the first leg, and avoid any near term anxiety.
Of course we could all be wrong about valuation and the upside but personally I like it and keep checking the US school data to read the tea leaves.
I wish I could post a chart. If you have bloomberg run a YTD comp of NEX, FGP and EZJ. The Beta is surprisingly high for NEX (1.65) and there is a visible lag (both positive and negative moves) where NEX lags EZJ (as a proxy for short haul air) by about 3-5 days. No science but the correlation is there if delayed.
I'm really just getting to know NEX - this local color is interesting. thanks
Thank you. Good feedback on seeing the intercity buses. Of course the CEO void makes the company even more vulnerable to an approach. I will keep channel checking school bus news and post if there is any news. Beats calling sell side analysts
Regarding recent trading patterns, there has clearly been a change in the shareholder base. For 10 years NEX was a compounder and attracted a GARP/Growth investor set. Some of these have rotated out, presumably because "normal" growth may take several quarters to resume. Others seem to have been upset at how the equity issuance was followed by management change and perceive the board to have been slow to manage the newsflow / process. It wasn't a well run process.
Today (at 5x average last 3 years FCF, a 30% discount to book, 4x 2019 EBITDA) I would describe it as as deep value and believe it will quickly attract a new subset of institutions. If not I suspect that the sale process of FGP's US assets has already got serious PE attention and NEX sub 250p is a comparable lay up.
As I wrote earlier, I'm in the US and found this via the US school bus segment. Perhaps I'm missing some UK/local market nuance.
whatever the case, better days are likely coming and with back to school firming up in the USA (much more significant than UK airport shuttles) better newsflow looks imminent.
Both appear relatively asymmetric in risk / reward from where I sit in the USA. Both have plenty of near term upside as our schools get going.
NEX seems a little cleaner (FGP break up offers a little more upside but also greater execution risk). From a UK perspective, how do you rate the relative merits (management, UK assets etc)?
@monkshood, thank you.
Our school district is opening and running the buses on an altered schedule with staggered pick ups and lower density for the next couple of months. They have increased the budget by around 25% to pay for the extra miles and parents have enrolled their kids as usual. I actually think that the bus operators may make MORE this year due to these changes than usual, lets see. It was the budget increase that got me looking at NEX.
Each town is different but generally the school district have a cosy relationship with the local bus operators. There is history and trust. In fact it has the feel of a mom&pop more than dealing with a corporation.
I will post here if I hear of any hiccups but I've spoken to friends all over the country and people have not lost trust in the bus service and EVERYONE wants the schools open as usual ASAP.
There are some remarks on here about short interest in the stock. At this valuation I think it's HIGHLY unlikely that anyone is specifically short NEX and that for Citadel the NEX position is probably part of a "stay home" hedging basket..i.e thematic and loosely researched. In any event, if the stock goes higher you will have a couple of natural buyers who won't be price sensitive.
Schools are reopening. In most school districts the education authorities are asking bus operators to provide additional services, staggered pick ups, more cleaning, shorter routes. Under the contracts the bus companies are paid by the mile and if additional miles are required they will be paid for. Here in NY our local authority expect to pay 30% more this year for school services. This is why I have started looking at NEX and First Group. Market seems to think that school buses are a negative but they could turn out to be a pandemic winner.