Member Info for Velo

Thanks for that SB. Appreciated.

I’m not sure if you’re advocating a metric adapted for your own use, that doesn’t readily exist, or using a conventional metric that already exists but obtained by using a spreadsheet to escape having to pay for a data subscription package (as I do) which provides virtually every major balance sheet metric without cause to refer to a spreadsheet as they also produce the past historical performance of those metrics too. But it’s a costly subscription per year.

I suppose No:1 & No:2 on your list might already be provided with the ROE metric to arrive at a figure per share. As there are several metrics that make use of equity. Or maybe you are using it in an alternative method?

Anyway thanks for that little list. I’ll copy’n’paste it, to my files.

Hi Damon H,

I don’t think there’s anything that reliable to forecast a specific 10% fall in such a short timeframe.

- Bear in mind that every year there’s a highly significant Half Year (H1) trading update in late February.

And every year, or rather most “probably” every year, there’s a huge pullback intra-month in Feb BEFORE that trading update. And usually (in recent years) those H1 trading updates have all achieved market approval for meeting market consensus.
And usually, the SP goes on to respond favourably by the end of Feb in glowing fashion.

Don’t know if it’s a leaky ship syndrome or some big fund, manipulating funds in and out - but that’s what I’ve become used to. That important H1 trading update is out a week today ie., next Tuesday the 21st Feb.

If this pullback in the SP has not dissipated away by then - I expect it to do so upon sight of the H1 update.

This big pullback that occurs intra-month in every February, I’ve come to regard as an annual “tree-shake” based on (ahem) probabilities - because that’s what they’ve been in the past. I expect them to sell straight away in March for a quick buck. So more concerned about March than I am about February.

However, January’s performance makes me less confident this year in asserting that. Next Tuesday’s update should right the ship. (Probably :)

Set up that trial portfolio dated from the closing ask of yesterday the 13th Feb.
Interestingly (but insignificantly) all are up in small gains so far with PSN currently sporting the smallest % gain of the 4 selections.
So the portfolio is pleasingly 100% all blue.

Yeah, that's how it goes in real life too, doesn't it? :) :)

“ Velo, looks like your phases may not be playing out ? “
—————

Hi Tach,

I’m not drawing any conclusions just yet, as barely mid month; and Feb can throw up severe down trends intra-month, time and time again, (admittedly, only after first rising to an unsustainable height beforehand) but ultimately leading to a good close for the month.
So it’s a wait and see, from me :)

However after the poor showing for Jan, I’m beginning to feel that my original outlook of desiring a good performance for Jan&Feb (because it may herald the return of characteristic reliability) is on the ropes, currently.

The trouble with probabilities is that when it’s time for a negative performance, one always feels - can’t be now, no, do it another time :) LOL!

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“ Falls through its 50 day MA for the first time (yesterday and confirmed to day) since end Sep/start Oct. `22 “

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Hi Quiggers,

Yes, and the last time it did so, it represented a buying opportunity as the SP recovered to commence this 5 or 6 month bull run.

After the SP floored in early July last year, then between late Aug and late Sept it commenced delivering higher highs and higher lows, culminating in finally breaking-out on a strong bull run from the very beginning of Oct to this mid Jan.

Late Sept is the last, most recent time, the SP dived below that 50 day average, but as said, it proved to be a buying opportunity.

Although I’m unhappy with January’s result I’m regarding this dive below the 50 day average, as yet again another buying opportunity, as from intermediate trends upwards to long term is still bullish - only short term trends have gone AWOL and are bearish. Trouble starts only when they infect the next trend up, what I call the Intermediate trends. And that although bullish is narrowing quite a bit :(

" 'we recommend that you do not accept the offer' would be nice."

--------------------

Yes, that stinks to hell that it's not been forthcoming.

Wouldn't be surprised to learn he's done a deal with the management promising them no loss of income/remuneration under the guise of:
I'll need a management team to continue running the company for me. Oppose me and you can close the door after collecting your hat and coat. Support me and you won't lose out financially.

They've put nil effort into negotiating a better settlement for holders.

Probably sheer coincidence but from the first RNS announcing a bid for the company had been received - to the second RNS coming out stating:
We've accepted it (without negotiaton) - was all of 15 minutes apart from start to finish.

Stinks to heaven by not negotiating for better terms. Maybe they didn't want to put their head on the line, especially as the bidder gets himself involved in real-life assassination attempts.
- What undesirable company is he mixing with?

Yep, that link not responding so went back to the indirect FT link and here's a flavour of their distaste against the offer. They're encouraging holders to go all Ukrainian and resist the enemy -

"With more than half the shares already in Sagi’s hands, minorities should contest the skimpy 13 per cent premium to the three-month average price....
... Shares on Monday traded above the offer price. Even if Sagi controls most of the shares, Kape minorities still deserve more for their holdings. "

With the FT running a piece coming out against the offer yesterday of:

"Kape Technologies: Teddy Sagi gambles on quiet minorities

Shareholders should contest the skimpy 13% premium to the 3-month average price"

---------
It's advocating resisting the offer and just about confirms the financial media as a whole are disgusted with the smash and grab raid. I gained access to the FT article by other indirect links so it may not open if not subscribed. Surprised it allowed me in -
https://www.ft.com/content/b2015b87-d92b-4883-99f7-ed5147a99211

My choice for the better-performing home builder stocks:

Late now, so briefly, used the screeners in Stockopedia to filter for top-notch metrics in the Industry group of, Home Builders & Construction Supplies.
And below are the results.

First surprise is, that after the 'winning' choices at the top of the page, the runners-up were stretched out down the page because they were interspersed with better-performing Construction Supplier stocks!

And way, way, down was PSN - so stopped there as the overall score was getting too low by the PSN area.

Yes, despite PSN coming out top dog against all comers for ROE, ROCE & ROA (Profitability metrics that if high scoring, indicate a stock that is efficient at converting earnings into cash) - And PSN was head and shoulders clear of all
- but not enough to prevent a low score by failing to beat the others on other metrics.

Here’s the initial run devoid of some of the better-performing construction suppliers:

97 - BDEV Barratt Dev
97 - TW. Taylor Wimpey
91 - CRST Crest Nicholson
85 - RDW Redrow
83 - VTY Vistry
83 - CRN Cairn Homes
75 - BWY Bellway
75 - BKG Berkeley Group
74 - PSN - Persimmon

The points are ranked out of 100 (very few ever achieve 100).
Only those stocks scoring over 90 make the grade.
Between 50 and 90 is not poor, only average to not bad, but 90+ scorers, on the whole, outperform scorers in the lower deciles.

Where stocks score the same, the slightly better choice is listed above the similar scoring stock.

So that means my selection is:

97 - BDEV Barratt Dev
97 - TW. Taylor Wimpey
91 - CRST Crest Nicholson
& consolation entry -
74 - PSN - Persimmon

- With ‘loser’ PSN included in the mix but is actually unqualified (currently).

(My opinion: A score of 74 means for the foreseeable it’s unlikely that PSN will perform better than any of the 90’s trio rated higher than PSN)

So, should PSN wipe the floor with the beauty parade winners I can save myself hundreds per year by cancelling my data subscription package and just read StrictlyB’s interesting posts for free :)

So come on PSN! It’ll be a win-win for all :)

Accidentally found my way onto this forum earlier today whilst following a trail on another matter.

Thought I was done with house builders (sold out years ago; PSN &TW) but became so intrigued by StrictlyB’s posts that I could hear a subconscious refrain at the back of my mind, in the voice of Victor Meldrew proclaiming in utter amazement: I Don’t Believe it!

If I recall correctly, StictlyB says he’s been in nothing but house builders for 20 years and in that time it’s kept him in income without worrying about the too-ing and frow-ing of bearish cyclical trends inherent in house builders. That’s when I could hear Victor Meldrew kicking off in an amazed high-pitched whine :)

I would urge StrictlyB to write up a nifty ebook and put it on Amazon Kindle ebooks expanding on his methodology under the title of:
How I prospered for 20 years investing in nothing but house-building stocks
- I’d buy a copy!

Will settle down with a cuppa and some choccy biccy’s and some point (gone midnight now) try to find the time to read all SB’s posts since last October on PSN, and see what his methodology reveals.

My first question would be:
How did he know October was the precise floor? (Should PSN ever retrace to £12 or lower I’m buying an initial tranche for a bottom drawer somewhere).
I can see it showed up on my systematic processes, but don’t think I would have acted on it back then, only when the other indications backed it up in December - but that’s hindsight talking :)

Anyway, to the point of this post: I’ve put the industry for Homebuilding and Construction Supplies through my screener and come up with a list of the best, most favourable, in deep quality/value and momentum metrics to see what comes out in the wash and my biggest surprise is that PSN doesn’t make it to the final cut!

So for fun, I’m putting the so-called “winners” together with PSN in an LSE portfolio with an imaginary £5k position in each and just let it lie there, and see if the ‘loser’ (PSN) outruns them all as the year progresses.

Think this post is long enough as is - so will post my list of homebuilders in a separate post.

Pound to a penny, Unikmind aka Teddy Sagi, relaunches KAPE as a brand new IPO in a couple of years (claiming to have now "added value") -

- at a vastly greater SP than that which has been agreed today, of anything up to £10 per SP.

90.5 thanks Roofer.

Whilst I can appreciate your dislike of using TTM calculated ratios, I think you’re too dismissive of their use. They are handy.
Without TTM metrics you’re just left with previous years' accounts whereas TTM trails the previous 12 months starting from the current most recent trading updates to gain a better insight into trends, to better manage the future.
(Yes, I did erroneously add “and calculated forward” instead of current quarterly trading results) that’s because I’m always looking at the forward metrics that run down the right-hand side of my screen :)

Although I dislike stocks with single-digit profitability metrics, those single-figure metrics I initially posted on - are higher than last year's single-digit metrics
- so a trending improvement, and I look forward to maybe the first of double-digit metrics in that category come late March.

(Market consensus for revenue is for $619m for year ending ‘22).
The Jan 17th update did reveal to expect circa $623m in the upcoming March 21st trading results - so a beat on the consensus guidance!
And hopefully, that transmutes all the way down to the bottom line. So holders are right to be bullish going forward
- but currently, the SP is paying no attention to that ‘in the bag’ update, at all!

Not backward-looking data at all, DaddyAIM - it’s current data,
- they’re all TTM (Trailing 12 months based) so they’re based on the latest trading updates and calculated forward. (Not by me but by the algo’s :)

The last 4 years or so where profits were produced, all fall in much of a muchness, in line with the latest TTM metric results I posted about, so they sound about right.

Which leads me to the thought that if it’s a well-known fact that KAPE functions on a low margin and therefore achieves less earnings per $ than the average for the industry, then gaining huge revenue to compensate must be their modus operandi - their edge in achieving increasing market share by being cheaper than the competition - and thus low earnings per $?

So, why doesn’t the market like that? I’ve back-read a handful of some analysts' reviews and ROE comes up frequently where they bemoan the lowly achievement in ROE but go on to highlight the increasing revenue (to compensate?)
Sort of like a Tesco of their industry? Pile it high and sell it cheap?

Why is the market behaving as if it’s a bad thing to operate on low margins like a High Street supermarket - and thus withhold the overdue re-rating due in the SP? Has there been a change in company culture, that the market dislikes?

The SP has been retracing for well over a year now - before that, it was years of a fantastic climb from the lowly depths up to record highs, before this current long-term retrace in the SP then took over.

Is there another reason the market is holding back on re-rating the SP?
Has there been a change in the business I’ve yet to find out?

That’s all I can come up with - somewhere along the line the company went for growth at the expense of profit margins.

Typo! (From 1st post) -

" If so, they're not efficient at converting **revenue** into cash."

Should have read as: **earnings**

PS.
Just looking at ROCE, ROE & ROA, and all three are in v low single percentages.
That's a poor performance.

High percentages in double figures say at the very least 10 to 15% would indicate a company that is efficient in converting paper earnings into cash.

So with such a lowly cash conversion, I checked out liquidity and sure enough, it was poor.
Of the three key metrics measuring liquidity, two were dire with the third unimpressive.

Which leads to the query : How is it paying its bills?
With difficulty, if the figures are to believed.

(Or is there another explanation? I look forward to the March big reveal).

Earnings look great, but as the caveat goes:
Profit is vanity
Cash is sanity.

Maybe that's all a byproduct of a growth stock?
If so, they're not efficient at converting revenue into cash.
Paper earnings can be manipulated (not in a criminally fraudulent way) - cash very much harder to do so. That's why analysts are always yabbering on about cash this and cash that. Something us private investors are not so hot on.

PSS.
Not deramping just offering an alternative viewpoint to the inexplicable refusal of the market to re-rate the SP on what appears on paper to be terrific progress by the company.

" We’re all scratching our heads, Trendz!"
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Could be to do with market distrust of the accounts.

The recent update declaring to expect truly astonishing growth in revenue for the full year should in normal circumstances have been rewarded, but more than one analyst in recent years has complained of confusing balance sheet entries.

The other year, nothing made sense but when one analyst put a minus in front of a key metric it turned that positive entry into a negative. So it lessened the impact of good results - but the balance sheet now made sense. It goes on like that to this day. Deliberate manipulation or incompetent bookkeeping?

More than one analyst has thrown their hands up in surrender proclaiming "I can't understand these accounts; so I never recommend anything I can't understand". A neat way out of crossing the line in legal action against claims of fraud.

For instance, overall Kape scores very poorly against the Beneish M-Score indicating a high likelihood that the earnings ARE being manipulated (Stockopedia/Sharepad).

However, should the market really go for it and seriously depress the SP, I may commence buying on a very cheap entry offer, because should that huge increase in revenue stand up to scrutiny in the full accounts in the full year, March 21st reveal, that's when all might be forgiven.

Phew! Only just posting in time by the skin of my teeth, this week.

88.9 please Roofer.

My expectation for January was for a 100+teen double-figure close, to show a double-figure % gain, based on the month-end to month-end performance.

It wasn’t to be.

Dec’22 month-end closed on 102.50
So with Jan closing on 104.50 that means a measly 2p gain of 1.9% !

- I’m disappointed; not in the month closing up such a small amount but in the probabilities dictating that this year a glorious January close was not to be.

Disappointed because I had hoped for no less than the bare minimum of 110 with a preference for a top of 115 (the nearest to that, came with an intra-day high of 113p on the 16th/17th Jan).

That was all based on historical cyclicals. Despite my playing with that ‘toy’ (just for SLP because it has proven with SLP in the past, to be particularly reliable in its cyclicality - that was until the summer of ‘21) and I was looking forward to a return to that reliability but as you can see by January’s close, it still hasn’t returned to pre-summer ‘21 reliability.

However, the trends (all that matters; and where the focus should be) remained at the end of January almost as strong as they started the month and that is as follows:

SLP Currently -

Price to 200 day ma trend .= BULLISH

Long term trend . . . . . . . .= BULLISH
Medium term trend . . . . . .= BULLISH
Intermediate trend . . . . . . = BULLISH
Short term trend . . . . . . . . = Bearish
Ultra-short term trend . . . = BULLISH (but barely above bearish!)

This doesn’t alter my opinion for February and I’m looking for a close to Feb in the 120’s.

Should Feb close with as puny a gain as January did, then it’s best for me not to translate the cyclicality of SLP (or the perceived cyclicality as I see it) into a pounds and pence expectation, but merely either to expect a close of bullishly up or a close of bearishly down, with no mention of price from me.

- Well at least until some evidence surfaces that some cyclicality of the old super cycle remains in SLP’s blood :)

I think poster Giraffe4444 below, best sums up my thoughts succinctly with his/her post of:

“ . . . and the SP having stabilised between 100 and 110 for a while, am expecting a great year . . . “

- And that’s a very nice change for the better from what SLP holders were experiencing before this year commenced.

Hi CheddarBob,

Yes I do (update - after Jan concludes) and thank you.
Saved half the post below some hours ago (interrupted) after a quick similar post elsewhere, and now just returned to try and finish it off, grabbing the opportunity to post when I saw your post - so was attempting to advise of my absence before Jan closes.
And it was this:

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Time available only to post that:
Last Tuesday I hit the long road north, and won't be returning home until late this coming week.

So will (or hope to) post my assessment of January's target hits/misses (most probably by next weekend). And by then it'll be already into February of course.

So... the SP has some catching up to do tomorrow & Tuesday :)

After reading that heads-up alert about Quintessential Capital I ran my subscription-accessed, 'Manipulation of Accounts' algo's through Dark's balance sheets and they were giving the all clear with a rating of 'Low Risk'.
(Still have personal queries on those results even though they issued a thumbs-up low risk).

Two of the algo's are by finance professors. I also went through, seperately, classic liquidity and cash flow metrics and whilst I came up with a personal assesment of 'could do better ' as they weren't good, but neither were there any Red Flags to report.
- Explained by the multi year history of net losses in the absence of any net profits until last year
so understandable circumstances.
(Besides, net profit this year will be a hugely exponential increase! ) Almost anything decent will be
against that first ever, puny $1.46m net profit for last year :)

Away from home and busy until late next week, so will share full details of my findings by next weekend most probably.
(Warning:
Some of the data will make your eyes bleed; they do mine :)
So will put those in their own headed-post as could take a couple of A4 pages to divulge all).