Member Info for Velo

Yes, thanks for downloading the Questor article. That's the 3rd or 4th article 'downgrading' earnings in as many days - and in all of them, they've had me pulling out my hair in angst. Now you just don't argue with the Questor column in the Telegraph. But I am. Gone midnight as I post so will leave a proper review until tomorrow (maybe) but busy right through to end of July, so difficulty ahead for me and posting on forums.

Just tried to get all the recent articles together starting with the £1 article. And found another one dissing BT's earnings as now being downgraded. Again they were using the wrong figures or the wrong heading. Just don't have time to email the writers of the articles including the mighty Questor. So quickly tonight just the Telegraph (busy day; still haven't eaten it's gone midnight and I have a meal in the oven and then off to bed - I can do that without consequence: eat a meal - then bed :)

The Telegraph, like the other articles are quoting forecasts being down for the current year as if it's a brand new thing (it's all having a cumulative effect on the SP I think) Revenue down is old news - if it was new - it would constitute a profit warning. BT is still on course to guidelines. The error in the Questor is them saying EARNINGS are forecast to be down too. Factually incorrect - earnings are forecast to be up (all that cost cutting).

"... Revenue is forecast to fall for at least the next three years, with a return to earnings growth only in 2021"

The first part is correct. The second part, after the comma is incorrect. Earnings growth is forecast to be up now in this current year & next year.

"... The share price reverse is easier to explain if we remember the bearish outlook for the current financial year that nudged down BT’s earnings forecasts..."

No, no, no, earnings are forecast to be UP this current year!

"....Trading at a little over eight times this year’s forecast earnings,.."

Just checked and I have 8.17 (the same as Questor) and I re-quote "....Trading at a little over eight times this year’s forecast earnings,.."

Question though. How come I'm getting the PE the same as the Questor when I'm basing it on a figure which is well up on earnings and as in Questors sentence above he's achieving the identical at just 'a little over 8 times' earnings on his REDUCED earnings forecast? Mathematically impossible!

I've found similar in the other articles and assumed it must be me, but I think something else is at play here. If time I'd write to all of them; they do make mistakes.

Example:
Anyone remember last year when Aus complained about an article saying the SP was falling because of this and that and Aus saying he wonders if the analyst knows it's just gone XD? Well I wrote to that analyst and not only that I found a total of 4 errors. He wrote back 48 hours later admitting to all the errors and promised to correct in his next article. (I posted that reply on here, remember, anyone?)

When the SP re-commenced sinking after the results I felt almost certain that 200 would hold. It was only the SP's second visit in a full year to 200 area, so it was truly early days for testing an old major support, and could have at least another revisit in the future to 200 before one would have to become concerned. I was confident it would hold.

Confident!

But it was not to be, and the SP pushed through and found the lower 190's the place that was too difficult to proceed further, not 200.

Later, it had weakened in the days before intra-daying to 190 and the oversold condition started improving with the SP rising away to the good. Subsequently once back up past 200, the SP paused for 'breathing' circa 205-ish - and that was I felt, the place to be 'destroyed' before further progress could be considered in proceeding past it, IMO.

I had the view that this was as good occasion as any for an old gap-down to be filled (just under 213 up to just over 219) and set an expectation for initially 200-teens and if that could close and be held, then onwards to the ultimate target of 220 to close the gap would be on the cards.

If anything I always thought a bit of dithering would occur around 212/213 area and if this recovery were to fail that was where it would be - so I'm very taken aback to see that it's that mid singles that proved too tiring for the SP and here it is this weekend flirting with almost closing on 200. So what next?

First I'm not confident of a good week for the SP next week, so if it is a good week ahead, none will be more surprised than I.

What I am expecting though is a "tendency" no more, for an expectation of a good week in the first full week of July.
In fact that first week of July could easily commence early, next Friday 28th June, IMO.

So if it is a poor performance next week, I have a belief that it could all be repaired in the first full week of July.

In summary, my personal belief is for a tough week next week; but with modest expectations of a better performance the first week of July. So if any progress towards filling that old gap-down is possible at all, I'm looking for it be in that first week of July.

Tough-t!tty to any one having a coronary, or choking on their cuppa, for me simply putting my thoughts down. It's a forum - designed for personal opinions.

PS. No pack drill with explanations on why I'm so keen on the first week of July, (possibly commencing from next Friday 28th) except to say - it's no idle random pick, or gut feel.

And if all my immediate expectations are dashed against the rocks and it's back to living in sub-200 land, no matter what the week, then there's nothing other than to simply rely on following the trend (which are mixed this weekend).

All only IMO. No refunds.

No need to apologise for mentioning another equity up on here - My fault. I'm the culprit that initated it :)
Markets are closed. It's the weekend; so what the hell :)

I'm amazed and shocked for you with that £25K profit (Thought I was the bees knees with near £15k Profit on GVC over 5 years or so - until I read that). Amazed and very pleased to congratulate you - well done mate! Well done!!!

And shocked in the same breath.

Shocked as in - WTF were you thinking??? It was odds on to go t!ts up.

It's a high risk, volatile, low expectation share, with the emphasis all weighted on high risk, so I would have expected someone like you to have placed a modest to balanced stake on it - but to make £25K profit - well I'm left speechless.

Huge risk.

You high risk taker you! You high roller you! You Las Vegas gambler you! You pulled off the heist of year!!!

Go on tell me, shame the devil and own up - you go on bungee jumps over death defying gorges in the far east when on holidays, don't you?

Respect man. Respect. You pulled it off whilst dead bodies lie all around you.

(No, not holiday makers at the foot of the gorge - IQE holders :)

And YOU have still not revealed when you bought in to IMB

The list of companies I posted on BT was not from this board it was from behind a paywall @ Stockopeadia.

Is that your comeback? Sheesh. I ask you! Well it is the weekend, I suppose.

Hi TL - You still in IQE? (Haven't seen you or Jack on there for some time - I don't post, only read/ 'lurk' there).

Read their latest profit warning (2nd or 3rd now?) this morning and the subsequent result uoon the SP. Pain!

Not in it, but have followed it in a watchlist for a year or two now.

Am I the longest holder of IMB on this board? (I bought in 2016 and am hung up at £30+) [Yes; more fool me].

I ask because once again, I'm asking myself if most posters on here are brand new investors to this stock. I see things such as:

"....given that the recent hit to the share price too ......"

- and can you blame such statements when even the CEO encourages you to think like that with what she said on 11th June in the analysts Q&A session with:

"...because that's been quite a significant downward pressure on the stock since the end of March, but we see that coming off now...."

And that's why I wonder if some on here are only talking of life from when they got into IMB. Well life with IMB started for me in 2016 and since that date it's been three years of 'unrelenting downward pressure' and 'hits' of which "just recently", is par for the course from my point of view.

What are you expecting? Just because you've bought in very recently the price will now for no earthly reason fly back up to well over £30 ?

What are you expecting of the SP?
The long term trend is down.
The medium term trend is down.
And the short term "recent" trend is down.

Woodford is just the latest in a long line of excuses, so thinking all will be well after Woodford has gone takes some swallowing.

It's not a recent hit nor a recent significant downward pressure - it's been three years solid of all that - because unlike some on here - I've lived through 3 years of downward pressure with IMB. To hell with only recent. There's nothing "recent" about it.

Ah well the end of the week. One tries. Do you want me to submit and accept defeat?

Can I push for asking for just a wee bit longer? No, admit defeat you say? Well I remain defiant and state here and now:

My name is Maximus Decimus Meridius Velo, commander of the Armies of the North, General of the Felix Legions and loyal servant to the true emperor, Marcus Aurelius. Father to a murdered candlestick, husband to a murdered second digit 3. And I will have my vengeance, in this week or the next.

Can I have next week please? :)

Wow! Somebody carry out a full security body pat down for knives. And for god's sake, before leaving the room ensure all milkshakes are removed from easy reach.

No,I agree, that post wasn't a rant either. Just a simple post by someone with a vein throbbing angrily in their temple. That's all.

(Was that a full stop half way down the page?) Paragraphs; no not when one is ranting, no time for them.

So the message is clear. Some posters are allowed to criticise others, but woe betide you if you even dare to even think of criticising that person back - Is that why they get so angry - They kent hendle the truth?

Still, some valid points in there, well there would be if only the anger was replaced with reasoned opinion and debate.

Aah thanks for that Uddinkas. You're a client of theirs. So the inference from those media analysts who're reporting a mood swing against BT is genuine. It's just that I'm not reading it generally.

I do pay a subscription for the cumlative brokers estimates for the future and that still indicates an increase in earnings. I'll stop here as it's not VOD pertinent. But thank you, it has cleared up a qeury I had.

Finish this cuppa off and time to turn in.

Uddinkas - Out of general curiosity, did you get that UBS research paper for free by sheer chance, or as a paid subscriber to UBS?

I ask because seeing a disturnbing increase in media analysts briefing against BT saying due to analyst downgrading earnings for the current year.

Haven't seen any myself (all my research shows an expected increase - not downgrades), so assumed it was paid subscriptions to Broker's houses. Only thing is all the latest Broker's noes on the BT page have a very high SP forecast for BT so doesn't sound like they're downgrading BT.

It's left me puzzled, so I wonder does it mean they're subscription only, did you pay for the UBS paper on VOD?

Mary Poppins @ "The yield is getting high here - if it gets much higher it may become a matter of concern. A yield approaching 10% is high yield and indicates a junk status..."

Yes, and the forward yield on today's lowly price is a stonking 11.5% !!! And still no takers!
(But there will be, should the SP drops to 1830's -ish :)
At the moment a similar price to last week's low seems to be the support area - for now.)

However, I prefer to insert the term "red flag" rather than your "junk status" though.

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

And: "...Not sure the company wants that, and it may be a signal to reduce the yield (irrespective of cover)."

That's the crux of my point on this matter: ( 'irrespective of cover' ).

The dividend is not covered. Despite all and sundry saying it is. Even the CFO doesn't have the brass neck cheek to say free cash flow 'covers' the dividend yield.

Check that interview provided the other day and he refrains from using the word "covered" for very specific reasons. Instead he says throughout, that cash flow "SUPPORTS" this dividend payment and future divi payments. Why didn't he say "covered" instead, as all on here are continually saying? Surely it means the same thing. Well it doesn't.

Because if he did and subsequently the divi was cut he would be attacked for misdirection. This way, any bumps on the road that require funds for a new directive that involved cutbacks, then dividends would be an easy choice with the board saying: Well the dividend is only being cut to prudently bringing it back into line to be covered by earnings, as free cash is now needed elsewhere.

Bumps in the road / unforeseen events. That's what could trigger a divi cut - it's supported until the day cash is needed elsewhere that is, despite the free cash flow being amply supportive of the dividend payments.

It happened only last month on VOD and caught many out (inc some who post on here) who said the dividend is safe from a cut because Free cash flow amply supported the VOD dividend. Debt was the problem. And all the divi is safe because of supportive FCF adherents, perhaps underestimated that.

FCF supported the dividend before it was cut and after the dividend was cut. So a sustainable and generous free cash flow didn't save the dividend from being cut at VOD.. That's an example point I'm failing to get across here. A healthy Free cash flow does not mean the dividend is safe just because it's well supported by cash. It's only well supported as long as the cash is not needed elsewhere. And in almost every case where a CEO has had to backtrack on their word - it's been to unforeseen circumstances.

Anyone here swear on the bible that IMB will never, ever, encounter any unforeseen bumps along the road - that it's plain sailing, for ever, for IMB? Can they "guarantee" absolutely the current Free cash flow will be sufficient for any "unforseen" unplanned events?

GabsterX @ "Have you done any DCF analysis on IMB? If so what fair value did you come up with?"

I've got a variety of valuations on hand but barely glance at them, as I subscribe to the school of thought that runs DCF valuations run the very high risk of "rubbish in, rubbish out" results. The inputs are just to open to interpretation and makes DCF valuations endlessly variable.

For instance on the pre-set variables (provision is made to input whatever you like) within Stocko', it's shows the DCF fair price for IMB as 6162.86p and therefore 228.9% undervalued compared to the current actual showing of 1874p.

I can alter the variable inputs to my heart's content, but my heart's not in to DCF's :)

Wonder what Sharepad default is showing?

Here's an example of the rubbish in, rubbish out phenomenon. This is the fair value calculation from a free and also subscription site that allows you permanent free access but only for 10 goes per month (subscription for the rest).
https://simplywall.st/user/views/157/popular-view

I find it useful on an infrequent basis as a free comparison, but don't rate it highly. It's showing fair price on future cash flows as 5119.0p

Back to Stocko' and there's a neat little default setting only of the Enterprise Value to compare to the current Market Cap, and currently it's showing the actual Market Cap as £18.11B
BUT the Enterprise Value (takes into account debt and cash) is £31.53B
- Which is 74.15% ABOVE the current M/Cap. So effectively saying that the current SP's fair value is circa 3263.57p

So, there's:
6162.86p
5119.0p
3263.57p

My preferred method for simplicity (but derided by most) is a quick multiply of the 'forward' PE ratio against the industry average. To date it's given me not half-bad results. In IMB's case the forward PE is 6.70

But the Industry average for IMB's is double that @ P/E 13.5 and so an everyday quickie calc (when looking at any share) gives me a fair average price of 3775p. (Stocko' has Price to Earnings ratio price as 2610p).
There's also a ruck of various other methods using price to book etc., Loads of them. All different outcomes LOL!

So all-in-all, my highly personal opinion on fair value to the industry average P/E and no more, is an SP of 3775p

Thanks for the reply GabsterX.

That's interesting. Very. Guess what? I get my data supply from Stockopedia.

We can conduct a useful real-life experiment. Both are the 2 leading data suppliers in the UK.

We both pay a couple of hundred in subscription charges. So one would expect some convergence on forecasts, but as that's forecasting ahead into the unknown, we can expect and allow a small margin of movement between the actual results and the prior forecast expectation.

But here we are massively apart. You've been supplied with £11B and I've been supplied with £12.8B.

I've marked my calendar so when the results are published in November I will return and post back here so we can compare for 'reasonableness' in accuracy, for what we're paying for.

There's other things we probably both like in our respective subscriptions (For instance amongst other things I love the little algo Piotroski F Score so would happily pay for that alone).

I'm hoping that "the truth" is equidistant between both estimates so neither of us feels dissatisfied.
If mine is way out, I will definitely write up a post on the Stocko forums and write in to their offices. But I've been so pleased to date, I'm not expecting a massive error.

I've read retail comparisons on the benefits contained within the two systems but never read of a head to head accuracy test. Perhaps we're the first to conduct such? :)

Patience Mikey, patience.

Although I realise citing patience to long sufferring holders of Vod is an abuse of the word patience, nonetheless this is still in XD period so unless there's new news, any rise is going to be within the confines of the restrictions that are artificially placed upon the SP within XD period. No way is the system stacked to allow you to collect a dividend and a big rise too in the same period. Otherwise the whole world would trade every shares every single dividend period like a fiddler's elbow and get rich quick. The market's not daft. It's already wise to that wrinkle.

The pattern is secure but lacking strength. Tonight's close is inadequate to throw it off course completely. It was a bit iffy, and yes could go on to declare this a misfire based on the 80/20 principle as otherwise if patterns were 100% accurate no one would bother with fundamentals or anything else - as the world would know that patterns never ever fail. Well they do. Now and then. Not enough to give up but enough to confirm no one system is beyond the occasional misfire.

Not prepared to declare a misfire tonight. Let it zig. And let it zag. There is no straight edged ruler like rise. You know that. It will zig and zag along it's way. It will not perform on cue to anyone's command. It will seesaw and whipsaw along it's chosen path.

Patience. If it fails I will of course submit.

However, as of tonight the fat lady has not yet sung her song. It's still game on.

".. But ,Velo sounds high, As a kite,,.."

- Ha! Mad as a hatter would be a better fit :)

"I think you must have had you charts upside down :)"

- exactly what I'm thinking when I hop over to check up on the VIX where down is good for share prices, and up is bad.

Spot on Longish - a Bullish Engulfing.

- In the dentists waiting room so riverdancing a no-no at the moment, besides my riverdancing is more related to that David Brent dance.

If anyone can beat Longish to the draw with the answer to the riddle, I'll get up from my computer and sing:

" I think I'm turning Japanese, I really think so " ( 'Japanese candlesticks' for the uninitiated :)

And accompany the song whilst doing R\verdance at the same time. Or maybe just the feet going, if I can't cordinate

GabsterX - Have some observations based on your post below, but to late tonight. Hopefully I'll find time to post them tomorrow.

GrabsterX @
" Velo, I'm not sure where you saw that debt was projected to increase, can you please share the source with us? I'm genuinely asking because from the consensus forecasts net borrowings is projected to decrease by 0.6% in 2019 and by another 6.6% in 2020."

Yes, £12.8B net debt - it's based on the TTM projection for the current year.

It's behind a paywall, so unless you want to fork out a couple of hundred in subscrption fees it won't let you in.
I wonder - does anyone out there have a subsciption to "Sharepad"? I'd be interested what they're showing as the current projection for net debt this trading year ending September.

I've always found it generally turns out to be in the ball park area of near enough to be reliable. So a little bit above or a little bit below can be expected when the results are published (in early November is it?).

Where are your forecasts from? Are they TTM or based on before the interims were out? Whatever, going to mark my calendar to come back here (planning on having a beak from here soon) in Nov once the results are known just to compare notes on this as IMB can be very confusing - as brokers forecasts deduct income from duty on cigarettes, which can often be approximately half of their revenue.

The reason they do this is that duty is directly payable to the tax authority, and therefore has no chance of ending up on the bottom line. Due to regulatory accounting rules though, the same adjustment isn't made in the annual historcal reports.

I've spoken to my people on this and they're working on making it easier to navigate, as I find the forecasts for IMB practically unintelligble compared to what I'm used to.