Member Info for Velo

Monkeyjack @ " Velo I would be very interested in hearing your strategy on a falling share gla regards jack "
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Okay Jack; it's really quite straightforward, it's not rocket science.
Averaging down, then selling when it rises - that's it.

First you have to decide what it is you want to achieve. In my case it's achieving an overall lower buying price average in a hopeless situation, then any little rise makes it easier to sell up with not the same amount of huge loss.

You start back in the day with say 1,000 shares @ £5 per share for say £5k's worth of stock but years later the SP has fallen steadily to 90p and is now valued at only £900.

No good telling yourself you should have sold far sooner, the damage is done. What you gonna do?

In my case I like to buy the exact same amount in shares - so I buy 1,000 shares @ 90p for £900.

Now my account is showing 2,000 shares with an original cost of £5,900. So the average price paid has now dropped instantly from £5 per share to £2.95

As the current price is 90p you can either wait until the SP rises to £2.95, sell the lot and escape (unlikely) or sell as soon as the price rises enough to cover commission and spread costs and sell only the 1,000 shares, leaving the account with 1,000 shares valued at the new SP that has risen to say, 95p valuing your holding at now £950, but still with the huge red loss showing. The loss doesn't go away.

You could go on to do it a second time or more as I have reducing the average each time, even if you buy a bit higher, so long as it keeps rising again (unlikely)
- mostly to date I've done each stock concerned only twice each. So should the SP fall to say 80p you do the same again. And down goes the average SP.

If the price instead keeps on dropping then you become a victim of the "Catch a falling knife" syndrome - throwing money away - that is warned about in every investment book ever written. Dangerous.

I've been fortunate. Or lucky?

The catch is this: You first have to be very good at identifying floors and breakouts otherwise how are you to know the SP has ceased falling? And how are you to know it's now in a confirmed uptrend?

I use a variety of charting tools "to try" and reach those conclusions (another subject entirely) and it always carries risk.

In my case I've brought one stock down from £2-odd to 136p and another held in two accounts from 260p odd to 160 odd, with the other account in the same stock reduced from £2.20 odd to 126p I intend reducing them all further - and both with the original qty of shares, not any more or any less.

I sold mostly within days after each rise, and in all but one case the SP retreated just after I sold the latest new tranche. By multiplying the amount of shares by the new lowered average, the full amount of my original old investment is revealed.
(The red loss always sits there staring right back at you).

But of cour

( Continues > > > )

M/Jack - busy now but will reply, but maybe tonight or on the weekend.

In the meantime by Googling: Catching a falling knife - you'll get half the gist of my reply.

( Concludes > > > )

. . . I wouldn't be surprised to learn that none of the cost of the BT shares has come out of his own personal pocket but is being financed by merchant banks. If he's doing what I've being doing last year and just last month too - then by using BT's shares (a small portion only) to sell and buy back - he's paying the merchant bank fees - for free.

Call it catch a falling knife, but if you're curious to how I've done it several times in other stocks, what I'm proposing Drahi may or might be doing similar or has done, I can reveal all in a separate post (if you request it)
- but catching a falling knife (succesfuly so far) should be enough to inform you how I retain the exact same amount of shares I started out with yet pocketed a little profit on each occasion and the true purpose of the trades - lowered my buying-in price average by a pound per share.

When I say don't rule out Drahi selling, you infer the entire holding - whilst I am implying maybe only 2% of his 12% holding traded back and forth in downtrends - just to pay his fees so he encounters no personal expense to his financial backers fees.

Just musings to show he doesn't think like us amateur PI's hugging shares to our chests, whilst posting as we are prone to do: 'no one's having my shares on the cheap'.

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PS. I will conclude with the threar trowards BT that one of Drahi's minions who headed up one of Drahi's subsidary companies issued at the height of the 'Openreach up for sale' media witch hunt.

The company leading the approach failed to persuade the sale of Openreach but concluded to the media with this:

" We will get Openreach, the only question is: you can do it the easy way or the hard way".

After that nothing; then flash bang wallop several months later - and that minion's boss suddenly acquires 12% of BT stock.

" What does he hope to achieve by selling some stock that he worked so hard to accumulate on the quiet. "

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This post is too long, bet I regret it :)

Larry, Larry, mate - You're more open-minded than that; you're displaying how the ordinary man in the street thinks.

- These are the super-wealthy rich, we're talking about here (£13b Drahi is worth) The reports of Amazon, Facebook bosses and other super-rich bosses wealth going up billions this year alone yet paying less tax than the average US citizen are not fake news items. (Read the 1990's classic; Rich Dad, Poor Dad).

I've operated how he might sell to gain more in my own investing in the past few months elsewhere (and I'll explain how I do it - from the kitchen table in a moment) - if an amateur like me can do it, how much is it worth to the Drahi's of the world?

Take DT for instance and their 12% shareholding. When interviewed by the media how they felt about their £5 shares now worth less than half their value their spokesman replied:
- We're delighted and very happy with our holding.

That's how people come to post your sentence above. You believe it.
But it's what the spokesman said next that went unnoticed in the wider media, but I ran with it here years ago, in a couple of posts.
He closed with:
"We couldn't be happier with our holding in BT, and we've transferred all the BT holdings to a hedge fund for safe keeping."

LOL! A hedge fund. Blackstone I think, not Blackrock.

Not an investment bank mind - but a hedge fund.
What do you think hedge funds do for a living? Don't make me explain as I credit people more gumption than that, despite that assertion sentence I've pasted-in at the very top.

I'm currently tracking that Jim Mellon billionaire mentioned below. He has billions in wealth beyond dreams of avarice yet I'm taken aback that in all the successful companies and chains he sets up of how little of his own wealth is risked in those ventures. He invites venture capitalists and general investors to stump up the majority of the money - at little risk to himself - yet everyone talks of this guy with the same business esteem as they do Drahi.

Drahi's company came under duress the other year collapsing some 50% in value because the market couldn't believe he could handle the extreme debt he had incurred in acquiring those businesses. Obviously he survived without being out of pocket.

2 merchant banks came forward to disown Drahi claim by confessing it was they who had each purchased BT stock on Drahi's behalf commencing back in March 2021 to get round market regulations, then in the final two weeks transferred all the shares into his name - for a fee. Drahi then said I've just bought 12% of BT shares - (which was true but not in the stock market; but privately).

I wouldn't be surprised to learn that none of the cost of the BT shares has come out of his own personal pocket but is

( Continues > > > )

Fleccy, there's a misconception at the heart of your calcs. You've taken £446m net profit as if it was this year's net profit before the one-off tax charge.

It's not - it's LAST YEAR'S net profit!

Neither you, I, or anyone else knows what this year's net profit would have been, had the one-off tax charge never existed - but whatever it is, it was less than last years net profit.

Why?
Because this year's PRE-TAX profit is less than last year - so by extension the net profit was looking more likely to be less than Q1 2020 for starters. The RNS is stating it is £446m down against last year, not that £446m is the exact net profit achieved this year.
Repeat: down £446m against last year.

It's impossible to calculate from the figures you've highlighted. There's regular corporation tax and VAT etc., but no mention of what this specific one-off nasty charge amount is.

All you can do is subtract one from the other and make a wild guess to allow for whatever the net profit would have been this year. You've used last year's net profit in your calc's, when it's likely to be less than that anyway, before you even start calculating.

We can agree to differ, (only time for one more post coming up; then I'm onto other chores) so fair enough and leave it there - but events are ready to move on from debating this anyway, as new forecasts will reset the slate, imminently.

Okay, following on from my posts last night; decision reached.
Based on my belief that this year's, full-year net profit is likely to be downgraded in the next Analysts update - with consequences in the market, I've decided against selling in order to buy back cheaper. Instead will continue with top-up's at low points. And only from then on, indulge in trading the SP.

That's because I've had plenty, plenty, of increasing notice that a downtrend is in play since late June. If I was of a mind to sell BT in order to buy back lower the time to sell was then, or quite near after it. It was clear, but I wasn't interested. Trends have gotten worse to the downside, so it's significant but not yet a deep event, with almost less further downside risk than has already occurred - IMO.

The downtrend is without doubt due to big holders selling. That's unarguable. I can copy/paste of one billionaire (Jim Mellon) promoting BT (£1 area) then later in this July advocating selling BT as he sees better opportunities elsewhere other than BT. It's people like him selling.

It's not MM's, it's not shorters. It's not hedge funds or conspiracy groups, it's actual selling by those adjusting their position. That's all a trend is. Big holders moving the market. Not us PI's who are no more than a flea on an elephant's bum by comparison, generally we don't move the market unless it's a directed event like the Gamestop fiasco.

Will await the mood and direction of the imminent analysts update; if not out this weekend, then it's defo out next weekend. Whatever, I believe it will impact the SP one way or an another - short term.

Had a good think on matters whilst I slept overnight and have come to a decision. (holding on) and make money the opposite route. Will post later on.

Fleccy, it's never quite as straightforward as that. I like to see it mentioned specifically in trading reports as their are bits that you only ever discover impact things that only ever later turn up in the year end footnotes.

"I bet the mms still open share price lower.
Is it the frenchman ? "
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The reason the Frenchman has outwitted not only the market regulators but the entire market too, taking all by surprise is that he doesn't follow herd thinking.

Why rule out that a steady drop in the SP is usually the sign of a big holder/s reducing their position?

Could he be selling a couple of % of his holding? With the intention of buying back more stock cheaper through his intermediaries like he has done thus far and thus evade the market regulators inspection?

Why is everyone assuming he will only ever want to buy?

Okay, following on - here's the reasoning that's leading me to try something tomorrow:
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Question:
1) What is the net profit the analysts said to expect for this full year in their 16th July latest update?
2) And if they are accurate to say within 10% of that, what will they now likely publish as the new forecast for net profit after losing the entire Q1 net profits?

Ans 1)
The latest to hand analysts forecast for annual net profit for this year is given as circa £1.639bn
(£1.472bn achieved last year).

Ans 2)
Q1 analysts forecast was for circa £392m to help achieve that, but we now know that's been flushed down the toilet and BT achieved not £392m but only £2m for Q1.

- Therefore there is a shortfall of £390m to achieving that forecast of £1.639bn in net profits.
I'm guessing the analysts now only have 3 quarters to achieve that, so will decide with only £2m to show for Q1 that they will be forced to reduce by £390 down to circa a shockingly low of somewhere in the region of £1.249bn net profit.

If they don't, then it's too complicated for me and there's more to this tax charge than meets the eye.

Did Jansen say despite the £2m Q1 net profit, he still intends meeting market guidelines? ie., £ 1.639bn net profit?
Don't recall him advising to expect less.

I'm going to sleep on things but might try selling my shares tomorrow to lock in the profits, in the expectation the analysts will drop the full year net profit alarmingly, and thus a dim view taken by the market and I can buy back much cheaper.

And if there's more to this than I've understood and the new update is fine there's no harm buying back in anyway, as anywhere below £2 is still good value.

(Hope there isn't anyone out there, thinking of copying me; this is for forum board interest only - not advice!)

Good questions Whetherboy. We can only speculate.

" Why was the charge only in Q1 or . . . "
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- First thoughts that come to mind are that the rush to push it ALL through in Q1 was because the company had mishandled the payment from the previous year and the taxman was issuing deadlines. I just can't accept that the tax authorities would purposely ruin a company's finances by demanding payment RIGHT NOW. They are very generous in tax issues with commercial enterprises, allowing them to claim virtually everything to be offset against tax demands, and give generous repayment dates, but . . . -

" . . . or will all quarters be as bad? "
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- Well they issued that time-worn old hand-me-down of "this is a one-off event and won't be repeated" but you'll hear that every year in a variety of stocks.
Can't say if all quarters will be "bad" until we know what the actual Q1 net profit was before the new tax charge.
BT have declined to state it - but leave you to fumble about with pre-tax profit etc, never ever stating the exact tax charge either; deliberately in my view.

Even the media are citing LAST YEAR'S net profit of down from £446m to just £2m - despite market expectations being much less at circa £390m anyway!

It would be an ace way to cover up a nasty start to the year - and escape criticism. The media et al are taking the line that a huge £440m+ charge has been deducted from BT's net profit, but what if the tax charge was say half that at only £199m yet the management only produced a derisory £201m net profit?
That would leave just £2m net profit also. (The've come in twice with lowly quarters like that in the past 2 years).
No fraud has been committed but maybe the charge wasn't that huge, but is being used to cover up a poor Q1 start to the year?
I was immediately suspicious when Jansen opened with how good, how great EBITDA was.
Warren Buffet despises CEO's who use EBITDA to impress. He maintains good companies never mention EBITDA in their opening statements when profits are good. He regards it as akin to booking profits in twice!

I'm keenly awaiting the imminent new Q2 consensus update to see how the analysts interpret this.

Will follow this up with a second post. I'll expand further in that in a moment or two. I think I now know what the analysts are going to publish tomorrow for net profit for this year.

Question:
What is the net profit the analysts said to expect for this full year in their 16th July latest update?
And if they are accurate to say within 10% of that, what will they now likely publish as the new forecast for net profit after losing the entire Q1 net profits entirely for good?

I will post on that - and what I'm going to take a chance on in the market tomorrow before they publish their update.

Thanks Whethboy, posting this has helped me think things through

Error:

"...never mind me committing to an experiment commencing at July's end"

Should have been from June's end.

"I would very much appreciate Velo's analyses taking into account the Q4 report"
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Despite warnings of months and months of Rhodium pricing decline - the results were unexpected to be so severe.
Sentiment is bearish, so it's adversely affected the SP unduly.

When the full year results are revealed in 5 or 6 weeks time, I expect to see a decent revenue gain and a decent net profit gain - both well above that achieved over last year. Yet because of SLP failing to achieve market guidance forecasts, I expect the same behaviour in September as it occurs temporarily every September - a slight downturn by September's month end.
However, I expect the bearish sentiment to be short-lived and the gain over the previous year to be re-evaluated after Sept/Oct.

If you examine all the results from the past 5 or 6 years, no one is interested in what the market analysts estimates were - only the magnificent results achieved
- and that's what I'm expecting, given time, to occur again.

Last year, the media pulled a face that forecasts were not met. But who now recalls that? What you will see is a magnificent gain nonetheless. - recap:

Revenue:
2016 - . $39.5m
2017 - . $50.5m
2018 - . $62.8m
2019 - . $70.5m
2020 - $114.1m
2021 - ? ? ?

If you ignored the para with the media lamenting the failure to achieve market guidance, would you be able to pinpoint it from the results achieved above?
That's why I believe, given time, the full results, if received badly by the market, will not endure.

Maybe you could pinpoint the poor performance to guidance from the net profits below then? Here -

Net Profit:
2016 - . $3.73m
2017 - . $8.87m
2018 - $11.0m
2019 - $18.2m
2020 - $41.0m
2021 - ? ? ?

=========

The current trends as I see them are:
SLP Currently -

Ultra Long term trend . . . . = Bullish
Long term trends . . . . . . . . = Bullish

200 day ma trending . . = Bullish
(Enters screen at bottom left and exits, still rising at the top right of the screen)

Price to 200 day ma trend .= BEARISH!

Medium term trend . . . . . .= BEARISH!
Intermediate trend . . . . . . = BEARISH!
Short term trend . . . . . . . . = BEARISH!
Ultra-short term trend . . . .= BEARISH!

Probably the worst performing table of trends for SLP that I've ever posted.

( Concludes > > > )

. . . Updated the tables and the current expected gains to the year-end are looking decidedly modest but acceptable. The cyclical stats wilted in July and at the last hour have wilted for August too!

And yet 80% is now the stated confidence preference, down from 100% !
So sticking with the strategy to see this experiment through to the year-end (long term investment in SLP is held elsewhere (the experiment includes the placebo stocks of JLP and THS which have also been affected by the downturn).

So, all in all, this downtrend has come at a bad time for my experiment, despite my occasional chirping on, about an expected mean reversion to the 200 average for just about a year now - and here it is!

" How do you now see August playing out? "

- My answer is not to let personal opinion intervene (trends are quite nasty at the moment) but stick to the new experiment strategy, which is currently down to (unusual for August) of only 80% certainty of a gain - and not the blow-your-socks-off variety either - just for August to close higher than it opened. A close lower for August would be seriously significant - it has been the driving force month for 5 years.

Separately to this strategy and trends - I am of the opinion that the final months of this year will experience a positive outcome that will continue into 2022 - but also yet another pullback yet again, likely before summer ends or maybe later on, but still ending with a general market uplift by year end (don't wish to reveal how I come to that conclusion; but if events transpire to that outcome and I'm asked, will probably reveal it).

If this is only a mean reversion to the 200 day average curtsey of Rhodium decline etc., et al, then the SP should not travel very far from the ever rising 200 day trend, and with hindsight I firmly expect this area to become regarded as a buying opportunity.

Next post is a point about the impact of the Q4 results in the next post and at the foot of that post a table of how I see the SP trending current positions.

Nonegspleeze @
" Velo - 10 days ago you were confident we'd close July higher than we opened.
Q4 report containing higher AISC with lower production has put paid to that.
How do you now see August playing out? "
&
Ecosselibre @
"I would very much appreciate Velo's analyses taking into account the Q4 report"

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Back home and free at last :)

" 10 days ago you were confident we'd close July higher than we opened..."

Ha! :) 10 days ago nothing LOL! I've been on about it since the beginning of the year :)
- Particularity August as for the past 5 years it's been at the heart of propelling the SP forward. Jan and Feb are the other half of that propellant and they duly delivered at the beginning of the year. However, this downtrend (deliberately not focussed on to allow myself no excuses to commit fully to these cyclical stats) was given added strength for that rare occurrence - a poor Q4 trading update, which destroyed July's expected outcome. It looked like July would come good in the final week, had it not come up against the brick wall of a dismal Q4 reveal.

That's what's different this year to all others since 2016. It had shown a 100% confidence rating all year, then at the 11th hour, reduced that certainty to 80% and also reduced the expected probable gain from some 12%+ down to 7%+ gain. That meant the opposite bet was a 20% chance of a close lower than which the month opened at.

Which would a professional take? An offer based on stats of an 80% certainty of result A, or an equal bet of outcome B with only a 20% chance of success?

It's been my misfortune to take the 80% bet during a mean reversion to the main 200 day average.

80% or 20%?

Who'd have thought it - 20% held sway - due to the bear trend during a mean reversion condition.

More worryingly, August was rerated by close of Monday, Augusts' first trading day, down from 100% certainty to also 80% re-introducing the prospect of a 20% chance that Aug closes down on what it opened at. Worse than that - the 23%+ gain for Aug, knock-you-socks-off promise I've been blabbing about has been reduced down to 17.5% gain - this is how July started curling down at the corners. I'm concerned, no doubt about it. Should August go on to fail what it's done for the past 5 years solid - that would be a major change in characteristics of the SP in the almost predictable behaviour exhibited since 2016 to this June.

In all this, my Trend Following preference has sung the truth non-stop, and is still bearish and screaming at me not to invest just yet, never mind me committing to an experiment commencing at July's end.

Updated the tables and the current expected gains to the year-end are looking decidedly modest, but acceptable. The cyclical stats wilted in July and at the last hour had

( Continues > > > )

" Is the net profit drop not down to the spectrum auction spectrum?"
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Think that would be allowed to be amoritised over several years under ammoritisation and depreciation and the full cost reclaimed against tax duties over many years as that's an operational cost
- besides BT and media reports say it's because of a new corporation tax change in the following explanation (why wasn't the market warned in advance instead of being shockingly hit in the face on the trading update day?):

"... Meanwhile, reported net profit after tax tumbled to just GBP2 million, down from GBP446 million in the corresponding period a year earlier, due to ‘a one-off tax charge in the quarter to reflect the remeasurement of deferred tax balances following the enactment of the new UK corporation tax rate of 25% from April 2023'..."

Unbelivable!
???
Err.... Unbelievable!

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- It's difficult to spell accurately when there's spittle and ranting flying about.

Will be surprised it there ISN'T an analysts consensus forecast update this weekend. Hoping to have time this time round to see that one! Can't believe the Q1 net profit has been flushed down the pan!

Net profit only £2m, Yer wot? WTF !?! . . Eh? . . . WTF?

- down £446m? In Q1 alone!!! Geezalou!

What one-off, accountancy-change tax charge? Where was the RNS in advance warning of this? (Did I miss it?)

Even the analysts (ie., the market) have been blindsided as the last analysts forecast update was for net profit to be just under £400m at circa £390m - yet BT deliver just £2m!

Did anyone see ANY statement, in advance by the CEO, advising or issuing guidance that Q1 will be down the pan this year - and by extension now the whole friggin' year too?

As there's no replacing that!
All I read from Jansen is that it's going to be great etc., great! Never read any advance mention of it, that the £400m net profit expected for Q1 - would now, not-be, as a tax-change accounting charge is being levied this year.

That's 3 times Jansen has been talking lottery-like expectations only for the exact opposite to occur. Not impressed. He's not a man who likes to 'fess up' to bad tidings, in my book.

Want to see in the next analysts update if a now huge jump exists between this year and next year, as should be the case if it's a non-repeatable one-off accountancy charge.

Still have high hopes for a positive close in the final months of this year; trying to see if there's one more big pullback before then, or if this is the last of the year
(I suspect one more before the positive months at the year end, leading into further positive performance next year.)
Which would mean personally, I have until September to top-up on the 'cheap'.

First, want to see if the analysts (will they be in 'angry'mode?) first Q2 update extends this misery (short term) as it shouldn't - it should show a decent Y-O-Y growth for 22/23 year, against this year.

But will the mess-up in the accounts continue; after all, it's only supposed to be a one-off?

The market via the SP, is unimpressed with Jansen's lack of clarity.

PS.
Long term trends all the way down to medium term are all still very, very, bullish.

However, everything from intermediate down to short term trends are seriously bearish.

Whatever - the predominant trend rules over all.
- And the predominant trend is always whatever the long term trend is.

So it's confirmed, this bull trend is alive and still in game-on mode!

Hi Nonegspleeze & Ecosselibre,

As previously posted, I'm tied up elsewhere until at least midweek-ish next week.

On course for posting later next week, once back home  (so hopefully will reply then :)

Error!

I said 113 was my preference close for today. Made an error, it had been a long day and it was approaching midnight. Meant 112.

Only a 1p but it's more a 111/112 penny than a 112/113 penny :)

Typo's!

" If bullish holders are convinced of another replication of Tuesday, then there's plenty of support for them...."

Wednesday, not Tuesday!

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And,

" WHAT VIEWS HAVE YOU FORMED FOR TOMORROW, THURSDAY 23rd? "

Tsk! the 22nd!!!