The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Broker update was positive as would be expected with another set of results that overachieved.
On the share price, there is a feeling the market over estimates the costs and doesn't appreciate the capex flexibility.
The view is that a rerate will come as the track record of good results is extended. A continuation of Max's investor presentations should help.
In a pretty awful market, I am thankful for the stability of this investment in my portfolio.
That was a response to my question.
I replied and pointed out that this was price sensitive information, so I disagree with their logic.
I also pointed out the decline in shareholder value over the last year even though the board who have not covered themselves in glory received fat bonuses.
No reply as expected.
Please indulge me with a short diversion into global politics.
A couple of weeks ago news was coming out of US that the Neocons who encouraged the Ukraine war, were becoming nervous. It was going at all to plan and Russia was still in a strong position.
The had discussions direct with Russian diplomats to see if a mutual settlement was possible. It transpires UKR membership of NATO was a red line as it always was.
The neocons put out a message that UKR should not be given membership.
The subsequent NATO conference confirmed no membership until after conflict ended.
This week Biden admin putting out mixed messages, but one that encourages settlement.
What's this got to do with SRC ? The prospect of a settlement appears to have a positive impact on SRC share price.
And why wouldn't it with BlackRock as a large shareholder and having a contract to rebuild Ukraine. I don't necessarily agree with the ethics here, but that's how it works these days.
That's just my opinion.
Thank you for your support of EKF as a shareholder.
The Board judged that it was not necessary or appropriate to announce Mike’s departure via RNS given that he was no longer a director, and that we have continuing access to his knowledge and expertise through a consultancy agreement.
Instead they intend to note Mike’s departure as part of our next significant announcement. Their judgement on this will have been backed by appropriate professional advice.
I am sorry that you feel the Board’s judgement in this matter is not correct.
Thank you again for your support of EKF.
I will be watching very carefully.
I suspect the technology will be sold to someone in the industry very cheaply.
The must think we're fools.
Yes, sounds like he has a grudge if he has posted prior to the official announcement.
It's a case of watch this space.!
I can see no announcements on this ?
New US website
ekfusa.com
The purchase of own shares continues. As it progresses not only does it reduce shares in issue, it also increases the percentage of shares held by affiliates.
They are heading for a situation, where they are in control of the company and future direction, such as alternative or additional listing.
Interestingly it was the CFO who interjected when the chairman was asked if he was staying on as CEO. He said something like "that's a very good question"
That was not usual , in front an audience of shareholders.
Perhaps there was some dissatisfaction brewing then.
The need to fill both positions quickly.!
Thanks Silver. Good to know it's factual. You never know these days.
I am not surprised BlackRock are heading their bets. Fink is is deeply involved in the WEF and their agenda in respect of Ukraine is probably fluid.
I have hear rumours, that I am not able to verify that BlackRock have negotiated an agreement to manage the reconstruction of Ukraine when the hostilities cease.
If this is true, my supposition is that SRC may well benefit significantly on any such activity.
I am not encouraging anyone to act on this information, but just to be aware of something that may evolve and be verified.
Silver, I agree. The last year and a half has been a case study in BoD ineptitude.
It all started with buy back of share to buy what we know now was a dud. The pricing of the buy back was well below market value sending a message to the market that EKF did not value their stock as high as the market did and the downward correction happened as most predicted.
From then on we saw a number of gaffs in execution, that see the share price where it is today.
Today's chairman's statement lacked any inspiration.
If he can't summon up any enthusiasm, the little wonder the markets marked it down again.
I was on the call when Baines was asked about taking the CEO job. His CFO jumped in and said we would all like to know that.
Baines' response was pretty much no fekin way.
He might at least have said something like, I am staying in control until we steer through this phase of development and until a suitable CEO can be found.
Just writing this now, makes me think Baines needs to get a feel for investor sentiment. I will write to him.
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Further to my previous update from the company.
They are also pursuing further analyst coverage.
Numis have now issued a buy recommendation with target of 95p. Not as optimistic as the existing analyst, but I am sure we would all settle for that.
I have the note and can share if anyone's interested.
We know Pershing Sq have a stake in SRC and they are very careful about the resilience of the companies they invest in. I.e ability to withstand turbulence and long term growth prospects.
Having read the latest letter, I noted the following.
1. 26% of public shares are held by Pershing affiliates
2. As of 30.04 11.1% shares are held in treasury and increasing. Pershing state they will continue buying as long as the discount to NAV persists.
3. Pershing SPARC Holdings looks interesting. It is an acquisition vehicle, where you chose to invest at the point when there is total transparency of the transaction. This is now waiting final SEC approval.
4. A US listing whilst retaining the existing London listing is being sought. The vehicle would be an acquisition.
I see Pershing as somewhat of a safe haven in the current uncertain macro economic climate, especially the risk of a deteriorating banking crisis.
I got a very detailed response from Max Vermoken to my question on shareholder value decline.
It seems this is on their radar as something that needs attention.
I will summarise below.
Three major funds (top 5 holders of SRC) ceased to be investors as they shut their funds and liquidated all stock.
A further fund in top 5 sold out to avoid exposure to UK housing, even thought that sector is only 7% of SRC group turnover.
On the back of this there was other selling. This was no doubt compounded by nervousness in the markets over the macro economic climate.
How to resolve was discussed by the board and strategy agreed
1. Deliver good results and ensure our communications for Full Year Numbers was high quality. We worked endlessly with our brokers to deliver this
2. Get on the front foot strategically by executing on a series of transactions which further enhance earnings in order to give potential shareholders both the certainty of further expansion and also a reason not to stay passive: buy the shares today and take part in the uplift of this activity
3. Focus on new non-holders both in the UK and in Europe through roadshows and meetings.
On top of the above we are currently looking at IHT funds which might have to sell their Breedon holding as they move to the main market. If we can convince them to invest in our stock, we should through that stimulate further buying.
Personally I am reassured that they are trying to address the matter.
There is also an offer of a phone call to discuss. If a number of people on this forum wanted this, it may be worth arranging.
Agree that BlackRock is not responsible for current share price. My comment is more general and related to my distrust of that organisation.
On the point of funding acquisitions, this was a question raised at the institutional investor call.
The CFO said plainly that there would be no need for further funding and that the 5yr acquisition plan was self funding going forward.
I have also been burnt on aim due to dilution due to such funding.
My view is that due to their good cash generation, that they won't need further funding. Just my personal opinion.
I have emailed SRC IR on the question of shareholder value as was suggested on the call. I await the reply with interest.
BlackRock investment is seldom good. They always have alternative agendas.
I was hoping Pershing would up their stake, but I guess as activist investors this may not be welcome, at least at this point in time.
I am happy to hold, but unfortunately at a paper loss for now.