Member Info for Wigwammer

Och-Ziff.... now there’s a company that knows what it’s doing :)

https://www.google.co.uk/amp/s/www.bloomberg.com/amp/news/articles/2018-11-27/och-ziff-s-shares-stumble-toward-nyse-delisting-territory-at-1

I know that the GBP FX rate is lower now than it was even a few weeks back. So whatever random path it follows from here it is starting from a lower base. Hence the point - the upfront cost now is lower as a result of lower GBP. And I wouldn’t make guessing “growth” and “ex growth” industries your first port of call when deciding between investments. Punters are about as good at guessing that as they are predicting the FX rate. What we do know with INTU is that the price is far lower than it was, the assets are nigh on impossible to replicate, and that physical retail will still have a substantial role to play in the larger economy of 5-10 years time.

Zcax - some truth to your currency point, but the lower purchase price is upfront, the impact on cash flows will be spread over years. The terms “binary option”, “value trap”, management not to be trusted etc - all a bit rhetorical and emotive for me. ATB :)

It appears the bears agree that a “£17m evaporation” actually translates into flat sequential income half on half (it was actually one of the bears that pointed to the £17m figure in the first place). What management actually said with regard to raising equity was “that’s the last thing we’ll come to”. They have not broken any covenants, they have a reasonable cushion before they do, the initial covenant breaches are not expensive, they have a high level of liquidity, they own prime assets at a time when the currency has weakened, making them even cheaper to international investors. 0.16x p:tbv. “Ignore at your peril” if you think this is an easy short sub 40p :)

"We anticipate full year like-for-like net rental income to be down by a similar amount to that seen in the first half of 2019"

I read into that precisely what it suggests. That 2h19 income will be down around £17m on 2h18, which implies a flat sequential movement between 1h19 and 2h19. So do you agree that your “£17m evaporation” actually suggests no sequential deterioration between the two halves? Hard to see how it doesn’t.

Sain - I’m not sure anyone needs reminding of what is happening on the high street, we can all see it in the numbers provided by the company. That is the easy part. The difficult part is working out how far through the process we are, how well prepared the co is to whether the storm, and whether 0.16x price:tangible book is an appropriate valuation at this stage. So am I right in thinking the expected £17.1m evaporation you highlight in H2 actually implies flat sequential movement in income in H2 vs H1?

With respect sain, these points are little more than repetition of what you said before. So to repeat my points - We have have to see another seismic movement down in prime assets prices of 15% before we breach - similar to the seismic shift seen already. Covering the cost of such an initial breach is well within the companies liquidity capacity. Of course, we can all paint a picture of “evaporation” and “racing toward” Armageddon if we want to, but at sub 0.2x book my guess is the market is already pricing in a lot of fear. Your point that £17.1m “evaporates” in H2 isn’t very clear. Perhaps you mean income compared to H218. If so, that implies no sequential reduction against H1. Right?

I’m not sure how it shows that. It shows that if rental income drops a further 10% from here then an amount of capital will be owed which is negligible in the context of their liquidity position. It also shows that a further 15% fall in capital value is required from the recent valuation (comparable to the fall already seen from peak that has got the market talking Armageddon) before we see a covenant breach - again, the amount is pretty easily absorbed by their liquidity position. In the meantime, they anticipate no further sequential fall in rental payments into H2. Lost amongst the noise that Debenhams, Arcadia, HoF are having difficulty, is that other more relevant retail concepts are taking their place - Apple, Mango, Uniqlo, etc etc. If you are an ambitious global retail outfit and you want exposure to the U.K. - intu are a first port of call - that isn’t going to change for a long time :)

They haven’t conveniently ignored rental income. - “the majority of the interest cover covenants have substantial headroom. A 10 per cent fall in income, would create a covenant shortfall of GBP26 million”

Not sure I understand the alarmist sentiment. Beyond the shares crashing and management trying to respond sensitively to the sentiment, I can’t see how a 50% fall is justified. They haven’t breached any covenants, there is a decent cushion before they breach any covenants, the covenants are written such that in the event covenants are breached the initial cash requirements will be small, they have a high liquidity position, in the event they have to sell things they own prime assets with enduring and rare value. “Covenant headroom on both loan to value and interest cover:
- a 15 per cent fall in capital values, from the June 2019 valuations, equivalent to a peak to trough fall of 33 per cent, would create a covenant shortfall of GBP83 million
- at this 15 per cent fall in capital values, none of our investment grade bonds, secured on our flagship assets (around GBP4.7 billion of asset base), would reach their covenant limits
- the majority of the interest cover covenants have substantial headroom. A 10 per cent fall in income, would create a covenant shortfall of GBP26 million”.

Timeframe? Lanstead own 19% of IMM. In the event the shares fall to zero then all the capital they pay in will be worthless. That’s just the way it is :)

Let me know the risk to Lanstead if you can find one? If the shares fall to zero then all the cash they have invested up to that date becomes worthless. Hope that helps :)

Good post PVX.. I too have ignored the advice of the cynics and profited here as a result. A few points 1) the most disgruntled are those who have repeatedly told us they are selling all the way up - each of those sells was a mistake and they are peeved about it 2) the level of dilution of the new convertibles is roughly the same as the old - around 28%. Given the potential rerate here runs into many multiples of the current market cap - it has been and continues to be an odd judgement to be distracted by the 28%. 3) if the maturity extension tells us anything about current free cash generation, it is clear the market doesn’t care. And perhaps rightly so. The value of an equity is determined by its cash generation into perpetuity, not over the next 12-18 months, and a wide variety of positives are reinforcing the medium-long term story = successful commissioning of pog, irc recovery, debt extension, rising pog, the vast quantity of resource that requires pox processing etc.. ATB :)

Rising nicely, as predicted. For the pessimists and the cynics who have reduced their position with each increment in the price - the market is trying to show you the door. ATB :)

The weakness continues. Strange. POS has become my largest position. If you can see beyond the recent pull back, and trust the fundamentals as described by management, then this looks like a great opportunity. Or perhaps it?s darkest before pitch black! Good luck, if there is anyone else out there :)

POS LN. Odd share movement. £27m tangible equity, possible further £27m coming in from technip, low cash burn at circa £4m pa, tech commercially endorsed by a tier 1 services provider, a landmark deal signed with gazprom, tendering for the largest deals in its history on the gas production side, a willingness to pay excess cash back to shareholders, a sub £50m market cap. Ho hum :)

Surprised2 has spent a decent amount of time attempting to deramp RENE. He has the subtlety and artistry of a brick, though I’m sure this point comes as a surprise to him. He spent much time siding with purp and all that nonsense near the lows. Be careful about being influenced or acting on anything he suggests. ATB :)

Did someone mention purpleackey? Jeez. How much did that guy cost investors by encouraging them to sell near the lows? Little wonder he doesn’t come here anymore or has changed his username. The only thing he is good at is protecting people from a profit. Clueless :)

PC01 - I agree the stroke trial is of great interest, but suspect the most likely driver of value going forward is now hrpc. The trial result so far has been both surprising and impressive - yes it is a small sample size, n=3, but it is difficult to see how a significant placebo effect could be expected. You cannot enable an eye with RP to function better simply by trying hard. At this level of valuation, only hrpc is required for this to be a very worthwhile place to be :)

I’m looking at the chart and I don’t see a major pull back. GLA :)