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Marben's Misc Bits

Monday, Apr 02 2012 by
19

Well, I've finally moved into the 21st century and have started tweeting @marben100 .

Seems like a great medium for exchanging brief investment notes. However, it's not so good where things need more explanation or tweets need to be discussed... So, I've created this thread as a place to post more detail that doesn't conveniently fit into another thread - e.g. economic/political topics and brief posts on non UK companies that S'pedia can't yet support.

If anyone wants to discuss my tweets,or ask questions about them, this would be a good place to do so.


Filed Under: Investment Strategies,

Disclaimer:  

The author may hold shares in this company, all opinions are his own and you should check any statements that appear factual and not rely on them before making an investment decision. The author is NOT a qualified analyst nor authorised to give investment advice. Whilst the author is a director of ShareSoc, all views expressed are entirely his own and not necessarily those of ShareSoc.


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155 Posts on this Thread show/hide all

nigelpm 2nd Nov '12 117 of 155

Well done on HFD Mark! I was very downbeat on them (still am longer term) but you made a nice turn.

What else are you buying/holding ATM if you don't mind disclosing?

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marben100 2nd Nov '12 118 of 155
3

Thanks nigelpm. Suggest following me on @marben100, if you want to know ! I generally post day-to-day buy/sells there. Have bought lots of ICAP (LON:IAP) and AstraZeneca (LON:AZN) lately, within my "high yield" subportfolio.

Continuing a Twitter thread with Stemis3 re Signet Global Fixed Income Strategies (LON:SIGG) ...

Me:

$SIGG.L final NAV for SEPTEMBER published: 91.07p. => 37% discount or 58% upside on full realisation.



Stemis3:


@marben100 Yes but only 37% = 34p per share can be realised with any time frame. Share price = 57p

Me:

But just because a time-frame can't be put on the rest with any certainty doesn't mean it can't/won't be realised. ;0)

 

From their last update:

 

The remaining 63% consists of assets held through 27 funds, 3 of which are side pockets, where their expected realisation cannot be precisely estimated. All the investments are in wind-down. 

Given that they're all in wind down, and assuming that NAV is conservatively estimated (generally the case, in such situations), whilst the process might drag on a bit, I don't expect the wind down will take forever. As the situation clarifies, SIGG should be abe to add assets to the realisation table and the ultimate NAV should become more certain. Risk/reward looks pretty good to me but, as ever, the market hates uncertainty, so is discounting the shares heavily (plus short-term traders not prepared to wait).

It may pay to wait, but who knows? Clearly the SP could move upwards sharply on announcements of significant realisations and subsequent tenders.

Happy to add even more at higher discounts to NAV.

Cheers,

Mark

PS a 58% gain over a 2-3 year timeframe (a significant proportion of which will be realised sooner) will do me nicely. ;0)

 

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SteMiS 2nd Nov '12 119 of 155
2

Hi Mark,
My concern is how long it will take to realise and at what discount. Visibility of the investments is very low. Not really sure what they are or even how they are valued (bearing in mind there is no market in a lot of them, clearly). What if the 37% realisable takes a 10% discount and the balance 30%. Say you get the 37% (less 10% haircut) back in one year and then the balance (less a 30% haircut) in a further 2 years. My model says IRR is about 10%. There must be easier ways of making 10% pa?
Do you have any evidence that the investments are conservatively valued? Or even that they will increase over next two years. Are there management/admin fees eating into the value?

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snickers 14th Nov '12 120 of 155
3

'Mark ‏@marben100 Been trimming $RCP.L - discount to my estimate of NAV now small, so being cautious. '
Last week it was a major core holding! The price is only up about 10p, and no RNSs!!


you're wielding big sums for small shavings.

you're doing highly geared bets under the guise of being a sober investor.

you're too much in love with your spreadsheet software and internet research.

.. nota

 

 

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MadDutch 14th Nov '12 121 of 155
2

It is a troll.

Ignore it, don't feed it.

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marben100 14th Nov '12 122 of 155
1

In reply to snickers, post #120

The price is only up about 10p, and no RNSs

Whilst the SP is up only slightly, markets are off substantially (and hence NAV is likely to be lower). Therefore, controlling risk makes sense. I would prefer to have a larger holding, but when Mr Market offers me a good price for these shares, I prefer to sit on cash for the time being.

Will be happy to reinvest, either when the general outlook looks more promising, or a bigger discount becomes available. Interim results to 30th September are due soon. Will review when they're released.

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marben100 19th Nov '12 123 of 155
1

Signet Global Fixed Income Strategies (LON:SIGG) released their IMS this a.m. SIGG is a "liquidation situation", offering a substantial uplift to the current SP on realisation of assets, but an uncertain realisation (and hence cash return) timetable. I have analysed the realisation timetable issued today compared with the one contained in the interims. I have adjusted the figures in the interim report to allow for the cash return made by way of tender offer in September:


Interims IMS



Nov 12% 6%
Dec 12% 7%
Jan 22% 15%
Feb 23% 15%
Mar 23% 15%
Apr 29% 27%
May 29% 27%
Jun 29% 27%
Jul 30% 34%
Aug 30% 36%

As can be seen, the anticipated timetable for near-term realisations through to next March has slipped, but more realisations are expected in July and August that year than were previously visible. If that timetable proves accurate, I'd expect a further tender offer (at a small discount to NAV, to allow for costs) next April/May and possibly another one towards the end of next year.

NAV has increased from 89.95p at the date of the interims to 91.07p as at end of September. The SP currently stands at around 57p.

I hold.

Cheers,

 

Mark

E&OE - as ever!

 

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marben100 21st Feb '13 124 of 155
6

@FangornForest1 has asked me about my comment that the market is perturbed by underperformance at Medusa Mining (LON:MML) .

Here is a table showing the trend of recent production forecasts by Medusa's management (in '000 oz p.a.):

  FY12 FY13 FY14
Nov-11 90-100 120 200
Feb-12 75 120 200
May-12 60-65 120 200
Sep-12 61a 100-120 200
Jan-13   80-90 200

 

Though I still have a modest holding, I think quite a few investors have "fallen in love" with the company and the above table shows that, frankly, recent performance has been woeful. FY12 actual prodution came in at only 60% of the original target and now FY13 forecasts are starting to drop too. Is it any surprise that the market is now sceptical of delivery on the 200koz target for 2014 (which posters on the ADVFN thread seem to assume is "in the bag")?

Another consequent factor is that, due to this underperformance (and heavy CAPEX), instead of generating cash, Medusa has been burning it. At the start of FY12, cash and bullion stood at US$100.7m. As at 31st Dec 2012, it had fallen to just US$15.7m. Is it any wonder investors are nervous?

 

Having said all that, it does look like production may have turned a corner (as would be expected from the CAPEX undertaken), rising to 18.2koz in the last quarter from 14.4koz in the previous quarter. Further increases are implied by the latest production forecasts.

Based on past experience, I think the heavy selloff in the last two days is mainly driven by steep falls in the gold price. The market for MML does seem to adopt a herd mentality and ignore the fact that Medusa's low operating costs make it much less heavily geared to the gold price than most other producers. I may take advantage of that and buy back some of the shares I sold at much higher prices, when I became concerned about management performance.

Mark

 

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marben100 11th Mar '13 125 of 155
2

Looks like John Craven & co. are back in business with Cove mk II - "Discover Exploration": http://www.ft.com/cms/s/0/d4cc6e4e-89a2-11e2-92a0-00144feabdc0.html

Also looks like he & his team might have pulled off quite a coup, securing 18,000km2 of Comoros acreage:

The 10-year deal covers a block of 18,000 sq km close to the gas discoveries made in the Mozambique blocks operated by Anadarko, Cove’s former partner, and Eni of Italy that are estimated to contain up to 175tn cu ft of gas.

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marben100 22nd Apr '13 126 of 155

I owe a big H/T to "Jaws6" from ADVFN for suggesting Ashmore Global Opportunities (LON:AGOL) some weeks ago as an interesting wind-up situation. Since then he and I have built up significant positions, relative to our portfolios.

Following hot on the heels of its first confirmed capital return, AGOL has just issued its annual results this p.m.

These contain an update on the expected capital return:

The Board intends to distribute the cash currently available for distribution by the Company to Shareholders by way of a pro rata compulsory redemption of Shares at NAV per Share. The Board will then make subsequent quarterly distributions to Shareholders once investments are realised and the proceeds of such realisations are received by the Company, provided that the Company holds liquid funds of at least US$10 million at each quarter end. The initial distribution relating to the quarter ended 31 March 2013 will be US$88.8 million with payment expected to take place on or around 3 May 2013. The Board expects that approximately a further US$40 million will be realised during the following six months and that, including the above mentioned distributions, in total approximately 50% of the 31 December 2012 NAV will have become available for distribution by 31 December 2014.

So, at the current SP of 590p, how do these anticipated returns look?

    NAV  
  US$m   £/share
Dec-12 480   7.77
       
Apr-13 88.8 18.5% 1.44
Oct-13 40.0 8.3% 0.65
Dec-14 111.2 23.2% 1.80

 

I.e., a return of ~144p/share now ( 149.91p confirmed for 3rd May); a further @ ~65p/share in two quarterly tranches over the next 6 months; and a further 180p by the end of 2014, representing a total of 389p/share... with a residual value of 389p at the end of 2014 (assuming NAV unchanged between now and then).

Looks rather attractive to me, even after some SP gain following the first redemption announcement.

NB, if you do consider an investment, check with your broker that shares you purchase are cum the initial distribution.

Cheers,

Mark

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JKeat 22nd Apr '13 127 of 155

In reply to marben100, post #126

Hi Mark, thanks for flagging this up. Picked up a few myself on the same day as the RNS. :)

On your advice to check if that they are cum initial distribution, would there be any reason for them not to be? Especially since the record date is the 26th?

I'm guessing you might be mentioning it for the benefit of those that may come around to reading your comments a bit later?

Cheers!

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marben100 22nd Apr '13 128 of 155

In reply to j1mster88, post #127

Hi j1mster88,

I'm not entirely clear on the situation, which is why I recommend checking. This is the key passage:

 

Up to the Redemption Date (but not including the 3 May 2013), Shares will be traded under the Old ISIN. The Redemption will be effected pro rata to holdings of shares on the register at the close of business on the Redemption Record Date, being 26 April 2013. Purchases of shares that were unsettled as at the close of business on the Record Date, including trades arranged after the Record Date but before the Redemption Date, will be transformed automatically by CREST and will settle under the New ISINs with an accompanying delivery of cash though CREST in respect of the redemption proceeds.

It suggests to me that they can be bought cum the return right up until the redemption date - hence best to double check if buying or selling until then. For dividends, the ex- date is usually 2 days before the record date, but different dates may apply to other forms of corporate action.

Cheers,

Mark

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marben100 5th Jun '13 129 of 155

In today's volatile market session just wanted to document some repositoning I've done on puts that hedge my porty.

  • Sold FTSE6500 June 20th puts. These have gained 50% today and are close to expiry. Being in-the-money they're also no longer a pure hedge but more of a gamble on short-term price movements.
  • Sold small tranche of FTSE6500 December puts. This was an intial tranche of what was intended to be a larger position, assuming worthless expiry of June puts. However, since acquring these on 20th May, the market has fallen considerably and hence they've gained some 40%. I did consider repricing to a FTSE6250 strike price - but even these are rather dear.
  • Used the proceeeds of these sales to buy September FTSE6250 puts (fully hedging my porty with a little cash left over). My intention is to retain these for 1-2 months and then review the situation again: if the market falls continue, I may well simply sell & take profits, as (absent seriously bad economic news), the possible froth in the market will have lessened; if the market bounces back or stays around these levels, I may look at swapping to December expiries.

 

I did not previously consider the September options because they expire at a time that may prove volatile, making them risky as they get close to expiry. Now, however, they provide a "bridge" whilst market sentiment sorts itself out.

Mark

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Monty9 6th Jun '13 130 of 155

Sept 6250 puts :-))

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marben100 1st Jul '13 131 of 155
1

Just bought back some shares in Brightside (LON:BRT) @ slightly below 23p. Had previously trimmed my holding substantially, because I was concerned about the amount of additions to software intangibles shown in th prelim. results. Were profits overstated because heavy ongoing software development costs were being capitalised rather than expensed?

However, I asked CEO Martyn Holman about this at the company's recent presentation at Proactive Investors. He explained that these expenses were a one-off related to the acquisition of the eCar, eBike and eVan businesses. That being the case, the forecast P/E of 7 and yield of 2.6% do look rather a attractive for a business with a good return on capital and good growth into the bargain.

Rather lucky to be able to buy back the shares nearly 2p cheaper than I sold them at. :0)

Cheers,

Mark

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marben100 9th Aug '13 132 of 155
1

Just trimmed most of the extra tranche of Fenner (LON:FENR) that I acquired mid-July @ 316p (H/T to John Rosier for the heads up!)  @ 359p. Still have a decent holding there. Reinvested most of the proceeds into Kentz (LON:KENZ) , which I've had my eye on for a little while.

I have slight reservations about Kentz (though the shares look excellent value), so am not buying aggressively (yet):

  • Reported cashflow for the last FY was rather poor. Hope to see that improve in the interims, expected later this month.
  • Concentrated focus on hydrocarbon capital project services. This could be a plus if the sector continues to grow strongly - but equally concentrates the risk in the [unlikely, IMO] event of a slump in the oil price, leading to CAPEX cutbacks.

 

I now have three investments in the broad area of basic materials capital works: Kentz, Fenner & Amec (LON:AMEC) . Together, they constitute around 5% of my SIPP portfolio. Fenner, of course, is slightly different in that it is a manufacturer, rather than a service supplier. This sector has been distinctly unloved over the course of the last year, as the meme circulates that the "commodities supercycle" is over. Certainly Fenner and AMEC have been affected by a slowdown in CAPEX by mining companies as mined commodity prices have been under pressure - but ISTM the market has underestimated their diversity and ability to grow, despite tough conditions in part of their business.

In the case of Fenner, it's "Advanced Engineering Products" division gives exposure to a range of industries beyond mining (and, most specifically, coal mining). AMEC is exposed to a whole range of sectors, besides oil & gas, including mining, "clean energy", environment & infrastructure. AMEC is also expected to grow through geographical diversificaton, expanding its Asian operations (amongst others).

All these businesses have been growing strongly and good growth is forecast into the future, but they're all on modest current year P/E ratings.

Cheers,

Mark

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djpreston 9th Aug '13 133 of 155
2

In reply to marben100, post #132

Hi Mark

Though oil does make up a decent chunk of Kenz's business, it is not as concentrated as many think and a lot of the new work is coming from LNG and elsewhere. . Interesting to see where Kenz goes form here having "broken through" the top fo the 12 month trading range. 360-440p.

D

Fund Management: European Wealth
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ohisay 9th Aug '13 134 of 155
5

In reply to djpreston, post #133

Hi Mark -I've held Kentz for a couple of years and its always been in my 3 largest holdings .
One of the few shares I won't trade as I'm sure it will attract a bid around 600p at some point.

If you haven't seen it a decent broker note from a few weeks ago.

http://www.shareprophets.com/file_download/104/130723+Kentz+Corp.pdf

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marben100 12th Aug '13 135 of 155
4

Early in July, sold the the September puts mentioned above. Later that month, bought an initial tranche of December FTSE6250 puts.

Added a second tranche of December FTSE6250 put options just now, so now 50% of my SIPP porty is hedged. Have chosen to do so now as, technically, the market may be turning down. On a strategic basis, I want to have hedging in place, as I am concerned about a number of macro events in September that could cause a major market turn. In the US, sequestration & the debt ceiling may cause jitters. In Europe we have the German election, and I feel that quite a few Eurozone issues have been swept under the carpet until that's out of the way. They may creep back out, after that election. My own view is that the current Eurozone situation, where economies with different cultures and operating at different speeds have been artificially forced together, is long-term unsustainable and sooner or later there will be a major dislocation.

Originally, I was quite in favour of the Euro concept but, in the light of experience and greater knowledge, it appears to me that you cannot have monetary union without fiscal union and the latter, ceding control of individual countries fiscal policy to a central authority, is politically unacceptable.

The September puts expire on the 21st of that month - which may be just before the critical time, hence I prefer the longer dated options, which won't expire just when they might be needed most.

Cheers,

Mark

PS - thanks for the Kentz note, ohisay, which I had not seen before.

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marben100 16th Aug '13 136 of 155
2

RIT Capital Partners (LON:RCP) , which is my largest shareholding by some margin, reported its interim results to June 30th today.

The 31st July NAV was reported as 1,378p. That's somewhat below my estimate of 1,417p, but still means that the shares are trading at a historically high discount to my revised estimate of 1,350p at present, with a share price of 1,210p. Over June and July combined, the trust has outperformed, with the reported NAV for June exceeding my forecast. I estimate current NAV in a pretty simpistic manner, just looking at a weighted average of the change to the FTSE and the S&P500 since the last reported NAV and multiplying accordingly.

The July NAV represents a record high for the trust, after paying out a 14p dividend earlier this year. Total NAV return of 16.9% YTD is excellent. A further 14p interim dividend has been declared.

I'm a little surprised to see the trust following the herd and switching funds from emerging markets to the US - which concerns me a bit. Most of the move was before the start of 2013, so that's worked out well (and I was happy to see that, when announced), but I'm not so confident of US outperformance going forward. However, I see that the trust has taken some money off the table and liquidity has increased from 3% to 7%, which seems wise to me. OTOH US$ exposure has increased to a massive 80% - not so sure that's a good idea, though I approve of the JPY short, whilst they remain long Japanese equities.

Earlier this week, I added a "trading tranche" to my already large holding in view of the unusually high discount (this trust often trades at a premium to NAV). Timing turned out to be poor, with the markets tumbling yesterday.  Good to see that the market is starting to recognise the high discount with a 1.4% gain so far today, however, I think I'll let my trading trache run for a bit, as there ought to be considerably further to go. OTOH, I remain nervous of the US as mentioned in my last post, so will wish to reduce my overall position and increase my own 11% cash position before September/October events. Will then review later in the year.

As I mentioned to Lord R at the AGM, I'd like to see the trust implement a more active discount control policy, which would increase NAV/share and ensure that share price performance more accurately reflected underlying NAV performance.

Cheers,

Mark

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