Marben's Misc Bits

Monday, Apr 02 2012 by

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,


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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164 Posts on this Thread show/hide all

emptyend 1st Oct '12 106 of 164

In reply to loglorry, post #105

If I got something for free and it didn't turn out to be quite what I expected I wouldn't complain too much.

We provide free content to them and they provide a free service to us. Thats the deal - and the way the deal works is set out in terms and conditions, including rules governing posts. If they had actually stuck to their own rules then I wouldn't have complained - but they insisted that they should have carte blanche to make up new rules as they went along without even subsequently putting them in their Ts&Cs. So I left. And I'm not surprised that others do the same eventually.

Anyway you moved on

Indeed. Some years ago. I only commented today in response to Marben's evident difficulties which appear to have a similar origin (viz. inept moderation).


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loglorry 1st Oct '12 107 of 164

Well indeed. I don't know the details and don't want to know but I'm sure there were grounds to leave otherwise you wouldn't have done so. My point though is that the T&C's mean little since at the end of the day they can change them and not even publish the change. It's not like there is any contract in place as we don't pay a dime so if there was a breach of contract we'd not have suffered any loss so would have no claim.

In any case I can come here to read all about the interesting things going on at Soco and sometimes some other things and go elsewhere for other content so I'm not worried either way. If I'm really bored I can trawl through the dross on Advfn.


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zangdook 1st Oct '12 108 of 164

I don't recall how it works at TMF but at advfn (and to a lesser extent here) I'm exposed to a fair amount of advertising; that's how I pay for the content. It's not free, even though a large part of it is provided free by readers.

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nybor 1st Oct '12 109 of 164

In reply to zangdook, post #108

You could always install Adblock Plus and never again be obliged to see an ad on any web page. That way, only the advertisers would pay for the content and you'd never be tempted to remunerate them.

This is the kind of post that would no doubt get pulled on TMF. For what little it's worth, I too gave up posting there for exactly the reasons that ee and Marben describe: inept moderation that did not meet their own published policies. (Not that I ever had much worth saying on investment, but I tried at one time to give something back via other boards on the site.)

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marben100 4th Oct '12 110 of 164

Well, so much for Isaac's dire prognostications re Halfords:

Shares up 50% since those posts. Nevertheless, having gone heavily overweight previously, I have halved my holding this morning as the outlook implied by the figures in the release is not strong and, clearly there is nowhere near as much value now as there was then. Happy to have got a decent profit on my earlier contrarian purchases.

Also illustrates why paying too much attention to charts causes many to sell and buy at precisely the worst possible moments.

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marben100 4th Oct '12 111 of 164

PS I'll live tweet the HFD conf. call @marben

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marben100 4th Oct '12 112 of 164

I've been asked for my views on the likelihood of a divvy cut. at Halfords (LON:HFD) . IMO management are wise to be cautious and not commit at this stage, until H2 results are known.

Net debt is down to £115m from £145m a year ago - and that's after half a year of share buybacks which have now ceased (and after the current level of divvy has been paid). That implies that cash generation remains strong. I see no reason why the level of CAPEX should need to increase significantly, so IMO that augurs well for being able to maintain the divvy.


Pretax profit of around £70m implies an EPS of around 26.7p, based on NPAT of £53.2m and 199.06m shares in issue. That compares to a 22p divvy, at present, i.e. 1.2x covered.


So, cover is a bit thin and it may be prudent to implement a cut - maybe to 15p. What happens will depend on a) evolution of the business and the UK economy; b) whether the new CEO sees a need to invest the cashflow in other ways (unlikely, I suspect). Overall, whilst the divvy may need to be cut, I'd put the odds at less than 50% (contrary to analysts previous assumptions).

Worth bearing in mind that the whole reason for not paying out too high a proportion of earnings is precisely so that in tough times the divvy can be maintained and cover will improve as and when the economy improves.



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marben100 4th Oct '12 113 of 164

In reply to marben100, post #111

Oops. The twitter id should, of course, have read @marben100

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marben100 19th Oct '12 114 of 164

I have just read a learned article which illustrates precisely what is wrong with the academic approach to finance: - however, it also supports my own approach to hedging!

The thrust of the article is that diversification may not help you when you need it. Here is the key flaw:

Diversification in stock markets refers to the reduction of portfolio risk caused by the investment in a variety of stocks. If stock prices do not move up and down in perfect synchrony, a diversified portfolio will have less risk than the weighted average risk of its constituent stocks19, 20

The problem is the definition of "portfolio risk". Academics and many financial mangers equate risk with volatility - that's handy because volatility is a nice, measurable statistic. From my POV, as a long term INVESTOR (not a short term speculator) , risk has little to do with volatility. Risk in my eyes is the chance of a permanent loss in value. True "risk" is the chance that I've got my assessment of the merits of a particular investment/asset class wrong, not that the market decides to fall out of bed for a period. The former is what diversificaton protects against - the article infers that the best way to protect against the latter (if you wish to do so) is through hedging, rather than diversification. That is what I do, and I am currently well protected with December FTSE100 puts, hedging my well-diversified portfolio.

Just for the record, despite the hedging "drag" and broad diversification my porty is currently up 18% YTD (10 year performance 13.9% p.a.)



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loglorry 22nd Oct '12 115 of 164

Hi Mark - those are impressive returns well done. If I could have given your post a bigger thumbs up I would have because it makes a lot of sense. I'd go a even further to say that diversification can be a very very bad thing indeed for private investors.

In simple laymen's terms it is difficult for a private investor to research a basket of well diversified stocks which fit all the usual boring old criteria which define traditional safety any better than an institution or fund. Thus the returns are likely to be rather in line or worse. So why bother apart from avoiding fees.

However it is possible for private investors to get into all sorts of special situations which might be quite risky in a volatility sense but carry much lower risk because they are likely to multi-bag and pay for any disasters elsewhere. This is how I would describe a strategy which mitigates risk by investment in stocks which have a good chance of very large returns even if a large percentage of these situations turn out rather badly. I guess this is more the VC approach to picking investments.


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marben100 1st Nov '12 116 of 164

Some porty adjustment that needs more than a tweet to explain...

Noticed that this morning SocGen were recommending IMI (LON:IMI) over Weir (LON:WEIR) ... so did a comparison. Having done so, I agreed: IMI looks better value right now than Weir, being on a lower rating but with better short-term growth prospects, a higher yield and (importantly for me) a significantly higher ROC. Both companies have performed well over the last few years. I also checked IMI's pension scheme and find that it looks manageable relative to the company's market cap. (£1.3bn gross liability & net deficit of £202m vs £3bn mkt cap.). The deficit forms a large part of the company's non-current liabilities - so not as heavily geared to external creditors as the raw figures might suggest.

Moreover, both companies' shares have risen strongly today, with Weir bouncing more. So, easy decision to bank a 20% profit on my Weir purchases made in May and June. However, I am already overweight the "miscellaneous" portion of my porty, so have decided to defer any purchase of IMI and will put it on my watchlist instead.

By contrast, I am underweight my target for globally diversified investments, so decided to add to my already large holding of RIT Capital Partners (LON:RCP) . That now stands at over a 6% discount to my estimate of NAV (historically quite high for this trust, which was trading at a substantial premium to NAV last year), so 1126p looked like a good price to add at. I expect interesting developments at RCP over the coming years, with the company strongly building interests in asset managers. Having asked about this at the AGM, Lord R confirmed then that it was part of a deliberate strategy, to take advantage of forced sellers in the sector, needing to divest to meet new regulatory requirements. With the earlier premium to NAV causing me to sell down (and I was even short for a period!), I am now back to RCP being one of my largest holdings.



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nigelpm 2nd Nov '12 117 of 164

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 164

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) ...


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


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


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.



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 164

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 164

'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 164

It is a troll.

Ignore it, don't feed it.

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marben100 14th Nov '12 122 of 164

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 164

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.




E&OE - as ever!


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marben100 21st Feb '13 124 of 164

@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.



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marben100 11th Mar '13 125 of 164

Looks like John Craven & co. are back in business with Cove mk II - "Discover Exploration":

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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