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.

Do you like this Post?
21 thumbs up
1 thumb down
Share this post with friends

161 Posts on this Thread show/hide all

marben100 24th Apr '12 23 of 161

In reply to @Greenroom78 's Twitter query about shorting Carpetright (LON:CPR) ....

@marben100 Thanks. Don't understand 'Unborrowable'. Should be able to short everything or nothing at all to create a level playing field.


SB and CFD providers will generally try to maintain a neutral book (and make their money on spreads/commissions/interest). Unless they have corresponding longs to hedge against, to short a stock they need to be able to borrow stock from an institutional holder and then sell it into the market on your behalf. There has recently been a bear squeeze in CPR and stock borrowing has been harder.

IG may well let you short in small size with a telephone order but they won't let you do so online because of this borrowing issue with CPR.



| Link | Share
marben100 26th Apr '12 24 of 161

Just added another tranche of RIT Capital Partners PLC (LON:RCP) @ 1156p, swapping it against a tranche of JPMorgan Brazil Investment Trust PLC (LON:JPB) that I sold a couple of days ago . Here's why:

Firstly, regarding the JPB sale, I have become increasingly concerned about base metal prices on reports that I have heard and read about slowing infrastructure spending in China. With major miners such a Rio Tinto (LON:RIO) , Bhp Billiton (LON:BLT) and Brazil's Vale now heavily dependent on iron ore for profitability, price falls could have a big impact on both their profits and on the Brazilian economy. Growth in Brazil has also been slow (~2%), of late, with little sign of improvement in the near term. These concerns appear to be confirmed (or is that confirmation bias? ;0)) by the latest reports in the FT that I have tweeted about recently - including a near 50% drop in Q1 profits reported by Vale. Some days ago I also halved my holding in Blackrock World Mining Trust PLC (LON:BRWM) on these concerns. I am now  focussing more on oil and gold in my natural resources subportfolio, for the time being, via Medusa Mining (LON:MML) , Pan African Resources (LON:PAF) , Coastal Energy Co (LON:CEO) and Premier Oil (LON:PMO) (with smaller, more speculative holdings in  Bowleven (LON:BLVN) , Diamondcorp (LON:DCP) and Aminex (LON:AEX) too, plus some residual BRWM - despite possible profit falls, major miners still look cheap). I expect these commodities to be more resilient, due to tight supply and relatively robust demand (I recently read an HSBC report of heavy gold buying by central banks). I prefer to focus on producers with low costs that are less geared to oil & gold prices.

Now coming back to today's RIT Capital Partners PLC (LON:RCP) purchase... I like RCP and it's investment philosphy a lot. However, for much of last year it was trading at a growing premium to NAV. With concerns about a toppy market too, I therefore progressively sold my holding, ultimately exiting altogether in August of last year, when the market plunge was not accompanied by a corresponding drop in RCP's share price. In the latter half of last year I even (successfully!) shorted the trust at points when my estimate of it's premium to NAV became silly, and it seemed like a nice hedge against a tumbling market.

That situation is now turning round. The last available NAV report (1217p) was for the end of February, when the FTSE100 stood at 5871 and the S&P500 at 1366. Now whilst the FTSE has fallen to 5746 now, the S&P is actually above the end February figure at 1394. Given that the trust currently has significant US exposure, I therefore do not expect that its NAV is much below the end February figure, whereas its share price has fallen significantly from 1223p at the end of February to 1156p now (plus the Agora realisation will have added value). Hence a discount appears to have opened up  and the shares look better value. The next NAV update will be published in RCP's preliminary results to 31st March, which I expect in June.

NB I remain very nervous about potential shocks to the market from Europe, China and the US, so I maintain a significant cash buffer and hedging in the form of FTSE puts against my equity holdings. Though the puts are expensive, I prefer doing that to just liquidating more of my portfolio, with the market being so difficult to read at present. With many of my stocks already being on cheap multiples/valuations, it is not hard to imagine a scenario where the market (and my investments) grind higher, absent shocks. I will probably actively trade my June puts for longer dated expiries as the mid-June expiry approaches. December FTSE5500 looks attractive, as I fear post-election blues (i.e. reality of the huge deficit biting in the US) maybe no Santa rally this year.



| Link | Share
sirlurkalot 26th Apr '12 25 of 161

On the subject of Twitter mentioned earlier, I find using Tweetdeck as a desktop client for Twitter helps a lot, particularly in the areas of:

a) you can return easily to the point in your stream that you left off reading last time you were at your desk. You do this by Marking All As Seen and Clear Seen up to the point you've got to, at which point you have a blank screen, and then when you return all the tweets there are new so you can start reading at the oldest tweets and quickly start where you left off.

b) you can separate different sorts of tweets to help with privacy issues, as Tweetdeck allows you to set it up to monitor multiple IDs simultaneously. My investment account @SirLurkalot I just use as a rolling news feed for financial sort of things, and whilst I know investment people who look me up can see who I follow, @SirLurkalot only follows financial things which have no connection to my real identity. I suppose I am more concerned about privacy online issues than many other people, and @SirLurkalot in his anonymity is completely isolated in his investment universe. I also have different IDs with completely different usernames for family and friends things and for leisure, travel and sports things, and each is self contained but I can follow all of them simultaneously in the Tweetdeck display.

| Link | Share | 1 reply
marben100 26th Apr '12 26 of 161

In reply to sirlurkalot, post #25

Thanks SirL, I have had Tweetdeck suggested before but hadn't got round to installing it yet. Expect I will do so.

Quite agree with your privacy concerns, and I only use Twitter for financial commentary/news. Whilst I joined Facebook some time ago to use its photo sharing factilites for keeping up with friends and family, I hardly use it now due to those concerns and wouldn't consider using it for anything I'd consider personal. I suspect that this will be a growing problem for Facebook's business model going forward. When frequent users come to realise how much pivate information Facebook holds about them, and how easily that information could be abused, I suspect they'll become much more circumspect about what they post. Google having records of all your search requests is bad enough, but this is in another league.

There have already been reports of some prospective employers (esp. in the US) demanding to know candidates' Facebook passwords, though the legality of this is highly questionable.


| Link | Share | 1 reply
sirlurkalot 26th Apr '12 27 of 161

Hi Mark, Yes I think there are problems for eg students trying to get jobs with their Facebook profiles with partying photos visible to recruiters. One solution is for students to adopt nicknames for Facebook social purposes as distinct from their real names which are for formal jobhunting, but then the lack of any social stuff on the formal name account would itself be obvious to recruiters. I'm not sure what solution is possible on this - Facebook should be careful to set up something.

I know I'm more concerned about anonymity than many others - but then that's on publicly-accessible things only and I'm perfectly happy in individual emailing and meeting normal people for them to know my full real name. SirL works well for me as an investment persona - lots of things are set up in that name now.

| Link | Share
tacheman 26th Apr '12 28 of 161

In reply to marben100, post #26

Hi Mark,

If you ever get round to installing tweetdeck, I recommend installing an older vesion

I wasn't impressed by the latest version.  On investigation, it appears that since twitter bought it they've removed lots of features (particularly for other social networks*).  The older version seems really good and is a lot more configurable.


*Couldn't comment/like on other's facebook posts, or write on their wall from the application.  Also seemed an issue viewing facebook vids/pics in the application (though it did do it occasionally)



| Link | Share
marben100 2nd May '12 29 of 161

WARNING: several prominent posters have had their Twitter accounts hacked by a phishing scam. Thought I'd best post so people understand the scam and can avoid falling victim (similar scams could operate in other social media).

The scam works in a very similar way to conventional e-mail phishing scams, except that the objective is to steal Twitter passwords, rather than bank account passwords. Instead of a simple e-mail, victims receive a Twitter "Direct Message" (DM). That message says something like "Hey somebody is saying terrible things about you... " followed by a short URL. If you click on the URL it appears that you have been directed to Twitter's website and are asked to enter your login and password... Of course, you haven't really been directed to Twitter's website but to a fake one, whose purpose is to capture your password.

Once the phishing website has your password, it logs in to your a/c and DMs all your followers with a message similar to the one you received.. and so it spreads.


If you fall victim to this scam, CHANGE YOUR TWITTER PASSWORD IMMEDIATELY. That stops the scammer hijacking your a/c. NB I do not know what other actions this scam may have taken (e.g. it might add new follows to your list*).

Just as with ordinary e-mails, to avoid phishing scams, BE VERY CAREFUL ABOUT WHAT LINKS YOU CLICK ON in e-mails you receive - even if those e-mails seem to be from friends.

Please spread the word.



*There is a valuable market in "followers", so if a scammer can add people to follow to a few thousand twitter users accounts, that is worth hard cash.

| Link | Share | 1 reply
mick 2nd May '12 30 of 161

Thanks Mark, I have received the offending tweets and have clicked on the links but thankfully didn't input log ins or passwords

| Link | Share
Isaac 2nd May '12 31 of 161


ShareSoc Recommends Voting Against Faroe Petroleum Remuneration via #constantcontact


What is Sharesoc's view of Soco managment taking 100% bonuses? Does Sharesoc recommend shareholders vote against their remuneration ?

| Link | Share | 1 reply
marben100 2nd May '12 32 of 161

In reply to Isaac, post #31


Fair question.

Firstly, please note that the full text of our press release is as follows:


ShareSoc (the “UK Individual Shareholders Society”) suggests that shareholders in Faroe Petroleum should vote against the new management incentive scheme. This scheme which is entitled the Exceptional Performance Incentive Plan (EPIP) will permit substantial grants of nil-cost options to senior executives, subject to certain performance conditions.

The details of the performance conditions are complex but the prime requirement for full vesting is total shareholder return of 25% per annum over 3 years. ShareSoc suggests that a performance incentive scheme focussed primarily on total shareholder return (in practice mainly dependent on the share price) is not a prudent arrangement. It encourages a focus on the short term share price instead of the fundamental strength of the business.

Nil cost share options are also contrary to the guidelines on remuneration laid down by the A.B.I. and N.A.P.F. for listed companies. This scheme will enable the senior executives of Faroe Petroleum to obtain a substantial proportion of the shares of the company when they already have large numbers of share options– indeed the total shares under option has had to be raised from 10% of the capital to 15% to accommodate the new scheme. The directors already have awards under the existing share option schemes and under the Co-Investment Plan (CIP) that represent over 5% of the total company shares. In addition pay levels at the company are already quite high with total board remuneration (including cash bonuses and pensions) of £1.95 million for what is not a particularly large company.

ShareSoc Chairman Roger Lawson had this to say: “Faroe Petroleum is a good example of what is wrong with executive remuneration in public companies. Multiple complex incentive schemes and a total package that is extremely generous. The use of nil-cost options and not particularly stretching incentive targets is something we recently criticised at another AIM company, Intercede Group, and it is most regrettable that this kind of approach seems to be spreading among AIM companies. We therefore recommend that shareholders vote against the specific resolution on the EPIP and against the Remuneration Report resolution. The only saving grace at this company is that at least shareholders are being given a vote on these matters.”


So, as you can, see it is specifically because of the EPIP that we recommend voting against.

Secondly, note that Faroe's market cap. is £376m vs £1.02bn for Soco & at a quick glace, total Board pay for this year appears similar for both companies. Given Faroe's considerably smaller size, their Board pay apperas disproportionate,as indicated in our press reelease.

I would say that, in general terms, we see little jutsification for bonuses above 50% of basic remuneration. There is no evidence that larger bonuses result in better performance. This is particualry true in cases like Soco's where management already have large stakes in the business and should benefit far more from long-term value that they add to the business than short-term cash awards. Moreover, complex incentive schemes can lead to perverse incentives, that are not necessarily in the company's long-term interests, besides being opaque for shareholders. ShareSoc is meeting with the FRC tomorrow, attending a session to discuss this very topic.

Sadly, there are so many examples of excessive board pay that we have to pick our targets carefully, and select the most egregious cases to highlight.


Whilst I only have a token holding in Soco at present, I do have a larger holding of Premier Oil (LON:PMO) . I must say that I do find their total pay of over £13m for 2011 pretty excessive and most certainly will be attending their AGM, asking questions and voting against their remuneration report. I think that that also illustrates that Soco is far from being the worst example.



| Link | Share
Isaac 2nd May '12 33 of 161

Sadly, there are so many examples of excessive board pay that we have to pick our targets carefully, and select the most egregious cases to highlight.


I would say about 99% of pay awarded to directors of UK PLC are excessive, it is all well and good in choosing the worst examples you can think of or come across but what is the point of that approach if your influence is negligible?

The fact is there are a LARGE number of shares controlled by readers of Stockopedia and TMFetc of Soco & in my view what is required is for these holders to be influenced to vote against Soco remuneration to have a meaningful impact, one that raises a few eye brows.

It hacks me off that the Chairman of Soco's rem committee holds significantly less shares then I do (he holds 10,000) but has been given the job of deciding how much the execs get paid.

I think this is unreasononable and there should be a minimum shareholding the Rem. committee members should hold to qualify in deciding how much the execs are paid etc. Only then will I believe the rem. committee is awarding bonuses etc with the best interests of shareholders.

It is very difficult to have any trust in Michael John's ability, one should be made aware of how is appointment was made and what process and how many candidates were considered for his role. For all I know he could be Soco exec's best mate.

Sharesoc should look to clamp down on companies where they can make a reasonable influence rather then look ay any old company where they have little impact.

With all your posts you keep saying Sharesoc and so does Mr Lawson on ADVFN etc, would it not be better if people read in the broadsheets of the financial press how Sharesoc managed to influence 10 or even 15% of Soco Shareholders to vote against Soco Remuneration?

If that got read in the papers it would bring the Sharesoc site to life and people will reigster without you and your colleagues having to advertise it.



| Link | Share | 1 reply
marben100 2nd May '12 34 of 161

In reply to Isaac, post #33

Well, Isaac,here's an example of our impact in the mainstream media:

I think we're getting our message across and our membership is growing pretty rapidly - but we still need all the support we can get!

More importantly, after our engagement with the BIS, many of our wishes to empower shareholders to have a greater say over executive remuneration and to force rem. coms. to consult more actively with shareholders seem to be forming the basis of government policy. Ideally, we'd prefer to see shareholder-led committees nominating directors for election and determining their remuneration.

You can see our latest response to the executive pay consultation here:

There is still a lot of work to do, not least pushing institutions to exercise their voting power.



| Link | Share
marben100 2nd May '12 35 of 161

In reply to marben100, post #29

An update on this scam: it appears that the hacked accounts are being used to send out spam tweets, advertising weight loss products, as well as trying to recruit more accounts.

If your account is affected, please make sure you change your password ASAP to prevent the scam from spreading and to avoid annoying other Twitter users with spam.

| Link | Share
Fangorn 2nd May '12 36 of 161

I was surprised to learn that Carmensfella had dropped a load of weight by taking berries :)

Thanks for the heads up Mark

| Link | Share
marben100 3rd May '12 37 of 161

Bought an intial tranche of Baker Steel Resources Trust (LON:BSRT) @ 103p. See this post for more background. Today's NAV writedown to 114.7p FD does not represent any real diminution in the value of underlying assets but is simply prudent accounting due to a distressed off-market asset sale of shares in Ferrous Resources shares by Harbinger Capital to Carl Icahn. CI not a bad partner to have on a project!

Hence no real justification for today's price drop, AFAICS. Good  opportunity to enter.

| Link | Share
marben100 5th May '12 38 of 161

Nice digest of Warren Buffett's annual letter to investors by TMF US: 

I'll just add a few comments of my own to a couple of the strategic highlights:


On value: "The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter: Most people, including those who will be net buyers in the future, take comfort in seeing stock prices advance. These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day's supply."

On market moves: "Here a confession is in order: In my early days I, too, rejoiced when the market rose. Then I read Chapter Eight of Ben Graham's The Intelligent Investor, the chapter dealing with how investors should view fluctuations in stock prices. Immediately the scales fell from my eyes, and low prices became my friend. Picking up that book was one of the luckiest moments in my life.

Have to say, that's part of the psychological "secret" of my approach to investing. I'm happy when share prices rise and when they fall (absent fundamental changes). When they rise, I see the value of my porty rise and, obviously, that gives a warm feeling. However, when they rise too much (relative to a combination of intrinsic value and weight of the investment within my porty), I topslice or sell out. When they fall, though, as long as nothing fundamental changes, that's a great opportunity to add to undervalued holdings at an even bigger discount.

Of course, it's necessary to always maintain an adequate cash buffer to take advantage of such opportunities. The put options I currently have in place help too: a) they help cushion big market drops like yesterdays; b) in the event of further drops and available cash running low as I pick up "bargains", I can cash the puts to allow more buying!


On share buybacks: "The first law of capital allocation -- whether the money is slated for acquisitions or share repurchases -- is that what is smart at one price is dumb at another." ...

More on buybacks: "Charlie and I favor repurchases when two conditions are met: first, a company has ample funds to take care of the operational and liquidity needs of the business, second its stock is selling at a material discount to the company's intrinsic intrinstic business value, conservatively calculated...

Readers of my posts may have noticed that recently I have been generally opposed to buybacks (e.g. at Halfords). The reason is that most of the buybacks I see in trading businesses (as opposed to investment vehicles) fail Buffett's tests: they are not done at a material discount, nor has any attempt been made to calculate a conservative intrinsic value by management. Shareholders are generally better off receiving a cash dividend - which they can choose to reinvest themselves at prices of their own choosing, if they wish. There is no benefit to long-term investors in a company supporting its shareprice with buybacks. It only benefits those with a short-term view and managements incentivised to increase EPS, rather than earnings. I'd prefer to be able to buy more shares at cheaper prices myself.



| Link | Share | 1 reply
marben100 5th May '12 39 of 161

Apologies to anyone who had difficulty reading my above post - had considerable difficulty with the text editor, having pasted in some text with TMF links. Should be OK now, if you refresh.

| Link | Share
Gormless George 6th May '12 40 of 161

In reply to marben100, post #38

There is no benefit to long-term investors in a company supporting its shareprice with buybacks. It only benefits those with a short-term view...

I never see it as supporting the share price - in any given example you can only speculate that it does - I see it as increasing my share of the company, which it certainly does, at least until they next issue shares. I have a happy spreadsheet column for the denominator of my fraction.

Besides, even long-term investors often have a bit of the trader in them, whether top-slicing at the top and (re-)adding at the bottom or having a trading pot in addition to their core holding. I've tried to do something on those lines but while the spirit is willing the mind is weak and I usually end up getting it completely wrong.

I suppose the real reasons I'm quite fond of buybacks are:

a) that money cannot now be spent on cigars, and

b) in theory buybacks confirm my belief that I am right to hold on at these prices

Not really any argument against dividends as a better alternative, of course.

| Link | Share | 1 reply
marben100 7th May '12 41 of 161

In reply to Gormless George, post #40

Hi "George",

I see it as increasing my share of the company, which it certainly does, at least until they next issue shares..

Well yes, that's true, but at what price? A key principle Buffett and Graham emphasise about share investment is that price is crucial. To succeed at investing, you must BLASH (or hold forever, if the company is good enough and never becomes overvalued - very rare*).

Unfortunately, in the vast majority of cases (e.g. Halfords, BP in the past, Cisco), when companies undertake buybacks, little or no attention is paid to price (which is what Buffett's comments reflect). That is simply a waste of money that rightly belongs to us, the shareholders. Tax considerations aside, I'd far prefer excess cash to be returned as a dividend than by the company feeding the cash into the stockmarket. If investors have tax concerns (I don't, as the vast majority of my holdings are held in my SIPP or ISA), companies can use schemes such as £RR. 's to allow dividends to be taken as capital gains. If cash is returned that way I can choose whether/when to reinvest it to increase my shareholding. It could well be that at the time the dividend is paid, there are other better investment opportunties that I'd prefer to reinvest the cash in instead. Why should I allow the company's managers to take that choice away from me, and often to line their own pockets by having an easy way to trigger incentives linked to EPS?



*I don't agree with Buffett's punch card analogy, recommendiing a pure LTBH strategy. IMO that thinking is heavily influenced by the scale of investments he makes, where he can't easily enter or exit, so he has little choice but to LTBH businesses he's researched very carefully. He also mentions in the letter that BH sometimes hangs on to investments that logically it oughtn't, because of reputational issues and BH long-term interests. Those issues are not ones relevant to small investors like us - though selectivity is very important.

| Link | Share
marben100 7th May '12 42 of 161

My week ahead. Busy week for me:

  • J Sainsbury (LON:SBRY) prelim. results on Wednesday. Fingers crossed for a juicy divvy & satisfactory business outlook. Historic yield currently 5.0%
  • HgCapital Trust (LON:HGT) AGM on Thursday. Look forward to hearing Ian Armitage's take on the Euro crisis and the impact on the ground - though I see that the portfolio is now pretty heavily UK TMT focussed. With financial turmoil continuing, I guess realisations are unlikely in the near term, but IMO that's where patience pays.
  • T Clarke (LON:CTO) AGM Friday. They need a grilling on their cashflow. I only have a token holding now, because of the grim cashfow and UK construction outlook.


Sainsbury and HGT are two of my larger holdings (especially the latter, which is currently my largest equity investment).



| Link | Share

What's your view on this thread? to Comment Now

You are feeling neutral

Use the £ sign in front of a ticker to turn £VOD into Vodafone PLC

You can track all @StockoChat comments via Twitter

Stock Picking Tutorial Centre

Stock Picking Simplified

Stockopedia takes your stock picking to the next level with cutting edge Stock Reports & Screening tools.

Get started
or Take a Tour to find out more.