Marben's Misc Bits

Well done, you helped me. Thank you very much!

Gosh, is it really that long since I last posted on this thread?!

It's been very a busy day, so rather than tweet individual trades (which I often, but not always, do), I'll document what I've been doing here and then tweet out a link.

So, first up was the outcome of the Lord Chancellor's review of "Ogden rates" (see http://www.bbc.co.uk/news/business-39103069 ). Direct Line Insurance (LON:DLG) has been a core position of mine for some time now, due to its excellent track record of returning cash to investors. Informed investors had been expecting a decision on the Ogden rates for some time, which was promised before the end of February and I had been aware that DLG used a rate of 1.5% vs the previous statutory rate of 2.5%, giving it a certain margin of safety in its reserving of expected claims liabilities. It was therefore with some shock that I read this announcement from £ADM before the market open (DLG did not report the magnitude of the change in their initial RNS). A drop from 2.5% to -0.75% was far worse (from insurers' POV) than expected. I therefore decided to cut my DLG holding significantly ASAP after the market open, and did so at an average of 337.2p. Having seen DLG's subsequent RNS I am pleased that I did so. Suspect their divvy payout is going to be rather less than I had hoped as a result, but will wait for their results on 7th March before considering my next steps.

Next up is Custodian REIT (LON:CREI) . The shares have been extraordinarily strong of late, and are now trading at a premium of over 10% to the NAV  of 101.9p, last reported for December (less the dividend of 1.5875p subsequently paid) and a shrunken yield of around 5.8%. Given Custodian's propensity to make regular placings (enabling them to enlarge their portfolio), I felt it prudent to trim at this level, with a view to buying back more cheaply if/when another placing is announced. Happy to bank some cash in the meantime by trimming @ 111.25p.

BlackRock Commodities Income Inv Trust (LON:BRCI) is another share that usually trades at a premium to NAV - but was on a discount today. So, deployed some of that cash to re-enter BRCI @ 83p having sold out in December @ 87p, when the shares were trading at a premium of around 7% to NAV. With the likes of BHP Billiton (LON:BLT) raising their dividend substantially, BRCI is likely to be able to follow suit. Currently yielding 4.8% @ 83p.

Adjusted profits & amortisation of acquired intangibles

Richard Beddard recently wrote an article about Judges Scientific (LON:JDG) , where he discusses the accounting treatment of acquired intangible assets, and whether adjusted profits (ignoring the amortisation costs) are a fair reflection of "true" profits.

There is one particular area of where I do think this treatment is entirely justified: acquired customer relationships. Unfortunately, IFRS rules require a discrete value to be assigned to customer relationships on acquisition and for that value to be amortised over time. Here's why I think that statutory treatment is problematic and an adjustment is entirely justifiable.

Q: What investment is required to generate or maintain customer relationships? A: Sales and marketing. However, sales & marketing is never capitalised in the normal course of business but is always treated as an expense. Therefore, whereas depreciation of a tangible asset  broadly reflects the actual cost of replacing it in due course (which will be capitalised), we're in danger of double counting sales & marketing costs, which are already reflected as an expense in the accounts and so I do thin k it's entirely justifiable to adjust out amortisation of customer relationships, which is often the major part of the amortisation of acquired intangibles figure.

When considering adjusted profits appearing in an annual report, I always check the accounting notes to discover how much of that figure relates to acquired customer relationships. If it's the major part, then I generally view the adjusted figure as fair. This contrasts with businesses that capitalise software development expense, and where those costs don't appear in the P&L: in that case the amortisation represents a real expense that would otherwise flatter the P&L.

Cheers,

Mark

Better still make your pc dual boot by adding linux as second operating system; linux is free! (as in free beer and in free speech)
I did that 5y ago and never use windows now even though its there

Mark

do yourself a favour and come over to a Mac

With a degree in computer science and ~40 years as an IT professional, I can honestly say that my best ever decision was to ditch Windows and all that goes with it and come over to Apple

T

Just posting this (non-investment related) message to try to save other Norton users the two hours I have just wasted.

Got onto my computer this morning to find that my I.E. browser had crashed. Found I was completely unable to restart it, without getting repeated error messages "Internet Explorer has Stopped Working". Tried everything to fix it, including uninstall/reinstall. Eventually checked the windows event log which showed the error related to IPSENg32.dll... that in turn led me to this forum discussion: https://community.norton.com/en/forums/tonights-up...

I use Norton 360 and it appears that Symantec have released an update last night that breaks Internet Explorer! Pretty disastrous.

I shall revert to Chrome which is unaffected, thank goodness, until Norton release a fix. They will have rather a  lot of irate users!

Cheers,

Mark

Generally I agree that the medium term prospects for the housebuilding sector are benign. However just a note of caution for current would be investors. Most of the quality shares are currently trading at 90%+ of their 12-month high. Timing is crucial.
(I hold PSN, BVS and BKG, in total 14% of my portfolio)

Crest Nicholson Holdings (LON:CRST) is one of my larger holdings, acquired initially in April last year., with some significant top-ups in September & October when I felt the SP was unduly depressed (correctly, with the benefit of hindsight). I therefore studied this morning's results announcement with interest.

On an initial look the results are very strong, with revenues, EPS and dividends growing strongly, ahead of expectations. The outlook is also reasonably positive There are a number of factors, however, which cause me some concern and so I've trimmed my holding @ just over 386p, though by < 20%.

• Average selling price rose 15% and is now £287,000. Crest's South East (but not London) focus was one of the attractions, for me, as demand is particularly strong in that region - which is reflected in the ASP. Nevertheless ISTM that such a high price level is simply not sustainable. Median GROSS pay in the South East region is £24,391, so this ASP represents a very high multiple of regional average earnings.
• FCF is slightly negative, after strong spending on land & working capital growth. Though debt remains modest & not troubling, I don't like the fact that, in effect, rising dividends are being paid out of debt.
• ISTM that some caution is advised in the run-up to the general election, when the market may become increasingly nervous about the uncertainty of the outlook for the homebuiling sector, pending political decisions.

To some extent, all these worries are already "in the price", with the 2014 historic P/E now below 10 and the 2015 forecast below 8. However, I tend to favour Persimmon (LON:PSN), with a more sustainable national ASP of £190,500, a much higher annual cash payout, net cash and positive FCF. After this morning's sale, my Persimmon holding (which is my largest single shareholding overall) is now 55% larger than that I have in Crest. I also have a smaller holding in Bovis Homes (LON:BVS) within the sector.

My fundamental thesis for having significant exposure to the sector (8.8% of my portfolio) is that share prices appear depressed relative to current & forecast earnings, due to fears that the sector is around a cyclical high. I believe those fears are overdone, a) unlike past cycles debt levels in my investee companies are very modest: they have been much more cautious than in past cycles about the prices they pay for land. b) a strong supply/demand imbalance for homes remains and there is a strong political imperative, irrespective of which party is in power, to increase the rate of housebuilding substantially. Finally, the market fears rising interest rates will put pressure on the market - but economic conditions are forcing central banks to delay a tightening cycle and IMO even when rates do rise, they are only likely to do so at a modest pace. 5% rates mooted by a commentator I have seen seem a very distant prospect to me. I therefore feel that this positive cycle still has a long way to run and many housebulders will do well in the next 2-3 years, at least.

Ramridge - liquidity. There might not be enough depth in the market to buy what they need.

Hi marben100
I can never get my head around placings going at a premium. Why would an institution agree to buy at a price greater than the current market value? I am obviously missing something pretty basic.

Finally catching up with everything that happened whilst I was at Mello2014 and the aftermath.

I note that one of my deep underwater natural resources holdings, Baker Steel Resources Trust (LON:BSRT) , made an interesting announcement.

BSRT is an investment trust that invests mainly in unlisted mining companies - hard to think of a more contrarian play at present!

Looks like they're massively expanding the trust, I guess primarily to absorb holdings which they need to redeem for clients in other funds they manage. The interesting bit, however, is that they also plan to raise up to £100m, at a 15% discount to NAV, which equates to around 42p, by my reckoning - but the shares are priced at 31.3p today, having bounced somewhat on the announcement.

I agree with the thesis set out in the announcement that there are bargains to be had in the mining sector, especially cash starved companies with sound assets, which their capital raising could assist. As and when the global economy recovers, such assets could gain massively in value. I have to trust, however, that BSRT's managers won't step in too soon, and will demand tough terms from their investees, as I can easily imagine that the commodities sell-off may have further to run.

Anyhoo... if they can get the proposed placing away, I would expect the shares to trade not too far below the placing price. Hence I have added significantly to my holding today, with an expectation of being able to take some money off the table again, short-term, if they can announce a successful placing.

Cheers,

Mark

I tend to agree. The risk is that the Eurozone plummets again and drags the UK and US down with it. The US is already showing signs that the recovery has run out of steam, only the UK looks strongish in the Western World at the moment but I'm sure the incoming Labour Government will manage to put us back at parity...

Hi,Mark.Lloyds bank looks reasonable value to me.Any views ?

Mark

seems to me that the market has taken a bath and is now busy throwing the baby out with the bath water.

I've no doubt that good stocks are being priced at ridiculously low valuations but the old problem is that such situations can go on indefinitely. Seems to me to be too early to be bargain hunting. Although having said that I could not resist the opportunity to pick up some Balfour Beatty prefs (BBYB) when they fell almost to par the other day. They pay a coupon of around 10% and with a new CEO being brought in to turn the co round, the risk seems sensible vs the reward.

I have turned temporarily negative about the oil sector. We have no real idea where the PoO will settle and no idea when funds will be available to finance development. Every stock in the sector seems to be getting hammered. I will want to see at least a semblance of stability looming over the horizon before I take on any exposure.

Sold my holding of December 2014 FTSE100 6500 put options this morning @ 36.91p .

The options "did what they said on the tin" and have more than trebled in value since my purchase in early September, hedging my portfolio against the major market fall we have just had. As a result, they have grown to be worth around 4.5% of my portfolio, which is a sizeable position for me. So, I'm faced with a dilemma: do I hold them in case of further market falls, or should I "take the money and run"? Two factors played into my decision: what is the risk/reward now?, and time.

Yes, it is entirely possible that the market could fall further, but if I were unhedged, would I buy a hedge now? The answer is "no". At current levels, I feel that the market is presenting value in several stocks and I'd be more likely to be a buyer than a seller - and I have indeed added to several positions, as readers would have seen from my Twitter feed.

The second factor is expiry time. As the December expiry approaches, the options start to lose time value with increasing rapidity and become a geared play on the index. That is not their purpose for me. Risk/reward has reversed from when I bought them, when they offered substantial potential upside in the event of a market fall, which did materialise, but only limited downside, should the market continue moving ahead. The situation has now reversed: yes, they would gain further if the market continues down, but they would lose value very rapidly if the market starts to recover.

So, I'm now happy to sell them and the resulting cash has brought my overall cash position up to around 16% of my SIPP porty, well ahead of my 11% target weight and allowing me to pick up bargains where I see them.

Whilst I think the market is offering value in a number of areas, e.g. housebuilders, Direct Line Insurance (LON:DLG) I am wary of natural resources. I feel the oil selloff may have further to run in the near/medium term and it could be several months before the current supply/demand imbalance corrects and the oil price stabilises and starts to recover (unless the mid-east situation worsens and supplies from the region are affected). This will hit (almost) all oilies but those with higher costs will be hit especially hard and I expect there will be some company failures.

Cheers,

Mark

One inetersting snippet in BG (LON:BG.) Q1 results:

In March, the Sunbird-1 exploration well intersected a gross hydrocarbon column of 44 metres in the Miocene reef, at 1 584 metres subsea, in a water depth of 723 metres, offshore Kenya. Oil and gas samples have been recovered to surface and are being analysed

Perhaps some read-across for Ophir Energy (LON:OPHR) offshore Kenya wells?

Is this the first possible oil discovery offshore southern east Africa? [recoverability/commerciality still TBC, however]

Cheers,

Mark

Nice to see that 3 of my holdings have moved right to the top of the screen-of-screens:

• Amec (LON:AMEC) (9 long screens)
• Pan African Resources (LON:PAF) (10 long screens)
• Kentz (LON:KENZ) (8 long screens)

I was debating whether I should trim AMEC back, as in my ShareSoc AGM report (accessible to ShareSoc members) on the company I'd identified that its Price:FCF was not great and the price has continued rising since, so might be looking a bit pricey now, but Stockopedia's more comprehensive quant analysis persuades me to stick with it! Let's see whether the quant. approach works on this one (though as quant. analysis is statistical, picking a single instance isn't exactly a fair test).

Cheers,

Mark

I've now had a good look through the Admission Document (AD) for Manx Telecom (LON:MANX) (MT) , and decided to add a small number to my high yield porty.

The prospective yield of just over 6% is attractive, but there are quite a few risks Here are some that caught my eye:

• I observe that during the period of Hg Capital's stewardship the business was transformed from a loss-making one (which is undoubtedly why the previous owners, Telefonica, sold) into a business generating decent profits. From Hg's annual reports, it appears that management were strengthened & better financial controls put in place to effect this turnaround. That indicates to me both upside and downside risks: if management can continue improving the business (and by improving the scope of the service offering, I believe they're doing the right things). On the downside, this improvement could be temporary and the business could slide back.
• Regulatory risk: the AD points out that the increased transparency of being a public company may highlight profitability to the Manx regulator, tempting them to try to force greater competition, to MT's detriment. I'm not generally keen on highly regulated businesses.
• Significant revenues/growth are obtained from the Isle of Man based eGaming sector. I have noted that this sector will be affected by the new POC Tax (H/T to CantEatValue for highlighting this issue to me). So, some potential threat to revenues here - but management are mitigating by broadening their the offering, including offering services onshore UK.
• There is a signfiicant pension liability, but it appears to be manageable relative to market cap. & profits, with a gross liability of £67.8m and a net deficit of £3.3m as at 30 June 2013. The scheme is currently in surplus, but the company is contributing £2.3m p.a. (net of employee contributions), which needs to be deducted from profits to to get a more realistic view

On the positive side, a progressive dividend policy is promised, subject to business performance. So on balance, I felt it was worth having a few in my HY porty, which I'm trying to build up, and I don't find very many new attractive opportuntiies to do so, at present.

Results are due on 15th April, and I shall study both 2013 performance and the outlook statement carefully.

Cheers,

Mark

loglorry has enquired what's in my high-yield subportfolio. Here's a table setting it out:

I see that I posted about in previously in #145 above. Main changes are disposal of Vodafone (LON:VOD) when the VZW sale was announced, disposal of Vianet (LON:VNET) - luckily only a small holding: I'm concerned about risks from regulation and the impact this may have on revenues. Also disposed of Halfords, after some strong recent gains and big fall in yield with lower divvy: not high-yielding anymore and (unlike Interserve) growth is priced in, raising risk. I topsliced ICAP since my earlier post, at a high price, if it continues falling might add some back. Added a small position in Begbies, which should benefit if the UK economy normalises and banks start crystallising some losses, instead of allowing zombie companies to hobble on. V recently added GLIF, whose change of direction looks interesting and which offers an exceptional yield, which that change in direction should support. Its shares are depressed for historic reasons IMO.

Cheers,

Mark

I have held shares in the Qatar Investment Closed Fund (LON:QIF) (an investment trust) for some time. Their recent tender offer @ US$1.2674, however was too good to refuse, with the shares trading at well below $1.20, so I tendered my entire holding. I was pleasantly surprised to learn that all my tendered shares had been accepted. Nevertheless, I still like the trust (as Qatar's prospects look strong and the market is on quite a low rating) so wish to hold some. QIF announced their NAV as $1.3193 yesterday, so I was pleased to pick up an initial tranche @ $1.172 this morning. Will be looking to buy more if the SP drifts or NAV (announced weekly) rises.

Cheers,

Mark

Attended Fenner (LON:FENR) 's AGM today. I expect the AGM presentation will be availale on the company's website in due course, but it's not there yet. No time for a full write up, I'm afraid, but here are a few things I picked up:

• Some 85% of Fenner revenues from the conveyor (ECS) division are from aftermarket service (mainly belt replacement). Hence this arises out of miners' OPEX budgets, rather than CAPEX. The company feels that this is poorly understood by the investment community, which presumes that Fenner's fortunes are linked to the evolution of miner CAPEX. Nick Hobson went on to explain that in the early stages of commodity price falls, miners sought to cut all costs (e.g. deferring belt replacement). Such deferent, however, leads to more breakdowns/interuptions, resulting in a higher cost/tonne for the miner, ultimately. As the commodity market progressed, however, miners would seek to improve their costs/tonne, which belt replacement would assist.
• Their AEP division (via Mandals) is the market leadr in seals for fraccing operations. These seals are replaced every 1-2 weeks, whilst fraccing is underway.

So, my view is that Fenner is a sound business, that I seek to invest in long-term. Nevertheless today's statement appears to suggest that interim results will be poor. Management's optyimism about the second half remains to be seen. Therefore I was pleased to be able to cut my holding in Fenner i half @ 454p this afternoon, banking some profits. I expect I'll be able to buy that half back at a lower price, following the interims (should I still wish to do so then). By that time, there should also be some more clarity on commodity prices and the behaviour of the mining industry.

Regards,

Mark

That one's not for widows and orphans !

Added a "new" natural resources stock today: International Ferro Metals (LON:IFL) . IFL is a South African Ferrochrome producer.

I was previously invested there in 2008/9 but the company suffered badly in the financial crisis & I sold out: the ferrochrome price slumped, production fell short of expectations (teething troubles with new plant) and costs exceeded expectations.

Now, however, we may be past those problems. According to the last IMS/prodution report:

• Production is rising
• Costs are falling (ZAR6.43/lb)
• The company benefits from the weak ZAR. Those costs translate to USc 60.1/lb
• FeCr prices have been rising (over USc120/lb now)
• Recent director buys

After several years of losses, an EPS of ZARc 25.1 is forecast for Y/E 30th June 2014 and ZARc44.8 for the subsequent FY, putting the firm on a current year P/E of 6.9 and a 2015 P/E of 3.9.

The December quarter production report is expected later this month & interims next month.

Cheers,

Mark

Some sharp price moves today offer an opportunity for a bit of rejigging of my high-yield sub-portfolio:

• Trimmed Halfords (LON:HFD) to a pretty small holding now: seems a lot of "hope value" in the price, prospective yield not v attractive. Keeping some for monitoring pruposes.
• Added some more Direct Line Insurance (LON:DLG) : v attractive yield at this price
• Also added back some ICAP (LON:IAP) previously trimmed @ 400p at 367p now, with a better yield on offer.

Prior to this was rather underweight my desired size in higher yielding stocks, so today has offered an opportunity to increase my weight a bit. Still scope to add more if more attractive prices become available, or a new high-yield opportunity presents.

My complete high yield portfolio now comprises:

*Interserve can't really be described as high-yield any more (it was when I bought it at around 200p!) but still looks an attractively priced growth stock. So, whilst I've topsliced more than my original investment, I'm still retaining a decent holding.

Cheers,

Mark

Added back some of the  Baker Steel Resources Trust (LON:BSRT) that I trimmed at the start of the month at 60p, for 52.5p now.

Since then, BSRT's underlying investments have been improving on the back of rising copper and gold prices. I estimate the discount to NAV now at around 30%, vs 13.5% when I sold. IMO there is a strong possibility of both gains on underlying investments and a discount unwind, in due course.

BSRT released its interim results on Friday, and I have taken the new declared holdings and their current share prices into account in estimating the current NAV (73.2p). The chief listed holdings are Ivanplats (TSX:IVP), Metals Exploration (LON:MTL) and China Polymetallic (HK:2133).

Cheers,

Mark

Been a busy day, with RNSs from Premier Oil (LON:PMO), Nighthawk Energy (LON:HAWK) and HgCapital Trust (LON:HGT) .

I regard Premier's interims as "steady as she goes". Some minor disappointments but the medium term picture looks good to me (barring an oil price collapse), with plenty of new projects in the pipeline to boost production.

The "biggie" for me is HGT's report whch was more than a little disappointing, with some writedowns leading to a fall in NAV in the first half. The market had well overcooked the share price prior to the announcement and I tried to sell some of my pretty large holding early doors, but the price fell too rapidly, so at the current price level, which reflects a zero preimum/discount to NAV, I'm happy to hang on for the long-term, for the reasons explained below.

One, three and five year NAV performance has been poor, underperforming the FTSE all-share, but there has been strong outperformance at the seven and ten year levels. I suspect that recent underperformance will turn into outperformance in the coming years.

Firstly, I do not expect the reported writedowns to repeat. They are largely due to the extreme weakness of the European consumer affecting a small number of investee companies. Their other business are growing nicely and I expect profits growth to accelerate in due course, to match revenue growth ("due course" might mean 2-3 years, however).

Secondly, the trust is still very much in the "investment phase", having held a significant proportion of cash for a while. It has deployed some of that cash post- the period end and is actively pursuing further opportunities, forecasting full investment in the near future.

Thirdly, NAV should get a boost from realisations as HGT6 starts to mature.

So, all in all, I feel that the prospects for a return to outperformance are good. Nevertheless, I might consider a tactical trim, in the light of the unusually low discount and general market risks (which I tweeted about earlier today).

Cheers,

Mark

Sold the initial tranche of Kentz (LON:KENZ) that I acxquired just 10 days ago, at around a 30% profit @ 590p. Disappointed that an approach has come so quickly, as I'd been hoping to build a larger position at a more opportune time. However even though there are two bidders, I do feel there is no certainty that any bid will be confirmed, so I'll leave it to the M&A arbs to see whether they can squeeze any more out in the short-term. Of course, if the bids are called off, I'd be keen to reinvest.

With a larger shareholding in Amec (LON:AMEC) , I hope/expect that they will keep to their word and not overpay to acquire Kentz.

Cheers,

Mark

Sorry- double post because of connectivity glitch, now deleted

Thank you, Mark, for those interesting comments. Undoubtedly your approach has been the smart way to play RCP since 2006 (whereas from 2003 to 2006 and indeed from 1995 to 2000, LTBH would have been all that was needed).

If the company adopted the measures you advocate to manage the discount/premium to NAV, it might do your trading strategy a disservice!

Best regards

Hi nybor,

Likewise today's SP is barely above its September 2008 level. I have held since 2006 and my annualised return is a mere 3.8%. 

Thanks for making that point. At the end of September 2008 NAV stood at 992p, whereas it is 1,378p now. So in NAV terms, annualised return is a reasonable 6.8% + dividends. However, the SP stood at 1119p then vs just 1220p now, explaining the poor return you actually achieved.

This is an excellent illustration of why the company really should implement a more proactive discount/premium control policy. If the company issued shares when they stand at a significant premium to NAV, as they did at the end of September 2008 and bought them back when the discount is significant, as it is now, shareholder returns would much better reflect the underlying NAV performance and that NAV/share performance would be enhanced through selling shares at above intrinsic value and buying them below intrinsic value.

Unfortunately, I am unlikely to be able to attend next year's AGM and make this point in person. If you possibly can, I would recommend that you do so. Either way, I will try to make sure that another member of ShareSoc does. May also be a good idea to write to Lord R. concerning this point.

RCP has rewarded those (no doubt like you) who have made good entries and exits, but for LTBH slowcoaches like me, it has barely achieved its stated aim of capital preservation.

I have held the shares since 2002, but have traded them quite actively, depending on my view of the market and my estimate of discount to NAV. I sold out altogether early in 2008 @ 1075p and started re-entering in early 2009 @ 896p, adding some 12 tranches from 780p to 960p. I subsequently sold out again (in a series of tranches) in late 2010 with the last tranche being sold at @ 1205p, when I estimated that the shares stood at a consideable premium to NAV (which proved correct).

That premium disappeared quite rapidly and I have been rebuilding my holding since later that year, with it now standing close to a high water mark (in terms of value) again.

As you say, this absence of discount control allows those, like me, who trade the shares to take advantage of the market, effectively at the expense of LTBH holders who buy & sell at "the wrong time". I'd prefer just to LTBH myself.

Best,

Mark

I'm glad to see you generally positive on RCP, Mark. For me too it is a significant holding, though by no means my largest. Yes, the NAV performance YTD has been strong. But it needed to be after a very disappointing run throughout 2011 and 2012. Likewise today's SP is barely above its September 2008 level. I have held since 2006 and my annualised return is a mere 3.8%.

RCP has rewarded those (no doubt like you) who have made good entries and exits, but for LTBH slowcoaches like me, it has barely achieved its stated aim of capital preservation. Let us hope its return to form this year can be sustained. Certainly Lord R's statement today suggests they are comfortable with their recent reading of markets, unlike some of his statements in recent years when he said fairly plainly that market conditions at the time were not for them.

As a footnote to the above, I note that Lord R has appointed his daughter, Hannah to the Board.

I guess his son, Nat (who was on the Board a few years ago), might be in the dog-house for a few years, after his disastrous foray into Bumi (LON:BUMI) :0). I am sure Nat will have learnt a few painful lessons from that adventure, which should serve him well in the future.

Good to see that Hannah is up to speed technologically, and I am now following her on twitter @jazzybaroness

Mark

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

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.

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

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

Sept 6250 puts :-))

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

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?

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

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.

@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.):

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

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:

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!

It is a troll.

Ignore it, don't feed it.

'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

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?

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)

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?

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.

Cheers,

Mark

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.

Log

I have just read a learned article which illustrates precisely what is wrong with the academic approach to finance: http://www.nature.com/srep/2012/121018/srep00752/full/srep00752.html - 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 stocks^{19, 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.)

Cheers,

Mark

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.

Cheers,

Mark

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

Well, so much for Isaac's dire prognostications re Halfords: http://www.investegate.co.uk/Article.aspx?id=201210040700078819N

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.

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.

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.

Log

Are the moderators paid? Do they undergo any training? Is there a clause in the T&Cs that say that their decision is final and it is there content to administer how they want to ? I suspect No, No and Yes to these questions but I haven't bothered checking.

If I got something for free and it didn't turn out to be quite what I expected I wouldn't complain too much. Anyway you moved on and I don't really care too much.

In my mind these boards are very useful ways to share information but I doubt they'll make their owners rich. Fortunately, if one went bust or didn't give us what we wanted we could just move to another and there always seems to be people willing and able to fund them.

Log

I left TMF because I did not like their treatment of ee. Simples.

what do you expect for free?

Wouldn't it be cheaper for them to moderate less aggressively?

Both fair comment guys but you have to realise that TMF don't really need your contributions either. The boards don't make them any money and its a service they provide which costs them money to administer. It is a very hard space to monitise. I can therefore see why they might take rather draconian actions at time because they are simply not being provided with enough resources to do anything else.

Put simply what do you expect for free?

Well Mark I have to disagree because what counts is not moderation practices and pretty pictures of edit facilities but the content and S'pedia is lacking in good content provided by quality posts.

There are some exceptions to this but generally speaking there isn't nearly the same quality and depth of posts on S'Pedia as there is on TMF. TMF will survive because it is the best quality. If you were to remove the Soco content on S'Pedia I doubt there would be very much left of interest to most. This may well happen as a function of corporate action anyway.

Stockopedia is a me too in a very crowded space. The other entrants in that space make little or no money and have been there for some time. I don't think selling premium market data products is going to generate much revenue either. I'm just guessing but I suspect Stockopedia is in a fairly fragile financial position.

Full marks to Stockopedia for the technology and its willingness to improve and take on board customer feedback but the real value is in the quality of posts on the boards and I'm afraid with a few exceptions (your contribution being one of them) it lacks that. I don't think S'Pedia have done much wrong - its just a very hard space to make money in.

Also I can't really blame them for removing posts that link to a competitor website. It's hardly surprising is it.

Ok bring on the big red thumbs ;-)

Over on TMF, fredahad raised this point, after earlier posts lamenting the dearth of activity in PP's pub:

As regards TMF boards' lack of activity: -
What we are up against is dilution of primary content on TMF by all the other alternative media -Twitter, Sharesoc blogs, other blogs and forums. Would it be an idea if the "Pub" could be considered as THE hub for all these alternatives, with, at the very least, links posted from there to the alternatives, on subjects that are considered of interest to TMF regulars? It might be that original content remains on PP Share Ideas, and the links be posted on PP "Other Stuff" (to avoid the Pub becoming like the Wild West)

I responded as follows:

Would be glad to so... except that when I posted articles on Stockopedia and linked them on TMF, TMF pulled my posts. If I knew that my posts wouldn't be pulled, I'd be glad to post links here.

Moderation for what appears to be commercial reasons is a key factor in why I rarely post here now.

Yesterday, my post received quite a few recs (11 when I last looked). Surprise, surprise, TMF have pulled it, this morning. Kinda proves my point.

While TMF moderatesoveraggressively, it will be impossible for their BBs to be any kind of "hub". I will, of course, continue to use Stockpedia as MY hub for posting articles. Besides sensible moderation and a management that is incredibly responsive to users' issues, I find S'pedia's modern technology allowing pictures, tables, charts etc to be easily incorporated into well-formatted articles to be far superior to TMF's outmoded pure text based approach with only the most basic of formatting capabilities.

Mark

Signet Global Fixed Income Strategies Ltd (LON:SIGG) (which I hold as an arb. opportunity) has now published its final NAV for July: 90.72p/share. This is the NAV to be used in calculating details of the tender offer. Plugging this figure into the formulae for calculating the tender parameters, I arrive at:

• Maximum tender will be 18,738,977 shares
• Basic entitlement = 19.5% of holders' shareholdings
• Tender price will be 90.35p

Current bid price for the shares is 68.5p.

Cheers,

Mark

E&OE

I live-tweeted Premier Oil (LON:PMO) 's rather lengthy interims conf. call call this morning (@marben100). For convenience, I'm copying my tweets below, as notes. The accompanying presentation slides can be viewed here, and are well worth a look. 

• Has grown NAV at CAGR of 14.2%
• Chim Sao currently @ 35kboepd, well capacity 40kboepd
• FDP approval received for 10mmbbl Dua development, first oil end 2013
• Pelikan & Naga first gas into GSA1 1Q14
• Huntington on schedule/budget - first oil expected December/January. Well results ahead of expectations. Rochelle also OK.
• Solan 1st oil expected 3Q14
• Negotiations ongoing with Catcher JV consortium re development concept. Targeting 1st oil early 2016.
• Sea Lion is LESS waxy than highly successful Chim Sao but needs more heat. Measures to deal with waxiness in Sea Lion discussed.
• Sea Lion production technology similar to UK's Captain field. Well proven.
• Falklands logistics dicussed. FI will be supplied directly from UK - Islands will be forward supply base for Sea Lion development/ops
• Development concept and UK based logistics allowed for in published costs for Sea Lion.
• Sea Lion sanction expected mid 2014, 1st oil mid 2017
• Risked prospective resources 453mmboe
• Kenya: has 2D seismic, 3D + AVO planned for this November. Potential well 2H13
• 3 Falklands explo wells planned for 2014
• Lacewing & Luno wells in Q4 this year key prospects.
• Realised oil price $110.5/bbl, gas $9/mcf - moving to opportunistic forward sales rather than hedging to manage price risk
• 2013 fwd sales averaging $110/bbl
• Current tax charge of 40% of operating profit expected going fwd.
• $1.6bn of tax losses/allowances c/f
• No UK cash taxes until 2018 due to allowances
• FY development CAPEX $650m, explo $180m
• ALL development projects, explo & dividends funded at oil $85/bbl+. CAPEX profile fully funded @ $65/bbl
• $2.6bn p.a. of annual cashflow anticipated once Catcher onstream.
• Questions begin...
• Partners in GSA1 incentivised to increase PMO share to avoid penalties, as their prodn. declines. Pelikan & Naga will be + for PMO
• Apache failure would not have -ve implications for Kenya explo.
• Intends to build up G&G staffing. Will be bulding development team for Falklands - progressive over several years.
• Development staff for FI will become available as other projects complete.
• No significant divestments planned.
• $350m p.a. pre-tax ($250m post-) explo budget planned going fwd
• NS rig market tight. Has Solan rig contracted for full programme. Bream is proving tricky to contract rig for. No prob. for Catcher.
• Farm down of Sea Lion would be considered but is not current intention. CC ends

Cheers,

Mark

PPS The strategy of consolidating small, undervalued and poorly financed miners (or near miners) into a much larger and well financed entity seems extremely sensible to me, as market valuations have become derisory and mining juniors have huge difficulty raising finance to advance their projects.

PS Endeavour has a modest amount of hedging in place (110,878oz spread across 5 years) and fluctuations in the hedge valuation distort earnings figures. Reported earnings are also heavily affected by fluctuations in deferred taxation. Cashflow tells a clearer picture, IMO.

Rather pleasing to see an all-share bid announced after market close yesterday for Avion Gold (TSX:AVR) by Endeavour Mining (TSX:EDV). At Endeavour's closing SP, it values each Avion share at C$0.876* - a big premium to last night's close of C$0.56 (after strong recent gains for Avion).

This looks like a win-win deal to me, as an Avion shareholder:

• Clearly Endeavour share my view that fears over the Mali coup have been heavily overdone. Avion has continued production and gold sales uninterrupted. Indeed, Avion recently reported record production of 28,640oz for the June quarter from their Mali mines.
• Endeavour itself looks undervalued to me.
• The whole looks stronger than the sum of the parts: Endeavour is currently a 200,000oz p.a. producer. This deal takes the combine straight to 300,000oz with expansion projects in the pipeline taking it to 500,000oz in 2014. The all-share deal results in a well-financed business with strong cashflow, easily able to fund CAPEX from its won resources.

As I wasn't previously familiar with Endeavour, I've done some preliminary research and like what I see. Endeavour Mining Corporation has grown out of a mining financier, Endeavour Financial, closely linked with Canadian Entrepreneur Frank Guistra. A couple of years ago, it appears to have decided to turn itself into a miner, by acquiring smaller mining cos. This strategy appears to be succeeding and it now has two operating mines, in Ghana & Burkino Faso. Production has grown very rapidly (mainly as a result of acquisitions), to now reach 102,691oz for the six month period to 30th June 2012 (see recent quarterly report), produced at a "cash cost" of US$679/oz.

As might be expected, this threw off a substantial operating cashflow of US$57m (before sustaining CAPEX of $7.7m). Endeavour's balance sheet is sound, with $136m of cash and $100m drawn of a recent $200m revolving credit facility, lasting until 2016 (but reducting to $125m from 31 December 2014).

I really like the look of the combined entity:

• Risk will be well diversified, with three 100,000oz p.a. operating mines in Ghana, Burkino Faso and Mali
• Expansion to a total of 500,000oz p.a. is well underway, through the Tabakoto (Mali) mill expansion taking Malian production to 200,000oz in early 2013 and by a further 100,000oz coming from the new Agbaou mine (Cote d'Ivoire). A mining permit is pending, with first production targeted for the first quarter of 2014. Clearly this can be funded from existing cash, debt facilities and cashflow.
• The combined Endeavour/Avion entity has numerous further growth opportunities from existing licences in West Africa.
• The deal looks decent for Avion shareholders, ending up with 39.8% of the combined entity

There are some aspects of this I don't like:

• The loan agreement and break clause looks highly favourable to Endeavour - but that'd only be an issue if the deal didn't go through.
• Endevaour seems to have some very generous bonus and option schemes in place for its executives.

*Mr Market seems to disagree with my view. Whilst Avion's shares have gained strongly on the news (currently 20% higher @ C$0.68), Endeavour has been hammered, with the shares currently at C$1.95, down nearly 20%. I guess that fear re Mali still rules. At these levels I will be very happy to retain my Avion holding and let it convert into Endeavour shares. If all goes well, a 500,00oz West African focussed producer would look like a very tasty target for a mining major, in a couple of years time, if not sooner.

Cheers,

Mark

Roger Lawson & I attended Halfords' AGM on Tuesday, in Birmingham. Roger has written a report on the AGM, which is available on ShareSoc's member network, here: http://sharesoc.ning.com/xn/detail/6389471:Comment:18669 and I have added my comments and further notes in response to his report.

To access the report, you'll need to be a member of ShareSoc. If you're not already a member you can join as an associate FOC here: http://www.sharesoc.org/free_membership.html

Once you've joined, you'll receive an invitation to register for our "members network" private social network, from where you'll be able to access the report (and reports on over 70 other AGMs). If you're already a member and have any difficulty accessing the report, please do not hesitate to contact us here: http://www.sharesoc.org/contact.html


It was a useful AGM and I remain reasonably optimistic for the longer term. Following Wild's departure, the Board  acknowledged that the company's service levels were not up to scratch, with too much inconsistency between branches. They stated that they were fully focussed on addressing this.

IMO the bearishness has been overdone and we are more likely to be around the bottom of a cyclical decline than in  a terminal one. There are signs of hope already: http://www.guardian.co.uk/environment/bike-blog/2012/jul/25/bradley-wiggins-boost-uk-cycling-sales 

...Halfords, which sponsored the ITV4 coverage of the Tour with some of the most irritating ads seen in recent years (perhaps it was just me?), says it has seen an 18% increase in sales of bikes and related equipment over the last seven days. Sales of its top-end Boardman bikes, which cost £600-£1,300, saw a 12% increase in July following disappointing sales figures in the spring...

Cheers,

Mark

Mark

Halfords mentioned in Panorama for misleadings customers on making them pay for the disposal of tires :

http://www.bbc.co.uk/iplayer/episode/b01l316c/Panorama_Britains_Biggest_Waste_Dumpers/

Buying stocks in companies that pay high dividends can be a bad strategy especially if the dividend a)Is not sustainable and b) the prospects for the company look weak.

I am all for dividends on the basis they are sustainable long term.

The IG Android Ap is AMAZING btw - I am very impressed with IG over the years, the only surprise is I don't hold any of their stock in my portfolio!

Short the rallies seems to be the name of the game. It is interesting that after each bailout we get massive rallies in the pre market, shorting them works well as the bailout's don't really solve the solution so the markets unwind.

It seems a bit of an obvious trade at the moment.

Fenner.. i'm a holder, so a bit interested in your tweet last week.. What's your opinion of their debt situation? I've taken the bold position of thinking that i know zip about businesses are financed, through debt or profits, while the management Do know. I bought into Fenner while looking at the defunct Churchill mining, who had a scheme, written on a fag packet possibly, to shift coal to the indonesian coast by conveyor belt - a distance of 100KM!! I thought if they dare even suggest such a thing there's probably a bright future for conveyor belt makers [about 2/3 of fenr's profit is from CB's]. resources are getting devleoped in increasingly remote places. & i was impressed by the director's piece in an annual report - actively looking for problems.

Fenner's Z score.. suggests some risk. the net debt has risen 25% CAGR, which is a higher rate than revenues, earnings, fixed assets etc. The main part of the Zscore measures EBIT / Total Assets. Fenr [800m/100m] passes the threshold.. but fails on Market Cap / Total Liabilities [650m/490m]. hopefully that's a lot of long term debt.

i also notice that capex seemed to fall right away from 2009. it was high in the years before. this has freed up a lot of cash. i'm wondering [rather than asking] what another round of investment would do to the finances, and how regularly one can expect a cycle of heavy investment to occur.
Thanks!

marben.. if you can take time out from your busy twitter schedule, i'd like to ask a question - relates to stockopedia, quantitative analysis, & to your announcement today that you're now into WEIR. Obvs (as tweeters have it) you can't follow all the companies in a sector, so i can't tell with whom / with what you're comparing Weir, but i Rushed to stockopedia to compare them with other oil service firms.. i'd like your opinion of the valuation S'p puts on them..

in the 1st 2 columns, stockopedia's margins of safety. 'o' for % overvaluation, 'u' for under. the epv is, AIUI a retrenchment valuation, as if you got to take the company over and run the current products while avoiding extra spend on r&d and a growing sales budget. (is that, indeed, a informative way to value a firm??). then piotroski and Z scores.

the fcf>eps column is my rough measure of how those 2 measures compare, year by year. a 5 means fcf exceeded normalised eps, down to 0 indicating a complete undershoot.
the last column is a crude summary of the table, taking no account of recent news..
now, this isn't a ramp for the wonderful Kentz (LON:KENZ), but quantitatively, WEIR look like a mid-table firm. Why not (following buffett) buy Even More PFC, for instance?

Interesting tweet from @Wexboy_Value just now:

As I highlighted http://wexboy.wordpress.com/2012/05/25/ass … $FIG & others to benefit frm secular shift in institutional investing allocations http://www.bloomberg.com/video/94532081 …

Solves a small riddle that had been puzzling me concerning RIT Capital Partners PLC (LON:RCP) (and I intend to ask about at the next AGM): why the recent strategic shift into asset managers? Specifically:

• Investment in Brazil's BTG Pactual (some of which was realised in a recent IPO)
• Investment in Renshaw Bay, Bill Winters' company. [Bill Winters is now on RCP's Board]
• Investment in China Creat fund managers
• JV with Edmond de Rothschild, involving taking a 49% stake in Capital Holdings

They all fit the theme that Wexboy highlights: institutions are desperately seeking returns. Neither bond nor direct equity investment in traditional markets look particularly attractive [sic ;0)]  - so there's $5trillion (per the Bloomberg report) looking for a home with "alternative asset managers". That's one heck of a lot of potential fee income. ;0)

So, I'm happy to get my exposure to this sector via RCP. A pretty safe bet in turbulent times, IMO. :0)

Cheers,

Mark

It was also stated that the company would target 2x dividend cover in the medium term, but was mindful of the importance of dvidends. [FWTW]

Easy - Halve the dividend and it's covered by 2.

Looks like I won't have to ask the Board about the Which? survey. The question was already asked and answered towards the end of the Q&A in the preliminary results analyst presentation.

Wild, the CEO, said that the Which? report was not consistent with their own sampling. He reported that the Which? sample was only about 100 customers, whereas their own sampling was much more extensive. Halfords will, however, use this report as a "call to arms" to staff to action customer service training mentioned earlier in the presentation.

It was also stated that the company would target 2x dividend cover in the medium term, but was mindful of the importance of dvidends. [FWTW]

Mark

Agree, some of the hefty remuneration packages seem to be getting out of control. I've no beef with those where it is justified (eg a significant increase in profitability/a large surge in payout/share performance) but it has become more obvious recently that many are still reaping siginificant rewards even as the companies they run publish dire results.

Good luck to you in your Shareshoc endeavours in that respect.

Hi Mark,

Regarding your " What we will be asking tough questions about this year, is the "worst retailer" report and I intend to do my own "mystery shopping" to form an independent (though limited) judgement."

I have to say I found it surprising that Halfords secured this dubious award havign frequented the Elstree/Borehamwood branch and been pleasantly surprised on each of the five occasions I happened to venture in there. The staff were both friendly, helpful, and eager to please regardless of whether I was picking up some bits for the car, or getting my bike its annual once over.

Must be very much a case of some stores being alot worse than others.

Marben

A quick Summary of Halfords results :

-Profit before tax down 27%
-Debt up from £103m to £139m - So they bought back loads of shares (£63m worth) whilst weakening the balance sheet
-Current trading 'very disappointing'
-Despite tough trading conditions they are growing their workforce by 1000 new employees
-Free cash flow generated last year was £70.4m vs Dividend payments of £44.4m so dividend was covered 1.58 times
-With increased debt = higher finance costs = lower cashflow to pay the high dividend, add in further weak trading & continued capex spend of £20m per year & the dividend becomes unsustainable. Finance costs are double last year.
-They won't recieve the one of interest income from 2011 in future years.
-Cost of Sales have increased but revenue slightly down

-Property rents are up

- Staff costs are up approx 10% to £155.8m, almost a third of the market cap

-Corporation tax down from 28% to 26% but profits still down on the year

I would also question the management on the following statement :

Capital Expenditure

 

Capital investment in the period totalled £19.7m (FY11: £22.8m) comprising £15.2m in Retail and £4.5m in Autocentres. Consistent with prior periods, management has continued to adopt a prudent approach with regard to capital investment and has focused on investments generating material returns.

 

Within Retail, £11.5m was invested in stores, and included £1.2m in three new London stores, together with two completed store relocations. It also included £10.3m of investment in 83 store refreshes, the rightsizing of two stores, other expenditure covering general maintenance and the investment in three laboratory store formats opened recently.  Additional investment in Retail infrastructure included a £2.4m investment in IT systems, including further development of the online customer proposition, £1.0m in logistics and £0.3m in central facilities.

 

A further £4.5m (FY11: £6.2m) was invested in Autocentres predominantly to drive the centre roll-out plan and upgrade centre equipment, especially in relation to the delivery of the tyre proposition. 

 http://www.investegate.co.uk/Article.aspx?id=201205310700104694E

Why is the value of the property,plant and equipment (PPE) down for the year if so much money is being spent on capex? Answer is ofcourse £21m worth of depreciation so in effect they seem to be almost  spending as much as depreciation. They spent about £17m on PPE.

Also a look at the cashflow statement shows a loss on the sale of PPE for the year, hardly prudent management!

One bright spark is management appear to have converted some of their short term borrowings into longer term finance that is due in over a years time, however I would urge caution, the balance sheet appears to be geared quite heavily and trading is in a downturn.

Let's not forget Halfords were voted the worst retailer for Customer Service recently.

Well, I've added to my holding @ 237p today: nearly a 10% yield now, which appears sustainable to me. Still generating an FCF/share of 40p - not bad against an xd-equivalent share price of 223p. I'll be sticking to my simple strategy: buy things that I find cheap and sell when they're not or become overweight, rather that trying to read tea-leaves.

With put options in place, protecting against potential market crashes, I prefer to have my cash invested, earning beefy divvies. :0)

Results looked awful for Halfords this morning Mark....

I still have'nt bought, I would be a buyer after a prolonged period of sideways movement followed by a slow and steady rise on the back of a positive trading statement.

The chart looks awful, amazing how the markets tell Investors to avoid the downtrending shares - people could have sold much earlier & still can whilst the direction is down :

This afternoon, swapped FTSE100 covered warrant puts that I hold to hedge my porty as follows:

• Sold SY35 5700 strike, Jun 15th expiry
• Sold SY44 5500 strike, Dec 21st expiry
• Bought SY04 5250 strike, Sep 21st expiry

My rationale is as follows. Firstly, I wanted to take profits on the June expiry puts (bought in February when the FTSE stood at over 5900). They have now become rather risky in themselves, as wild market swings, in either direction, are quite possible in the short time remaining until expiry. What I want now is hedging that will last over the next round of Greek elections and subsequent events/market reaction. Hence the September expiry nicely covers that period.

As markets have fallen, I've been adding to my portfolio, so the amount of equity exposure I need to hedge has increased. By swapping to a lower strike and a shorter expiry than the December one I've had in place, I can buy a larger quantity of puts and free up a modest amount cash.

I can now feel comfortable to continue deploying cash, if opportunities present themselves, knowing that I don't have to worry about market crashes if the global economy looks like its going pear-shaped.

My intention is to review my position in a month's time (whilst there's still a decent amount of time-value left in the September puts). We (and the markets) should know a lot more about the European situation by then, but that still leaves concerns about China, India and the US. I will try to take those risks into account when judging what represents a real bargain, as opposed to an apparent one. A specific concern that I have (per the piece I wrote on TRY) is that banks have still not properly written down European properties that are now on their own books after the 2008 crisis. That presents a similar risk to that in 2008, that there could be a liquidity freeze-up, with banks scared to lend to each other. Hence refinancing needs for any indebted potential investments require close scrutiny. Those with significant debts may get sold off, but as long as the debt maturity is relatively long, the risk may be lower than the market judges (providing that there is a sound income stream allowing the debt to be repaid, ultimately).

http://www.youtube.com/watch?v=Jmg86CRBBtw

Cheers,

Mark

Mark

I don't agree with Soco directors taking a 100% bonus for their performance last year.

I am actually VERY ANGRY as I feel they are totally taking the p.

Can you please tell me what is ShareSoc's view on this? I have voted against their remuneration & I personally want to send them a message across that greed and excess for failure is unacceptable.

55,000 boepd at the end Dec 2011 was not achieved. If they did achieve it what kinda bonus would they get? 200%?

I mean seriously someone needs to put the execs of UK Plc straight.

Congrats on Faroe - http://boards.fool.co.uk/sharesoc-1-v-fatse-faroe-0-12561306.aspx

Considering that Halfords rate "service" as one of their differentiating points from competitors (or the internet), this is certainly disappointing. Definitely a question to be raised at the AGM on this. And yes I hope they choose a more convenient time and place for it this year. Tesco have devised a cunning plan to avoid being mobbed by shareholders this year after their dismal performance - holding their AGM in Cardiff at 11.00 in the morning. I have been to an AGM in Cardiff once before, but the timing does not help.

Halfords has been voted the worst shop on the high street

http://uk.finance.yahoo.com/news/shoppers-rank-halfords-lowest-high-155745941.html

Hear, hear, Mark! We think ShareSoc's a fantastic initiative and would encourage everyone to sign up and join them. It's free after all for Associate membership and registration is quick and easy, or it's less than £3 a month for Full membership, which is frankly very little in the scheme of things (the cost of a pint!), given all the good work they are doing on the lobbying front.

I think there are a lot of ways in which Stockopedia and ShareSoc can collaborate, and we'll be working hard on a number of them in the coming months, but that's certainly not a reason not to sign up to ShareSoc, as it's a different organisation with different objectives, as Mark notes. 

We'd love to help make the "Shareholder Spring" a reality. For that, there needs to be more bloggers, more lobbying and more instances of active investor self-organisation - the United States are ahead of us on many fronts, although it's a bigger market and they have RegFD. 

The power of greater numbers will make ShareSoc's lobbying efforts that much more effective, so the more people that join them, the better for all of us who care about a fair deal for private investors, so spread the word...

Mark

Would Sharesoc consider merging with Stockopedia? Too many bb's to visit!

I think it will be a win-win for both parties.

What do you think ?

Here's a little more on EnCounter:

http://www.upstreamonline.com/live/article1247438.ece

UK independent Premier Oil has signed an exclusive co-operation deal with a new explorer, EnCounter Oil, to pursue new North Sea plays.

The new outfit is made up of the former senior exploration team of EnCore Oil, which has operated as a subsidiary of Premier Oil since January.

Former EnCore Oil chief executive Alan Booth and former geosciences manager Paul Young are among the directors of the new London-based company.

Under the agreement, Premier Oil and EnCounter Oil will jointly seek to identify new exploration opportunities in the Central and Northern UK North Sea for Premier to pursue.

Premier Oil said it “hopes to harness the proven exploration skills of the EnCounter staff...to improve the quality and materiality of its exploration programme in the UK North Sea”.

The independent has applied for 15 licences, ten of them operatorships, in the 27th licencing round.

It looks like Alan Booth & co are back in business! Per Premier's IMS, out today:

Premier has signed an exclusive arrangement with EnCounter Oil, a new exploration company set up by the former senior exploration team of EnCore, to seek additional exploration opportunities in the Central and Northern North Sea. 

Can't wait to hear more about EnCounter.

Last year's AGM statement from T Clarke (LON:CTO) was quite full. For me, the order book is the key figure as I expect it will drive sentiment on the share which is currently poor.

The forward order book stands at £180 million as at 30 April 2011 (April 2010: £200 million) of which £110 million is scheduled to be completed in 2011 having completed £45 million of work so far this year.

http://www.investegate.co.uk/Article.aspx?id=201105130700085235G

All that said, come the AGM we will be more than four months into the full year and Outlook will be important too. Shares are currently 51p to buy, with a forecast of 6.66p (Morningstar - Stockopedia has 6.80p) for 2012 and 7.39p (Morningstar) for 2013 (Stockopedia has 7.41p). Dividend for both years is expected to be 3p.

Looking at those numbers again makes me rather nervous for my holding... it feels like a good statement is compulsory at the current price.

Regards,

Asagi (long CTO)

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).

Cheers,

Mark

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.

Nice digest of Warren Buffett's annual letter to investors by TMF US: http://www.fool.com/investing/general/2012/05/04/25-must-read-quotes-from-buffetts-letter-to-shareh.aspx 

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.

Cheers,

Mark

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.

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

Thanks for the heads up Mark

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.

Mark,

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.

 

ShareSoc Recommends Voting Against Faroe Petroleum Remuneration http://myemail.constantcontact.com/ShareSoc-Recommends-Voting-Against-Faroe-Petroleum-Remuneration.html?soid=1104305073958&aid=NM3bFdjgNXw via #constantcontact

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

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

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.

Cheers,

Mark

*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.

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.