Marben's Misc Bits

Monday, Apr 02 2012 by

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

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

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

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

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174 Posts on this Thread show/hide all

Fangorn 2nd May '12 36 of 174

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

Thanks for the heads up Mark

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marben100 3rd May '12 37 of 174

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.

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marben100 5th May '12 38 of 174

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

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


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

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

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

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


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

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

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



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marben100 5th May '12 39 of 174

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.

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Gormless George 6th May '12 40 of 174

In reply to post #65773

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

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

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

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

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

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

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

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marben100 7th May '12 41 of 174

In reply to post #65786

Hi "George",

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

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

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



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

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marben100 7th May '12 42 of 174

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).



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Asagi 7th May '12 43 of 174

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.

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.


Asagi (long CTO)

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marben100 17th May '12 44 of 174

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.

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StrollingMolby 17th May '12 45 of 174

Here's a little more on EnCounter:

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 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.

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Isaac 19th May '12 46 of 174


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 ?

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marben100 20th May '12 47 of 174

In reply to post #66025


We are two very different organisations, with different objectives. ShareSoc is a not-for-profit, campaigning organisation, very much for our members, by our members. Our BBs are not intended for regular discussion (especially on companies) - I'll come back to that issue in a mo'.

Stockopedia OTOH, is a commercial entity. Stockopedia's founders share many of our aims, especially in creating a "level playing field" for private investors, as far as is possible. They also, quite reasonably, aim to make a profit and compete with other BBs. I and other ShareSoc directors find the features of Stockopedia's software and the responsiveness of their management to user raised issues excellent. So, there are certainly a number of matters we can co-operate on (and do) - but we do not explictly favour any one commercial service over another.

ShareSoc's remit is different to Stockopedia's. We are a campaigning organisation (and will also be developing other services, such as private investor education). We campaugn both in the cases of individual companies where our member shareholders feel they have been mistreated by a company's management and also at the level of government and regulators such as the FRC, to try to correct many of the weaknessess we find in the current regulatory regime. That is not something I would expect Stockopedia to get involved in, and it would not be so effective for a commercial organisation to do so.

Coming back to our social network, the "members network", it does not aim to compete with commercial BBs, such as Stockopedia etc. It is intended primarily for private discussion amongst our members of policy matters. For example, we post proposed consultation responses there for our members' comment.

The one, oddity, I suppose, is AGM reports, which I presume is what led to your question. I and other writers put a lot of effort into attending AGMs (primarily for our own benefit, as shareholders) and into writing them up afterwards - for the ebenfit of our members, without getting a bean in return. Unashamedly, we also use these reports as a marketing tool for ShareSoc, as we know that there is considerable interest in the reports.

Asking people that want to read them to join our organisaton doesn't seem too much to ask, especially considering that readers can do so free of charge, as associate members. if it weren't for that, I don't think I'd be particularly motivated to write such time-consuming reports (and I am looking at further ways of monetising my efforts on them).

If you want to read the reports, just join (assuming you haven't already done so). You'd then be notified by e-mail whenever a new report is posted (unless you turn that feature off) and can read or download it then. You don't have to visit the members network regularly (unless you want to), so this shouldn't take any significant extra amounts of your time.

One thing we haven't been very diligent about is flagging new topics that we're soliciting comments on here (or on other BBs). I'd be happy to do that here, so you and others would know when there's something new you might want to tune in to.



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Dave Brickell 20th May '12 48 of 174

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...

Website: Stockopedia PRO
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Isaac 22nd May '12 49 of 174

Halfords has been voted the worst shop on the high street

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marben100 22nd May '12 50 of 174

In reply to post #66094

Thanks for that Isaac. Looks like Roger and I are going to have to take a trip up to Birmingham again (or whereever they're holding their AGM this year, finals not out yet) and make their ears sting.

This is unacceptable performance. Halfords is supposed to pride itself on its customer service. Seems that something's gone badly wrong. I'd also better get off my backside & do some "mystery shopping" myself. Have to say, though, that I do get my car serviced by a Halfords Autocentre and a) was happy with the service (improved a bit since the Nationwide days); b) the manager (same guy as when it was Nationwide) said that the Halfords brand had increased volumes at the centre.

I'd very much appreciate hearing any other customers' views about Halfords' in-store service - especially whether they've noticed any changes (positive or negative) over the last couple of years.



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Roger Lawson 23rd May '12 51 of 174

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.

Website: Roliscon
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emptyend 23rd May '12 52 of 174

In reply to post #66095

I'd very much appreciate hearing any other customers' views about Halfords' in-store service - especially whether they've noticed any changes (positive or negative) over the last couple of years.

I'm very surprised indeed at Halfords being picked out (unfairly? given that many seem to have scored similarly).

I've visited both the local branches and found the staff at both to be very friendly and helpful.

I'd also worry about the sample, given that Lush seems to come out top........

Halfords problem is simple - people aren't as interested as they might be in buying their product lines. I was the only customer in the store on both occasions - and one of those was one of their massive "superstore" units:


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SparksTrader 23rd May '12 53 of 174

In reply to post #66103

Halfords staff do tend to have a look of surprise when you enter the store, though by the worst customer experience and others I know have had is from Curry's/PC world. Sales boys and bimbos repeating what's on the sticker and looking blank if you ask further, and their supervisors ignoring you and explaining to staff what to do with the potential customer, whilst the potential customer stands next to both of them.

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Isaac 24th May '12 54 of 174


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 -

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marben100 28th May '12 55 of 174

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).



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