Ashtead has fallen through the 50 day moving average for the first time since the end of October 2020. I cannot find any specific news. Is this just a blip or anything to be concerned about? I am sitting on a healthy profit having bought in around March/April 2020.
Hi Colin, what do you make of yesterday’s ‘senior notes’ announcement? I can’t work out what to make of it.
I am a long term holder of Ashtead (LON:AHT) and it has done very well for me over the years.
The market perceives this company to be in a cyclical sector from what I can see. So, in the short term the price can be impacted by perceptions of the health of the US construction market. But the fundamentals of the company are generally very sound so I have topped up when I think Mr Market has been irrationally negative about the share.
I’m not worried in the slightest about a recent pullback. The price has increased so rapidly a bit of consolidation was probably overdue.
As regards the senior notes, I’m no expert in these things and perhaps should study the RNS again to try to verify, but my reading of it is that they have paid off some debt early by raising cheaper debt. The reason they can do this now may be something to do with credit ratings, having demonstrated a strong performance through the pandemic. So, I’m not bothered about it. Looks like a good move as it will reduce interest payments, unless I have misunderstood it of course.
My view is that it has just run a bit ahead of itself. It has started to look quite expensive compared to its close (and larger) competitor - United Rentals. I'm currently going through my research phase.
The Debt offering looks sensible - stated use is "Ashtead noted that it intends to use the net proceeds of the offering to fund the redemption of all of its outstanding 4.125% Senior Notes due 2025 and 5.250% Senior Notes due 2026, including the payments of premiums and accrued interest to the redemption date."
The existing notes look to be worth circa $1.2bn (both trading above par) vs the debt raise of $1.3bn. With some quick maths this will lead annual interest savings of $29.63m. Seems a great opportunistic move to me, reduce the amounts due in 2025/6, which could have sucked up nearly half annual FCFF and also reduce the annual interest payments.
Thanks for your considered reply Is2G08… that makes perfect sense. Maybe there has been a slightly negative reaction to deferring the pay off of the debt. This does aid the continued expansion drive in US acquisitions on the positive side to keep the business growing, so as you say it’s all good.
As one believes bad weather will continue in North America then Ashtead is well positioned to be a beneficiary
Thanks for drawing attention to Ashtead (LON:AHT) - the only news I can find is that they are buying back shares. The last annual report was positive. First quarter results are out on 16th September. The share price is forming a wedge under the 52 week high - my guess is that the price could continue moving upwards if the Q1 results are good. I'd be quite tempted to buy at the next 52 week high.
