Small Cap Value Report (9 June 2017) - Election, DX., MLIN
Good morning!
Actually it's not such a good morning for me, because I'm effectively long GBP, and I don't like the exchange rate movement!
EURGBP was 0.866 last night, and is now 0.881 as I write this.
Of less relevance to me personally, but of great relevance to many companies, GBPUSD has fallen out of bed. From 1.296 prior to the result, it's now at 1.27.
So it's a win for exporters and a loss for importers. Two of the big-caps in my portfolio have consequently moved in the appropriate directions: Burberry (LON:BRBY) is up 2.5%, while Next (LON:NXT) is down 4%.
As if the pound wasn't suffering from enough uncertainty already, we now have to deal with the potential for another election to sort out the hung parliament problem.
From an investment point of view, there's not much we can do except try not to get too exposed to the same directional moves - a mix of importers and exporters can help to manage the risk. Or the ideal situation is to find companies which are naturally hedged, or are otherwise immune to exchange rate volatility.
Anyway, that's enough rambling. Time for some company news:
DX (Group) (LON:DX.)
- Share price: 9.5p (suspended shares)
- No. of shares: 200.5 million
- Market Cap: £19 million
Investigation by the City of London Police
Logistics company DX is currently suspended as a result of ongoing discussions with respect to a potential reverse takeover by John Menzies.
If the shares weren't suspended, the share price would probably be taking a beating as a result of this mysterious and ominous announcement:
The Board of DX announces that it has been notified by the City of London Police Economic Crime Directorate ("City of London Police") of an allegation that has been made against the Company which has resulted in the commencement of a preliminary investigation centred on the DX Exchange operations.
The investigation is at a very early stage. The Board of DX received the details of the allegation on 7 June 2017 and is co-operating fully with the City of London Police.
So the Board found out two days ago. Perhaps they still weren't sure yesterday whether or not to announce it publicly? I suppose it doesn't make much of a difference while the shares are suspended.
I have no information about how serious the allegation might be and I'd bet that few ordinary shareholders do either. So that just leaves a large cloud of uncertainty hanging over the company for the time being.
John Menzies has responded in a separate announcement that it is "considering its position" in view of this news.
More tough news for long-suffering DX shareholders. Anyone holding from the 2014 IPO placing was down about 80% prior to suspension (including the effect of dividends).
The stats I've seen suggest that IPOs as a group tend not to do well compared to seasoned shares, at least not over the medium-term. There are just a few too many dud companies and otherwise mispriced flotations.
Molins (LON:MLIN)
- Share price: 101.5p (+28% yesterday)
- No. of shares: 20.2 million
- Market cap: £20.5 million
Proposed sale of division and notice of GM
Apologies for not covering this yesterday - packaging group Molins is selling off its "Instrumentation and Tobacco Machinery Division" (I&TM) for £30 million:
The Sale provides the opportunity to accelerate the Group's strategy to be a global leader of packaging solutions and will provide the platform to invest in the Group's existing Langen and Molins Technologies businesses and acquire complementary businesses
The tobacco division was previously core to Molins, so this is a major change. Given the long association between Molins and tobacco, it is perhaps not surprising that the name "Molins" is also going to be transferred to the buyer of the division.
Since this is a fundamental change, shareholders will have to vote on it.
Proceeds will be used to drive organic but also particularly acquisition-led growth.
We also get a positive outlook statement:
"[O]rder intake in the Continuing Group at the end of May 2017 was considerably ahead of order intake for the same period last year. Trading is as expected and ahead of last year in all parts of the Continuing Group, such that the Board is confident that the Continuing Group's sales in 2017 are likely to be significantly ahead of last year."
My opinion
This deal strikes me as good news in terms of removing a declining business unit from the group and removing it at a reasonable valuation, though I'll continue to leave Molins (or whatever it's going to be called in the future) in the "too difficult" pile. It's still effectively a pension fund with a small operating business attached to it, and that operating business is smaller now, until they make some acquisitions.
A new agreement with the pension fund's trustees reaffirms rising deficit recovery payments of £1.8 million per annum and other conditions, including that dividend payments in any year cannot exceed payments to the fund.
It could be a fantastic buy at current levels. I simply haven't got the insight/conviction to make a long-term bet on a pension fund outcome.
That's all from me for now. Have a great weekend and see you next time.
Cheers
Graham
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47 comments
All parties are coalitions of disparate interests, and the most disciplined tend to look the most credible to the public. We'll see who has the greatest capacity for self-destructive behaviour. Labour may have already had its greatest moment. The Conservative are quite capable of shooting themselves in the foot, as we have seen.
Northern Ireland offers a fascinating case study regarding the effects that different voting systems have on allocation of seats.
The Northern Ireland Assembly Election was held on 2 March 2017, using single transferable vote. Here were the results:
DUP: 28.1% of the vote / 31.1% of the seats
Sinn Féin: 27.9% of the vote / 30% of the seats
UUP: 12.9% of the vote / 11.1% of the seats
SDLP: 11.9% of the vote / 13.3% of the seats
Alliance: 9.1% of the vote / 8.8% of the seats
TUV: 2.6% of the vote / 1.1% of the seats
Green: 2.3% of the vote / 2.2% of the seats
People Before Profit: 1.8% of the vote / 2.2% of the seats
And here's the General Election on 8 June 2017 results, using first past the post.
DUP: 36% of the vote / 55.6% of the seats
Sinn Féin: 29.4% of the vote / 38.9% of the seats
Independent: 1.9% of the vote / 5.5% of the seats.
SDLP: 11.7% of the vote / 0% of the seats
UUP: 10.3% of the vote / 0% of the seats
Alliance: 7.9% of the vote / 0% of the seats
Others: 4.6% of the vote / 0% of the seats
I remain unconvinced that first past the post offers our best option for effective democracy. I think it exacerbates two party duality - DUP / Sinn Féin, Conservative / Labour. These are parties that, certainly in N Ireland's and arguably in GB's case, represent extremes of political choice, and this is to the detriment of the middle ground.
If one neither agrees with the policies of right wing Brexiteers or left wing Nationalisers, - or for that matter in N Ireland Syriza quoting united Ireland socialists or bible thumping anti-gay creationists (both historically, and probably currently, linked to paramilitaries) - just where does that leave us?
There's very little chance of a coalition of the minority parties (collation of chaos), but that won't stop them trying.
The sad thing is that the Conservatives under TM started to ape socialist tropes to secure wobbly labour voters, and look how far that got them.
Brilliantly (not) TM labelled her own party 'the Nasty Party', and maybe she imagines that business interests are indeed nasty, venal and self-interested. George Osborne was the worst Chancellor for middle class pensioners, successively removing significant incentives to save, but somehow never got stuck with the anti-pensioner lines of the 'dementia tax' kind. So we are in a Topsy Turvey world where the conservatives in trying to solve the deficit
have the potential to alienate their core voters, and still never get the popularity that crave.
The best motivations are to increase the wealth of the more Northern reaches of the UK, and create a larger middle class base there that will be less inclined to be taxed to fund a hugely enlarged welfare bill created by Gordon Brown, and which threatens to suck us back into a 1970's melange of unworkable Socialism.
There also doesn't seem much of a safe haven to retreat to, in the US you have the Trump debacle with many stocks still pricing in new tax policy and increased infrastructure spending which is now more than questionable if this will ever happen. Modi's India seems to have stalled and there has been disappointing economic numbers out of Japan. Euro stocks could be the answer as they could have a stronger negotiating position regarding to Brexit, but I still think it will hurt both sides. Also there is still tail risks with Greece and Italy falling apart.
Agreed that the markets were eerily unperturbed today. Given the numerous events over the past few week, it seems the wall of worry can be surmounted no matter what.. that we have come so far in the past 7 months is troubling. Even with the inverse GBP/UKX correlation, I reckon this correlation is getting on a bit and will break down ere long
I note that the NasDaq sold off hard today on big volume , biggest volume since Nov 2016 that may be significant and the big techs have been the stalwarts of this old bull.. It would be healthy and preferable to have more volatility and more natural market reaction to risk events ... this just doesn't feel right . That said I am probably biased by my own situation having taken a good few profits over the past months or so for a variety of reasons : Now have a bit too much dry powder. I'd welcome a good fire sale!
I expected my holdings to get thrashed this morning, but instead so far it's yet another up day. Perhaps there's an element of relief that the Tory-DUP arrangement got sorted out so quickly (whatever the consequences of that may be), and that Corbynism hasn't prevailed. But then again, my strategy of buying growth shares with strong balance sheets and an international client base may be paying off. Who knows - but if ever I bet on politics from now on, I will simply form an opinion and bet on the exact opposite scenario. B2V
TM's likeability score is zero. She has as much charm as an ironing board. In politics, emotional intelligence wins over raw rational intelligence every time.
The Conservative campaign was inept and the manifesto very badly put together.
Labour, though, would have to put up taxes by £48bn a year to fund their "promises".
Think how that would sink the market and destroy the economy.
Much of the electorate fell for the Labour magic money tree sums and the bribes,
especially the "free" university tuition and, apparently, the wiping-clean of student debt.
Bribes to the whooping generation do work!
The Conservatives are right to raise the issue of the cost of late-life care,
although their proposal was badly thought through and promptly labelled
the "dementia tax" by the social media nutters.
They are right on the question of school lunches; is it the duty of the State
to feed children when, in most cases, their parents prioritise instead their own wants?
They are right on scrapping the winter fuel payment and could and ought to have
linked this in the manifesto to cracking down on widespread market abuse by suppliers,
as well as perhaps phasing the payment out over two or three years.
They are right to at last tackle all these kinds of welfarism and others.
Having millions addicted to "benefits" helps who, exactly?
The ideas are right but they were very badly put together in the manifesto.
Besides all that, I really did not understand the logic of having a long campaign.
You're 20 points up in the polls, you want to capitalise on that. Why then have a
campaign of seven weeks when the legal minimum is only 17 working days?
Especially when you as a PM know you are not good in hand-to-hand debate,
to the extent that you refuse debate with leaders of other parties?
Nuts, madness, a short campaign and it would have been done and dusted weeks ago!
Complete screw-up by May. Her advisors ought to get the boot and she needs to learn
to work with her colleagues, rather than with advisors in their own little bubble.
If she can't do that, then she ought to be sacked as leader this weekend.
However, the Conservatives did get 42.4% of the vote, they did win the election, it is seats that count,
not screaming media and inane social media noise. Labour did lose, badly, on seats,
despite the inbuilt electoral bias in their favour. With a better leader, the Conservatives will win
next time as well - and with a decent majority.
Jane
The Conservatives didn't win the election on the only basis that matters - getting a majority of the seats in Parliament. Working with the climate change denying, anti-abortion, pro-creationist DUP is not a good outcome for anyone.
In any case the Tory dream of significantly rolling back the welfare state is at best in limbo and at worst lost for a generation. Debt will rise to fund public services, it's guaranteed. On the ground, here in the UK, there is the strong perception that austerity has led to significant funding shortages in the NHS and around social care - i.e. that this is the result of Tory political decisions rather than a necessary evil to fix the country's debt issue. And, frankly, despite seven years of austerity the failure to cut the deficit makes the argument for restricting funding ever less believable.
As for students - well they'll always vote preferentially for Labour. Corbyn saw opportunity and exploited it, the Tories would have done the same. It's politics. Thatcher bribed people with shares in public utilities, ending with Major flogging off the railways. It's more than mildly ironic that that particular decision is partly responsible for them failing to achieve the majority they expected due to their inability to sort out the Southern Rail dispute.
In truth it doesn't look very likely that the Conservatives will be able to get a significant majority of seats in the near future - this is the third close election in a row and it looks ever more likely that tight results like this are going to be the norm. May has blown the big opportunity they had to enact the boundary commission changes.
With a better leader, a more positive campaign and policies that didn't threaten their core older vote - i.e. targeting social care and pensions - they could have won a majority. But now they have to negotiate the minefield of a Brexit negotiation in the face of a much more effective opposition - Corbyn will be able to count on SNP, LD, G and PC votes in a pinch - and it will come to a pinch when Parliament has to agree whatever Brexit deal they can cobble together. Will soft Tories vote for a hard Brexit - look at what's happening in Kensington right now?
Like it or not we have a new political reality. Although quite what any of this has to do with investing is, as ever, hard to say.
timarr
Jane,
Conservatives won 48.9% of the seats with 42.4% of the vote. Labour won 40.3% of the seats with 40% of the vote. How does that equate to "the inbuilt electoral bias" in Labour's favour that you mention?
http://www.electoralcalculus.co.uk/boundaries2018.html
"Following the passage of the Parliamentary Voting System and Constituencies Act, the four national Boundary Commissions were asked to undertake the "2018 Review" of contituency boundaries to equalise the size of seat both within and between the four nations of the UK. The Boundary Commissions are independent bodies who put considerable effort into drawing up boundaries in a generally fair way, reflecting local geography and affiliations. There are two consultation periods where comments and objections to the proposals can be brought forward for consideration.
The Boundary Commission of England published its initial set of proposals on 13 September 2016, with final proposals being ready by September 2018. The Welsh Boundary Commission also published their initial proposals on the same day. The Boundary Commission for Northern Ireland published its initial proposals on 6 September 2016. The Scottish Boundary Commission is published its initial proposals on 20 October 2016."
"The Conservative majority would increase from 12 seats in the House of Commons to 38."
Full details there, obviously written before the General Election last week.
You may be confusing this electoral bias with the normal effects of the simple operation of a FPTP voting system.
The dispiriting issue is that any democratic party should support these changes but they are unlikely to get through Parliament.
Why is it dispiriting to support boundary changes exactly?
The average size of a Labour constituency is far smaller than that of a Tory one - surely if we want democracy we'd be supportive of constituency size equalisation??
Why wont they get through parliament?
It is dispiriting that they are unlikely to get through Parliament. As I said any democratic party should support these changes.
Ah sorry Deuce. Misread what you typed.Apologies
Absolutely agree.
The boundary farce has been a long time sorting.
Oct 2018 isn't it when it's voted on/finalised?
That date looks right. Not waiting for this is yet another reason why Mrs May was bonkers to have an election now rather than waiting.
They won't get through Parliament because the Tories can no longer muster a majority and none of the other parties have any interest in passing a measure that will probably increase the number of Tory seats. Turkeys don't vote for Christmas. People can complain about this all they want but May had it in her power to get this on the statute book and blew it comprehensively.
On the other hand I'm not sure that the historical evidence of voting patterns is a great guide to future elections. First evidence suggests the turnout of 18-24 year olds increased from 58% to over 66%. Two thirds of those are predicted to vote Labour. There were swings to Labour across swathes of the country. There are 29 Conservative seats in England and Wales with majorities of less than 2000, and 17 of them with majorities of less than 1000. For comparison after the last election there were 19 Tory seats with majorities under 2000 - and they lost 13 of them last week.
Basically, if we went back to the polls in the near future there's every chance Labour would be able to form a government. That's why May is still PM.
timarr
It's Mrs May's fault I agree. It is also a sad reflection on our democracy that no-one else will support it.
Yes agree.
What a shambles eh..
Can't believe Corbyn is claiming he "won" the election though..
#Newspeak
Yes, does he have Diane Abbott doing the "sums"?
Conservatives 318 + DUP 10 = total 328
All other parties combined 322
Majority 6
Assuming Sinn Fein do not take their seats
(since that would mean swearing allegiance to the Crown),
majority would be 6 + 7 = 13.
So how did Corbyn "win"?
As so often, Orwell had it spot on:
‘applied to a Party member, it means a loyal willingness to say that black is white when Party discipline demands this. But it means also the ability to believe that black is white, and more, to know that black is white, and to forget that one has ever believed the contrary. This demands a continuous alteration of the past, made possible by the system of thought which really embraces all the rest, and which is known in Newspeak as doublethink.’
Hiya Jane,
Indeed. Newspeak at its finest!!!
We have truly gone full circle and are closing in fast on the 1984 scenario Orwell envisaged
Maybe, but this is first past the post constituency politics. The seven smallest Tory constituency margins amounted to a total of just 1,392 votes. If they'd lost those then they'd have been unable to form a majority government even with the DUP.
The real point though is that power at the next election is definitely within Labour's reach. To achieve a bare majority Labour needs 29 seats currently held by the Tories - and to give everyone a feeling for what that means in terms of votes that seat is Ed Balls' former constituency of Morely and Outwood where the Tory majority is a scarcely out of reach 2,104.
It is hard to imagine the Tories running a worse campaign, but they're riven with division, and they have a long tail of MPs for whom representing their constituents has now become more important than representing their party. Their legislative program will be paralysed and any attempts to force through a Brexit deal that their MP's sitting in pro-EU constituencies can't accept will probably lead to a second referendum.
The odds on Corbyn as the next PM have shortened drastically. Victory it was not but from his perspective a socialist government is now clearly within reach so you can understand if he's a tad chirpy about it.
I'm going off to read the Labour manifesto, might as well know what's coming.
timarr
"The seven smallest Tory constituency margins amounted to a total of just 1,392 votes. If they'd lost those then they'd have been unable to form a majority government even with the DUP."
And The Telegraph reported yesterday that 400 more votes in several constituencies the Tories only just lost would have given them a majority on their own. It does go both ways.
In fact, assuming Sinn Fein are not going to turn up to vote ever, the Tories actually already do have a majority of three seats, even without the DUP, assuming that the DUP themselves do not vote with Corbyn!.
The LibDems have also said they will not go into coalition with any other party, Tory or Labour, which may further increase the effective position of the Tories.
It isn't all doom and gloom, it is difficult but the Tories really have to stick together, they have no choice, do they, they will just need to carry on in government and avoid a fresh election.
That said, I agree with much of what you say, it is likely to be a very weak government, at least until it gains confidence and gets over the trauma of the results of June 8.
I suspect the result of this election will be similar to the Brexit vote: cause minor tremors rather than an earthquake. The earthquake will come if Corbyn/McDonnell get their hands on the nation's credit card.
We are still attempting to pay off the bill from the Blair/Brown years.
Well run businesses are still a necessity, will earn a living, and be worthy of our investment and support.
Life's too short: be happy!
Bonitabeach
There are different ways to measure debt including allowing for inflation etc but this impartial site shows that our debt has been equally taken on during recent Conservative administrations. https://fullfact.org/economy/labour-and-conservative-records-national-debt/
Its is a myth that austerity has cut our debt. It has just been pursued ideologically by the current government along with several other policies based on ideology alone. The most successful conservative administrations have been pragmatic ones who had more talented leadership and who did pursue a more one nation policy. The last 2 Conservative governments have governed in favour of an limited elite and ignored the bad effects of their policies on the general public while still piling up debt . For example we now have 23% of UK people on minimum wage highest in Europe, reducing growth as they don't have funds to spend on anything more than basics.
@feggers,
It's actually a myth we've had austerity.
Annual Budget deficit now £50-75 billion per year. rather than £100-120bnSo we're still massively spending over and above what this country earns.
Nat Debt risen from £750bn odd 2008/2009 to £1.77 trillion now (Excludes Gordon Brown's off balance Sheet NHS PFI)
How anyone thinks adding such an eye watering amount to Nat Debt,how continually spending way beyond our means every year is austere I'll never know.
What exactly is profligacy then?
Hi Fegger,
I appreciate there are many interpretations of events and disagreement over cause/effect and I expect on some issues we shall just have to agree to disagree.
My own opinion is that the state of the nation's economy was far far better in 1997 than that inherited by Osborne (I'm no fan) in 2010. National debt was 42% of GDP in 1997, and 66% in 2010. To his credit, Liam Byrne wasn't joking Ashamed to be honest
Politicians repeatedly make the mistake of thinking they know best about everything and can improve the human condition. Their answer to any problem is to throw money at it. Their repeated failures merely spur them on to ever more wasteful efforts. Eradicate poverty? - just needs a more generous welfare provision. Schools turning out the uneducated and unemployable? Must be a shortage of money! Aircraft carriers with no aircraft? Not enough money in the defence budget!
They think what the country really needs is a faster train to Birmingham. I have been to Birmingham hundreds of times on business - never ever by train.
Please don't forget the "minimum wage" was a Labour invention to "protect" the low-paid from the worst effects of mass immigration. For too many it is now the "maximum wage". Raise it 50% and it is still poverty money.
The politicians cannot spend us to prosperity/equality/Nirvana - it's just not that simple.
All good fun.
Bonitabeach
Conservatives have successfully almost doubled national debt since 2010 while running "austerity" how bad can it get under labour?
I actually think labour would have been better for economy, their proposed big investments in infrastructure is badly needed to fix crumbling British infrastructure. Also privatisation of railways and water companies may actually improve services. Certainly I have no complains about Scottish Water which is essentially government owned contrast it with Thames water.
"How bad can it get under Labour?"
Personally speaking, I wouldn't want to find out.
Bonitabeach
Did you mean nationalisation rather than privatisation?
Many seem to have been brain washed by the mejia - the tories last night still won the most seats - don't lose sight of the glaringly obvious
But if want you want is compulsory renationalisation, increased deficits and the economics of Stalinist Russia then you carry on voting for the happy Diane and Jezza combo
numerically the glaringly obvious is an incumbent government called an unnecessary election at a critical time to return with a smaller majority built on an unstable administration meanwhile further weakening the country's currency and international standing
That narrative sounds like some tin-pot sub Saharan D&E or a corrupt South American junta
Hi ds.
I'm no student of politics (well I was to be honest but that was 30 years ago) but sub-Saharan D&E's and corrupt South American juntas (think that's a tautology by the way) don't usually hold free and fair elections. They either don't hold them, rig the count or simply ignore the result. However we view today's result itself, can't fault the arcane workings of good old British democracy!
Gus.
probably tautological but that was for effect (or affect)
I am no student of politics either but conflating a plebiscite binary referendum with representative parliamentary democracy has resulted in this chaos . The referendum result was used in a "tyranny of majority" to pervert the role of elected representatives by forcing them to support an outcome that did not reflect the majority will of their constituents on that binary decision.
Going to the country on a misguided premise built on that plebiscite result but using a different mechanism i.e. parliamentary democracy was incredibly misguided. A chaos from conflation of mismatched mechanisms.
But then in conclusion you are right, democracy does work, though it depends on which type you mean
My comment on the narrative reflects more the external view of our predicament and the ghoulish nature of the populist agenda used in an attempt to beguile a much more savvy electorate.
May has become her own Cassandra, her coalition of chaos is at best meta-stable
Of interest is this discrepancy still outstanding - one I thought had been sorted already.
"The next big question is whether or not we have another election. That would again delay the Brexit negotiations, and potentially open the door further to the Labour Party who have the strongest momentum at the moment. There is though one technicality to consider, and that is an argument to try to hold on until October 2018, when constituency boundary changes take effect. These are estimated to bolster the Tory presence by a net 25-30 seats. So the Tories could try to hobble on until then." - Investec
**October boundary changes take effect. 25-30 extra Tory seats.
HI Fangorn
Yes it's still outstanding. However, it has to be approved by Parliament, which can no longer be guaranteed.
timarr
Ah cheers Tim.
Wasn't aware that HoC would need to approve it. Something the likes of SNP/LD/Labour will surely vote against..Ditto DUP as it will reduce their "influence"
Long past time though given the constituency size discrepancies.
Anyone seen a breakdown of the Seats that fell to opponents in terms of Brexit/Remain?
Some heavy weights lost their seats - Clegg, Salmond, Robertson - implying electorate actually sending a Pro Brexit message,not this disingenuous "Hard Brexit vs Soft" we get peddled daily by BBC...
Goldsmith back in at Richmond, as it goes Tory.but Twickers falls to Libdems.
Quite incredible some of the seats that we saw being swapped.
SNP lose 21 of their 56 seats...being massively played down I see. Thats some collapse.
Bound to be another election within 6-12months then one assumes.
.
Hi Fangorn
Yes, another result of May's hubris, the vote on the boundary change was scheduled for September. I think it's dead in the water for the reasons you've given: she's just cost the Tories a decade of majority rule.
I was picking my way through some of the demographics and there's certainly some kind of Brexit effect - the Tories picked up the UKIP votes but a lot of anti-Brexit Tories either voted against or stayed at home. The possibility that Labour will win Kensington is utterly astonishing.
Corbyn also mobilised the youth vote, which overwhelmingly votes Labour. Anecdotally that's a partial Brexit effect as well, as a lot of the kids who didn't vote in the referendum woke up to the fact that voting matters. We might not agree with their politics, but their engagement is one of the few positives from the whole depressing campaign.
One other interesting sideline is that it looks like the Tory failure to sort out the Southern Rail dispute has damaged them - Croydon Central, Eastborne and Brighton Kemptown all fell to Labour. Those three seats alone might have been enough for a majority ...
Normally I'd agree that another election within the year is a certainty but the Brexit negotiations make that difficult - the Tories won't want to ditch May while that's going on, and the DUP have every reason to keep her in power to guarantee their version of a soft Brexit and otherwise extract their pound of flesh.
Interesting times, eh? (again)
timarr
One would hope that "democracy" being seen to be done more important than holding up "boundary changes" for they are long overdue.
Yes, Kensington was a shocker - but then the margin was only 20 votes! Hence the three recounts.
Much of the youth vote for Labour seems to stem from the vast promises Corbyn was handing out, presumably financed with other people's money -such as "garden tax"
What's a Soft Brexit?
Surely remaining in either Single Market or Customs Union is,in fact, a Remain. Not what 17.4m voted for. Personally I'm rather tired of these endless challenges to a democratic vote - it's the same in the US. Poor losers using whatever avenue to undermine,and then challenge a legitimate result.
Back inn 80's to noughties voting results were accepted -the majority carried the day. Now it seems no result is accepted but requires endless challenges.
Interesting times for sure.
All goes south I expect and trouble hits the streets. Just needs an economic slowdown, a China credit bubble bursting,and it's going to be difficult times for all..
So much to go wrong - Car leasing bubble, china credit bubble, Student loan bubble in US, eye watering national debts.
Time for a stiff GnT!
The Conservatives strategy always seemed bonkers to me. Giving away political points on meaningless issues like fox hunting and the ivory trade - what votes are you gaining from those policies? Anyone in favour of those sorts of things are likely to be staunch conservatives anyway, all you will do is alienate the undecided.
When you combine that with attacking their core voters- the home owning pensioner it always was going to lead to disaster. I placed a lay bet on a Cons majority when Labour started to gain traction in the polls to hedge my portfolio. Fortunately it doesn't seem to have affected my UK holdings significantly. EDIT: which shows it was a bit of a poor hedge!
Reading a bit about the DUP worries me - they seem quite fanatical; anti-gay/abortion/alcohol, creationists and climate change deniers. Someone on twitter described their manifesto as "the bible with a promise to collect the bins on a fortnightly basis". Economically they may be useful however as while they are pro brexit, they are very against a hard brexit - or anything resulting in a hard border in Ireland.
Yes, relying on the DUP crazies isn't the business as usual that people think. I can't imagine many on the mainland voting for them or wanting to be held hostage to their world view.
The Tories have only themselves to blame.....chaos from Brexit and now chaos with a hung parliament. If they can't read the mood of a country then how are they capable of governing?
I suspect the rather disastrous Conservative performance has silenced many on the discussion boards.
Would like to think that May and the Cons have learned their lessons, about getting their message right, but we are in for a bumpy political ride, I guess, which is not great overall
Duke Royalty (LON:DUKE) made an update on their first investment under their new "royalty" model. That investment appears to be going well. Their fundraising presentation is quite interesting (http://www.dukeroyalty.com/~/media/Files/D/Duke/documents/2017-01-12-duke-royalty-investor-deck-vweb.pdf?pdfdata=1). It looks like they can cover their G&A expenses (about £1.3m based on doubling 1H) by deploying the £13.8m they raised at 13% but that's before tax and investment management fees leaving not a lot to distribute to the 45m shares. Will probably have to raise and deploy more to get to their target of paying 7-8% dividend once capital fully deployed. Jim Webster looks very competent. Not sure about the rest. A bit too much TSX, resources and Bwin.party. But, an interesting concept that has worked well elsewhere.
Swings and roundabouts in the "value" sector of AIM this morning. Another often discussed canine, Stanley Gibbons (LON:SGI) made an announcement earlier about a possible takeover approach. Shares are up about 22% at the moment. Could present an opportunity to exit for anyone still daft enough to hold (I am among their number.... Well it looked an interesting punt on the possible value of the property and inventory at less than 10p share).
Gus.
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RNS Text Extract.
The Stanley Gibbons Group plc
("Stanley Gibbons" or the "Company")
Statement re. Possible Offer
The Stanley Gibbons Group plc notes the recent share price movement and confirms that it has received an unsolicited approach from Disruptive Capital ("Disruptive") regarding a possible offer by Disruptive for Stanley Gibbons.
At this stage, there can be no certainty that any offer will be made nor as to the terms on which any such offer might be made. A further announcement will be made as appropriate.
Thanks for sharing, gus!
Graham
Further announcement from Stanley Gibbons (LON:SGI) this morning that they have asked Finncap to run a formal auction process for the business over the summer. Following their own assessment, looks as though the board prefer a sale to the stress of an internal solution that would require more capital investment against the back drop of tired shareholders and pretty tapped out bank credit capacity. Probably the cleanest way to allow prospective buyers the time and access to run the rule over the company (in particular the substantial inventory) outside the relatively tight timetable of a formal bid. Doesn't appear that the shares will be suspended. Text of RNS here:-
Gus.
Subsequent/in parallel to this, Diruptive Capital have put out their own slightly terse RNS this morning (second text below) saying they're not bidding (although not clear whether they will look as part of the new process). Does this mean we now have a company whose management don't think it has prospects as an independent entity but whose prospective buyer isn't planning on making a bid after all. Sounds a bit ..... Disruptive?
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The Stanley Gibbons Group plc
("Stanley Gibbons", the "Group" or the "Company")
Strategic Review and Formal Sales Process
Background
Following a complete overhaul of the Board and the executive leadership last year, the Company has now been comprehensively restructured. During this time the new Board has successfully reduced annualised operating costs by over £10.0million and announced disposals totaling £6.3million from the sale of parts of the Interiors Division to date. The Group now has a clear focus and understanding of its competitive advantages and achievable corporate goals. The core activities of the Group are now conducted via Baldwin's, Stanley Gibbons, Murray Payne and Apex, which share similar characteristics alongside the commercial advantages associated with being market leaders in the numismatic and philatelic markets respectively, including:
• large global markets;
• brand integrity and leadership;
• loyal collector customer base;
• invaluable industry expertise which is revered worldwide; and
• heritage.
The restructuring program has created a Group that is now much more stable than at any time in the last 18 months.The Board's success in achieving divestments from non-core assets to generate investment capital for the Group and the recent approach from Disruptive Capital, leaves the Board determined to ensure that the underlying strength of the core business is fully reflected in shareholder value. The Directors believe that Stanley Gibbons with its heritage brands and expertise has significant strategic value not only in its existing core markets but also across the broader global collectibles market, particularly the Middle East and Asia. Unlocking this incremental long term value is likely to require further investment and the Directors believe that it is likely therefore that such value is best delivered either within a larger group or alongside a strategic investment.
Against this backdrop, the Board had resolved to conduct a full strategic review to investigate the options open to them which, for the avoidance of doubt, could include a sale of some or all of the Group. The Board has appointed finnCap Ltd ("finnCap") to conduct this review.
Strategic Review and Formal Sale Process
In order to maximise the effectiveness of the strategic review the Board is announcing today a formal sale process as set out in Note 2 of Rule 2.6 of the Code for that aspect of the review that could result in a sale of the Company. Parties with an interest in making an offer for the entire issued and to be issued share capital of Stanley Gibbons should contact finnCap through the contact details set out at the end of this announcement.
Any interested party will be required to enter into a non-disclosure agreement with the Group on reasonable terms satisfactory to the Board and on the same terms, in all material respects, as all other interested parties before being permitted to participate in the process. Following execution of an agreed non-disclosure agreement, the Group intends to provide interested parties with certain information on the business. After which, interested parties shall be invited to submit proposals to finnCap. The Group expects to invite proposals to be made during the course of the summer 2017 and will update shareholders on this and other aspects of the strategic review as and when appropriate. Shareholders should note that as announced on 9 June 2017 the Company is already in receipt of an approach from Disruptive Capital that may or may not lead to an offer for the business. As set out below, there can be no certainty that an offer will be made or as to the level at which an offer or proposal will be made.
The Takeover Panel has granted a dispensation from the requirements of Rules 2.4(a), 2.4(b) and 2.6(a) of the Code such that any interested party participating in the formal sale process will not be required to be publicly identified as a result of this announcement (subject to Note 3 on Rule 2.2 of the Code) and will not be subject to the 28 day deadline referred to in Rule 2.6(a) for so long as it is participating in the formal sale process.
The Board reserves the right to alter any aspect of the formal sale process or terminate it at any time and will make further announcements as appropriate. It also reserves the right to reject any approach or terminate discussions with any interested party at any time. The Board is being advised by finnCap (as regards the formal sale process) and finnCap (as Rule 3 adviser in the event that Stanley Gibbons receives an offer or offers for the issued share capital of the Group).
A copy of this announcement will be made available (subject to certain restrictions relating to persons resident in restricted jurisdictions) at www.stanleygibbonsplc.com by no later than 12 noon (London time) on the business day following the release of this announcement in accordance with Rule 26.1 of the Code. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.
There can be no certainty that any offer will be made for the Group, or even proposed, or as to the level at which any proposal or offer that may be made.
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Disruptive RNS
Rule 2.8 Announcement
Disruptive Capital Finance Ltd
9th June 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.
THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.8 OF THE UK CITY CODE ON TAKEOVERS AND MERGERS (THE CODE)
For immediate release
Disruptive Capital Finance LLP ("Disruptive") confirms that it is not making an offer for Stanley Gibbons Group plc.
Disruptive has been in discussions with the management of Stanley Gibbons Group plc for some time and had received, but not yet executed, a mutual non-disclosure agreement between us and them since we required sensitive information to evaluate whether or not to make an offer.
On 31 May 17, Disruptive were informed by Stanley Gibbons Group plc that an email we had sent them was interpreted by them as an Approach under the Takeover Code and that they had informed the Takeover Panel of the same.
Disruptive Capital Finance