Wednesday, January 28, 2004
On Monday I declared my sweetspot for London listed Tate and Lyle, a billion pound carbohydrate manufacturer. The business is sufficiently simple that it may be readily appraised, a vital ingredient in the investment selection process.
It was my intention to publish this analysis on Monday. That didn't happen for one reason or another and this morning's news from the company has forced a rethink. Prior to the market opening this morning Tate and Lyle announced the results from its Amylum business will this year be hit by rising raw materials costs in Europe. This was news to the market and at the time of writing the shares are down 28 pence, a 9.2% fall.
"Profit before tax and exceptional items for the Group for the financial year to
31 March 2004 will depend upon the final outcome of the pricing negotiations in
both the US and Europe and the translation impact of exchange rates.
Nevertheless, we anticipate results will be close to market expectations with a
weaker Amylum result in the final quarter being offset by a satisfactory
performance in the rest of the business."
Trading statement, 28/01
Tate's biggest attractions as an investment are the company's consistent profitability and the large dividend. The previous years' full earnings and dividend were 27.8p and 18.3p respectively. Should these numbers be held for this full year's results (expected early June) Tate would be trading at 9.9 times earnings and a 6.64% dividend yield at today's price to buy of 275.5p. Today's news only increases the difficulty of putting a value on Tate, comments like this do not bode well:
"Looking forward, based on our current experience of raw material costs and
contract negotiations to date, we expect Amylum's results for the financial year
to 31 March 2005 to be significantly below those of 2004. A review of Amylum's
operations is in hand in order further to reduce the cost base. Although we
anticipate further progress in 2005 at our North American businesses, this is
likely to be offset on currency translation."
Phrases such as 'reduce the cost base' are usually directorese for 'there will be redundancies' and 'be offset on currency translation' means 'earnings derived in North America will not look that impressive in our bottom line on conversion to pounds sterling - due to recent dollar depreciation'. It reads as though Amylum is in trouble. The comment about full year earnings being close to market expectations is encouraging. Most recent market expectations were for earnings per share of 33p. At today's price that has the business on a price-to-earnings ratio of 8.34. Coupled with the sizeable dividend Tate looks very attractive indeed. Unfortunately, I need more time to digest today's serving from Tate. I shall return with a new price target in 48 hours.
And how much would I be investing should I decide Tate and Lyle is worth it? £4000. That would constitute my largest ever initial stake since I started buying shares.
The Artful Dodger
(0) comments
It was my intention to publish this analysis on Monday. That didn't happen for one reason or another and this morning's news from the company has forced a rethink. Prior to the market opening this morning Tate and Lyle announced the results from its Amylum business will this year be hit by rising raw materials costs in Europe. This was news to the market and at the time of writing the shares are down 28 pence, a 9.2% fall.
"Profit before tax and exceptional items for the Group for the financial year to
31 March 2004 will depend upon the final outcome of the pricing negotiations in
both the US and Europe and the translation impact of exchange rates.
Nevertheless, we anticipate results will be close to market expectations with a
weaker Amylum result in the final quarter being offset by a satisfactory
performance in the rest of the business."
Trading statement, 28/01
Tate's biggest attractions as an investment are the company's consistent profitability and the large dividend. The previous years' full earnings and dividend were 27.8p and 18.3p respectively. Should these numbers be held for this full year's results (expected early June) Tate would be trading at 9.9 times earnings and a 6.64% dividend yield at today's price to buy of 275.5p. Today's news only increases the difficulty of putting a value on Tate, comments like this do not bode well:
"Looking forward, based on our current experience of raw material costs and
contract negotiations to date, we expect Amylum's results for the financial year
to 31 March 2005 to be significantly below those of 2004. A review of Amylum's
operations is in hand in order further to reduce the cost base. Although we
anticipate further progress in 2005 at our North American businesses, this is
likely to be offset on currency translation."
Phrases such as 'reduce the cost base' are usually directorese for 'there will be redundancies' and 'be offset on currency translation' means 'earnings derived in North America will not look that impressive in our bottom line on conversion to pounds sterling - due to recent dollar depreciation'. It reads as though Amylum is in trouble. The comment about full year earnings being close to market expectations is encouraging. Most recent market expectations were for earnings per share of 33p. At today's price that has the business on a price-to-earnings ratio of 8.34. Coupled with the sizeable dividend Tate looks very attractive indeed. Unfortunately, I need more time to digest today's serving from Tate. I shall return with a new price target in 48 hours.
And how much would I be investing should I decide Tate and Lyle is worth it? £4000. That would constitute my largest ever initial stake since I started buying shares.
The Artful Dodger
Monday, January 26, 2004
In my previous and inaugural blog I pondered the amount of detail I would be going into in these postings and whether I would be remaining anonymous.
I discussed a hypothetical investing blog with a friend and we decided it was vital such a blog detailed the amounts being invested. This will hopefully give the blog a vital edge, introducing those dichotomous emotions, so prevalent and relevant throughout investing: fear and greed. This information will supply a human element to the blog, the tone and mood that is missing in most media investment writing. The downside is that I will not be identifying myself, which will choke at source any possibilities of sharing my writings with friends and colleagues for practical criticism purposes.
In addition to the values of my current holdings I promised to discuss a share that I am close to purchasing. First things first.
My portfolio at present looks like this, with current realisable market value in parentheses.
BBC: Ben Bailey 1281 shares on 20/02/03 at 178p (£5,546.73)
CHU: Chaucer Holdings 8092 shares on 06/10/03 at 42.88p (£3,560.48)
DNX: Dana Petroleum 1551 shares on 20/11/03 at 223.75p (£4,110.15)
Cash holdings (£6250.89)
That is a total portfolio valuation just shy of £20,000.
The cash component of my portfolio is rather large and would ideally be put to better use invested. I am close to doing just this with Tate and Lyle (EPIC:TATE) a food producer listed on the London Stock Exchange. Tate and Lyle is a £1.5b capitalised enterprise, the website claiming Tate is "World Leader in Carbohydrate Ingredients"
http://www.tateandlyle.com
Tate's most famous brand is the eponymous sugar, readily available in surely any emporium in the UK. Shares in Tate and Lyle can currently be purchased for 306p. The price at which I will be buying is 297p. I will be describing how I arrived at this figure and just how much I could be investing in my next blog.
The Artful Dodger
(0) comments
I discussed a hypothetical investing blog with a friend and we decided it was vital such a blog detailed the amounts being invested. This will hopefully give the blog a vital edge, introducing those dichotomous emotions, so prevalent and relevant throughout investing: fear and greed. This information will supply a human element to the blog, the tone and mood that is missing in most media investment writing. The downside is that I will not be identifying myself, which will choke at source any possibilities of sharing my writings with friends and colleagues for practical criticism purposes.
In addition to the values of my current holdings I promised to discuss a share that I am close to purchasing. First things first.
My portfolio at present looks like this, with current realisable market value in parentheses.
BBC: Ben Bailey 1281 shares on 20/02/03 at 178p (£5,546.73)
CHU: Chaucer Holdings 8092 shares on 06/10/03 at 42.88p (£3,560.48)
DNX: Dana Petroleum 1551 shares on 20/11/03 at 223.75p (£4,110.15)
Cash holdings (£6250.89)
That is a total portfolio valuation just shy of £20,000.
The cash component of my portfolio is rather large and would ideally be put to better use invested. I am close to doing just this with Tate and Lyle (EPIC:TATE) a food producer listed on the London Stock Exchange. Tate and Lyle is a £1.5b capitalised enterprise, the website claiming Tate is "World Leader in Carbohydrate Ingredients"
http://www.tateandlyle.com
Tate's most famous brand is the eponymous sugar, readily available in surely any emporium in the UK. Shares in Tate and Lyle can currently be purchased for 306p. The price at which I will be buying is 297p. I will be describing how I arrived at this figure and just how much I could be investing in my next blog.
The Artful Dodger
Friday, January 23, 2004
Welcome to TheArtfulDodger's blog.
This blog is intended to be an online store for all my investment activities, attitude and beliefs. I'll be detailing deliberations, trumpeting triumphs and confessing calamities. Enough alliteration proliferation. Three of the reasons I am doing this
a) My English skills have come well off the boil, like, since leaving school. I've never been professionally required to write or speak well and any skills I might have had are by now somewhat rusty. It's taken thousands of years to develop the languages the world has today, it'd be ungrateful not to capitalise on that.
b) This blog gives me an opportunity to organise my thoughts and justify any stance I might be taking with my funds. Artful investing must be well-founded, if I can't justify my investing, I shouldn't be investing.
c) An opportunity to learn from my readers. I've known writers comment on how they get a lot of their best ideas from their readers, if I'm going to be discussing investments and strategy, it'd be a lot less expensive if any flaws in my plans and approach are flagged here than in my bank statement.
All that said, I'm not yet decided what exact form the blog should take. For instance, I'm not sure if I should write this anonymously, or tell my friends. I'm not sure if I should detail the amount I am actually investing, or remain coy. It is something of a conundrum as I'd appreciate feedback from friends on the quality of my writing but I don't want them theorizing amongst themselves as to how much capital I may have. I welcome your feedback on this issue.
My next dispatch will detail my current portfolio and discuss a stock I am very close to buying (or rather, it is very close to being bought). More after the weekend.
The Artful Dodger
(0) comments
This blog is intended to be an online store for all my investment activities, attitude and beliefs. I'll be detailing deliberations, trumpeting triumphs and confessing calamities. Enough alliteration proliferation. Three of the reasons I am doing this
a) My English skills have come well off the boil, like, since leaving school. I've never been professionally required to write or speak well and any skills I might have had are by now somewhat rusty. It's taken thousands of years to develop the languages the world has today, it'd be ungrateful not to capitalise on that.
b) This blog gives me an opportunity to organise my thoughts and justify any stance I might be taking with my funds. Artful investing must be well-founded, if I can't justify my investing, I shouldn't be investing.
c) An opportunity to learn from my readers. I've known writers comment on how they get a lot of their best ideas from their readers, if I'm going to be discussing investments and strategy, it'd be a lot less expensive if any flaws in my plans and approach are flagged here than in my bank statement.
All that said, I'm not yet decided what exact form the blog should take. For instance, I'm not sure if I should write this anonymously, or tell my friends. I'm not sure if I should detail the amount I am actually investing, or remain coy. It is something of a conundrum as I'd appreciate feedback from friends on the quality of my writing but I don't want them theorizing amongst themselves as to how much capital I may have. I welcome your feedback on this issue.
My next dispatch will detail my current portfolio and discuss a stock I am very close to buying (or rather, it is very close to being bought). More after the weekend.
The Artful Dodger
