Wednesday, September 29, 2004
Dana does the business
Yesterday, Dana Petroleum, my second-largest holding, impressed followers and confirmed the speculation of a tie-up with a foreign company, announcing a deal with Woodside Petroleum of Australia. The agreement bolsters confidence in Dana's African exploration work, the odds of drilling and discovery in Mauritania, Kenya and Australia boosted by Woodside's involvement.
Dana will acquire a 6.25% interest in the Block 2 Production Sharing Contract ('PSC') offshore Mauritania, with effect from 1 July 2004. In exchange, Dana will assign a 5% interest in the Block 7 PSC offshore Mauritania to Woodside...Dana has invited Woodside to become a strategic exploration partner offshore Ghana, by granting Woodside an option over one half of Dana's interest in the Western Tano Basin. Woodside's option to join Dana remains subject to the completion by Woodside of a study of the exploration potential of the region and the conclusion of ongoing discussions with the Ghanaian authorities to extend the term of the Western Tano Petroleum Agreement to accommodate further deepwater exploration...Dana has agreed to assign a 10% interest in the Block 5 and Block 7 PSCs offshore Kenya to Woodside in exchange for the assignment to Dana of a 10% interest in the Great Australian Bight
Tom Cross, Dana chief executive commented:
'This deal crystallises Dana's African exploration drilling plans for the next 12 to 18 months, with three wells now confirmed. These will test two important prospects offshore Mauritania, namely Dorade and Petrel, and a major first structure in Block 5 offshore Kenya. If results are encouraging, two further high-graded targets could be drilled within this period, at Faucon in Mauritania and in Block 7 Kenya.
The goods news has helped put paid to some market followers' doubts about Dana. These qualms centred on the Mauritanian acreage where Dana's blocks were supposedly peripheral to the real action elsewhere, the boondocks of exploration effort that would apparently never be drilled.
Dana bulls' patience was rewarded this week, Woodside coming on board in Block 7 is a big thumbs up to investors while cocking a snook to those pesky bears.
Dana's deal-making didn't stop there however, the company also announced an asset swap of the Indonesian interest in Ujung Pangkah for more North Sea production:
Dana Petroleum announces that its wholly owned subsidiary, Dana Petroleum (E&P) Limited, has reached agreement with Amerada Hess Limited to acquire an additional 28% interest in the Hudson Oil Field in the UK North Sea, thus increasing Dana's total stake in Hudson to 47.5%. In exchange, Dana will transfer its wholly owned subsidiary Dana Petroleum (Indonesia) LLC to Amerada Hess (Indonesia) Limited, along with a balancing cash consideration payable at completion.
this deal will prove earnings enhancing at the next reporting stage, Cross was again positive explaining that Dana was:
trading an undeveloped discovery in a non-core area for cash generative reserves in our core UK producing portfolio. For Dana, such a trade minimises the time between discovery and production and eliminates the capital intensive development phase. This step is an efficient method of realising the value of exploration success whilst continuing to grow the Company.'
and the market just loved the revelation this will add 3,500 barrels of oil per day to Dana's production.
This distracted attention somewhat from the day's scheduled news announcement, interim results. Diluted earnings for the first six months of the year were in fact down to 12.16p from 14.61p. That fall was expected however, with Dana the company now paying tax at a higher rate (a whopping 51%). Typically that would suggest a fair value around 300p but the current strength of the price of crude oil over the price achieved during the interim period (an improvement of around one third), combined with the elimination of company debt and increased production rates promise much higher earnings for the next twelve months.
I'll report again soon with a newly calculated fair price for Dana. At 392p to sell the shares have moved faster than a gang of football hooligans to a Burberry sale, the 75% increase since my purchase last year rating as one of my biggest successes since I started investing.
The Artful Dodger
(0) comments
Dana will acquire a 6.25% interest in the Block 2 Production Sharing Contract ('PSC') offshore Mauritania, with effect from 1 July 2004. In exchange, Dana will assign a 5% interest in the Block 7 PSC offshore Mauritania to Woodside...Dana has invited Woodside to become a strategic exploration partner offshore Ghana, by granting Woodside an option over one half of Dana's interest in the Western Tano Basin. Woodside's option to join Dana remains subject to the completion by Woodside of a study of the exploration potential of the region and the conclusion of ongoing discussions with the Ghanaian authorities to extend the term of the Western Tano Petroleum Agreement to accommodate further deepwater exploration...Dana has agreed to assign a 10% interest in the Block 5 and Block 7 PSCs offshore Kenya to Woodside in exchange for the assignment to Dana of a 10% interest in the Great Australian Bight
Tom Cross, Dana chief executive commented:
'This deal crystallises Dana's African exploration drilling plans for the next 12 to 18 months, with three wells now confirmed. These will test two important prospects offshore Mauritania, namely Dorade and Petrel, and a major first structure in Block 5 offshore Kenya. If results are encouraging, two further high-graded targets could be drilled within this period, at Faucon in Mauritania and in Block 7 Kenya.
The goods news has helped put paid to some market followers' doubts about Dana. These qualms centred on the Mauritanian acreage where Dana's blocks were supposedly peripheral to the real action elsewhere, the boondocks of exploration effort that would apparently never be drilled.
Dana bulls' patience was rewarded this week, Woodside coming on board in Block 7 is a big thumbs up to investors while cocking a snook to those pesky bears.
Dana's deal-making didn't stop there however, the company also announced an asset swap of the Indonesian interest in Ujung Pangkah for more North Sea production:
Dana Petroleum announces that its wholly owned subsidiary, Dana Petroleum (E&P) Limited, has reached agreement with Amerada Hess Limited to acquire an additional 28% interest in the Hudson Oil Field in the UK North Sea, thus increasing Dana's total stake in Hudson to 47.5%. In exchange, Dana will transfer its wholly owned subsidiary Dana Petroleum (Indonesia) LLC to Amerada Hess (Indonesia) Limited, along with a balancing cash consideration payable at completion.
this deal will prove earnings enhancing at the next reporting stage, Cross was again positive explaining that Dana was:
trading an undeveloped discovery in a non-core area for cash generative reserves in our core UK producing portfolio. For Dana, such a trade minimises the time between discovery and production and eliminates the capital intensive development phase. This step is an efficient method of realising the value of exploration success whilst continuing to grow the Company.'
and the market just loved the revelation this will add 3,500 barrels of oil per day to Dana's production.
This distracted attention somewhat from the day's scheduled news announcement, interim results. Diluted earnings for the first six months of the year were in fact down to 12.16p from 14.61p. That fall was expected however, with Dana the company now paying tax at a higher rate (a whopping 51%). Typically that would suggest a fair value around 300p but the current strength of the price of crude oil over the price achieved during the interim period (an improvement of around one third), combined with the elimination of company debt and increased production rates promise much higher earnings for the next twelve months.
I'll report again soon with a newly calculated fair price for Dana. At 392p to sell the shares have moved faster than a gang of football hooligans to a Burberry sale, the 75% increase since my purchase last year rating as one of my biggest successes since I started investing.
The Artful Dodger
Monday, September 27, 2004
Judgement of September. Final chapter: Dana
Last Friday, Dana announced interim results have been brought forward to tomorrow, Tuesday 28th September.
No reason was given but discussion board members at The Motley Fool were quick to speculate, the more cogent thread contributions argued:
A deal on Tuesday?
SirLurkalot
I see hardly any reason why Dana would choose to announce its results on Tuesday, and yet do the analyst presentation on Thursday. That's almost unheard of, to me.
What reasons could there possible be for this unusual arrangement? One reason that jumps out is that there's a deal they want to announce, that needs to get got out quickly for fear of it leaking if they try to hold up announcing it until Thursday.
emptyend
That is exactly my conclusion! However, the timing won't be as much about the risk of a leak, as the need to announce it simultaneously with another company [who I suspect may be in a different timezone?).
SirLurkalot
Couldn't the other party be down under? So announcement c.10pm UK time Monday night shortly before Sydney trading via asx.com.au, followed by announcement 7am UK time Tuesday morning on uk-wire?
davjo
...Hardanaman Petroleum (or HD Resources) has a kinda nice ring to it ;-) Combining some decent N.Sea cashflow with W.African explo/development would seem a pretty good marriage. Such a merger wouldn't look terribly different from the resultant successful re-structuring of PMO -- good core c/f, early development prospects and loads of explo.
emtpyend
I think the chance of such a late change isn't what the delay's about: I think that one of the deals under discussion has finally crystallised....which is why the date was originally delayed from the 23rd when it became clear it wouldn't quite get done by that date. The advancing of the results to Tuesday is, IMO, at least 60% certain to be driven by a need to coordinate with the other party....with the other 40% being down to the convenience of a Monday signing once the lawyers have finished a busy weekend.
....as to who the other party might be, there are clearly a vast range of possibilities, including USA and Australia.
emptyend
I doubt very much that it is a UK player. I suspect that if there is a big deal announced [which we are assuming on the basis of assembling snippets of gossip and half-truths and little more!] then it will involve a larger company trading a large parcel of North Sea assets to Dana....which, incidentally, would explain why they didn't participate in the latest round. Such a company would, I guess, be non-UK, but I don't rule anything out.
And, reverting to the general point about the results, I would certainly be hoping to see some unambiguous [;-)] clarity about drilling plans in Mauritania and Kenya.....because that's the bit which I think remains greatly undervalued by the market......
thegreatgeraldo
IF the suspected deal was a merger/takeover , surely they wouldn't bother waiting until Tuesday ? If it's agreed , why wait & maybe cause a bit of a false market in the shares on Monday ? So assuming there is a deal , my money's on an asset sale/purchase/swap. Next stop is to consider what Dana might want to dispose of. Obvious candidates are Indonesia (THE obvious one , IMFO , as the next step there is to start spending on developement) , after that , I'd be surprised if they turned down a decent offer for South Vatoskoye (spelling ?) , plus of course , any decent farm-in offers should be considered WRT Mauritania.
The obvious buyer of Dana's Indonesian interest is Hess...
KevDean
Could this be the answer?
From olive blossom on Hot Copper:
"Hardman – results preview
Hardman Resources reports results for the year to 30th June 2004 on
TUESDAY 28th SEPTEMBER....
emptyend
Maybe, just maybe, it IS to do with Hardman? And Woodside perhaps?
But neither have North Sea assets [do they?] - and I'm fairly sure that we're looking mainly at a swap of assets.
Not long to wait to find out, of course. I'd personally think that a DNX/HRD tie-up was a great idea IF they could sort the management issues! I'd expect both the share prices to rally if there was such news too..
Well, as of 10 p.m. Greenwich Mean Time, there has been no announcement from Hardman Resources to the Australian Stock Exchange, or from Dana Petroleum. I'll be rising early for the last time this month to check the newswires at 7 a.m. tomorrow.
With Dana shares riding high at 373p a positive announcement is expected by the market, either on earnings, corporate activity, or both. Dana comprises 24% of my portfolio following Ben Bailey's recent setbacks.
Fingers crossed for good news tomorrow, my pocket needs it.
The Artful Dodger
(0) comments
No reason was given but discussion board members at The Motley Fool were quick to speculate, the more cogent thread contributions argued:
A deal on Tuesday?
The Motley Fool, Dana Petroleum Discussion board
SirLurkalot
I see hardly any reason why Dana would choose to announce its results on Tuesday, and yet do the analyst presentation on Thursday. That's almost unheard of, to me.
What reasons could there possible be for this unusual arrangement? One reason that jumps out is that there's a deal they want to announce, that needs to get got out quickly for fear of it leaking if they try to hold up announcing it until Thursday.
emptyend
That is exactly my conclusion! However, the timing won't be as much about the risk of a leak, as the need to announce it simultaneously with another company [who I suspect may be in a different timezone?).
SirLurkalot
Couldn't the other party be down under? So announcement c.10pm UK time Monday night shortly before Sydney trading via asx.com.au, followed by announcement 7am UK time Tuesday morning on uk-wire?
davjo
...Hardanaman Petroleum (or HD Resources) has a kinda nice ring to it ;-) Combining some decent N.Sea cashflow with W.African explo/development would seem a pretty good marriage. Such a merger wouldn't look terribly different from the resultant successful re-structuring of PMO -- good core c/f, early development prospects and loads of explo.
emtpyend
I think the chance of such a late change isn't what the delay's about: I think that one of the deals under discussion has finally crystallised....which is why the date was originally delayed from the 23rd when it became clear it wouldn't quite get done by that date. The advancing of the results to Tuesday is, IMO, at least 60% certain to be driven by a need to coordinate with the other party....with the other 40% being down to the convenience of a Monday signing once the lawyers have finished a busy weekend.
....as to who the other party might be, there are clearly a vast range of possibilities, including USA and Australia.
emptyend
I doubt very much that it is a UK player. I suspect that if there is a big deal announced [which we are assuming on the basis of assembling snippets of gossip and half-truths and little more!] then it will involve a larger company trading a large parcel of North Sea assets to Dana....which, incidentally, would explain why they didn't participate in the latest round. Such a company would, I guess, be non-UK, but I don't rule anything out.
And, reverting to the general point about the results, I would certainly be hoping to see some unambiguous [;-)] clarity about drilling plans in Mauritania and Kenya.....because that's the bit which I think remains greatly undervalued by the market......
thegreatgeraldo
IF the suspected deal was a merger/takeover , surely they wouldn't bother waiting until Tuesday ? If it's agreed , why wait & maybe cause a bit of a false market in the shares on Monday ? So assuming there is a deal , my money's on an asset sale/purchase/swap. Next stop is to consider what Dana might want to dispose of. Obvious candidates are Indonesia (THE obvious one , IMFO , as the next step there is to start spending on developement) , after that , I'd be surprised if they turned down a decent offer for South Vatoskoye (spelling ?) , plus of course , any decent farm-in offers should be considered WRT Mauritania.
The obvious buyer of Dana's Indonesian interest is Hess...
KevDean
Could this be the answer?
From olive blossom on Hot Copper:
"Hardman – results preview
Hardman Resources reports results for the year to 30th June 2004 on
TUESDAY 28th SEPTEMBER....
emptyend
Maybe, just maybe, it IS to do with Hardman? And Woodside perhaps?
But neither have North Sea assets [do they?] - and I'm fairly sure that we're looking mainly at a swap of assets.
Not long to wait to find out, of course. I'd personally think that a DNX/HRD tie-up was a great idea IF they could sort the management issues! I'd expect both the share prices to rally if there was such news too..
Well, as of 10 p.m. Greenwich Mean Time, there has been no announcement from Hardman Resources to the Australian Stock Exchange, or from Dana Petroleum. I'll be rising early for the last time this month to check the newswires at 7 a.m. tomorrow.
With Dana shares riding high at 373p a positive announcement is expected by the market, either on earnings, corporate activity, or both. Dana comprises 24% of my portfolio following Ben Bailey's recent setbacks.
Fingers crossed for good news tomorrow, my pocket needs it.
The Artful Dodger
Sunday, September 26, 2004
I've lost a lorry-load of lolly
Say that five times and my tongue is in a twist. Think it and I feel sick. But that is just what happened to me in the previous week. I lost, a lot.
Ben Bailey is comfortably my largest shareholding but no longer a share I'm holding comfortably.
Thursday saw Countryside and Countrywide, two of Ben Bailey's housebuilding peers, warn the market on trading. The companies announced profits would not match up to the market's expectations. These announcements are termed 'profit warnings' and are the most precipitous proclamation possible.
The recent Bank of England interest rate rises have loomed over housebuilder's share prices for much of 2004, prices stalled across the sector in spite of the strong interim results many reported. Now, the long-held fear that UK housing was due a turn downwards has been confirmed in Countryside and Countrywide's area of operations, will Ben Bailey escape unscathed?
Bailey operates in the North of England, the two 'country' companies the south-east, where housing is more clearly over-priced and indeed unaffordable. But sentiment is what sets the prices of houses and shares, even if Ben Bailey continues to enjoy the construction boom for awhile yet, the shares may not escape.
This is a frightening prospect for my portfolio. In the last week alone, Ben Bailey has fallen from 425p to 390p. With my 2000 strong holding, that's a £700 loss in just one week.
And Ben Bailey could continue falling yet, my calculated fair value won't stop it. The media and the public have turned bearish on the housing market, the bull run appears to be over. Of course, I can't second guess which way Ben Bailey will go from here. But it would be wise to start looking for new opportunities.
The Artful Dodger
(0) comments
Ben Bailey is comfortably my largest shareholding but no longer a share I'm holding comfortably.
Thursday saw Countryside and Countrywide, two of Ben Bailey's housebuilding peers, warn the market on trading. The companies announced profits would not match up to the market's expectations. These announcements are termed 'profit warnings' and are the most precipitous proclamation possible.
The recent Bank of England interest rate rises have loomed over housebuilder's share prices for much of 2004, prices stalled across the sector in spite of the strong interim results many reported. Now, the long-held fear that UK housing was due a turn downwards has been confirmed in Countryside and Countrywide's area of operations, will Ben Bailey escape unscathed?
Bailey operates in the North of England, the two 'country' companies the south-east, where housing is more clearly over-priced and indeed unaffordable. But sentiment is what sets the prices of houses and shares, even if Ben Bailey continues to enjoy the construction boom for awhile yet, the shares may not escape.
This is a frightening prospect for my portfolio. In the last week alone, Ben Bailey has fallen from 425p to 390p. With my 2000 strong holding, that's a £700 loss in just one week.
And Ben Bailey could continue falling yet, my calculated fair value won't stop it. The media and the public have turned bearish on the housing market, the bull run appears to be over. Of course, I can't second guess which way Ben Bailey will go from here. But it would be wise to start looking for new opportunities.
The Artful Dodger
Wednesday, September 22, 2004
The Fourth Major Zurich Axiom: On Forecasts
Returning to Max Gunther's The Zurich Axioms it's the turn of the fourth Major Axiom, dealing with the nagging pestilent presence of the forecasts of others.
Major Axiom IV:
Unfortunately, wannabe cassandras, quack clairvoyants and boys that cry wolf are legion in the business media. Their opinions (however weakly held) are communicated with the conviction and persuasion of a professional. Their prognastications, pontiffications and punditry must be avoided with the determination and diligence of a Parisian pedestrian with a compulsive obsession for clean shoes.
Gunther explains the reasoning behind Axiom IV:
We listen, no doubt, because knowledge of the future is and has always been one one of the most desperately sought human goals. If you could read tomorrow's stock prices today, you would be rich. And so we listen with respect and hope any time someone stands up and announces a vision of things to come.
(0) comments
Major Axiom IV:
Human behaviour cannot be predicted. Distrust anyone who claims to know the future, however dimly.
Unfortunately, wannabe cassandras, quack clairvoyants and boys that cry wolf are legion in the business media. Their opinions (however weakly held) are communicated with the conviction and persuasion of a professional. Their prognastications, pontiffications and punditry must be avoided with the determination and diligence of a Parisian pedestrian with a compulsive obsession for clean shoes.
Gunther explains the reasoning behind Axiom IV:
We listen, no doubt, because knowledge of the future is and has always been one one of the most desperately sought human goals. If you could read tomorrow's stock prices today, you would be rich. And so we listen with respect and hope any time someone stands up and announces a vision of things to come.
More often than not, listening turns out to be a mistake.
The journalists and economists rife throughout the business sections are often forbidden from holding stakes in the companies they pass judgement on, they earn their living from commentary and dissent - their role is peripheral to the main attraction. They posess no proven ability beyond the literary and amount to nothing more than parasitical pimps, taking a salary while those with the real courage of their convictions take the risks.
Forecasters are particularly dangerous because they often operate a hidden agenda. This can be increased stockbroker commissions from trades inspired by their recommendations, or simply the need to cobble together an article for the print deadline. There is usually little money to be made should the verdicts even be proven correct as market prices already reflect the majority opinion, only analysis so left-field and rarely held can produce significant gains.
There are no silver bullets, crystal balls or magic goat entrails to enlighten the stock market investor. Ignore the so-called soothsayers, give them no more attention than opera-goers give the choc-ice vendors at La Scala.
The Artful Dodger
Tuesday, September 21, 2004
Judgement of September. Chapter II: Chaucer
Monday's results from Chaucer Holdings showed progress on three key equity valuation metrics: earnings per share, dividend per share and net tangible asset value.
The shares advanced on Monday only to give back their gains during today's session. Chaucer is the racehorse that hasn't put a foot wrong over the course but has so far failed to reward it's owner with prize money. The dividend yield and advance from the 42.88p purchase have paid the stable bill but as my calculated fair value rises so does the frustration - I'm tempted to take a knife to my portfolio and make a gelding of this underperforming nag.
The company announced record results for the half-year. Operating profit increased from £15.0m to £19.8m. Earnings per share was buoyed to 5.3p from 5.0p and net tangible asset value put in a 21% improvement reaching 41.9p per share. All assisted by Chaucer's canny underwriting strategy as the combined ratio (a measure of payouts to premiums received) fell to 82.8% from 89.6%.
Commeting on trading, Ewen Gilmour, Chief Executive, said:
Underwriting conditions remain fundamentally sound, with the market motivated by the importance of maintaining discipline. The current hurricane season, though severe, provides opportunities for a group like ours.
but the Atlantic weather fronts have put the wind up Chaucer management:
Hurricanes Charley and Frances have provided a salient reminder of the continued importance of our core business disciplines - risk selection, pricing and management. The Chaucer Group's total estimated net exposure to these two events is between £8m and £12m and remains within budget for such events. Hurricane Ivan is clearly a substantial catastrophe. Whilst it is too early to make accurate estimates, Chaucer is confident that the loss remains within its reinsurance programme.
The 2004 hurricane season has brought the insurance industry's first major disaster since 2001. The events in the Atlantic will hit the company's combined ratio through higher payouts than previous but a reassessment of the risks present should be positive news for premium rates. The market currently prices Chaucer so cheaply because consensus is that premium rates (and hence income) have peaked and the industry is sailing towards stormy waters. I shall keep faith in management to inform me of the business climate - Chaucer will avoid any portfolio pruning as long as the shares trade below 65p.
Ben Bailey, down 3.5% today looks unlikely to inspire the portfolio to the gains it enjoyed in 2003. This year's biggest earner, Dana Petroleum, announces interim results on September 30th. 2004 has seen Dana rise from 250p to 352p. Dana was no cheaper when I bought then Chaucer is today. Dana's rise has knocked Chaucer into third place in my portfolio, I'm hoping this embarassment will spur Chaucer on. Just over three months of 2004 remain, there's a lot of this race still to be run.
The Artful Dodger
(0) comments
The shares advanced on Monday only to give back their gains during today's session. Chaucer is the racehorse that hasn't put a foot wrong over the course but has so far failed to reward it's owner with prize money. The dividend yield and advance from the 42.88p purchase have paid the stable bill but as my calculated fair value rises so does the frustration - I'm tempted to take a knife to my portfolio and make a gelding of this underperforming nag.
The company announced record results for the half-year. Operating profit increased from £15.0m to £19.8m. Earnings per share was buoyed to 5.3p from 5.0p and net tangible asset value put in a 21% improvement reaching 41.9p per share. All assisted by Chaucer's canny underwriting strategy as the combined ratio (a measure of payouts to premiums received) fell to 82.8% from 89.6%.
Commeting on trading, Ewen Gilmour, Chief Executive, said:
Underwriting conditions remain fundamentally sound, with the market motivated by the importance of maintaining discipline. The current hurricane season, though severe, provides opportunities for a group like ours.
but the Atlantic weather fronts have put the wind up Chaucer management:
Hurricanes Charley and Frances have provided a salient reminder of the continued importance of our core business disciplines - risk selection, pricing and management. The Chaucer Group's total estimated net exposure to these two events is between £8m and £12m and remains within budget for such events. Hurricane Ivan is clearly a substantial catastrophe. Whilst it is too early to make accurate estimates, Chaucer is confident that the loss remains within its reinsurance programme.
The 2004 hurricane season has brought the insurance industry's first major disaster since 2001. The events in the Atlantic will hit the company's combined ratio through higher payouts than previous but a reassessment of the risks present should be positive news for premium rates. The market currently prices Chaucer so cheaply because consensus is that premium rates (and hence income) have peaked and the industry is sailing towards stormy waters. I shall keep faith in management to inform me of the business climate - Chaucer will avoid any portfolio pruning as long as the shares trade below 65p.
Ben Bailey, down 3.5% today looks unlikely to inspire the portfolio to the gains it enjoyed in 2003. This year's biggest earner, Dana Petroleum, announces interim results on September 30th. 2004 has seen Dana rise from 250p to 352p. Dana was no cheaper when I bought then Chaucer is today. Dana's rise has knocked Chaucer into third place in my portfolio, I'm hoping this embarassment will spur Chaucer on. Just over three months of 2004 remain, there's a lot of this race still to be run.
The Artful Dodger
Friday, September 17, 2004
Cheer up Chaucer
Chaucer Holdings, my insurance stock, announces results for the first half of the year on Monday 20th of September at 7 a.m.
Despite strong final results, an encouraging AGM statement and most recently improved syndicate forecasts Chaucer shares have shown all the motivation and inspiration of a bloodhound with M.E. At today's 45p to sell they are down on the year to date and my stakes in the company have acted as a financial vampire, sucking the life and energy out of portfolio performance.
Comparisons with the previous interim results are confused by the huge issue of new shares on 10 April 2003. Another 133m shares were listed bringing the total now exceeding 290m. The subsequent dilution of profits per share will be significant but the final results of April 2004 can be utilised for a estimate of full year results and a fair price for the company.
I've come to expect lethargy from Chaucer shares. Analysts opinion is the insurance market is softening and about to dip into falling revenue. The City Cassandras and clairvoyants have been haranguing the public in a similar tone over housebuilders. With Ben Bailey and Chaucer representing each sector in my collection, the absence of advancement has been almost enough to make me renounce my beliefs and become a fully-fledged speculator chasing whichever hot stocks should be going up soon.
But I'm sticking with my philosophy of buying under-valued shares enjoying strong trading. The Dana Petroleum plan has put a lot of food on my table this year, the shares today sit at 350p, a high since purchase. We'll be better informed on Monday if Chaucer will be making a similar contribution.
The Artful Dodger
(0) comments
Despite strong final results, an encouraging AGM statement and most recently improved syndicate forecasts Chaucer shares have shown all the motivation and inspiration of a bloodhound with M.E. At today's 45p to sell they are down on the year to date and my stakes in the company have acted as a financial vampire, sucking the life and energy out of portfolio performance.
Comparisons with the previous interim results are confused by the huge issue of new shares on 10 April 2003. Another 133m shares were listed bringing the total now exceeding 290m. The subsequent dilution of profits per share will be significant but the final results of April 2004 can be utilised for a estimate of full year results and a fair price for the company.
I've come to expect lethargy from Chaucer shares. Analysts opinion is the insurance market is softening and about to dip into falling revenue. The City Cassandras and clairvoyants have been haranguing the public in a similar tone over housebuilders. With Ben Bailey and Chaucer representing each sector in my collection, the absence of advancement has been almost enough to make me renounce my beliefs and become a fully-fledged speculator chasing whichever hot stocks should be going up soon.
But I'm sticking with my philosophy of buying under-valued shares enjoying strong trading. The Dana Petroleum plan has put a lot of food on my table this year, the shares today sit at 350p, a high since purchase. We'll be better informed on Monday if Chaucer will be making a similar contribution.
The Artful Dodger
Wednesday, September 15, 2004
More profits for Mayborn, no more for me
Mayborn Group, my fourth largest holding this morning announced a profit of £4.1m for the first six months of the year, a 42% increase. Recent share buybacks and other factors resulted in a 53% increase in earning's per share to 13.6p. The dividend was hiked in line with the earnings to 2.6p.
Comment included:
The results for the half year benefited from exchange rate factors. Compared to the same period of the previous year, the overall exchange gain was £0.7m. This gain was largely offset by increases in freight rates, import duty and plastic prices.
the weak dollar has embellished these results while the high crude oil price has added a comparable tarnish. I'm left wondering what the effect on Mayborn's business would be if oil prices and dollar exchange rates strengthened in tandem.
Encouragingly, current trading is reported as
strong in the second half to date. Turnover for the Babycare Products Division and Impex have continued to grow and Dylon is also showing a good increase.
I was relieved and encouraged by these results. The dividend and earnings increases were widely anticipated however and trading at 268p to sell in the morning, shares dipped, closing at 262p.
With 13.6p earnings in the first half Mayborn is cheap but not excruciatingly under-rated. I don't expect a swift run up to fair value (which is probably around 325p) but the next fortnight will see professional analysts examining this announcement and issuing recommendations to clients. This and any sentiment or suggestion in the financial media might just present me with an opportunity to sell.
The investment case for Mayborn remains. I await the dividend and will watch for any price volatility to capitalise upon.
The Artful Dodger
(0) comments
Comment included:
The results for the half year benefited from exchange rate factors. Compared to the same period of the previous year, the overall exchange gain was £0.7m. This gain was largely offset by increases in freight rates, import duty and plastic prices.
the weak dollar has embellished these results while the high crude oil price has added a comparable tarnish. I'm left wondering what the effect on Mayborn's business would be if oil prices and dollar exchange rates strengthened in tandem.
Encouragingly, current trading is reported as
strong in the second half to date. Turnover for the Babycare Products Division and Impex have continued to grow and Dylon is also showing a good increase.
I was relieved and encouraged by these results. The dividend and earnings increases were widely anticipated however and trading at 268p to sell in the morning, shares dipped, closing at 262p.
With 13.6p earnings in the first half Mayborn is cheap but not excruciatingly under-rated. I don't expect a swift run up to fair value (which is probably around 325p) but the next fortnight will see professional analysts examining this announcement and issuing recommendations to clients. This and any sentiment or suggestion in the financial media might just present me with an opportunity to sell.
The investment case for Mayborn remains. I await the dividend and will watch for any price volatility to capitalise upon.
The Artful Dodger
Tuesday, September 14, 2004
Judgement of September. Chapter I: Mayborn
Three of my four shareholdings report interim results this month. The numbers and accompanying guidance from management will greatly influence my performance for the year, which to date slouches at a humbling +5%.
Chaucer reports on September 20th and Dana the 30th. My immediate concern however, is Mayborn Group, they announce results to the stock exchange tomorrow at 7 a.m.
Though more was spent on my Mayborn purchase than I have ever spent at any one time, the company only amounts to 16% of portfolio value. Since purchase at 282p in February, the shares have occupied a level slightly in the money, at the money and well out of the money. For the last month Mayborn traded at 255p to sell but recently the share price has shown life in anticipation of results, rising over four percent today alone to rest at 268p to sell. Tomorrow's interims are Mayborn's first results announcement since my purchase, I'm hoping strong earnings will cajole stock watchers to revalue the company, eventually allowing me to sell somewhere in advance of 350p.
The company's April AGM statement provided some suggestion of what I might expect tomorrow before breakfast:
the Directors now believe that the pre-tax profit for the first half of 2004 will be substantially in excess of 2003's £2.9m although, in 2004, the first half is likely to contribute a higher proportion of the annual pre-tax profit than 2003's 42%.
2003's first half (diluted) earnings per share was 8.7p. This figure was achieved on £2.9m of profit. Chairman Peter Sechiari's testimony states this pounds sterling figure will be exceeded. The implications are very encouraging for the shareholder. Since the last interim results Mayborn has been aggressively buying back company stock in the market for cancellation. The profit figure is set to rise and the number of shares fall. This push-me-pull-you action would boost stockholder's share of the profits, increasing the value of those shares greatly - a similar effect on the share price in the market should follow.
But beyond the numbers I will be keenly examining tomorrow's announcement for comments on the affects of high oil prices on Mayborn's profitability. Oil is a key raw material input to the plastics industry and plastics are a vital ingredient of Mayborn's baby nappy and bottle fabrication process. An investor must always pay close attention to earnings outlook comments as these constitute one of the few occasions information from the kernel and kidnies of the company may be obtained from insiders. Don't forget, on taking an equity stake the investor transfers safekeeping of his wealth from the bank to the company's management. Management has to be trusted to inform holders of the company's fortunes, the shareholder has to avoid developing the arrogant delusion that he knows better.
Fingers crossed for Wednesday September 15th. I'm confident Mayborn will report impressive numbers, the problem will be waking for 7 a.m. tomorrow, not getting to sleep tonight.
The Artful Dodger
(0) comments
Chaucer reports on September 20th and Dana the 30th. My immediate concern however, is Mayborn Group, they announce results to the stock exchange tomorrow at 7 a.m.
Though more was spent on my Mayborn purchase than I have ever spent at any one time, the company only amounts to 16% of portfolio value. Since purchase at 282p in February, the shares have occupied a level slightly in the money, at the money and well out of the money. For the last month Mayborn traded at 255p to sell but recently the share price has shown life in anticipation of results, rising over four percent today alone to rest at 268p to sell. Tomorrow's interims are Mayborn's first results announcement since my purchase, I'm hoping strong earnings will cajole stock watchers to revalue the company, eventually allowing me to sell somewhere in advance of 350p.
The company's April AGM statement provided some suggestion of what I might expect tomorrow before breakfast:
the Directors now believe that the pre-tax profit for the first half of 2004 will be substantially in excess of 2003's £2.9m although, in 2004, the first half is likely to contribute a higher proportion of the annual pre-tax profit than 2003's 42%.
2003's first half (diluted) earnings per share was 8.7p. This figure was achieved on £2.9m of profit. Chairman Peter Sechiari's testimony states this pounds sterling figure will be exceeded. The implications are very encouraging for the shareholder. Since the last interim results Mayborn has been aggressively buying back company stock in the market for cancellation. The profit figure is set to rise and the number of shares fall. This push-me-pull-you action would boost stockholder's share of the profits, increasing the value of those shares greatly - a similar effect on the share price in the market should follow.
But beyond the numbers I will be keenly examining tomorrow's announcement for comments on the affects of high oil prices on Mayborn's profitability. Oil is a key raw material input to the plastics industry and plastics are a vital ingredient of Mayborn's baby nappy and bottle fabrication process. An investor must always pay close attention to earnings outlook comments as these constitute one of the few occasions information from the kernel and kidnies of the company may be obtained from insiders. Don't forget, on taking an equity stake the investor transfers safekeeping of his wealth from the bank to the company's management. Management has to be trusted to inform holders of the company's fortunes, the shareholder has to avoid developing the arrogant delusion that he knows better.
Fingers crossed for Wednesday September 15th. I'm confident Mayborn will report impressive numbers, the problem will be waking for 7 a.m. tomorrow, not getting to sleep tonight.
The Artful Dodger
Friday, September 03, 2004
Stay sanguine, stay sang-froid
I recently sold an item on ebay, the internet auction site. I made a new moniker for internet auctioneering, only people with internet access via care in the community would buy from 'The Artful Dodger'.
My reactions as the auction progressed astonished me. Small increments of a pound or two were met with the cackling jubilation radical Muslim clerics ejaculate on hearing George W. Bush has choked on a pretzel. This is at odds with my response to the same day's news of a 3.5% advance in Ben Bailey shares, inspired by positive comment in the Financial Times' rainmaking Lex column.
That's as it should be. There's no place for emotion in this game and while I'm feeling bombastic, this isn't a game either. A lot more than a pound or two is at stake, if you're seeking expensive or dangerous thrills try stock car racing a Fiat 500 or strap a saddle on a polar bear.
Unlike a week long internet auction, the next day a share price advance can reverse - or worse. Unless the rise breaks my sell target there's nothing yet to celebrate and perhaps confusingly, the rise (on value grounds) only makes a subsequent fall more likely.
So, even sizeable gains ought to be met with sang-froid, as they could be gone by 4:30. Stay sanguine when stocks slip, providing the original investment case remains further falls may constitute call-to-alms, not crisis.
The aggregate consensus that makes the market often resembles certain characters from Winnie-the-Pooh. At the height of excitement players carry-on with the colourful optimism and ebullience of Tigger the tiger but after price falls the same individuals metamorphose into the dour, doom-saying donkey that is A. A. Milne's Eeyore, chronic negativism ensuring even banker investment opportunities are unfailingly ignored.
It's taken years for me to get such a good grip on emotion that I can leave it behind. Excitement, exuberance, despondency and despair will only hinder investment decisions. While share prices vacillate under the control of Mr Market the Manic Depressive an aloof detachment is the best weapon an investor can have in their arsenal. But remember that cash can be handy too.
The Artful Dodger
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My reactions as the auction progressed astonished me. Small increments of a pound or two were met with the cackling jubilation radical Muslim clerics ejaculate on hearing George W. Bush has choked on a pretzel. This is at odds with my response to the same day's news of a 3.5% advance in Ben Bailey shares, inspired by positive comment in the Financial Times' rainmaking Lex column.
That's as it should be. There's no place for emotion in this game and while I'm feeling bombastic, this isn't a game either. A lot more than a pound or two is at stake, if you're seeking expensive or dangerous thrills try stock car racing a Fiat 500 or strap a saddle on a polar bear.
Unlike a week long internet auction, the next day a share price advance can reverse - or worse. Unless the rise breaks my sell target there's nothing yet to celebrate and perhaps confusingly, the rise (on value grounds) only makes a subsequent fall more likely.
So, even sizeable gains ought to be met with sang-froid, as they could be gone by 4:30. Stay sanguine when stocks slip, providing the original investment case remains further falls may constitute call-to-alms, not crisis.
The aggregate consensus that makes the market often resembles certain characters from Winnie-the-Pooh. At the height of excitement players carry-on with the colourful optimism and ebullience of Tigger the tiger but after price falls the same individuals metamorphose into the dour, doom-saying donkey that is A. A. Milne's Eeyore, chronic negativism ensuring even banker investment opportunities are unfailingly ignored.
It's taken years for me to get such a good grip on emotion that I can leave it behind. Excitement, exuberance, despondency and despair will only hinder investment decisions. While share prices vacillate under the control of Mr Market the Manic Depressive an aloof detachment is the best weapon an investor can have in their arsenal. But remember that cash can be handy too.
The Artful Dodger
