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
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
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