Sunday, June 12, 2005
Chaucer, time is running out
On Friday, Chaucer's share price slipped back to 69p. The masses that make the market are beginning to decide after deliberating over the price Amlin will pay. The consensus is suggesting it's less than they thought on Thursday, the bidder's identity was announced.
As Amlin is already listed on the London Stock Exchange, they might just propose an exchange of Amlin shares for Chaucer shares. That's always less appealing than an outright cash offer and only complicated the situation appraisal further. How many Amlin shares might we be offered? And how much are they worth anyway? Blimey, this just got more complicated, sod it I'll sell! That's pretty much the mentality evidenced in Thursday and Friday's price action.
So what should I do?
By my calculations, Chaucer is still not expensive in relation to it's peers. The sector has advanced handsomely since that start of 2005 but there is still no 'bid premium' in the Chaucer shareprice. However, I wouldn't be a buyer at these levels either.
So what to do?
If I can find a better opportunity elsewhere I'll take it. I've identified three oil companies all trading on attractive valuations: Soco, ROC Oil and Samson Energy. If the numbers persuade me any of these companies is worth buying, I'll be selling my entire Chaucer shareholding to fund some new purchases. It's time I got my calculator out again.
After earning over 30% on my investments thus far in 2005 this conundrum is a sobering reminder of just how much of a slavish slog this game is. The market is in charge and there is nothing I can do about it.
The Artful Dodger
As Amlin is already listed on the London Stock Exchange, they might just propose an exchange of Amlin shares for Chaucer shares. That's always less appealing than an outright cash offer and only complicated the situation appraisal further. How many Amlin shares might we be offered? And how much are they worth anyway? Blimey, this just got more complicated, sod it I'll sell! That's pretty much the mentality evidenced in Thursday and Friday's price action.
So what should I do?
By my calculations, Chaucer is still not expensive in relation to it's peers. The sector has advanced handsomely since that start of 2005 but there is still no 'bid premium' in the Chaucer shareprice. However, I wouldn't be a buyer at these levels either.
So what to do?
If I can find a better opportunity elsewhere I'll take it. I've identified three oil companies all trading on attractive valuations: Soco, ROC Oil and Samson Energy. If the numbers persuade me any of these companies is worth buying, I'll be selling my entire Chaucer shareholding to fund some new purchases. It's time I got my calculator out again.
After earning over 30% on my investments thus far in 2005 this conundrum is a sobering reminder of just how much of a slavish slog this game is. The market is in charge and there is nothing I can do about it.
The Artful Dodger
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