This morning finds me in Scotland
with a potential hangover and our daughter deciding its much too
exciting to be staying in bed and wanting to play with our hosts. So
with the Queen of Curiosity coaxing the entire house to wake up at
stupid o'clock there perhaps beckons a pub visit with siesta before
the night time events!
Last night we were discussing
amongst other things, China, and it dawned on me...when I was working
through China's issues and their flow money, the wastage may have an
exponential impact on the economics when the over production is dealt
with. China is attempting to share the burden of expansion and growth
the with the West with the kind offering to finance China's railways
and the like. So in the absence of a more realistic growth
expectation and more commercial terms of business, China's head for a
train wreck within 3-4 years.
It dawned on me reading the FT and
seeing Gowex going bankrupt and all sorts of shenanigans coming to
ahead there. It was a lucky miss for two individuals whom wanted to
invest there and couldn't decide on a valuation/entry price. It was
not so long ago that whilst going to France four of us were
discussing the over-valuation of IT and Tech firms and Gowex came up.
My muted response to IT is normal, I see companies like that as
trading opportunities, not long-term investments and often short. It
would explain why I made paltry amounts on MSOFT and APPLE, but I've
also missed a bucket load of failures as well.
For some reason the appetite outside
of America for Tech/IT companies is either Uber-bullish/bearish and
very little middle road. Irrespective of the companies offerings
online, big data etc...there is an apparent lack of understanding and
a general over-expectation of performance. The analyst notes for
ASOS, Ocado, Supergroup, Boohoo etc....clearly have been under
pressure since being penned with revisions, this includes Bagir Group
a more recent IPO. The herd clearly can't think for themselves and
are considered contrarian if they are realistic or its viewed as
being negative for the sake of, amazingly very similar to the
contrarian definition.
So for those looking at investments,
try my view, negative from the start and if it passes the test of
being negative you're more than likely getting to a decent long case.
As Leggie rightly pointed out it's been a good run for Hurricane,
Victoria Oil & Gas and QFI (Quadrise Fuels). The latter
surprising me as not dropping further and a few% above when I sold. I
needed more clarity on the future for Quadrise to warrant holding, as
such, I sold I believe at 34p. Post holidays I'll review it
properly...Maersk appear happy! Half
Year Update on Active Programmes for QFI covers it much better
than I.
Disappointment for Faroe Petroleum
(FPM) today with Butch
South West exploration well results coming in with a a
contradictory "good quality reservoir" but no hydrocarbons.
So time to look at getting Butch into play, expect some selling as
people no doubt had over-expectations.
SXX (Sirius Minerals) (why they
don't change their name to York Potash I'll never known...look to be
making headway. York
Potash Project approvals - status update clearly showing the LA
(Local Authority) and the Company are progressing in the right
manner. Will first production in 2018 be too far away for most?
Leggie, your longer term ethos will no doubt pay wisely, if SXX
are allowed to go it on their own.
Finally, AAL looking a little more
positive with their Lafarge Tarmac deal raising £885m. If they could
find someone to pay them for their "unloved" assets AAL
would be more positive. The company knows this and apparently are
working hard on this. If rumours are correct, AAL can hope to wave
goodbye to Anglo American Platinum shortly!
Other gossip is BLT/BHP's takeover
of BG, I have always maintained this is the best marriage and most
affordable of all possibilities for BG Group. Off piste and
questioning the reasoning is an all share offer for London Mining by
African Minerals. After the most recent update, it wouldn't be
complimentary, in fact I don't think it would be earnings enhancing
unless an expansion to their concentrator could benefit LOND as well?
Atb Fraser (considering a nap)
Fraser- Hi and have fun in Scotland- the border will be closed in 2 months as Hadrian wall is reinforced by that useless aircraft carrier and manned by Mr Farage and his mob looking to curtail foreign immigrants heading south :-)) You may need to paint your face blue if you stay there beyond September :-))
ReplyDeleteRe SXX- the RNS indicates a 2 month delay but then explains the duplication avoided and that makes sense, plus the pre apps being fielded by the NYMPA indicates a much more positive approach from them this time around. The app this time should get 10/10 and a gold star as long as it isnt accompanied by the "dog ate my homework" post it note. In the medium term, I see that RIO have started a potash dev of their own, it seems the majors need exposure to this area and polyhalite has had some good crop test results in particular crops, plus the financing would be simple via a major whereas its tricky even with SXXs team of ex bankers for a £200m sized company, so I would see a corporate move being much more likely than SXX being the owners on the day production starts. And then there are the current potash players, who may prefer to control the SXX asset given its disruptive pricing potential.
Re BG- something has to give there, either a sale of a major division or the whole and given the pigs ear the mgmt. have made of meeting expectations and setting guidance, they have had the Up For Sale sign on their front lawn for sometime now. I can see the logic of BLT adding to their assets via BG and its affordable for them too but I suppose price will be the key and no doubt discussions have taken place with the usual US suspects too. I still think the sum of the parts is closer to £18 than the current share price, with Brasil being undervalued in most eyes. Its a long for me, despite the mgmts. failures to date. No doubt they will eventually follow the trend of protecting their jobs but turning down a £18 cash bid on the AZN/Shire basis.... One day the rules will change and the shareholders will be allowed to determine these things again... aren't they the owners and the board are meant to look after their interest, not just line their own pockets.... rant over :-))
Cheers. The Leggie
Fraser- quiet overall but some pressure building on some stocks in these low volume conditions and intermediaries not wanting to hold much overnight.
ReplyDeleteRe VOG- these daily rises look v much like the power deal is progressing, which would be transformational- perhaps the company needs to issue a comment on share price RNS given they were 1.2p or so a week ago. I might have to top slice soon but the fundamental value if a big power deal is done is 3p plus so sitting on my hands for now.
Re BLVN- just added as they seem to be the most undervalued v. my fair value assessment in the little universe of stocks I cover. I almost picked Afren, as they are as cheap as chips too, I expect the corp action in this area (small/med cap producers) to be awakened over the coming year, as spending $100m on a speculative offshore drill (Repsol/TRP off the Namibian coast last month) seems like a bad risk/reward bet compared with some of these underdeveloped discoveries. Most need capital to develop at the appropriate rate, still it creates opportunities so I cant complain too much.
Cheers. The Leggie