Carillion Share Discussion Threads

[lab305] 30/10/2016 11:10

Just pointing out as I am sure that some of you know already the fine balance that exists in the share price and the extent to which short sellers are in complete control of the stock.
On the short interest tracker site the maximum short interest level was reached around 13 October at 21.62%. This exactly corresponds with a share price low of 241.1.
On 19 October the short position had dropped marginally to 20.76% , however the share price had risen to 252.8. That's an 11p rise on a .86% drop in shorts.
Now I know that the short figures may not be exact and you cannot extrapolate along the whole 20% , but if ever a share had potential this is it.

[m4rtinu] 27/10/2016 13:28

Reason for today's drop? From ONS, overall GDP up, but among other sectors, construction down.



GDP was estimated to have increased by 0.5% in Quarter 3 (July to Sept) 2016 compared with growth of 0.7% in Quarter 2 (Apr to June) 2016. GDP was 2.3% higher in Quarter 3 2016 compared with the same quarter a year ago.

In Quarter 3 2016, the services industries increased by 0.8%. In contrast, output decreased in the other 3 main industrial groups with construction decreasing by 1.4%, agriculture decreasing by 0.7% and production decreasing by 0.4%, within which manufacturing decreased by 1.0%.

[rcturner2] 20/10/2016 18:31

From the article linked above:

"Once the company was lumbered with loss-making contracts, there are suggestions that it then employed accounting discretion to paint a rosier picture in its financial statements than was justified.
"They were quite aggressive in the way they recognised revenue and not very prudent in the way they recognised costs," Tim Steer, fund manager at Artemis, told the BBC.
Acting on his suspicions, he shorted Connaught's shares - in other words, he "borrowed" the shares and sold them, profiting by buying them back later at a lower price."

[wad collector] 20/10/2016 18:19

Which helps clarify a very different situation.
Marconi went bust so that makes Renishaw a concern?
Woolworths and John Lewis ?

[speedsgh] 20/10/2016 14:24

Connaught collapse: What went wrong? -

[redartbmud] 20/10/2016 14:15

Mouchel had cash flow problems. Not sure about Rok or Connaught.

[rcturner2] 20/10/2016 13:42

In recent years 3 similar companies to Carillion have gone bust, Mouchel, Rok and Connaught and a fair few others have suffered too (have a look at the IRV share price chart). Connaught was a FTSE 250 company when it went bust.

[rcturner2] 20/10/2016 13:31

Adam, I only mentioned Globo in passing to show that shorters can be right. Many people regarded Globo as a world leading company, it featured prominently in the IC for example. It's only a basket case with hindsight. When Rok went bust many people viewed Rok pretty much as you have just summarised Carillion.

[adamb1978] 20/10/2016 12:49

The comparison above of CLLN with Globo is utterly ridiculous!

CLLN has been around for years, has proper operating businesses with very well established market positions and is paying a dividend which is somewhere around 2x covered! Globo was a basket-case. If CLLN was funding the dividend from, say, raising debt or via whittling down a cash pile then you could indeed claim that the dividend wasn't appropriate, and there was something wrong with the company but that it not the case

[edmundshaw] 19/10/2016 21:54

bond yields turning up will be good news for all pension deficits; the companies with the biggest ones (when, as here, factored into the share price) also have the most to gain on that upturn...

The UK 10yr bond yield was around 0.66% on the 6th September, and is currently 1.087%, having risen fairly steadily for nearly a month. It bottomed at around 0.52% in mid August. Guessing the future may be generally tricky, but I cannot see why yields should not continue to recover to something reasonable as foreign investors shed sterling assets...

[m4rtinu] 19/10/2016 14:34

Thanks again guys/guyesses, for both sides of the argument. MU

[rcturner2] 19/10/2016 10:26

lab, fair enough, I don't necessarily disagree with you although you did write "excuses about pension funds is just froth". Carillion's pension deficit is one of the worst that is out there and it is a hot political potato after the BHS debacle.

[lab305] 19/10/2016 10:14

I cannot believe that you could compare the two. One in solid bricks and mortar literally with a long history and proven track record whilst the other was almost a dot com. The speed of the demise of globo and the time frame of when the shorters got involved also defies comparison. They smelt a whiff of blood and went for it.
The longer that this company demonstrates that it is well run and trades in a moderately profitable way the more hollow the short position appears. Roll on the autumn statement but even though I believe it will be positive as have been all those over the past 2 years the smear effect of the short position will probably continue to dominate .

[getscenic] 19/10/2016 09:09

If you had a short on LRD you would be a happy man (person for the ladies) this am!

[rcturner2] 19/10/2016 09:06

lab, I very well member the short attack on Globo (GBO). I sold my stake there as a result of the short attack and saved myself from a 100% loss. I also remember the thread discussion (it is still on advfn) which is a perfect lesson in investor psychology on both sides of the argument.

[lab305] 19/10/2016 08:55

If the shorters really knew anything don't you think that would have materialised in 2 years? They just acted in unison to crush the stock. There are many shares out there with far worse fundamentals and far higher valuations. Any sane person with half an O level can see that. Fear mongering and excuses about pension funds is just froth. It is a concern but not anywhere near justifying the stock having a PE of 8.

[rcturner2] 19/10/2016 08:47

In my opinion shorters do not pick targets at random. They either believe that there is a serous issue at the company or that there are macro factors that will seriously effect the company's business.

The most likely explanation is that they feel that the company's debt plus the pension deficit is sufficiently large to be dangerous to a company that has margins as low as they are. The shorters then get a free pass on any macro downturn that could hit Carillion.

[m4rtinu] 19/10/2016 08:31

Wad, RCT - thanks. The steady increase in short positions started end of 2014/ beginning of 2015, when it was about 5%. Now over 20%. It is almost like a long-short. Any ideas? Including CLNs.

[rcturner2] 19/10/2016 05:10

wad, there is also the possibility that Carillion is turning into a value trap, where people continue to buy on the apparent increasing dividend yield right up to the time the dividend is cut. Yields of this level are often warning signs. Now it may be that Carillion is being unfairly targeted by shorters, but in my experience they tend to know what they are doing and have a success rate that is high enough to concern holders here.

[wad collector] 18/10/2016 20:10

Tip TV is a guessing forum. £2 is presumably some sort of chartist "calculation" .That would put a prospective yield for next year of 10% covered 1.8x.
If that happens I will add to my large holding. But I won't be holding my breath!

[m4rtinu] 18/10/2016 16:30

Speeds - ta, have seen it too. Posted above? But thanks anyway. Held above 250p today.

Not sure if this is of interest to anyone. Estimated resistances/supports.

[speedsgh] 18/10/2016 14:17

As a predominantly LTBH income investor I'm not really interested in short term views on stocks but I just stumbled across this so thought I would share it anyway as it may be of interest to some. make of it what you will...



“Sell on any strength” is the message told by the chart of construction firm Carillion Plc, so says technical analyst Zak Mir.
Mir, in a Tip TV segment for Proactive Investors, highlighted that the share has been falling for more than a year and looks likely to go down to around 200p.
Bearish trader’s wanting to go short ought to sell on any strength, up above the moving averages seen in the chart, he added.
“At the moment 265p or 270p is where you’d go short if you were cautious and didn’t want to get caught out,” he said.

[m4rtinu] 18/10/2016 09:52

Any views on current chart?

Difficult to predict with volatile market. CLLN clearly downward from early Sept. But as we know it can go on quite significant upward/downward paths in quite short periods.

[tini5] 18/10/2016 09:47

hxxp://shorttracker.co.uk/company/GB0007365546/all

Around 21% short...