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Real-Time news about Erinaceous (London Stock Exchange): 0 recent articles
|chesty1: Yes Yvain & the share price has already given way....!
ETL was a dead dog BUT yet the share price went from 18p to over £1 in 3 days trading..
Shorters can also help the share price given the right piece of news.
Anyway I am long & happy to take the gamble after making plenty of money out of PRG from 49.5p to 75p in a week so more than happy to play ball here.
Are you short OR just out at a loss.??|
|tubruk: A more detailed and seemingly better informed explanation for the price monitoring extension from Contract Journal...
Erinaceous: price monitoring annoucements
(22 November 2007 12:00)
Erinaceous was the subject of two regulatory announcements at the end of trading on yesterday's Stock Exchange. Wednesday's trading in the group's shares resulted in a 'price monitoring extension' being triggered in the after-hours settlement period.
However, this development signalled neither a surprise new buyer of Erinaceous's shares nor an existing shareholder bailing out.
During the day, shares trade on two different price levels one price for buying and another for selling. The difference is known as the spread and the often-quoted figure of 'the mid-price' is the average of the two values.
At the close of trading, a company's orderbook for that day gets "uncrossed" according to a complex numerical algorithm. Once this uncrossing process is complete, a closing mid-price is announced.
Occasionally there can be a glitch in this system, triggering an automatic message. This is what happened to Erinaceous yesterday. After the five minutes that this process would normally take, Erinaceous still needed further unravelling, hence the second message.
Erinaceous has 20m shares and yesterday only 320,000 of them were traded, so hardly a bed of activity.
Earlier this week, two of the group's founders (and still current leaders) Neil Bellis and Lucy Cummings announced that they had resigned with immediate effect.
They had been under pressure to jump ship by Fursa Alternative Strategies, which holds 19% of Erinaceous's shares. It had called for an extraordinary general meeting to boot them out, a consequence of the disastrous collapse in the group's share price throughout the year.
At the start of the year, Erinaceous shares were worth 400p. They are now worth under 16p.
Bellis and Cummings were not sacked and they have walked away with compensation running to £395,000 and £341,000 respectively.
A spokesman for Erinaceous said: "The group has a recovery plan and the next development will be the publication of this strategic review. That will decide the group's future course."
Fursa is the largest shareholder. While it can be categorised as a hedge fund, it has been supportive of moves to turn the business round.
Consensus Business Group, one of four bidders rumoured to have been looking to buy Erinaceous outright, has signed a declaration not to make an offer for the group within six months but with a string of waivers that can nullify this position. One of these the announcement of a change in a majority of directors.|
|ch2175: Yvain - this explanation courtesy of Mr Rubin on iii.
When you have a seller of a significant chunk of a company, the broker acting for them goes into the market and conducts an auction. This is for two reasons: (i) to try and get the best price for the seller, (ii) to try and get all the shares placed. Pretty soon there are a lot of people in the market who know this is going on, and if there is a significant variance between the likely auction price and the currnet share price, this could cause mayhem in the market in these shares until such time as the auction is concluded and the quoted share price discounts it in. So the LSE will agree with the broker to suspend the shares until this cycle has gone through.|
|topvest: Well we all thought this was a problem child and boy its gone down fast! My view is that this is in real trouble now. I supsect the Lipmans may be running their rule over some parts of the Hercules Property empire again, particularly the insurance and auction businesses. Someone's loss is another's gain!
Overall, this has been an odd journey. ERG bought Hercules for a low price, the share price reaction very mooted. I sold out about 6m later, before a massive bull run on the ERG share price which ultimately looked overvalued, then the fraud at the commercial property co. broke and it's been a steep decline ever since. It seems to me that the ERG management team were a bit too racey for their own good!
This comment is very relevant here I think..
Among Warren Buffett's many timeless market aphorisms, one has stuck in my mind as particularly apt : "It's only when the tide goes out that you get to see who's been swimming with their trunks off."|
|simon gordon: I think there are two strands to ERG right now:
- Bear Raid.
- Kitching and Dove resigning.
The Bear Raid has decimated the share price and could be finally burning out. The serious money has come in and bought equity as the price crashed.
So ERG is due a bounce back to support - £2.60+.
Though in the medium term they might fall again.
The reason being is I think that Kitching and Dove's leaving could possibly bring about a fundamental change in how the Agency division is going to perform. I think Agency is the Achilles Heel of ERG's earnings. They are mainly transcational earnings and totally depend on the Agencys' dealmakers bringing in the business. Another way to think of these dealmakers, are as football strikers. Kitching was a Robbie Keane. There is a 'war for talent' in the Agency world, just like football clubs, everyone wants goal scoring strikers. Well, ERG have been losing their strikers in Manchester and London, and it's not easy to quickly replace a striker who walks out. As the strikers at the other Agencys' are under contract and even if they decide to join ERG they will have to go on gardening leave. So how will ERG replace the lost transcational earnings from the strikers who have left? The creative play makers (wingers: Aaron Lennon) could be dispirited that the strikers have left and may become amenable to be being tapped up? I liken ERG's Agency division to Tottenham Hotspur but if they lose top players they could rapidly turn into Manchester City.
I think the one guy who has called the ERG story correctly is Peter Bill, the Editor of Estates Gazette. What he editorialised is coming to pass and if I planned to spend £10m on ERG shares a 50p phone call to him would be a sound investment.
EDIT - I am a Leeds United supporter.|
|simon gordon: I find posting helps me clarify my thoughts. I am close to reaching an ERG overdose. I went to the supermarket, collected my food and then realised I had no cash - I'm just in an ERG zone.
I did not think I would be getting back into this story after selling in January, but the price has drawn me back. I held post McGarryGate, as I can see the long term business logic of what ERG are doing, and of what they can become. McGarryGate just screwed up the story and has caused me to change my approach and to think more like a trader, rather than as an investor. I think I can become one in the two and ERG is the perfect place to put that into action. After all, all I seek is profit. ERG is still a rich seam that has plenty of gold to be mined. Better to change mining techniques than leave the gold left in the ground. I know the ERG mine well. I have to be aware that a cave in is always a possibility and that the gold could turn out to be fools gold.
Here are some more thoughts:
Balance Sheet - 12/06:
Net Debt -152m
Deferred Consideration - 39m
Post - 12/06:
Letsure - 12m
D&H - ?
New acquisitions funded:
- Bank debt.
- Issuing treasury share.
- Deferred consideration.
Banking facilities - 215m
Some deferred has an option to be paid in ERG shares.
Commercial Property Services - 2006:
Agency turnover (transactional) - c.24.25m
EBIT margin - c.40%
EBIT profit - c.9.7m
*These are rough estimates, once the Numis note is out I will post more approximate details.
It is not a huge chunk (50% of the Commercial division) and should reduce as ERG have not bought an Agency since Egan Lawson last August.
On the Cantos interview Neil Bellis stated that 85% of budgeted income can been seen at the beginning of 2007.
The Agency earnings and Balance Sheet are intertwined as the main risk overshadowing the ERG share price.
Savills are bullish for '07 and so is Neil Bellis. We are already at the end of Q1, meaning the Agency earnings do not look overly susceptible. If this turns out to be the case then the balance sheet should be fine.
I compare ERG to such Support Services companies as Capita, WS Atkins and Serco. They started small, aggregated and became behemoths. I think ERG can become a behemoth. Although, ERG is being far more aggressive in growing than the three amigos did when they went from Acorns to Oaks.
I think the reward for holding the shares outweighs the risks.
Just remember the Black Swan.
BLACK SWAN by N. Taleb:
A black swan is an outlier, an event that lies beyond the realm of normal expectations. Most people expect all swans to be white because that's what their experience tells them; a black swan is by definition a surprise.|
|simon gordon: ERG are now perceived as a 'stigma' stock.
I think they can shake this off.
The only hook left for the bears and more share price downside is for ERG to issue a profits warning. What could cause that:
1. Commercial Agency cools and transactions drop. In the Prelims the Board said it did not anticipate this happening. Read Property Week and Estates Gazette for the answer.
2. IT integration goes pear shaped. ERG have a history of excellent execution.
3. Hurricane hits UK and expected Propgen profits vanish. Low probablity event.
4. An unknown Black Swan. Always there.
Rising interest rates would cut profits by c.400k, per quarter point increase.
McGarryGate looks like it will be going through the courts for years, so as a catalyst it looks negligible.
Collins Stewart, the house broker, do not anticipate a placing. That Propgen will make up any loss from Farr margin pressure. They say spurious bear stories are hurting the share price. I noticed that a c.500,000 short position was closed on Thursday - have recent sellers been swindled, again? Will the FSA do any thing? No chance! CS reiterate that ERG are a cash generating machine.
I don't see much downside from here. All being well, the share price should be re-built back to £3.50 during '07. In 2008 ERG should be able to join the 250. Whilst waiting, holders get a chunky yield.
If all goes well they could be a three bagger in 3 to 5 years.
The main factor that could de-rail the Bulls is a Commercial Agency slowdown.
So as a risk/reward trade I think ERG is a buy at this price.|
|simon gordon: Hi Harty1
Have you noticed that Altium have been downgrading forward EPS forecasts? Andrew Nussey is the best analyst following ERG by a mile.
After the acquisitions made in 2006 I was expecting considerable upgrades but these have not materialised.
I think the Board should have put a freeze on acquisitions after the Black Swan event of McGarryGate. Alas, ERG then got hit by a series of little swans - ChildsGate, FarrExodus, DunlopExodus. Not forgetting the swindlers!
The balance sheet has become too leveraged for my peace upon the pillow - hence I sold.
It is obvious the market does not want ERG to do more deals otherwise the share price would be c.£3.50, which I think is fair value.
So the current share price performance lies squarley with the Board of ERG.
I am surprised that Nigel Turnbull a very experienced City operator did not forsee that the ERG share price would need careful nurturing post McGarryGate. Instead ERG have ploughed on full throttle with a studious lack of humbleness.|
|rastapastamasta: ERG are not expected to have any financial liability in Mc Garrygate.
Believe Investec still have a target price of 370p? Even at that price ERG's P/E ratio is still much better than those of its competitors.
Institutional investors are still acquiring stakes in ERG.
It is possible that the share price has been hit by a bear raid, as previously, rather than the market becoming very wary of ERG since January. If this is the case, spread bets are usually closed at the end of the month, so ERG price will stop going south on thursday. That leaves one week until results are announced, so I expect a steep climb, and a share price in the region of 370 on 7/3/07.
Whatever your point of view there is no doubt that these shares represent excellent value at the current price.|
|simon gordon: CLIMBING THE WALL OF WORRY - Risks to ERG share price.
NEAR to MEDIUM TERM - bird flu, human pandemic: economy stricken.
MEDIUM TERM - UK recession: growth seizes.
LONG TERM - war with Iran: mega oil shock.
AT ANY TIME - fraud/mistake in one ERG division: particularly insurance.
AT ANY TIME - Neil Bellis dies.
AT ANY TIME - nuke terror attack.
AT ANY TIME - giant hedge fund implosion: '87 type crash.|
Erinaceous share price data is direct from the London Stock Exchange