Northamber Share Discussion Threads

[rainmaker] 29/9/2010 12:37

Thanks Sleepy,are you holding Northamber? As per previous message there's a real sense that Investors could be creating their own luck here-a slight improvement in Northamber's operating performance would send the share price substantially higher. They've made substantial cost savings over recent years and keep tight credit controls. Maybe there will be further share buybacks and the price gets to 70/80p then goes nowhere but.......... In any event I'm sure this isn't going to multibag because they operate in a fiercely competitive industry but holders could nevertheless be very pleasantly surprised.I feel competitive pressures will ease because their competitors,post recession, will be more concerned about margins than turnover short term.

regards

[sleepy] 29/9/2010 09:37

Rainmaker - well done on Volex

[rainmaker] 29/9/2010 01:13

Thanks OB-Just doing some back of the envelope calculations for Northamber and with regards to cost of equity and them making a "meaningful profit".Which I would define Northamber making a profit in excess of their cost of capital. So I have calculated that they need to make 4.46 eps or just under £1.3mln net income to justify a share price equivalent to their net asset value of 88.4p.

At face value, this might seem a tall order for Northamber but then appreciate that we are in a low interest environment then look at their performance in the last six months and realise that to achieve that target figure they just need to double those earnings over the next year.Also earnings are at a low ebb and if Northamber can generate a miniscule improvement of return on sales from their massive £130mln+ annual turnover then that figure is easily achievable.

There is a real sense here of creating your own luck, of being in the right place at the right time. That may strike a chord with some Investors or it may not.Ben Graham once stated a good investment was a good speculation in that if a share's downside was limited, by definition it must have good potential upside.I have absolutely no idea where the share price will be in three/six months, or 1/2 years time but given the fact you are buying Northamber's shares for it's net cash presently,and getting it's earnings and assets for free, I am very confident it will be higher.I sold the last of my Volex(VLX) holdings today-I started selling 9 working days ago and although I expected the share price to do very well when I was buying in late 2008/early 2009 never in my wildest dreams did I believe I would make up to 16 fold gains on my positions.

regards

[sleepy] 29/9/2010 00:49

Rainmaker - not all of the 4 biggest shareholders are linked to Directors

[old boy returns] 28/9/2010 16:08

RM - the price is largely irrelevant as you cannot buy or sell in volume at it. Basically the management have to finally decide what they want to do with the company - either find a buyer, take it private or wind it up. They have been in limbo making no meaningful profit - and certainly not a decent return on capital employed - for years now (at least 7 since I started following) - and they are all getting on and past retirement age.

[rainmaker] 28/9/2010 15:31

Hi OB,the problem is that the four largest holders hold 77.4% and I believe that they are directors.Certainly the Chairman holds in excess of 50%. Nevertheless even a 5k purchase moves the price in this thin market.

regards

[old boy returns] 28/9/2010 15:07

NAR buying back a measily 5k shares is neither here nor there really and makes bog all difference to NAV / share. If they are serious about buybacks they should approach some large holders and ask what they would accept and then see if it makes sense.

[cwa1] 28/9/2010 14:33

Fair comment R, they can have mine at an even more generous discount of 80p too if they want them. As you say, musn't be too greedy.

[rainmaker] 28/9/2010 14:08

I'm not too greedy, I was looking for ballpark 80p per share but there's a generous dividend to keep us company whilst we wait-it was recently raised 40%

regards

[cwa1] 28/9/2010 13:52

They can have mine at a generous discount of 85p ;-)

[rainmaker] 28/9/2010 13:44

.................and share buy backs benefit nobody more than the management who own the majority of the shares.

regards

[rainmaker] 28/9/2010 13:31

5k bought at 53p recently was the Company buying for cancellation. Remember any shares bought at less than 88.5p net asset value benefits all shareholders by boosting net asset value, eps and reduces the dividend bill.It will also support the share price.So let's hope we'll see further buybacks.

regards

[rainmaker] 28/9/2010 00:33

Just to correct a mistake in my previous post-net working capital is in fact 79p a share.

regards

[rainmaker] 27/9/2010 14:34

I'll double check but I believe that net working capital is 75p a share and net asset value 88.5p

regards

[rainmaker] 27/9/2010 13:13

Just got to be a little patient but the value is definitely there

regards

[cwa1] 27/9/2010 12:58

Always nice to see a little tick up.

[rainmaker] 27/9/2010 12:46

very thin market in Northamber with NMS 5k shares(normal market size-the minimum number of shares a market maker must deal in at the advertised bid or offer)so even small purchases have a disproportionate effect on the share price eg Northamber has risen 4% today on one single purchase at 53p for just 5k shares.


regards

[rainmaker] 27/9/2010 12:38

Up again at 50/55p and count on chart is to 72p, about 38% higher from current level.A 50%+ technical retracement from March 55p high down to 38p then 17p move added to 55p high.

regards

[rainmaker] 24/9/2010 13:47

doesn't look like the Company were responsible for the 20k purchase. It would be interesting to hear why Northamber aren't buying back it's shares for cancellation. I believe there will be a trading update in November.

regards

[rainmaker] 21/9/2010 12:38

20k bought at 53p this morning, I wonder if that was the Company buying back it's shares for cancellation?


regards

[rainmaker] 21/9/2010 12:19

thanks OB- I remember your comments on another NAR thread.I don't think that a lack of sellers is a problem. A share buyback would have a dramatic effect on the NAR share price. Just look at the share price performance of similiarly thinly traded Character Group.Of course buy backs at less than net assets of 88.5p? currently would be in everyone's interest-since it would boost eps and nav, cut the dividend bill and be the tax efficient way NAR could return value to shareholders.The Company have already remarked on the large disparity between the current share price and net assets so there could be a problem with free float.

I'm optimistic re Northamber share price short term as the Company is making money at an operating level and are experiencing a recovery in it's markets.It's current rating is so low that even a further modest pick up in business could easily send the share price 30/40p from current levels.Lack of capital expenditure will simply means it's cash pile will keep growing. I feel that short term competitive pressures will ease for reasons already mentioned. This share won't multibag I'm sure of that but I am confident there is a good profit to be made from current levels over the next six months.

regards

[rainmaker] 13/9/2010 22:51

From recent results"Surprisingly, net assets per share,and even net cash, continue to exceed by quite some margin, the quoted price of the company's shares and resultant market capitalisation"

So they need to be proactive and launch a share buyback programme since they funds way in excess of wroking capital requirements. Obviously this would be to everyone's advantage as I have have already explained.

regards

[rainmaker] 13/9/2010 14:08

A couple of highlights from the recent set of results-

Balance sheet

At our 30th June 2010 year end, the net assets per share were 88.5p compared
with 89.4p at the end of the previous year. Surprisingly, net assets per share,and even net cash, continue to exceed by quite some margin, the quoted price of the company's shares and resultant market capitalisation


Outlook

Whilst difficult trading conditions still prevail, we are probably now better
aware of the factual obstacles we need to overcome or avoid

Early indications are that the improved trends seen in the last quarter of
2009/10 may be continuing into the current year. However, it is too early yet
to say with any degree of certainty whether this is a mere blip or an underlying trend.

regards

[rainmaker] 09/9/2010 18:08

Yep, CW definitely one for the patient, the share price does nothing for months then rise 30%+ in a few days after the results tell them than things aren't really that bad and are improving.I'm very happy to continue to hold at current levels as we're trading around net cash.At 50p, it's still yielding 4%.

regards