RAB Special Situations Company Share Discussion Threads

[energyi] 03/2/2007 12:00

RAB Capital's 'money-back guarantee' demand raises concern

By Richard Fletcher, Deputy City Editor ... 02/02/2007

RAB Capital, one of London's leading hedge funds, is demanding "money back guarantees" before it invests in mining companies. The highly unusual demand is further evidence of the influence of RAB Capital's Special Situations Fund in the natural resources sector.

Run by Philip Richards, one of London's best known and highest paid fund managers, the fund has been one of the sector's leading investors.

RAB Capital recently invested £500,000 in Energy Capital, a cash shell listed on Plus Markets (formerly Ofex). The company is seeking shareholder approval for a deal which would see it reverse into Sicamines, a Republic of Cameroon-based exploration company. Details of RAB's money back guarantee are revealed in documents sent to shareholders before a general meeting to approve the deal.

According to the document, if Energy Capital has not moved to the Aim market or raised an additional £10m by April 2008 then the company will have to pay £10,000 (or issue new shares to RAB Capital equivalent to 2pc of the fund's holding) every month until it does.

Anthony Butler, chairman and chief executive of Energy Capital said that RAB Capital had requested the clause. "They are the largest shareholder. This is the condition they have requested," said Mr Butler.

Shares in Energy Capital have soared since trading was resumed last week and RAB Capital has seen the value of its £500,000 investment more than double. RAB Capital invested at 2p a share; yesterday the shares closed at 4¾p. As part of the deal the hedge fund was also granted options to acquire 600,000 shares at 3½p.

Despite the sharp rise in the share price small investors in Energy Capital have contacted The Daily Telegraph to raise concerns about the unusual deal.

A spokesman for RAB argued that the clause benefited all shareholders: "We entered into a contractual commitment with Energy Capital and consider it to be in the interests of all investors that this is achieved," said a spokesman for RAB Capital.


@:

[exmooroil] 05/1/2007 07:11

The NAV estimate for 31.12.06 has just been published:

Undiluted: 155.45p
Diluted..: 149.09p

Current share price is 130.25p(mid), a discount of 12.6% to diluted NAV.

RSS"B" warrants currently bid 7.25p / offer 9.00p, with a 130p strike price.

[exmooroil] 27/11/2006 06:33

energyi,

Thanks for the updated NAV/share price table.

The Special Situations Fund closed on 23.11.06 at $2794.02/share. That's 1% up on 16.11.06, thus RSS NAV should increase by a similar amount. (edit: now posted at 139.00p undiluted, equal to 136.75p diluted)

[mr ashley james] 26/11/2006 14:39

Energyi,

Since first RNS I can find 20th June 2005 and last 20th November 2006 a period of 17 months the NAV has only gone up 38.31% from 98.02p to 135.57p, surely I am better to stick at selective investments of my own in Natural Resources for example Aquarius Platinum Plc LSE:AQP ASX:AQP 300p to 1200p ie 400% or Platinum Australia Limited AU$0.11 to AU$1.40 ie 1,272% in the same period rather than expect a Fund severely Diworsified across the sector in IMHO Substandard plays compete with the Returns on Equity I expect to make by being extremely selective?

It strikes me Australian and Canadian Mining stocks consistantly outperform their London counterparts?

Surely I am better to concentrate on well run Development and Production Assets and let people like RAB Capital Plc concentrate on the dross in the London MINEX Sector?

Especially if I can make roughly 10 to 33.50 times as much money investing my own funds by my self?

Surely any mental pygmy can exceed a 23.50% Annual Return on Capital Employed anyway which is roughly the maximum I think RSS are managing to achieve?

Net Asset Value(s)

RNS Number:7595N
RAB Special Situations Company Ltd
20 June 2005

The Directors today announce that the estimated Net Asset Value per Ordinary
Share based on mid market prices as at 16 June 2005 was 98.02 pence.


Enquiries to: Collins Stewart Fund Management Limited
No 1 Le Truchot
St Peter Port
Guernsey GY1 4AE




This information is provided by RNS
The company news service from the London Stock Exchange
END

NAVFGGZVNGGGKZG

and last RNS

Rab Special Sit Net Asset Value(s)
RNS Number:3338M
RAB Special Situations Company Ltd
20 November 2006

RAB SPECIAL SITUATIONS COMPANY LIMITED (the "Company")



The Directors today announce that the estimated Net Asset Value per Ordinary
Share based on the estimated value of the RAB Special Situations Master Fund
provided by the Investment Adviser as at 16 November 2006 was 137.43 pence. The
fully diluted Net Asset Value after taking into account potential warrant
dilution is 135.57. As the market price of the Ordinary Shares is below the
exercise price for the B Warrants, we would not expect any dilution effect to
take place.


Enquiries to: Elysium Fund Management Limited
No 1 Le Truchot
St Peter Port
Guernsey GY1 3JX




This information is provided by RNS
The company news service from the London Stock Exchange
END

NAVMGMZMLGRGVZG_SN_RNS3338M_SU_RNSTEST_XX_091844.2732_RZ__RT_R.xRoute.0.3

All IMHO, NAG, DYOR etc

Cheers

Ash:)

[energyi] 26/11/2006 13:30

RAB is now at "BUY" levels at 116p.

Likely discount is over 17%,
and the Price-to-Pound.HUI is back down under 66%

Rising gold stocks should soon lift RSS

[energyi] 26/11/2006 12:51

RAB really is special
One highly experienced fund manager is Philip Richards. Nearly a year ago, MoneyWeek recommended buying into the commodities story via his RAB Special Situations fund – which is listed on Aim as RAB Special Situations Company (RSS). Last year it also issued two warrants, which we also suggested investors should consider (RSSA and RSSB). The 'A' warrants are due to be exercised next week at 115p. As the shares are now trading at 131p, the warrants have done well in the last eleven months since we recommended them. However, just because they are about to be exercised doesn't mean that you should sell out – you ought to be looking at a "two-to-three year investment in the fund", Philip Richards, the fund manager, told MoneyWeek. "We might be in a speculative bubble, but we are still in a secular up-wave." Collins Stewart agrees, "RSSA is currently trading at a 15% discount to the fund's net asset value... We continue to recommend RSSA on the basis of both the manager's impressive track record and the strength of the market for natural resources."

@:

[energyi] 26/11/2006 11:48

--Date-- --RSS- --NAV-- -fdNAV-- Disc. --HUI- --GBP- PdHUI PH/NA Ratio
25.Aug/5 102.11 103.79A ....... - 1.6% 201.29 $1.800 111.8 1.077 94.7%
15.Sep/5 103.79 108.50A ....... - 4.3% 229.19 $1.800 127.3 1.173 81.5%
29.Sep/5 105.50 113.63A ....... - 7.2% 248.36 $1.764 140.8 1.239 74.9%
30.Sep/5 104.50 114.50A ....... - 8.7% 245.19 $1.763 139.1 1.215 75.1%
06.Oct/5 104.00 112.27A ....... - 7.4% 237.40 $1.780 133.4 1.188 77.9%
31.Oct/5 101.49 105.79A ....... - 4.1% 222.84 $1.770 125.9 1.190 80.6%
17.Nov/5 100.75 105.88A ....... - 4.8% 246.47 $1.719 143.4 1.354 70.1%
30.Nov/5. 99.83 109.83A ....... - 9.1% 243.44 $1.729 140.8 1.282 70.9%
31.Dec/5 105.11 121.93A ....... -13.8% 276.90 $1.719 161.1 1.321 65.2%
19.Jan/6 119.50 130.85A ....... - 8.7% 308.80 $1.759 175.6 1.34A 68.1%
31.Jan/6 131.00 144.34A 133.42* - 1.8% 342.43 $1.775 192.9 1.335 67.9%
28.Feb/6 128.00 145.43A 133.96* - 4.4% 305.87 $1.756 174.2 1.200 73.5%
31.Mar/6 131.50 163.13A 142.81* - 7.9% 336.32 $1.747 192.5 1.180 68.3%
28.Apr/6 140.59 185.50A 154.00* - 8.7% 378.79 $1.823 207.8 1.120 67.7%
18.May/6 124.00 170.07A 146.28* -15.2% 324.45 $1.879 172.7 1.015 71.8%
22.May/6 115.25 157.33E 137.7E* -16.3% 310.00 $1.876 165.2 1.050 69.8%
31.May/6 123.00 151.23A 145.92A -15.7% 333.81 $1.872 178.3 1.222 69.0%
30.Jun/6 122.00 143.43A 140.07A -12.9% 337.18 $1.874 179.9 1.285 67.8%
31.Jul/6 127.80 144.65A 144.65E -11.6% 329.21 $1.867 176.7 1.222 72.3% -
31.Aug/6 116.00 143.18A 139.89A -17.1% 348.94 $1.904 183.3 1.310 63.3% +
29.Sep/6 115.00 132.63A 131.97A -12.9% 300.48 $1.871 160.6 1.217 71.6%
31.Oct/6 118.00 133.01A 132.26A -10.8% 318.84 $1.908 167.1 1.263 70.6%
02.Nov/6 117.50 134.23A 135.57A -13.3% 323.10 $1.909 169.3 1.248 69.4%
16.Nov/6 119.91 137.43A 135.57A -11.6% 317.33 $1.888 168.1 1.240 71.3%
24.Nov/6 116.00 ....... 141.00E -17.7% 340.26 $1.932 176.1 1.249e 65.9%?
--Date-- --RSS- --NAV-- -fdNAV-- Disc. --HUI- --GBP- PdHUI PH/NA Ratio

[f430] 20/11/2006 20:09

sandbank, you wouldn't have heard about it, it was for investors only

[sandbank] 20/11/2006 20:00

Trying to get info out of RSS is not easy. They say two of their larger investments, Asia Energy and Oxus Gold, have proved problematic and that the sector as a whole has undergone "valuation compression" - nice euphemism..
I didn't hear anything about a conference call - was there one?

[doctor octagon] 14/11/2006 15:29

Am told that RAB have arranged a couple of conference calls with investors in the SS Fund covering holdings,prospects and outlook.First one is this Friday pm.Is this so?Could move the share price if true.

[barnetpeter] 13/11/2006 11:34

Two big buys of the ws today at 11p.

[exmooroil] 13/11/2006 10:59

energyi,

Would it be possible to resurrect the table in the header to this thread -

possibly a simplified version with 5 columns:

Date,
RSS NAV undiluted,
RSS NAV diluted,
RSS share price,
%Discount to diluted NAV

Interest seems to be growing in both RSS and RSSB, so, if the facts are updated weekly, it will serve to enlighten bulls, bears, and those somewhere in between.

Regards.

[barnetpeter] 13/11/2006 08:57

NAV is now above 139 - up 5p on the week. Discount is now huge - will surely close a little soon.

[exmooroil] 12/11/2006 13:00

"B" warrants can never be called an investment - speculative punt at worst, calculated risk at best. If you are risk-averse, you are best not to touch them.

However, if you calculate the possibilities for growth, the risk/reward profile can look very attractive, but it needs to be watched closely, especially in early 2007.

imo

[barnetpeter] 12/11/2006 11:35

If it has added nearly 4% (and its biggest holding has recovered a lot) the discount to NAV will be nearer 15%. That is a big discount. The point here is that you have two chances - the stocks held move up and / or the discount closes. Its highly geared and risky of course!

[exmooroil] 12/11/2006 09:06

Mister X,

The closing share price of RSS plc on Friday was 119.25p, a discount to the last published undiluted NAV (2nd November) of 11.2%, or 10.5% vs diluted NAV.

I concede that RSS plc shares have been priced at a discount to NAV since IPO, but rarely above the current discount rate.

RSS plc was originally floated as a vehicle for "institutions" to gain exposure to the Special Situations Fund. Indeed, all proceeds of the 40m share float were invested in the Fund, as were the proceeds of the conversion of the 20m "A" warrants on 31.5.06, which logically would have been hoovered up in the run-up to conversion by "institutions" too.

Your assessment of the potential for a liquidity crisis within the underlying Fund is a possibility, but whether it is greater or lesser than any other resources based Fund is a matter of opinion. The Fund is currently +27.5% year to date.

With respect to "B" warrants, which are exercisable by 31.5.07, the critical period is the next 5 months.

If you think there will be a recovery in resources/gold based stocks, and the indications are currently positive, then the Fund NAV is likely to increase, thus the RSS plc NAV will increase, thus the RSS plc share price should increase, thus the share price of RSS B warrants should increase.

Earlier comments related particularly to "B" warrants.

[mister x] 11/11/2006 21:18

exmoor, just because the fund moves +3.5% on the week doesnt mean the listed vehicle shall. One of the problems of investing in an investment trust - the ability of the vehicle to trade at steep discount or premium (if its good). This has always been at a discount and so it should, the portfolio's filled with junk, largely. Oh and not forgetting the liquidity 'discount'. If the worst occurred there's no chance in hell of the portfolio being liquidated.

[exmooroil] 10/11/2006 19:58

Special Situations $Fund NAV closed last night at $2800.20. That's 3.8% up on the week. A 3.8% increase on the RSS NAV implies an undiluted NAV of approx 139.3p or a diluted NAV of approx 137p. Watch for publication of the undiluted NAV/share on Monday.

Steady as she goes, barnetpeter, it's all headed in the right direction.

[barnetpeter] 10/11/2006 17:24

On the recovery trail with OXS having ralied 250% in the last ten days. Bought some today myself at just below 10p. Expect to see the spread close next week as the price moves to around 15p or so.

[exmooroil] 07/11/2006 16:01

I hope you are right, dunnie.

Now that RSS undiluted NAV is once again over 130p, the effect of B Warrant dilution should be taken into consideration. The effect will be less pronounced than it was last year, when both A and B Warrants were adding to the dilution.

To recap, RSS originally floated 40m shares, and issued 20m "A" Warrants exercisable by 31.5.06 at 115p, and 20m "B" Warrants exercisable by 31.5.07 at 130p.

All "A" Warrants were exercised, probably by institutions, thus shares in issue is currently 60m.

RAB's website quotes the undiluted RSS NAV as 134.23p on 2.11.06. Here is a table covering the next 30p or so growth:

For every 1p increase in undiluted NAV, the diluted NAV will increase by 0.75p, as follows:

NAV...........NAV
undil.........dil

130...........130
131...........130.75
132...........131.50
133...........132.25
134...........133
135...........133.75

140...........137.50
145...........141.25
150...........145
155...........148.75
160...........152.50
165...........156.25
170...........160
175...........163.75
180...........167.50

etc etc

B Warrants are currently priced 8p bid,9p offer.

The key question is the discount of the actual price of RSS shares to the diluted NAV of the underlying Fund.

As at Monday 2nd November, the RSS shares were priced at 118p mid against a diluted NAV of 133.17p. That's a discount of 11.4%. If the discount narrows during the winter, and the sector enjoys the long awaited bounce, then B Warrants will offer substantial upside.

All in my opinion. I am a holder of B Warrants. Comments welcomed.

Regards,

Ex

[dunnie] 02/11/2006 17:54

exmooroil,i think the correction has bottomed out and the resource sector normally enjoys it's best months from September to May,so although the correction lasted longer than normal this year i expect a strong run from here,regards

[exmooroil] 02/11/2006 17:26

Hi dunnie,

I have started buying B wts too, but I'm a little wary of the climate surrounding small cap resources companies, because, since the correction in the Spring, the bounce has not occurred yet to any great degree as it did last year. At these low prices it will mean greater dilution for shareholders as these companies seek to raise further funds via placings to develop their assets towards BFS and that magical word: "production".

If it wasn't for the base metal/gold prices continuing in strength, I would be worried.

I still feel there is substantial growth to come in the Special Sits portfolio but it might not be so easy as last year.

B wts expire 31.5.07.

Ex

[hac29600] 02/11/2006 11:54

dunnIE

These warrants cannot have much life left can they ? Next March I would guess - do you know at what price they can be exercised ?