Robert Walters Share Discussion Threads

[imastu pidgitaswell] 24/4/2009 11:57

Another 30% rise passed me by - money tied up elsewhere. Some serious percentage swings available here. Next time...

[boozey] 26/3/2009 21:48

Robert Walters is a quality business but recruitment not exactly the in sector currently as you say. Michael page have quarterly update in early April and the RWA AGM is early May. If they halved from their current value I'd take a punt for sure!

[imastu pidgitaswell] 26/3/2009 16:38

Well, plenty of time to get them at 80p, but (apart from the directors) nobody seems to be piling in. Still no visibility on current level of profit or loss, nor is the business outlook any clearer.

Weird stuff on the price charts though - large volumes with no price movement, which contrasts with a 40% plunge on negligible volumes in less than a month before then. Doesn't seem quite right, but I'm sure it's all above board by the marketmakers...

I have no doubt these will be well above 80p in due course (5 years +) but many doubts that they will stay above it in the near future and that they won't get cheaper some time soon. Unlike most other sectors, this one has shown no uplift during the last month or so. Seems best to wait for the price to get moving first, there doesn't seem to be any reason to be in too early.

[v11slr] 21/3/2009 11:39

March 21, 2009
Robert Walters' move is only one of a number of promising portents
Nick Hasell: Tempus

Robert Walters, chief executive of the quoted recruitment consultancy that bears his name, is usually worth watching.

Although director's dealings can be an unreliable cue for outside investors, Mr Walters – who founded the company 24 years ago – has considerable form.

In 2003, a matter of weeks after what proved the bottom of a savage three-year bear market, he bought 159,000 shares at 61p. Four years later, just as his company's valuation peaked, he offloaded 2.9 million shares in three tranches at prices up to 360p.

Stock in Robert Walters – demonstrating the severe cyclicality for which its sector is known – has since slumped 78 per cent. So yesterday's after-hours disclosure that Mr Walters – alongside Giles Daubeney, chief operating officer, and Alan Bannatyne, finance director – has picked up stock at 82¼p (some £173,000 worth between the three) might command greater interest than usual. Not least because it comes at a time when the outlook for recruiters has rarely looked bleaker.

US and UK employment data gets worse by the month, and GDP forecasts for the world's major industrialised nations – to which the staffing sector's fortunes are most closely correlated – continue to be revised downwards.

Other usually reliable economic indicators also give cause for concern. For example, the number of manufacturing overtime hours worked in America – a traditional proxy for US demand for temporary personnel – has recently collapsed to levels not seen since 1983.

This month's brace of full-year results from UK recruiters only deepened the gloom. Michael Page International, commonly regarded as the industry's bellwether, reported that constant currency profits in the first two months of this year were down 38 per cent – to the point where it is now operating at breakeven. For a company that simultaneously reported pretax profits of £140 million for 2008, that is something of a turnaround.

It also helps to explain why Goldman Sachs this week slashed its earnings forecasts for the European staffing sector by nearly one third, and now predicts Page will make just £19 million of operating profits this year, and fall into a £1 million operating loss in 2010.

The travails of the recruitment sector are neatly captured by the graph below. Shares in Robert Walters, which draws the majority of fee income from financial services, have lost 40 per cent of their value since the collapse of Lehman Brothers in September. In contrast, those of Penna Consulting, a specialist in "career transition services" – human resources jargon for helping sacked workers to find jobs – have risen by 40 per cent.

But for those who see yesterday's boardroom buying at Walters as a significant straw in the wind, there are other promising portents. Rumours that Switzerland's Adecco is still on the prowl for a UK target refuse to subside. It has a €1 billion (£943 million) war chest, and having last year made a 400p-a-share tilt at Page, it is reasonable to assume that current depressed valuations give Adecco a good opportunity to fulfil its longheld ambition of diversifying away from its blue-collar base.

Elsewhere, KBC Peel Hunt, the stockbroker, this week counselled its clients to buy selectively back into the sector. Henry Carver, analyst, contends that with share prices at five-year lows, investors should look beyond what he expects to prove the trough in the sector's profitability in 2009 and 2010. But that contrarian call is not solely based on the view that a severe downturn has now been priced into recruiters' shares.

In addition, Mr Carver cites the likelihood of permanent structural changes in the way that employers manage their demand for labour. Although the market for temporary staff is well developed in the US and UK – job mobility is high and taking on temps is an accepted way for companies to flex their workforce to cater for peaks and troughs – it is still immature in many other parts of the world.

In France, for example, long-standing regulations which effectively stymied temporary employment have only just been relaxed.

In Asia, the job-for-life mentality is rapidly disappearing. Meanwhile, the shift towards so-called "recruitment process outsourcing" – using an external consultancy to do the work of an internal HR department – continues to gather pace, and is likely to continue doing so given the scope for cutting overheads. Equally, the bulk of recruiters are far more diversified than during the last downturn – both by geography and sectoral disciplines – and sport strong cash balances and solid dividend yields: 7 per cent in the case of Hays.

But monitoring short-term movements in a recruiter's finances is fraught with difficulty. The requirement for an agency to pay the temps on its books before it gets paid by its client means that a recruiter's cash position actually improves when placements are drying up.

Seasonality is also significant. March is the sector's first big trading month of the year. That suggests that less intrepid investors might await Page's first-quarter trading update – due on April 7 – before following Mr Walters' bold example.

[royaloak] 06/3/2009 21:35

Hi imastu, when I said a modest amount, I referred to the number of shares purchased. I agree with your comments, like all purchases at the moment there are risks, but less on here than many, many others.

[imastu pidgitaswell] 06/3/2009 11:23

It's not as if they have any debts - they have net cash of over £22m.

Those were, in fact, fantastic results in terms of cash and assets. In terms of profits and earnings, sadly they're irrelevant, as this year has started with a 21% decline in revenue for the first two months. What does that translate into in terms of profits? They don't say, but it's not going to be good - probably loss-making, hence the share price weakness.

Anyway, at 85p, they have market cap of around £60m (pretty much the same as their net assets). With net cash of £22m, that leaves an enterprise value of £38m. For a business that generated £16m net cash after tax, interest and capex (i.e real free cashflow) last year, and which has no debt just plenty of cash, that would seem ridiculous. The problem is the level of cash generation this year and next year - we don't know.

Probably a good punt, not least for the takeover possibility. Certainly it won't be going down the wipeout/debt for equity road that many other businesses will be doing, and there's a reasonable dividend in the meantime.

[royaloak] 06/3/2009 09:08

Took a gamble on these this morning, it's not as if they have massive debts to contend with, only a modest amount mind.

[imastu pidgitaswell] 05/3/2009 20:23

I think it's more a case of the market makers making the pre-results short brigade take a very low sell price, to minimise the winning should there be any. Certainly there would be very few buyers pre-results, so if only sells, the price would come down very quickly - and it did.

But look at those volumes since 130 - it's such a con. 45p down on a derisory percentage of the market cap traded. Difficult to justify being involved if you are going to be ripped off to that extent. On the other hand, better to be involved after a low-volume plunge than before...

Not in, and underwater on BP anyway, so won't be buying in the morning anyway, but following keenly. Key issue for the market will be the outlook - which can only be 'challenging'. Key issue for me is also their cash position - if they still have a healthy cash balance, I'll stay interested, should BP ever come good.

[gswredland] 05/3/2009 12:47

Bit of nervousness ahead of results tomorrow...
MPI's not too bad at all today.

[liarspoker] 23/2/2009 09:38

I agree imastu - watching though, once things get back to normal these recruiters will fly imo.

[imastu pidgitaswell] 23/2/2009 09:02

You have to wonder about marketmakers and their activities at times - 2 months of a steadily rising price from 80p to just short of 130, while the news deteriorates.

Then an RNS stating that AXA have reached a 5% holding, then instantly a plummet on miniscule volumes to 105.

Who is setting the price? - I can understand a rise until the 'order' is filled - but why an instant plummet once it is completed? Just the marketmaker's expectation of where the price should be? Or genuinely influenced by supply and demand?

Still not in, and don't think I will be this side of the results - the outlook will be, er, 'challenging'.

[gswredland] 20/1/2009 22:26

Dare i say it but this is showing a lot of strength.

[liarspoker] 13/1/2009 22:21

imastu - AIUI Ruanne & co have been selling as they had over 11%. Perhaps someone is taking a few shares of their hands and buying extra in the market as well.

[imastu pidgitaswell] 12/1/2009 16:04

Doing remarkably well lately - in the teeth of all the other recruiters reporting dire trading and outlooks.

RWA will be facing the same, so why the rise? Just too cheap in the first place, hence value investor purchasing (see below), or bid spec?



Not on board myself, last sold at 132, so could get back in quite happily, but I guess I'll wait for a pullback (if it happens).

[imastu pidgitaswell] 01/10/2008 09:16

Sorry about this - I thought this might happen, they take it down 20%+ on less than 200,000 shares yesterday and today.

The default movement is always down in this kind of climate, whatever the true story. No news will be forthcoming for a while now, unless it's bad news, so negativity will continue to flourish, I fear.

[kristini2] 20/9/2008 07:27

have been following RWA for a while now, share price seems to be weak despite the fundamentals showing value. 4p fall today when the markets bounce!

maybe the PE is so low for a reason and on balance i am considering selling. confident todays bounce is a DC and the dow will be back to 10600 within three weeks.

[liarspoker] 19/9/2008 20:07

People selling. ;o)

Some broker probably downgraded the sector.

[gswredland] 19/9/2008 19:06

Thanks Liars. Good to see you here.
Any suggestions as to why the recruiters fell in later trading today guys?

[liarspoker] 19/9/2008 09:10

Welcome aboard gswredland.

RWA seems to be going nicely today. :O)

[imastu pidgitaswell] 18/9/2008 16:20

Going very well - a sight better than BP, needless to say. Aaargh.

That said, visibility of earnings isn't great - one of the reasons I sold. (And also 'cos I like selling winners and buying losers...)

[gswredland] 18/9/2008 12:56

Just joined with a few for the long term. Watch em fall now!

[liarspoker] 18/9/2008 12:49

Some big swaps going through behind the scenes.