Ashtead Share Discussion Threads

[perfido] 15/12/2020 08:54

Looks like an attempted breakout from the ascending wedgie?

[bracke] 14/12/2020 12:38

Good day fenners

If the money was borrowed today on a 10 year note surely it would have to be on a reviewable rate.

"however the idea that asset values grow due to low interest rates and cash flow , makes a certain sense."
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With so much money in the system as a result of QE etc and interest rates at such low or negative levels investors will look elsewhere to put their money. Until interest rates rise share prices are likely to remain inflated. There will be retracements and maybe a Black Swan but other than that it's business as usual or should that be 'as unusual'.

"I see the market value has gone up £38m since I posted the idea......"
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Not ramping indeed!

[fenners66] 14/12/2020 11:34

I see the market value has gone up £38m since I posted the idea......

[fenners66] 14/12/2020 11:33

Good morning bracke.
I don't know what the interest rate could be be now but borrowing of that size would surely be 10 year notes etc.

Ramping -nope I don't think the current profitability supports the price, however the idea that asset values grow due to low interest rates and cash flow , makes a certain sense.

Anyone able to persuade the market to lend us £18bn or so ?

[bracke] 14/12/2020 11:19

What's This!!!

Do I detect fenners is ramping this share! I am shocked. I never thought it would come to that!

As to borrowing costs.....where will interest rates be in 5 years?

I note Abrams Bison Investments LLC have dropped below 5% holding.

[fenners66] 14/12/2020 10:26

I have been thinking what "could" be sustaining the share price.

Clearly the share price reacted to results.

Profits were down but cash generation was up.

Market cap is now north of £15bn

But imagine if this business was owned and run by Private Equity.

They have a reputation for buying assets with borrowed funds and sweating them to extract cash.

AHT have moved to cash generation this year and arguably if that was to be maintained for some time , the plant may age and not be as effective, however PE has a reputation for looking short term and not caring about that anyway.

Add to the equation that borrowed money hardly costs anything.
What is the cheapest rate the largest fund could raise £15-20bn at?
1% ?
More ?
Less ?

Imagine PE makes us an offer for £18bn
Generates nearly £1bn a year possibly more.

Pays off £5bn of debt over 5 years and sells it back to the market at a "loss" of £3bn
for todays value ...around £15bn.

5 years to clear about £2bn cash .....

A few years ago the borrowing cost outweighed the gains.

But now ?

So low / even negative interest rates you can see directly inflate asset prices for those that are capable of generating masses of cash.

It depends on what the borrowing costs could be .... but it may be possible.....

[bracke] 13/12/2020 14:02

Isn't it wonderful how the share price continues to respect 3300. Superb accuracy once again at the close on Friday parked at 3300, not a penny out.

One might even think it was being manipulated.

[perfido] 11/12/2020 14:34

bracke

Lol! Thanks as always for your views..

[bracke] 11/12/2020 12:00

Good day perfido

It is possible; although unlikely; that you would qualify for the GOAT but at best it would be 3rd class membership. It has been suggested that the Elliot Wave fraternity aren't so much waving as gesticulating furiously in despair.

Your intention to use the term 'trigons' whilst not de rigueur terminology is understandable given your terminological confusion. I of course will continue to use standard terms as required by my standing as an Elite Guru.

Looking at the price action rather than triangles, wedges and such like does show that the share price is some way above the Daily SMA200 and SMA100. In addition the Weekly MACD and RSI are stretched. The share price dropped to the Daily SMA100 at the beginning of September and also November. If it repeats these drops in the near future that would take the share price to approx 2900.

I appreciate that AHT does tend to do its own thing as I know to my cost but it can't defy gravity for ever.

Just for the record I do not currently have a position in AHT.

[perfido] 11/12/2020 10:06

Good morning bracke,

Thanks for the links to Bulkowski thoughts on 'rising wedges' and 'ascending triangles' and apologies if I have offended the sensitivities of any of the strict technical analysis Taliban by an inappropriate reference to ascending triangles.

I note that a rising or falling wedge is also referred to as a diagonal triangle by the Elliot Wave fraternity so to avoid further confusion I will be referring to such formations as up and down trigons in the future. This all embracing phrase will hide a multitude of sins! :-)

.

[perfido] 10/12/2020 18:30

Thanks for the links bracke, I'll have a look later and let you know - will this allow me to qualify for GOAT membership?

Grand Order of Analysts - Technical? :-)

[bracke] 10/12/2020 18:06

All well with me and mine perfido.

Are you referring to one of these:



or one of these:

[bracke] 10/12/2020 13:18

Good day perfido

I trust you are well and avoiding the 'plague'.

Where are you placing the top line of your ascending triangle?

[perfido] 10/12/2020 10:11

Back to a more normal volume yesterday, and what some might see as an ascending triangle is still intact.

If we are to see a market brexit hiatus AHT should be relatively immune from Eurozone turbulence, its U.S. market should recover from the pandemic panic eventually with a change of President, and if the pound drops this should deliver a US$ versus £ benefit when profits are translated.

I have sold down in recent months to reduce risk but definitely now a 'long term hold' for the residue of my AHT holding - DYOR :-)

[bracke] 09/12/2020 14:12

'Buy the rumour, sell the result.'

Logically whether Boris secures a deal or not should make little difference to the share price but what has logic got to do with markets!

[perfido] 08/12/2020 19:25

...... Rise seemingly supported by substantial volume in excess of 2,340,000,
happy days :-)

[bracke] 08/12/2020 16:48

......and parked on 3300.

[perfido] 08/12/2020 16:46

Re fenners 58386 & charker 58388

It looks like fenners inadvertently left off a salient portion of the share buyback statement of intent which he quoted, for completeness this is the paragraph in full:

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The Group paused its share buyback programme in March as we took action to optimise our cash flow and strengthen further our liquidity position due to the uncertainty arising from the COVID-19 pandemic. We have resumed greenfield openings and, within the context of our balanced capital allocation policy, leverage range and the macroeconomic backdrop, we continue to assess bolt-on opportunities and the appropriate time to resume the buyback programme.
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[bracke] 08/12/2020 13:55

Good day fenners

The share price likes to gap up on results days and it may try to test 3400 again but I am doubtful it will hold. More likely is an attempt to establish support at 3300. Given that it has not established 3200 as a support zone 3300 is a little optimistic.

The share price is now 800 above the SMA200 which is the largest distance it has ever been to the upside. The only occasion it was greater was in March when the virus struck and it dropped but the share price quickly returned to the SMA200 and continued the rise up to date.

I posted recently about periodic large retraces the last was from 3269 to 3098 for 171 points. US stimulus, the virus and Brexit are muddying the waters but a 150-200 point retrace would normally be expected about this time.

[riley109] 08/12/2020 12:14

Suffered the Lord Charles effect this morning.When Ray Allen died he was left speechless.Balfour Betty says things are on the up having tried the one leg over resulting in satisfactory gap fills and now expects the next jump to £40.

[charker] 08/12/2020 10:11

Wonder if the buy back was paused after they were able to hover up 3 x the expected number of shares at £11 for a few days.

[fenners66] 08/12/2020 08:59

Mind the gap bracke ?

[fenners66] 08/12/2020 08:58

This is a pertinent section : -

" Capital allocation

The Group remains disciplined in its approach to allocation of capital with the overriding objective being to enhance shareholder value. Our capital allocation framework remains unchanged and prioritises:

-- organic fleet growth;
- same-stores;
- greenfields;
-- bolt-on acquisitions; and

-- a progressive dividend with consideration to both profitability and cash generation that is sustainable through the cycle.

Additionally, we consider further returns to shareholders. In this regard, we assess continuously our medium term plans which take account of investment in the business, growth prospects, cash generation, net debt and leverage. Therefore the amount allocated to buybacks is simply driven by that which is available after organic growth, bolt-on M&A and dividends, whilst allowing us to operate within our 1.5 to 2.0 times target range for net debt to EBITDA pre IFRS 16.

The Group paused its share buyback programme in March as we took action to optimise our cash flow and strengthen further our liquidity position"


If they deliver on that I am much happier.
It's also clear the market is responding to the cash generated and reduction of debt - not the decrease in profit.


Once again the Enterprise Value is a function of debt and equity - reduce the debt and therefore (all other things being equal) the equity rises.


Actually had a discussion on another board where a posted who knew the expression EV= Debt + Equity , believed that meant increase debt ...ad infinitum.... increase EV !

There is one thing knowing the expression and another entirely understanding it !