Begbies Traynor Share Discussion Threads

[lefrene] 19/4/2020 11:28

I take the view that the State wants rid of private landlords and wants rental property in the hands of pension providers and insurance companies. The screws have been gradually tightened over the past 7 years or so. I have a business friend who has some 35 rental properties now with substantial equity only about 40% mortgage debt, but recently he handed them over to a professional management company at a 9% fee, simply because it had become too time consuming and possible penalties too onerous. He said that if he had had less than 20 properties he would have sold them, as it would not have been viable in terms of time and risk and management fees.

I feel there are going to be a lot of changes 'for our own good', the pandemic provides an ideal cover for the economic crash yet again created by the reserve Banks in the USA and elsewhere.

At least from an insolvency firms point of view the assets of a landlord business are straightforward to identify, and auction off. I suspect BEG will have a department that specialises in the sector, seems like they could be busy for sometime.

[sunshine today] 19/4/2020 11:09

Rental market chaos as tenants struggle to pay and 80,000 landlords fear bankruptcy
Concerns that properties may not be in a habitable state after lockdown
By
Adam Williams
18 April 2020 • 5:00am
Premium
landlords and tenants
Critics say there are major gaps in state support schemes
The coronavirus crisis has plunged the rental market into turmoil as tenants struggle to pay bills and landlords fear financial ruin.

Property owners are struggling with unexpected costs and are concerned that when the outbreak is over they may be left with rental homes that cannot legally be let.

According to one estimate, as many as 80,000 landlords may be forced to quit the sector.

One in five private tenants face losing their job, and Shelter, the housing charity, has warned that gaps in the social security system could mean renters are in financial trouble long after the pandemic ends.

[sunshine today] 18/4/2020 16:12

I can agree with that.Advice that is chargeable must be the first step.That can help to prevent the next stages in some cases.I have been looking at the fee structures and it’s like a pyramid with a partner sat at the top.He can not be replaced nor can new partners be found as only 1,850 are in the U.K.The way around this is to grow the teams below him or her who require less qualifications.Some of it can be sub contracted out. The rates charged for advice will be subject to the market and look likely to increase.Managing the workload will also play its part over the next 3 years.The government has relaxed some conditions that will also help.

[daneswooddynamo] 18/4/2020 15:52

Problem is that insolvency is only scaleable up to a certain point. The likes of beg and frp will welcome reasonable/good growth in caseloads but an explosion would be useless. They only have so many people who can only deal with so many cases.

[sunshine today] 18/4/2020 08:06

Yesterday’s BEG”S Red Flag has been picked up in the Daily Mail city pages this morning.What I find astonishing is the relatively tiny valuations put on the insolvency sector as a percent of the total stock markets valuation. Around £100M here and £250M at FRP.After deducting the shares in both companies that are not within the free float a total of about £170M.That for a sector that is or is about to pay growing dividends and has to be far safer than the so called bulletproof utility and tobacco stocks.A re rating of this sector is beginning right now. The amount of stock is extremely limited which may result in fierce competition to pick up worthwhile amounts of shares. It can’t be long before investors show up in droves seeking the opportunity. Newspaper headlines this morning are splattered with articles suggesting U.K. growth is falling at an astronomical rate of 35%. The Red Flag alert says half a million firms are on the edge with 10% of them in dire straits.To put things in prospective new issue FRP in the same sector handled 1,000 company failures last year.I have not looked up how many BEG did but is blatantly obvious they are going to do a huge number more in each of the next 5 years. Competition is a non starter the whole country has less than 2,000 insolvency partners who are licensed to carry out this occupation.A good proportion don’t even work directly on Administrations they work for the likes of the Inland revenue banks customs and so on.

[hawaly] 17/4/2020 16:32

Coronavirus: Bank of England boss checks hopes of bounce-back after economic crash

Britain's top banker cautions over forecasts the economy will completely recover, highlighting the risk of 'scarring effects'.

The Bank of England governor says the British economy may be heading for its worst three months since comparable records began, with a 35% plunge in GDP "not implausible" in this quarter.

In a conference call with reporters, Andrew Bailey said high frequency data monitored by the Bank suggested the scenario published by the Office for Budget Responsibility (OBR) earlier this week, sketching out an unprecedented collapse in GDP in the second quarter, was "quite within the grounds of possibility".



GLA

[santangello] 17/4/2020 16:05

MMs playing a blinder again.....the suckers who are selling are falling for it.....whilst I get quoted 1.5p over the declared spread for the amount I wanted........

[x54v] 17/4/2020 15:30

"Record number of businesses in financial distress is 'tip of the iceberg'

Almost 2,300 companies are in 'critical distress', which is usually a precursor to insolvency"

[x54v] 17/4/2020 15:27

"Something seems awry when the broader market can rise on the same day as shares in an insolvency practitioner. But we are where we are, and as Begbies Traynor (BEG) notes in its periodic ‘red flag’ survey today, that includes a 10 per cent rise in critically distressed companies in the last quarter alone. Indeed, the group’s research strongly suggests that 509,000 UK businesses are now in significant financial distress – defined as having a minor court judgement filed against them or failing Begbies’ own credit scoring screen. The stock is trading 5 per cent higher today at 90.6p. Buy."

[x54v] 17/4/2020 07:15

RNS

"Coronavirus pushes financially distressed companies over the half-million mark

-- Number of businesses in significant distress stands at 509,000 - the highest number measured by the Red Flag Alert research

-- Impact of coronavirus lockdown sees the largest quarterly increase since the end of 2017 - 15,000 more businesses in significant distress (3%) since Q4 2019

-- Record figure likely to be the tip of the iceberg, as full Covid-19 impact will build through Q2"

[sunshine today] 16/4/2020 17:17

These two companies BEG FRP are in the right place at the right time, if investors here are correct then they are very cheap indeed.It appears the last few weeks has seen enquires jump. Advice is not free.probably has the highest margins.These companies were both on a fast growth trajectory of C20% prior to COVID.if ever you have a buy and tuck away share it surely is in this sector. Personally I can’t get my head around what would realistically be a sensible predicted growth rate. The starting point rolling over from last year, is 20% based in part on the un booked revenues from 2019.On top of the 20% we have to add the covid factor.FRP has already seen two large Administrations arrive on its door step this month.I see round one being those that were on the edge and only just got through Christmas.In conjunction with this are fees for advice.Round two comes from various directions.Firstly from companies that just walk away, then from those that find the anticipated increase in turnover fails to materialise.Add on those that find the cashflow is non existent as buyers of their goods and services simply refuse to pay their bills. The third wave comes from the banks if the economy picks up a tad as they are desperate to recover at least a tiny amount of the bad debts they have occurred.
I am convinced this nightmare of covid and mountains of debt everywhere make buying anything else on the market is extremely high risk.

[rimau1] 16/4/2020 16:43

Sunshine - impossible to tell, from the admission documents FRP pre covid were looking at +20% revenue growth in 2020, who knows what this could be post covid. I suspect there is a time lag and 2021 will be the massive kicker. I am long and strong FRP and Beg and can’t think of any reason not to hold both for the next 3 years, its going to get painful In the UK sadly. Counter cyclical plays are the way to go IMO.

[aleman] 16/4/2020 16:42

Thanks, x54v, though I think this paragraph is more relevant:

Ken Pattullo, regional managing partner for Begbies Traynor in Scotland, said: “After an initial surge in enquiries immediately following the implementation of the Government’s restrictions, the number of distressed businesses coming to us appears to have lessened although it is still relatively high.

[x54v] 16/4/2020 16:29

"John Bett warns companies to seek 'caveat' as insolvency advisor Begbies Traynor sees higher level cases"

"Lindsays partner John Bett's warning came as insolvency specialists are bracing themselves for a rush of businesses going bust in the wake of the coronavirus lockdown."

[x54v] 16/4/2020 15:38

"To the lifeboats! A counter-cyclical stock I’d buy as the stock market crash continues"

"I think buying shares in insolvency specialist Begbies Traynor (LSE: BEG) is a sound idea as economic conditions worsen. Times are tough for British business and things threaten to get tougher as the lockdown continues and firms run out of cash."

"The AIM stock has risen in value since the coronavirus crisis emerged. It surged to a record closing peak of 97p per share this month. And I think it’s likely that new highs will be reached in the very near future as the broader stock market crashes."

[santangello] 16/4/2020 14:55

MMs fleecing the sucker sellers with bid drops, keeping the offer strong.....I wonder why they are happy to keep taking the stock at these levels ?

[x54v] 16/4/2020 14:49

Looks like a few buyers taking NT's advice today and buying in on the dip:

"I picked up some Begbies Traynor (BEG). Sadly we are heading into an environment where insolvencies are likely and that would help it.

It also specialises in trying to turn struggling companies around so surely it is going to have a lot of work to do.

Its staff is working remotely and it says it is in a strong financial position.

Looks like a potential winner here, even if there is another downwave.
It is surprisingly volatile and best picked up on weakness."

[aleman] 16/4/2020 14:23

1.4m people apply for Universal Credit in last 4 weeks - 6+ times normal.

[sunshine today] 16/4/2020 10:14

Interesting, those numbers started going up sharply in the second half of last year long before covid struck. It clearly shows all was not well in 2019.This year is torrid unfortunately for the country it's going to take several years to pass through the economy. None of this is priced into the share prices of the few UK listed insolvency practitioners today.

Does anyone know of any other stock market quoted insolvency practitioners other than BEG and FRP.?

[aleman] 16/4/2020 09:48

B of E lending conditions chart 6 (Small Companies) ties in with BEG's trading history roughly. It shows a BIG jump in expected loan defaults (with similarly BIG jumps in expected defaults for Medium and Large Companies).

[sunshine today] 16/4/2020 08:44

rimau1
What's you take on possible revenue growth over the next 3 years. On the assumption that the number of bankruptcies jumps anywhere from 50% to 5,000%
A rock bottom 50% makes both companies ridiculous cheap, 300% growth in revenues would send the shares into orbit, would it not. I have not researched BEG but FRP have seen a good start to the year, even before this dreadful sickness struck.

[rimau1] 16/4/2020 08:22

Fair play ST, i am also invested in FRP which is a pure 100% counter cyclical play on insolvency, has one recent large mandates and has a war chest to expand, its below the radar and very cheap still as it was priced to fly on its recent IPO. Beg is well run and i have explained on previous posts why the property side will stand up to a cyclical downturn and why at its recent mid 60’s levels it was very cheap, since the rerate FRP is more attractive but i hold both. Not many people know about FRP so its a good time to add.

[sunshine today] 14/4/2020 17:57

Looked here but was put off by the property side that might now slump. Gone for FRP a pure play on the insolvency sector. Plenty of room for us both.

[aleman] 13/4/2020 21:07

Their property and business sales potentially get hit straight away.

Business sales listings will likely rise strongly and can be conducted online, as they are now. Pugh do 14 sales per year, with the latest on 21st April, selling land, residential and commercial.



Eddisons sell commercial equipment, some also by online auction. If they have more to sell due to more business restructurings, why would there not be more sold through BEG's auctioneers?