Begbies Traynor Share Discussion Threads

[darwenlad] 14/10/2012 15:36

Paul,

Thanks for response. Just checked the Top 200 companies in today's Sunday Times and only three companies (Evraz, Resolution and RSA Insurance) have yields higher than their p/es. Begbies Traynor's current valuation (6.3 % yield versus 5.8 PER) looks very much out of kilter. My big concern remains BEG's dividend. They held it this year but if the insolvency market continues to contract they could cut it again in a bid to strengthen BEG's balance sheet.

Perhaps I am being unduly negative but I was badly caught out earlier this year by Morson, another Manchester company with a reaonably strong balance sheet, similar sort of yield and equally low P/E. It axed its dividend in order to "strengthen" its balance sheet, its share price halved, and in less than six months the Mason family, which owned circa 45% of the business, had taken the company private at close to the share price's all time low.

As for Caledonia, it is one of the most lowly rated investment trusts which has massively under-performed the market over one and five years. A new management team is trying to turn round its miserable investment performance which has been hampered by having too many subscale investments. It is in the process of reducing the size of its core portfolio to 40-50 investments and has set itself a minimum threshold of £10m for new investments. CLDN's current 14.3% stake in BEG is worth around £4.5m which suggests that CLDN might want to get rid of it which could act as a potential drag on BEG's share price.

[paulypilot] 13/10/2012 23:41

Hi DarwenLad,

Good post. The honest answer is, I don't know.

But one thing I am hearing from City sources generally, is that a lot of Instis are frustrated with the lack of liquidity in small caps, and hence are looking for exits from takeover bids.

So they often don't think about valuation at all. They need to raise some cash for redemptions perhaps, and it's all about selling what you can sell, not selling what you want to sell.

Hence valuation is irrelevant to many Insti sellers.

So one should perhaps see Insti selling as a buying opportunity for PIs to pick up good shares at undervaluations?

That's how I see it anyway.

Also, to be blunt, Instis aren't investing their own money, so they think differently to us. Also, a new fund manager will often kitchen-sink his predecessors holdings, and a low realised price is seen as his predecessor's failure, not his failure. Again, great buying opp for us.

DYOR as usual.

Regards, Paul.

[darwenlad] 13/10/2012 23:25

According to the latest RNS Caledonia Investments has cut its stake from 15.56% to 14.3% since end June by selling circa 1.1m shares. Caledonia is Begbies' biggest shareholder (apart from executive chairman Ric Traynor who has 29.6%), and John May, a former Caledonia executive, is one of Begbies' two NEDs.(The other is Graham McInnes, who stepped down as a Begbies exec last July).

Paulypilot's assessment of this company is tempting. But the weakness of Begbies' non-exec board, the recent downbeat AGM statement, the lack of any other well known institutional investors on the share register, plus the fact that Caledonia is running down its long-term shareholding, which it last topped up in 2009 by buying 4.3m BEG shares at 90p, makes me cautious - notwithstanding Paulypilot highlighting a prospective yield of 6.3% which is higher than the p/e of 5.8.

Caledonia is not a fly-by-night investor. Its long-term presence on the Begbies board, and its share register, was mildly reassuring. So what are small investors to make of its apparent decision to start running down its long-term stake in Begbies at what looks like a hefty loss?

[paulypilot] 08/10/2012 23:15

It's a nice each-way bet.

BEG will do OK in a downturn, and very well in an up-turn.
Banks pull the plug once there is a recovery & someone to buy assets remember.

Divi yield keeps things ticking along.

Although I'm not 100% comfortable with the morality of making money from other peoples' misery, hence only a small long position here.

Regards, Paul.

[honiton] 08/10/2012 21:56

Also cash is tight. It is all well and good being an administrator but you need to ind a buyer who can afford to pay your fees", whoops meant by assets from the administrators.

[topvest] 08/10/2012 20:01

The problem here is that the administration market is ex-growth at the moment. With banks not pulling the plug and interest rates so low the number of UK insolvencies are much lower than expected. So for BEG to grow they will have to be doing substantially better than the broader insolvency market...unlikely!

[flashheart] 08/10/2012 13:09

Tomorrow the 9th......ex divi on the 10th.

[macca42] 08/10/2012 12:09

so when is last chance to buy in for divi, the 9th or the 10th?

[the troll] 01/10/2012 11:14

xd 10th October, pay 7th November. Lol

[daneswooddynamo] 01/10/2012 09:44

strong hold...4.5% income return a week from now

[paulypilot] 01/10/2012 09:19

topvest - true, although the key part of the statement is surely this bit (my bolding);

Our expectations for the year as a whole remain unchanged, with the financial outturn dependent on trading activities in our traditionally busier months of the year together with wider insolvency market activity levels, supported by the benefits of the Group's cost saving initiatives.

That puts these shares on a current year PER of 5.8, and yielding 6.3% - not bad!

PP.

[topvest] 01/10/2012 09:04

A fairly poor update and more restructuring costs.

[macca42] 24/9/2012 19:21

yes it was tipped
please see below:

[pillion] 24/9/2012 10:44

Flurry of buys and up firmly this am
Has BEG been tipped over the week-end ?

[magnetincognito] 17/9/2012 20:20

port vale in 2nd place,

Port Vale at Plymouth: Stability key to flying start, says Mark Grew

This is Staffordshire-15 Sep 2012

the footballing side of the club and was quick to offer a nod of gratitude to administrators Begbies Traynor, who sanctioned the extra £1,500 cost of doing so.

[magnetincognito] 17/9/2012 20:18

Mostyns is in administration

Wiltshire Business-13 Sep 2012

Joint administrators Julie Palmer and Simon Campbell, from Begbies Traynor, have sold the business, which operates 35 stores throughout the UK

[pillion] 11/9/2012 18:30

Buy now while stocks last

[pillion] 05/9/2012 14:47

Good show macca; punters may load up soon for the divi

[macca42] 05/9/2012 14:39

glad i got in just in time,
gold cross is working nicely,

[pillion] 20/8/2012 12:38

Begbies get

[bonio10000] 19/8/2012 07:19

"market leadership"?

What does that mean then? Pretty sure the big 4 turnover a multiple of BEG.

[pillion] 18/8/2012 18:42

"Having re-focussed the business, we are now operating in a more stable environment with the benefit of a strengthened financial position and a core business which has retained its market leadership......

[macca42] 16/8/2012 16:16

WOW! so it is,