Begbies Traynor Share Discussion Threads

[c1d] 25/1/2013 11:16

Hi daneswooddynamo,
I am 100% in agreement with you!

[daneswooddynamo] 25/1/2013 10:56

a number of interesting developments which bode reasonably well for beg. Bank shares have risen sharply and large scale zombie companies are now being pushed over the edge (hmv, jessops, comet etc.)as banks think balance sheets are able to withstand the impact. Getting rid of excess unprofitable capacity at the end of the day is the only way for economies to recover. Small and mid cap insolvencies will increase just as larger ones have. No doubt the caledonia overhang is still a factor but just gives people to top up at stable price and enjoy a 6% yield until its cleared and then the shares could rise strongly.

[c1d] 22/1/2013 10:20

My reading of the RNS is similar to Ed 123's.

It sounds to me that they have given a number of employees (most of whom I would expect to be existing staff) a different label for marketing purposes. As and when fresh assignments are won they will pull in other existing staff from across the business to help with the work.

I took it as Begbies finding an excuse to remind their network of contacts of the range of services they provide.

[ed 123] 22/1/2013 09:46

bonio10000.

I didn't read the rns as notifying a costly new business start. I thought it more of a marketing exercise, rebranding and trying to win more work for Begbie's existing turnaround advice, using largely existing staffing, supported as necessary by outside consultant expertise. I might be wrong, but I don't see them risking a lot of money in this venture.

It may work well for shareholders or it may not. Even if it doesn't win a lot of new work, it may lead to some more commissions for the insolvency side?

As I say, I didn't see the rns as a risky departure, but I guess you're expecting them to lose money on this? (Sounds like you've been holding for a while? I'm a relative newcomer.)

[bonio10000] 22/1/2013 08:08

How long before this new venture goes the way of the rest of them?

12 months, 24 months?

Place your bets.

[paulypilot] 20/1/2013 22:48

Well there certainly seems to be plenty of work around for insolvency practitioners, although Deloittes seem to be getting it all.

Rik Traynor mentioned at the last results presentation that the frustration for BEG is that the big firms charge about double what they do, for the same work, yet the Banks still appoint the big firms.

P.

[hastings] 20/1/2013 19:57

Paul, only just caught up with your blog on these!! A very good read.

[shanksaj] 15/1/2013 12:18

Relevant article from Robert Peston:-

[crawfish123] 13/12/2012 22:07

PaulyPilot,
Thanks for the incite, very interesting and much appreciated. Seems like a sensible strategy.
Crawfish

[topvest] 13/12/2012 12:47

Thanks for the blog - an interesting read and I agree with the sentiment. The Caledonia Investment Trust holding is a significant issue. What tends to happen is that the share price surges once someone has bought their holding - it's happened on quite a few of their exits. Best to buy before they get out in my view as, if you hold medium term, it's a great opportunity.

There is still a bit of an empire buiding risk here as buying back the Caledonia shares must be a pretty good use of cash, but they don't seem interested. Good that they are sticking to the core business though and it is probably a good time for bolt-on's if they don't over-pay.

[darwenlad] 13/12/2012 09:35

Echo above thanks for Paulypilot's excellent BEG update. I was surprised by the market's initial adverse reaction to the interim results (the divi was held and the company remains profitable at current subdued levels of activity). But then "Mr Market" might not be as knowledgeable about BEG as we suspect. Having never met the management (always a good idea for a long-term investor) I take some comfort from PP's assessment of Mr Traynor as a "sensible, down to earth chap".
As for Caledonian's steady exit, the more I think about it, the more I believe it really reflects the approach of CLDN's new ceo who is trying to turn round CLDN's miserable investment performance ( I am a CLDN shareholder) by concentrating CLDN's funds in fewer and larger stakes. That said I would still line to see the reduction in CLDN's stake on BEG's share register being replaced by some savvy institutional shareholders or the likes of Giles Hargreave

[c1d] 13/12/2012 07:58

Paulypilot - Thanks for your excellent report on the results and your meeting. I always find your blog interesting and balanced and it is part of my daily must reads!

My opinion on Begbies remains unchanged: I believe that it is a great value play with limited downside risk and took the opportunity yesterday to top up with a few more shares. I am encouraged that they are trading fairly well in the current depressed market and that they remain committed to the dividend.

I am more convinced than ever that business will pick up for them at some point. One thing I have learnt over the years is that even when there seem to be good reasons for why "this time it is different" (e.g. in Begbies case record low interest rates for extended periods and unprecedented forebearance by banks) it never is and in time the old cycles and forces reassert themselves.

Regards

[paulypilot] 13/12/2012 01:32

Hi Crawfish,

You asked,

"I just hope they don't blow their cash on acquisitions going forward, better use would be share buy backs at current levels. I would appreciate if Paulypilot would ask about this at his next meeting with the directors ??"

Well, they don't really have any cash, just available bank facilities.

We did discuss share buybacks, and the Directors said they had no plans to do any. One analyst pointed out it would need a waiver from the Takeover Panel, as buybacks could tip the CEO over 30%, but that is not seen as an impediment.

Mgt plan to use cashflow for divis, bolt-on acquisitions, and reducing net debt. Seems fine to me.

They won't over-pay for acquisitions, and the environment is much better for them now, so reason for optimism actually - most of any price paid will probably be earn-outs, which is good for us.

Mgt & shareholder interests aligned here, with Mr Traynor holding 30%.
He's a sensible, down to earth chap - I feel comfortable as a shareholder with him running the business.

Regards, Paul.

[magic] 13/12/2012 00:19

Thanks Paul, topvest and others, it looks a good medium term play.
In the short term, I am wondering if there will be an earnings reassessment in the US in the next months which will drag down the markets and particularly small caps. The question in my mind is the entry point here and how many short term holders there are.
What might start to accelerate a zombie companies unwind?
There is an awful lot of money printing still to be done, which may continue to push bank decisions out, but also be supportive of equities.
General election may be in 18 months / 2 years, latest May 2015, will gment try to keep things afloat, will they be able to with a China/Euroland/Japan slowdown?

Maybe a grind downwards in the next 2 years with a positive, but limited increase in business for BEG?
On the other hand we are due another cyclical downturn in the next year or two.
Its good insurance overall for a strong medium term holder IMO.

cheers, Zeb

[crawfish123] 12/12/2012 22:49

I thought that the drop this morning was a little over the top. In my ortfolio beg is the naughty child going through some difficult times. Reading over the results I felt like they had achieved a grade C, so was more than satisfied. The restructuring charges were flagged in the last statement, as well as the drop in workload via the recent ONS report. I was just happy to see a positive basic eps figure.

I also hope they have finally reached the appropriate staffing levels, no further redundancy costs were flagged. So potentially this is a sensibly priced cyclical at the bottom of a cycle....

I just hope they don't blow their cash on acquisitions going forward, better use would be share buy backs at current levels. I would appreciate if Paulypilot would ask about this at his next meeting with the directors ??
Cheers

[paulypilot] 12/12/2012 21:38

Hi,

I attended the Begbies results presentation today, and posted my thoughts on my Blog here, for anyone interested;


Hope this is helpful.

Regards, Paul.

[topvest] 12/12/2012 21:38

Yes, I agree - but can see a 2.3p dividend in the full year that is covered. That is supportive to the price until trading improves, as it is likely to at some point.

[boonkoh] 12/12/2012 09:11

Dividend definitely supporting the share price. But can it go lower? I think some of the FY 2013 forecasts by the brokers will have to come down slightly over the next few days...

[bonio10000] 12/12/2012 08:56

Well - bears out what the other half has been saying about ongoing depressed work in the market.

What we need is a Red Flag report predicting for the 10th year in a row the world will end. Seems BEG have finally accepted it will not.

Good to see the usual raft of "Exceptional Costs" again.

If they occur every year, are they still "exceptional"?

[topvest] 12/12/2012 08:53

Well interim results out - I've decided to buy a few as it now looks good value after today's fall. It's still profitable at low activity levels so will do better when the market shifts. In the meantime there is a chunky dividend and debt is coming down.

[flashheart] 07/11/2012 15:16

Bit of a buying flurry ???

[c1d] 22/10/2012 07:29

Hi bonio10000,
Always good to hear from someone with knowledge of the industry from the inside. I believe that Begbies market will pick up at some point as there is an overhang of troubled companies which will need to be restructured sooner or later (but don't pretend to know when this will happen).
I agree with you about restructuring costs although companies do seem to get away with it year in year out. I always look at what they include in their exceptionals and add back anything I am not happen with when I am assessing underlying profitability. I think that Begbies looks good on this basis.
Regards

[bonio10000] 21/10/2012 16:46

BTW - Why are the baord always restructuring?

It can;t be called an exceptional item if it happens every year.

[bonio10000] 21/10/2012 15:13

The other half works in insolvency.

The market is still very tight with a lack of appointments and several decently sized firms have cut staff in this area as a result.

No doubt will be called a deramper - but just a fact of life.

Red flag can bleat all it wants, as it has done for years at a decent cost to BEG>

[paulypilot] 19/10/2012 18:51

Hi,

boonkoh - yes you're right, the Govt is artificially suppressing insolvencies. However, BEG are chugging along still making a perfectly acceptable profit margin, and paying out a decent divi. Hence the status quo is alright for them.

Meanwhile, in due course, business is likely to pick up at some point regardless of what the economy does - if economy recovers, then banks will gradually recognise the losses on zombie companies, which means more work for BEG.

If economy gets worse (not likely in my opinion), then BEG get more work too.

So it seems a great each way bet. If Caledonia are creating an overhang, then that's just a good buying opportunity for people who are prepared to be patient.

Just IMO, DYOR as usual.

Regards, Paul.