Caffyns Share Discussion Threads

[ntv] 08/8/2018 17:15

some big trades been going through this week

[value hound] 30/7/2018 14:22

If it does, I imagine the yield will increase over time.

[ntv] 30/7/2018 13:48

charles stanley back over 5%
Mr Perloff over 9%
He appears to have voted with the board on the resolutions proposed at the recent agm
maybe this going to go private

[ntv] 21/7/2018 07:25

several recent sales of 2,000 @ 401p
presuming these are all sales and not crossovers at the same price
i wonder who the purchaser is?

[coolen] 02/7/2018 16:49

Zoolock, yes indeed.

Perloff provides cash for the company to make a tender offer to the minorities. Once private, Perfloff buys the development-potential sites and cancels the debt, leaving the family to run a car business without the hassle of being public.

Co-incidence perhaps that Caffyn's is effectively controlled by high-voting unquoted Preference Shares ?

Some years ago, did Perloff acquire Beales Department Stores through some deal involving their privately owned Preference shares, and then offering only pennies for Beales Ordinary shares ?

[cjohn] 02/7/2018 15:11

Slight. What would be in it for him? And why would they need him?

[zoolook] 11/6/2018 08:48

What are the risks of Perloff doing a deal with the family to fund it going private?

[cjohn] 11/6/2018 08:36

And if they could be persuaded to see that relinquishing the preferences was in their own economic interest…...


It's the very fact they wish to keep control that holds back the share price and means that their own large stake is grossly undervalued compared to a similar stake in peer car companies.

[strathroyal] 07/6/2018 15:38

Hi NTV,

On the surface, the likelihood of a successful (or profitable bid for minority shareholders) is remote. A number of parties have built decent stakes and then gone away - I seem to recall that even BTEM were here at one time.

At least Andrew Perloff looks to be building a more substantial stake and presumably Armstrong are also activist investors. However the prefs do appear to make a hostile takeover impossible, presumably one reason why the family don't appear to control a majority of ordinary shares.

Perhaps the only possible way forward would be if the family itself were divided about retaining control. I see that the president has recently passed away and only two of the family are presently on the board.

[cjohn] 07/6/2018 13:50

Hi NTV,

My memory is that the prefs definitely can't vote on certain types of resolution:

notably to de-list the shares or to transfer them to another market/listing. This gives protection to minority shareholders.



The situation on takeovers is more complicated. In a simple takeover situation, I think they can still vote. But in some more complex transactions (class 1)I believe they are barred.

Sorry not to be more specific.

[ntv] 07/6/2018 13:49

i would suggest there would significant proceeds from the various dealerships they have
keeping hold of the freeholds is a good solution
rental income from those would mean a substantial increase in dividends hopefully
a pretty good analysis CJohn

[ntv] 07/6/2018 12:11

sadly i do strathroyal !! and feeling happier each time Mr Perloff adds to his holding
can he block some of the resolutions if rebel shareholders get to 25%
not sure what restrictions there are on prefs and voting
guess he has purchased rest of the GAM holding now

[strathroyal] 07/6/2018 11:36

Looks like Andrew Perloff means business, anyone here old enough to remember Jack Petchey (Trefick) who had a similar liking for asset rich car companies?

[cjohn] 06/6/2018 10:58

Hello Walbrock 82,

I read your analysis of CFYN with interest. I am guessing that you are in learning mode. And that publishing lengthy analyses is a way of diving in the deep end. Please do not be offended by the below.

You've made several errors. For example, you say the following:

"Unsurprisingly, the company’s debtors’ days have risen to their highest in six years to 17.4 days vs. the average 14.5 days. The rise in receivables from £7.8m to £10.2m is a larger percentage increase than 1.2%!

Receivables grew by 41%.

Does it even matter, given sales is a mammoth £213.7m?

It does because net profit is around £1m and a favourable movement of debtors of £2m or £3m makes a HUGE difference to how much profits are recorded."


In fact, collecting receivables makes NO difference to PROFITS. It does improve operational CASH FLOW however.


2. Because you're confused on the difference between profit and cash flow, you overlook the fact that operational cash flow BEFORE working capital changes was some £3.148m. CFYN looks cheap on these grounds.

3. You then go into a long analysis of what might happen in a wind-up situation. And come to some very pessimstic conclusions that poor CFYN shareholders might not even get the current MCAP back in cash in such a situation.

I find this unconvincing. Current MCP is £10.2m. NET tangible assets - ie after subtracting debt and pension déficit - are around £37m.

For reasons that escape me, you have done the whole calculation through EV and lost your way.


Whilst you include payables, you forget to include INVENTORIES. This is unfortunate, given that the level of inventories in car dealers is closely related to the level of payables. thedealer buys stock on credit - payables - and gains inventory: the cars. There is some £30.4m of inventory on CFYN's books. The lion's share of this is cars. the rest is parts. Whilst it's conventional to discount inventory in wind up calculations, it's not a 100% discount; and arguably the discount should be much less than normal given the inventory in question. (Stock turn of about 7 per year.)

including inventory produces a much more favourable outcome for long suffering CFYN shareholders.

What's more there is scant chance CFYN will end up in straitened circumstance, given the strength of its balance sheet, and initiate a fire sale. a wind up would be orderly then and likely to achieve book value or close to it for inventories.

4. Your analysis of wind up payouts means you miss thinking about what CFYN's current strategic position is and where value lies for shareholders. CFYN has just under £47m property on balance sheet and a £10.3m surplus off it. We now have a well-known property investor with a significant stake in the Company. There are various ways forward for realising value. This is where analysis WOULD be worthwhile.

An example:
. a couple of years ago, CFYN sold their Land Rover dealership. As well as getting FULL value for inventory and other assets, they also got a very decent price for the business in itself. Overall, the settlement came to a decent PREMIUM over book value. And CFYN retained the freehold.

So value could be realised through the sale of individual dealerships. This is just one possiblity.

[ntv] 05/6/2018 16:29

looks like charles stanley upped their stake

[cjohn] 04/6/2018 10:23

Yes, the share structure impedes corporate change. Let's see if this can be changed: the prefs need to go.


The results seemed OK to me; on an unadjusted basis, the shares trade at a PE of 10. So profitability supports the current very humble share price. The shares look positively cheap compared to operational cash flow of over £3m before working capital changes. However, cash flow is being used to expand the company - increasing the asset base - rather than pay down debt, which would be preferable in my view, given the meagre returns on assets.

Obviously, they continue to trade in bargain territory compared to tangible asset value; the extensive freehold property. So it's good to have a property investor activist with a significant holding in the company. Can things be shaken up?

[ntv] 31/5/2018 12:36

interesting but you forgot to mention the prefs in your analysis
from memory the company pension fund also owns shares in caffyns
that's all old school like the company share structure
too scared in case they lose control imho

[walbrock82] 31/5/2018 12:21

Here is my analysis on Caffyns:

[ntv] 31/5/2018 09:48

that is interesting ALS
think he could be debsdowner now though

[arthur_lame_stocks] 31/5/2018 08:47

I noticed a few posts ago people were talking about Simon Templar who tried to get the capital structure changed here. He's still about last seen on the DEB's thread slagging them off. I presume he's shorted them. I know his Court case against EKT failed and he got declared bankrupt. He's his own worst enemy, he thinks he knows the law inside out but also thinks he can use article 3 of the Human Rights Act in his never ending case against EKT.

[ntv] 31/5/2018 08:17

lol on self drive cars
what happens when yourcomputer does an update?
how many computers last a year or need to be refurbished
how long does a tesla car burn for?
how many times are electrical goods returned because they don't work?
put that in a car and self drive down a country lane or a minor road or a busy town?
NO CHANCE in 10years !!
anyway i think we get the convoy lorry first, that should interesting at a roundabout!!!

[arthur_lame_stocks] 31/5/2018 07:59

I thought the results were respectable and the divi yield is still pretty good. The balance sheet is underpinned by very large property assets although debt has crept a bit high for my liking.

I wonder if their business has a limited life now? I did read recent predictions that in ten years time we'll all be using self driving cars and I imagine it'll make a substantial difference to how cars are owned and used. I've no idea how likely that is though.

[ntv] 31/5/2018 07:51

GAM have 88,000 left or so it says on the website
guess they not the only seller

[ntv] 31/5/2018 06:35

from a business point of view, CJohn they get to keep their Vauxhall franchise (i thought they might lose it)Trouble is Vauxhall now owned by PSA so quality may drop further as Vauxhall brand reduces sales in the UK. still at least the service department will be busy!!
yield is good and the sale of the soon to be former Audi dealership should help reduce debt i presume going forward
lets hope for corporate action by you new shareholders may bring some good news on that front
looking forward to that

[cjohn] 30/5/2018 09:15

Hi NTV,

that was the right call, selling out. I had a small position at the time, but didn't sell. Much much larger postion now.

At least I can't see it going that much lower, given the steep discount to tangible asseta ........