Capita Share Discussion Threads

[abbotslynn] 06/2/2018 23:08

What a great punt this has been from the low.

[kingston78] 06/2/2018 21:10

Some people are in denial of the company’s financial situation by buying these shares, just as in the dying days of Carillion. I admit that Capita’s problems are fixable given the right support and favourable trading environment. However it is going to be a long haul,
By way of comparison Tesco has progressed since its accounting scandal but its share price has barely moved under the stewardship of another Mr Lewis,

[sr2day] 06/2/2018 13:40

Woodford will cut his losses at some stage and will sell.he is hoping for a bounce and I reckon 200p will be the highest price he may get back.but you never know with him because for the past few months he does not seem to see the wood from the trees.i reckon long term this looks doomed.

[soultrading] 06/2/2018 13:32

Will it break 200

[kingston78] 06/2/2018 11:34

Some people such as Woodford just do not admit their mistakes, blaming external factors beyond their control. No one wins all the trades and there is bound to be losers.

I think the share price rise of Capita yesterday and today is a dead cat bounce.

In the next few months I expect to hear more disappointing news from Capita. When that happens sellers will move in and drive down the share price sharply.

No one wants to take over a company such as Capita. It has suspended dividend, not one for Income Funds, nor for Growth Funds.

[nurdin] 06/2/2018 10:50

I traded these from 157p to 171p...pity I took the profit.However decided bu back in again today

[masurenguy] 06/2/2018 08:20

Woodford: I won't compound error by selling Capita

Neil Woodford admits Capita has been a 'poor investment' but says selling now would be 'almost impossible to justify'.

Capita has proved a 'poor investment' for his funds but said he would not be 'compunding the previous error' by selling the embattled outsourcer. Shares in Capita have halved in value since the company last week announced a rights issue, suspended its dividend and said it would sell assets to plug its pension deficit, as it delivered another profits warning. It was the latest in a string of warnings from the outsourcing group, whose shares are down 84% over the last two years.

Woodford is among the biggest backers of the company, with 0.8% of his £8.3 billion Woodford Equity Income fund held in the stock prior to last week's fall, and 1.3% of his smaller Income Focus. In an update to investors, Woodford acknowledged the impact on his funds' performance, but said it would be a mistake to sell the stock now. "I am not trying to make a silk purse out of a sow’s ear – this has been a poor investment, but it is one that has the capacity to become a significantly better one from here," he said. "The mistake I have made, albeit I didn’t know it at the time, was in owning Capita in 2016. It is not a mistake to own it now. And so, I will not be compounding the previous error by behaving in an irrational and valuation insensitive way now."

He said the heavy fall in the share price 'from an already depressed level' on last week's news was unsurprising given current market conditions. "After all, Capita represents many of the things that this market loathes at the moment – it is exposed to the UK economy, it has a recent record of disappointment, it is an outsourcer," he said. "This is the reality of what we have been writing about for some time now. Markets are being driven by momentum. Valuation is irrelevant – it simply does not matter in the stock market at the moment." He pointed to the company's standing in 2016, when having made a profit of £475m, its shares were worth £12. Now, with profits likely to come in between £275m and £300m, its shares are trading hands at 174p. "A decision to sell Capita here is almost impossible to justify from a fundamentally-based perspective," he said. Woodford also voiced his support for new Capita chief executive Jonathan Lewis's plans to turn around the business. "This is a complete reset for Capita,' he said. I would go as far as to say that the business will be in better shape at the end of 2018 than it was in 2016. It will have infinitely better leadership, a stronger balance sheet, better cash flow, more conservative accounting policies and a lower pension deficit."

Capita's woes have contributed to a tough year for Woodford, whose flagship Equity Income fund has lost 2.3% over the last 12 months and is the only fund in the Investment Association's UK Equity Income sector to have failed to deliver a positive return over that period. The manager said that while the stock market was "totally preoccupied with momentum and insensitive to valuation", he expected the environment "to remain as challenging for the Woodford funds as it has been since early summer last year'. Equally, however, we should expect rationality to return in an unpredictable way, as it has done always in the past," he added. "In the meantime, I would be doing you, my investors, a massive injustice if I was to abandon the investment discipline that has guided me for 30 years in this industry."



NB: I have never had any position here but it remains firmly on my watchlist !

[creddy] 05/2/2018 23:44

dead cat bounce? too many unknowns here. impossible to read the balance sheet with any degree of certainty. like trying to catch a falling knife.

[ch1ck] 05/2/2018 16:59

Well a nice finish to the day with the share up 7% on a disastrous trading day.It will be interesting to see how the US. and Asia fair today and tonight.

[fenners66] 05/2/2018 13:07

jon - I wasn't clear either on my calc for the 1 share at 1.50

What I was trying to say was

1, price shares at £1.50
2, still raise £700m
3, therefore need 466.66m new shares (which would be 1 for every 1.5 shares held not one)
4, leaving 1166.6 m shares in issue
5, so the new shares would be 466/1166 = 40%

But I was trying to illustrate the potential disparity in what the underwriter is signing up for.

Of course he never expects to buy all of the shares - but he has to consider the scenario - that is what he is there for.

[tim 3] 05/2/2018 12:53

Fenners This is my thoughts too I suspect many of the holders will be here for the dividend and will now be looking for an exit, quite a few funds in too last time I looked .

[jonwig] 05/2/2018 12:35

@ fenners - we're both adrift. This is what I meant:

So if you get a "right" to buy 2 shares at 50p for every share you own that would be different to say 1 share at £1.50 [£1.00]

Why?

Because I was referring to the underwriters - how can they agree before the price is known - if (lets say) no one takes up their rights then under the 2 scenarios above £700m buys the underwriters either

66.66 % of the company

or

40% of the company [50%]

[fenners66] 05/2/2018 12:29

I think it rightly hangs over all shareholders as to how much they have to put in to retain their stake or how much they are going to be diluted.

And for what ?

No dividends for many years - after this was touted as an income stock - they already have the wrong shareholder base.

As for Woodford ?
Even with access to companies he is making awful calls - now he is becoming a counter indicator - I think he must believe anything BOD's tell him...

[jonwig] 05/2/2018 11:53

@ fenners - your para 3 should read "... 2 shares at £1.00", so it would be 50% in your last figure.

In terms of voting power, it would matter, I admit - and apologies. But in practice how near to zero take-up would it be? Since we're probably talking about a dozen institutions, the voting difference for each one would be pretty small.

And thinking of Ordinary Joe, they want £1 for every share he holds, so it doesn't matter how it's priced ... except, as I said, he might leave it alone unless it was deeply discounted.

Anyway, I've looked quite a bit at this over the last week, and I reckon it won't go under and won't lose key government contracts (because there's probably no willing substitute). But it will be years before there's enough confidence to award it enough contracts to grow, and meanwhile probably no dividend - so dead money.

[abbotslynn] 05/2/2018 11:52

Its paid off already after the crash last week.
Money money money

[ny boy] 05/2/2018 11:48

I guess some bottom fishers looking for a trade amongst a sea of red.

Also interestingly investors buying heavily into (IMM) before Lupuzor phase 3 transformational results due anytime before end of March

Still pockets of opportunities around

[fenners66] 05/2/2018 11:27

jon - how can you say that the rights issue price has no relevance?

So you assert the company wants £700m from say (rounded 700m shares ) but the price of the shares the rights buys determines the number of shares which in turn determines the size of the stake in the company.

So if you get a "right" to buy 2 shares at 50p for every share you own that would be different to say 1 share at £1.50

Why?

Because I was referring to the underwriters - how can they agree before the price is known - if (lets say) no one takes up their rights then under the 2 scenarios above £700m buys the underwriters either

66.66 % of the company

or

40% of the company

and I know I would want to be damn sure of what I was getting before I agreed to spend £700m of my cash !

Of course the numbers involved can vary much further than that.

[cantrememberthis2] 05/2/2018 10:53

180p on the cards, nice 3 day W shape forming

[cantrememberthis2] 04/2/2018 16:25

ive had comms from the company... v.content this will do ok in the medium term. Rights issue underwitten so money in place. All noise, will be adding. £1 or £2, still a buy for me, pension deficit could be a nice suprise as it seems a priority...

[jonwig] 04/2/2018 15:38

kingston - you may be right on lots of that, but why should the price of the rights issue have any relevance?

As I've said earlier, they want £700m and have about 700m shares in issue so holders will be asked for 100p for every share they hold (underwritten). Does it really matter how that's priced up? And of course if you don't want to participate you can sell the nil-paid or lapse them and get a cheque.

[kingston78] 04/2/2018 15:13

The UK stock market will fall from here. The cycle of boom and bust has shortened to about 10 years. The last financial crisis happened in 2008.

Certain sectors and some companies, in particular those with s strained balance sheet with lots of worthless intangibles, will be hit very hard.

I expect Capita's share price will fall sharply from here as negative momentum gathers pace until the pricing of the rights issue is determined. My short term target is £1 a share.

[mj19] 04/2/2018 14:19

Woodford explains - https://woodfordfunds.com/words/blog/capita/

[blueball] 04/2/2018 11:57

stay short.