Capital Share Discussion Threads

[indiestu] 26/6/2022 21:38

https://www.cnbc.com/2022/06/26/g-7-nations-to-announce-import-ban-on-russian-gold.html?

[yasx] 24/6/2022 22:49

Otemple,

Not so - I wrote "any modest move from here and I will cut" - at just over 100p I did just that.

I also wrote "one has to take into account that bull markets do not last indefinitely and this share does not make progress despite underlying improvements - one has to think if there is any negative news this would crater given it fails to respond to anything positive." - that is what has happened since that post - the bull market, especially the smaller plays, has been punctured - CAPD has since fallen from 107p to the current 75p.

Finally, I wrote "They should reduce their exposure to the investment portfolio by selling some of them down so if they do require significant amount of cash at some point it could be a valuable pot to tap into, or, at least cash will be given better recognition by the market than the investment portfolio" - again, had they done that they would now be sitting far more comfortably. That investment portfolio might end up being negligible since some of the investments are, put mildly, not for widows and orphans. You have to sell while liquidity allows and sentiment is favourable. They could not sell some of those now even if they tried. Cash would now offer support since it would get recognition, instead of it muddling the investment case for CAPD who think they are exceptional fund managers.

[otemple3] 24/6/2022 20:45

Not sure I follow....You said the market won't ever re-rate so you are going to bail. This quickly puts on 20%+ which clearly goes against what you saidThe share price has been impacted by the general market sell off: risk off stance caused by Ukraine, inflation, rate rises, recession fears. None of these are things you 'predicted' in your posts

[yasx] 24/6/2022 12:21

Turned out exactly as I had anticipated below....

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yasX 18 Jan '22 - 20:43 - 1886 of 2250 Edit
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Results meeting or exceeding expectations on virtually every front - the shares barely changed. I think this is unlikely to ever attract a decent valuation for reasons discussed previously on here and recently similar concerns were echoed by a couple of those on that presentation.

Any modest move higher from here I will cut and move on - one has to take into account that bull markets do not last indefinitely and this share does not make progress despite underlying improvements - one has to think if there is any negative news this would crater given it fails to respond to anything positive.

Incidentally, as for increasing the buyback to bridge the gap to whatever they perceive the discount to fair value to be, it would make sense they instruct those tasked with the buyback to amend the parameters to make the existing campaign more aggressive. Buying a tiny fraction daily is hardly having much of an impact on anything.

One other point - the consensus appears to be that these listed investments simply cloud the picture as to the merits of this as an investment. If they reduced some of their exposure it would enhance the cash balance and that could be used to buy back a few more shares if they felt a 'material discount' is real.


yasX 21 Jan '22 - 14:11 - 1913 of 2250 Edit
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DS,

Broadly agree with the thrust of your post.

The problem here is the market places significant weight on various risks, cyclicality, regions in which they operate, risk of funding of further substantial contracts etc.

They should reduce their exposure to the investment portfolio by selling some of them down so if they do require significant amount of cash at some point it could be a valuable pot to tap into, or, at least cash will be given better recognition by the market than the investment portfolio which at this point seems to be a hindrance to potential investors since it clouds the nature of the business of this Co.

[troc1958] 24/6/2022 09:58

Bit of a "tree shake" I hope. Can't find any reason for the share price drop other than lower valuations of Capital's equity investments and general negative market conditions. Yes, future cost and availability of funds for explorers may reduce the long term drilling pipeline for Capital but does this justify a drop in share price from 110p high to 76p. Capital is already trading on such a low multiples (e.g. PE or EBITDA to MCAP etc) that a lot of the risk is already priced in. As I said before, I'm happy to hold and accumulate on weakness. But who knows ....!!I'm sitting miles away with more predictive spreadsheet models on this company than you can imagine; yet I can't model investor "sentiment"!!Troc

[rivaldo] 24/6/2022 09:33

Judging from today's trades, with a hefty (in these markets) 388k shares traded already, it just looks like there was an early forced/desperate seller who had to get rid. Plenty of funds out there I'd guess having to sell due to redemptions or need for liquidity.

The gold price is still high and looks like remaining so for some time to come. CAPD's core business is thriving. I saw a post from kaizenkid elsewhere noting that the portfolio is still worth $43m - the weak pound is working in CAPD's favour in translation terms, so that's still a very nice £35m or so, i.e around 25% of the m/cap on its own.

It's worth reiterating that the core business is forecast to make $80.5m EBITDA and $53.5m EBIT this year (i.e before investment gains/losses), i.e around £44m - and $37.5m PAT against a now £146m m/cap.

[hpcg] 24/6/2022 09:12

It is also in the face of a sticky gold price: decent enough open interest in the December 2022 contract at last close 1843 Even if people are worried about the price trajectory of copper and other industrial metals resulting in rigs leaking over copper is still well above any historical norm and will only head to an area that is still decently profitable for miners. In other words, there is no particular reason to think drilling in metals mines in Africa will reduce.
Dec 2023 is an important marker as the Fed will long since have finished raising rates, though probably still reducing its balance sheet. So that is a reasonable number of market participants who want gold then, with miners selling in to it. A drop in gold and reduction in drilling has to be the reason for unforced selling here. The company isn't part of the domestic economy and is yielding (as a business) way more cash. The other reason people are selling is the price action and there is nothing the company can do about that. The chart for Major Drilling is not too dissimilar, despite its big up day on results.

[fozzie] 24/6/2022 08:42

If I didn’t laugh I would cry. Share price has been underwhelming here for years. Numerous fund managers say it is because of the investment portfolio as it muddies the waters. Share price doesn’t really go up (as much as it should) when the portfolio performs strongly but as soon as it doesn’t the share price is in free fall. The last eighteen months of trading have just been erased and back to just 76p, I give up.

[qs99] 24/6/2022 08:33

over $40m cash from operations for whoever said they don't make any cash above....Must admit, I wish they would liquidate more of their investments as they are not a fund manager, this should be icing on the cake upside IMO

[shanklin] 24/6/2022 08:15

Even with the weakness in some/all of CAPD's shareholdings, the share price weakness is quite something to behold.

[rivaldo] 23/6/2022 09:56

See my figures above re Leo Lithium - CAPD's shareholding is taken from LLL's latest disclosure on 21st June, so I assume are correct.

The June interims should certainly show a substantial unrealised fall in the investment portfolio - but then CAPD never got any credit for the corresponding rise in 2021.

[podgyted] 23/6/2022 09:11

As far as I can see the investment portfolio isn't doing all that well at the moment.According to my records/calculations:-

PDI

31/12/21 141m at A$0.255 = A$36m . 23/6/22 141m at A$0.18 = A$25.4m Loss A$10.6m

Firefinch

31/12/21 19m at A$0.865 = A$16.4m . 23/6/22 19m at A$0.2 = A$3.8m plus Leo Lithium 13.6m at A$0.52 = A$7.1m giving at total of A$10.9m. Loss of A$5.5m.

Assuming no transactions.

Have I got this right?

[rivaldo] 23/6/2022 09:05

Firefinch's demerged Leo Lithium is now quoted in Oz (symbol LLL).

Its announcements show CAPD own 10.353m shares. LLL is trading at A$0.52, so CAPD's holding is worth A$5.4m, or £3m. I assume CAPD still own 18.95m shares in Firefinch, which is now trading at A$0.2, so that's worth £2.1m and the combined holding is worth £5.1m.

That's quite a drop from prior to the demerger, but since CAPD's entire investment portfolio is essentially valued at Nil in CAPD's current m/cap - especially after the recent fall - then it shouldn't really make any difference!

[rivaldo] 21/6/2022 08:57

Confirmation overnight that Firefinch's demerged Leo Lithium is to list on the ASX on 23rd June (Thursday):



And Golden Rim's shares are up on good drilling results from Kada (where CAPD are the contractor), with further drilling to come:

[otemple3] 20/6/2022 21:33

Strange comment for a business that generates significant operational cash flow. They have also sold stakes in the past and am sure they will do so in the future (when valuations are better hopefully)

[indiestu] 20/6/2022 19:47

They can't bank as they never paid for them. They gave away services for equity and the result is now playing out. No cash flow. Fairly obvious.

[rivaldo] 19/6/2022 07:51

CAPD are now River & Mercantile UK Microcap Trust's third largest holding. RMMC have just issued their accounts for the six months to 31st March, and had this to say about CAPD:

"Further to previous comments on the breadth of underperformance within the portfolio, there was only one holding that made a significant positive contribution. Capital, a provider of drilling and mining services to gold miners in Africa, gained 32% on the back of continued strong trading. The financial performance of the Quality investment case is geared to the utilisation of their fleet which continues to increase as gold exploration companies commit, given the ongoing strength of the gold price, to new exploration and development activity. The company made a 1.2 percentage point (ppt) contribution to relative performance."

RMMC have also upgraded CAPD re their ESG credentials:

"Capital: S3 to S2. As mentioned, one of the areas we focus engagement is in our S3 rated holdings. We have engaged with Capital several times and attempted to improve disclosure around GHG (green house gas) emissions and the board composition. The company announced the appointment of a new NED (non-executive director) who is heading up the newly formed sustainability committee. The recent annual report includes, for the first time, GHG emissions and the company has committed to announce an emissions target this year."

[concentrate] 16/6/2022 08:54

From another perspective, it sounds like the perfect opportunity for a well capitalised business to take advantage of distressed companies needing cash.

I assume the investments are still very informed 'speculation'.

[yasx] 15/6/2022 21:57

Now that the market in speculative plays is falling apart, it would have made sense had CAPD banked some of their profits on the investments they hold....

[otemple3] 15/6/2022 16:28

I've learnt not to expect much from the average UK investor.....

[rivaldo] 15/6/2022 15:59

:o)) It doesn't take much brain power to work out it's a typo....

[otemple3] 15/6/2022 14:05

Hope someone corrects the decimal point as 1.54p is not a target I like to see ?

[rivaldo] 15/6/2022 13:57

Berenberg yesterday reiterated their Buy and 154p target: