Carillion Share Discussion Threads

[wad collector] 23/6/2016 16:33

Shocking lack of confidence red!
I wonder how many stop losses have been set across the market. I have set none ; if Brexit happens then the markets will fall so fast that I would rather sit and await recovery.But if Remain wins then I will look to trade a fair few , but I am not sure CLLN will move a huge amount, and doubt the shorters will be closing yet.

[redartbmud] 23/6/2016 13:52

Sold some at £2.791867p
Hedging my bets as the sale was trading stock.

[apad] 23/6/2016 11:40

June shorts.

Fund manager % short Change Date changed/created
AKO Capital LLP for AKO Master Fund Limited 1.22% ↑ 0.12% 2016-06-10
BlackRock Investment Management (UK) Limited 2.25% ↑ 0.18% 2016-06-14
CapeView Capital LLP 1.22% ↑ 0.09% 2016-06-02

[redartbmud] 23/6/2016 09:55

APAD

free cash flow rather than profits

You are correct, I was being lazy.

red

[redartbmud] 23/6/2016 09:23

There are 14 US Hedge funds who have taken it upon themselves to short the stock. Add to that Blackrock.
One suspects that the 14 'talk' to each other.
They have an opinion that money can be made in shorting the stock.

Carillion's question marks are:
Pension fund deficit.
Lumpy cash flow and a lower cash inflow than declared profits in recent reports.
Dividend yield high and possibly under future pressure unless profits are raised.

On the other hand:
No mistakes.
Robust turnover and profits, although not growing.

red

[apad] 23/6/2016 09:21

Indeed! But, as you said, many are already well in the money.

I'm guessing that it will be unexciting and that the shorters will get bored and move out progressively, so I have taken my limit sells off the table.

One has to take a view, but it is pure guesswork. So, I am betting on conservative management.

I have a decent £1000 profit including the divi so I suppose that the prudent decision would be to walk away, but my ambition is for it to be my second share on the books at zero cost :-)

apad

[boonboon] 23/6/2016 09:16

Maybe because the other ones have already had profit warnings so there is an expectation that carillion will as well. I know balfour Beatty and interserve have. I'm not sure about the others.

[m4rtinu] 23/6/2016 09:13

I have asked this before, but will raise again.

Why is CLLN so heavily shorted when peers are not. Balfour T, Galliford T, Kier, Interserve. Last time I looked a couple were 5% and the others minimal?

[redartbmud] 23/6/2016 08:18

APAD

Let us hope that 5th is an anti-climax, for the US Hedgies, from the previous day and that they get their backsides singed or better still scorched.

red

[apad] 23/6/2016 08:11

Ocado has toppled CLLN from the top shorted podium.
I assume that the shorters will move quickly if there is some good news or more slowly if there are better alternatives.
At the moment I see nothing in the company or the environment to trigger a change in the shorters' view. 5th July trading statement will be critical if it contains new information.
apad

[redartbmud] 23/6/2016 07:52

RCT

I understand where you are coming from, but whilst the share price is well down from the mid 300p levels, reached not so long ago, the company has remained quite robust with its' ongoing performance.
How long will these shorters persist, and how far do they want the share price to go before they trouser profits and move on?

[rcturner2] 23/6/2016 07:39

I hold Carillion and have done off and on for many years.

However the shorting does concern me. I think lab's view is actually very dangerous. The idea that a solo private investor knows more than the average hedge fund is misguided to say the least. Shorters may be wrong, but I have seen them right enough times for it to be a concern.

[grahamburn] 22/6/2016 14:45

An even better definition of "intelligence" is the "ability to think through a problem for oneself".

Being "clever" is simply knowing a load of facts - but not necessarily knowing whether those facts are relevant to your decision-making process.

Both definitions are relevant to whether investing (or not investing) in Carillion - or any other share, for that matter - is sensible.

[apad] 22/6/2016 14:22

All companies are a mixture of expectation and worry. To take a one-sided view is usually delusional. You cannot ignore pension deficits, the lumpiness of contracts, an out of favour sector and free cash flow history.
Nor can you ignore good management or a mix of service and construction providing stability.
To blame it all on hedge funds is manachaen "rubbish".
apad
ps
A good description of intelligence is the ability to hold two contradictory ideas at the same time.

[redartbmud] 22/6/2016 11:53

I am firmly in the camp with lab.

The company has a robust business model, and sticks to it rigidly. I have not seen any problems with the management of the business or any contractual difficulties, unlike some of it's competitors.

The shorters will do what they do and I will continue to collect my dividends.

[apad] 22/6/2016 08:59

FT October.
Carillion has become the most popular share for hedge funds to “sell short” in the London market, according to official data, as analysts question the support services group’s lack of growth — and rising debt.
Substantial bets that Carillion’s share price will fall have been disclosed by 14 funds, and figures from Markit show that more than a quarter of the company’s shares have been borrowed by speculators hoping to sell them and buy them back more cheaply, to make a potential profit.
Carillion declined to comment. Some of the funds said the Wolverhampton-based group came to their attention last December — following an unsuccessful attempt to merge with larger rival Balfour Beatty — when it announced it would raise £170m by issuing a convertible bond. Seeking capital so close to the end of the year surprised the market, and led some investors to take a closer look at the company’s balance sheet.
In August of this year, the company — which employs 40,000 people in the UK, US, Middle East and Africa — reported flat pre-tax half-year profits, and said it had £17bn of orders in its pipeline.
But last week Andrew Gibb, analyst at Investec, told clients: “Carillion remains an enigma. On the one hand, it looks a cheap stock with one of the biggest dividend yields in the sector; on the other, it carries one of the biggest short positions in the market.” He claimed that “concerns centre on the increasing average debt position and absence of underlying profit growth over the past few years”.
Some of these concerns have stemmed from the ways in which companies can control the way their financial strength is presented.
At both the end of December and the end of June, when financial metrics are typically tested by lenders, Carillion reported a net debt figure of less than £200m. However, the company also disclosed that its average net borrowing between the two dates was far higher, at £487m.
Some investors have also pointed to the way Carillion has used a scheme designed to help small businesses receive payment faster in order to delay the timing of its own payments, providing a temporary boost to cash flow.
At the same time Carillion is owed £1.5bn by its customers — a total that has been growing faster than reported revenues and represents a larger proportion of sales than for peers, investors noted.
In recent years, other support services groups including Balfour Beatty and Serco have run into trouble when the cost of servicing their long-term contracts has proved larger than anticipated. Balfour and Serco are both trying to rebuild their businesses under new management.

[lab305] 22/6/2016 08:58

The rubbish talked on this board is breathtaking. The share price is where it is simply because around 14 hedge funds ,mostly US based, have decided to short it. Carillion's value has not dropped because it is performing badly or because of a deficit in it's pension fund. The concerted attack by the hedge funds amount to a self fulfilling prophecy.
What we are left with now is a well run company making increasing profit with a PE of around 8. Meanwhile the armchair pundits on here speculate on over technical reasons on why this is so and conjure up excuses not to invest . They imagine that the hedge funds must know something negative that we don't. It is far more likely that these funds are using Clln as a bellwether and an insurance policy against a downturn in the UK. Brexit would be another reason.
The fundamentals of this company are good , PE is very low and yield excellent which is covered twice. The icing on the cake is that should the hedge funds decide to take their profit there will be an exponential rise in the share price As there is not much liquidity in the stock the share price could easily exceed £4. My position is that I now have 127000 shares and still buying on weakness. Meanwhile 6.8% sure beats .5% from the bank.

[apad] 22/6/2016 08:40

Shorting.
Very detailed article in autumn FT.
DYOR
apad

[redartbmud] 22/6/2016 08:28

edmund

I asked the company.
Simples

red

[apad] 22/6/2016 07:57

....and not enough free cash flow to maintain its divi history.
apad

[eeza] 22/6/2016 07:40

The large pension deficit is what draws the shorters' attention.

[adamb1978] 21/6/2016 22:35

Really odd one to short if you ask me - they're cheap, rather than expensive, and recent trading statements have been getting better. Plus there's a slew of FTSE companies with far worse divi cover than these guys

[blomers] 21/6/2016 19:17

I see it's dropped from 20.3% shorted to 20% now, so maybe the shorters have started to unwind. At this rate OCDO might take our crown as most shorted UK stock.