Carillion Share Discussion Threads

[lab305] 15/12/2016 09:40

Well it certainly isn't witchcraft of picking some arbitrary figure and suggesting the stock could go to that level. It used to be checking the PE and yield and seeing if they were outside the normal parameters and then the prospects and trading updates. On ALL the above this company is valued at around two thirds of where it should be, however fundamental principles have been absent on here for some time and a preponderance of negativity has taken over.

[rcturner2] 15/12/2016 09:09

lab, you are the one losing money here

the fundamental principle of investment is to make money

[deadly] 15/12/2016 09:08

Very astute, care to enlighten us uneducated masses on how the fundamental principles relate to the share price in this case?

[lab305] 15/12/2016 08:51

Why 220 ? Why not 120 or 20 ? Why not a PE of 6 or 4 ? The fundamental principles of investment and this thread are distant strangers.

[salpara111] 14/12/2016 08:19

I guess the underlying issue is that so much of their turnover is on wafer thin margins and as a result they only need to screw up one decent sized piece of work and suddenly profits are down 30%, just look at how quickly the wheels have come off Serco then G4S, Capita, Mitie and Interserve
Carillion is one of the few outsourcers who have not warned.
Having said all of that I am so tempted to take a stake given the very low p/e and chunky divi.

[m4rtinu] 09/12/2016 08:42

T-matt - thanks for the post. Looks like I might need to take some time to read it. Understanding it will be another thing.

I did Maths at Uni a long time ago, but wasn't a high flyer. Maths professors often used the word "clearly" when explaining some theorem. There was a grading of profs viz use of this word.

"If prof A said it, you usually got it straight away, if prof B said it, you had to go home and might get it after a few days and if prof C said it, you might never get it!"

Anyway, cheers again for post. MU

PS: Just had a quick skim of the first link. Definitley not prof A :)

[edmundshaw] 08/12/2016 20:54

On the debt/pension deficit issue, one can at least take some comfort from the fact that they can not both get worse: rising interest rates may make debt dearer, but it improves the discount rate and reduces those pesky pension deficits. And vice versa.

And if management make good on those promises and reduce debt come the year end and announce earnings up for this year, the dividend should be safe for now.

And the current price is discounting a lot of bad trading; I find it hard to believe it is going to be that bad for that long.

[thorpematt] 08/12/2016 20:41

m4rtinu
I don't really do Bonds. I just about worked through what Ben graham had to say about them in his more well-known book but when it came to his more technical "security anaysis" I certainly reached my limits and so I took heart from the commentry of a GS fund manager who encouraged "equities facing investors to focus on equities."

I do know that the arbitrage strategy to long bond, short stock for convertbles is very common however.
(old but good)PDF here:-



maybe this calculator will assist:-


I hope this helps is some way, but I am afraid, that if there's one thing I do know,it is my own limits. Such calulations and strategy are the domain of the clever people (of which I am not one).

With regard to the shorting levels on this stock, I would asses that only some of it relates to the aforementioned. I believe that the general consensus amongst IIs is that CLLN has a diminshing pipeline (along with its competitors) which in turn will lead to smaller margins to enable winning of bids and that it is crippled to some extent by having to pay out big sums to the pension defecit. The low bond yields within the current market do not help, since any company with large pension defecits are bounf by actuary review to stump up any short-comings. The whole thing is seen as rather a perfect storm.

The TS does of course try to allay the concerns on working capital and the concerns on weakness of the £ and in some repsects discusses pipeline and margins positively. One has to be contrarian to the IIs sentiment / outlook-wise to buy in here I would say.

[lord gnome] 08/12/2016 16:54

Support at 240 looks to have held. Hopefully we will see the tide turn tomorrow. Can't be too many sellers left. Surely there is nobody else to lend them the stock to sell.

IC still likes the stock and maintains its 'BUY' recommendation.

'Shares in Carillion have been blown off course in the past year as a result of macro economic uncertainties and the referendum. However, revenue and operating profits for the year to December 2016 are expected to be higher. There is also a strong order book, maintained margins and a well covered dividend offering a 7.5 per cent yield. At 244p, the shares are down from our long standing buy tip (341p, 18 Dec 2014) and trade at just seven times forecast earnings. Buy.'

[m4rtinu] 08/12/2016 13:50

RCT - agreed, and being tested now.

[rcturner2] 08/12/2016 13:44

240p looks like quite a crucial support level. If that breaks then 220p could well be on its way.

[speedsgh] 08/12/2016 09:44

Peel Hunt downgrades Carillion after trading statement -

Peel Hunt has downgraded support services company Carillion (CLLN) as order intake and scope for growth raise concerns.

Analyst Andrew Nussey lowered his recommendation from ‘add’ to ‘hold’ and reduced the target price from 30p to 275p following a full-year trading statement for the second half (H2) of the year.

Nussey said the update confirmed that trading was in line but the ‘modest H2 order intake’ was ‘slightly concerning’.

‘Carillion has much to offer and the shares are not expensive on a headline price/earnings and yield basis,’ he said.

‘Although debt is high by peer group standards – especially if we allow for the pension liabilities – it is supported by the cash flows from support services,’ he said.

‘Near term, worries over the order intake and modest progression beyond services will mean there are likely to be better buying opportunities.’

The shares dropped 11.8p on Wednesday to close 4.6% lower at 244.3p.

[zcaprd7] 08/12/2016 08:52

Capita read across?

[m4rtinu] 08/12/2016 08:52

Any views # 3134?

[ch1ck] 08/12/2016 08:12

Master Investor report yesterday was interesting. The stock looks very strong for the next two years. I'm heavily invested here we should see some strong institutional buys over the run up to the div

[wad collector] 07/12/2016 20:44

I would like to see this share price manipulated....upwards.

[edmundshaw] 07/12/2016 19:02

RCT: dead right. If you are looking for excuses like MM games and manipulation, generally you should check an article about the psychology of confirmation bias. It's a must for all serious investors anyway IMO.

[rcturner2] 07/12/2016 15:47

People only tend to refer to manipulation when the share is going against them. I have never known a rising share price referred to as manipulation.

[m4rtinu] 07/12/2016 15:45

A bit of history about the short position. In late 2014, the short position started to rise from below 5%. The steep upward trend came to an end about 3/4 through 2015 at about 18%. Since then a slower but still increasing rise in shorts to over 21%

Source:

Also in late 2014, the £170m of Convertible Bonds were offered, redeemable in late 2019. An edited extract from which:

"The Bonds ... carry a coupon of 2.50% per annum ..., the Bonds will be convertible into fully paid ordinary shares of Carillion (the "Ordinary Shares"). The initial conversion price has been set at £3.9856, a premium of 25% above the volume weighted average price ("VWAP") of the Ordinary Shares on the London Stock Exchange between launch and pricing.

The Ordinary Shares underlying the Bonds represent approximately 9.9% of the Company's issued share capital immediately prior to the Offering based on the initial conversion price.

Upon conversion ... Carillion may elect to settle ... by way of delivery of Ordinary Shares, payment of a cash alternative amount (calculated by reference to the VWAP of an Ordinary Share over a specified period) or a combination of the two"

Source:

At the time a poster, (sorry forget who), explained how these CBs can be hedged by shorting (I think).

Any views viz the current SP, on the share price for conversion (initial and potential eventual), the % of share capital these CBs represent and if things may change at the end of 2019, when these CBs are redeemable? As you may gather I'm no expert!

For interest (excuse pun), I hold a modest amount for the large yield. My current ave share price is a bit above £3. I have made a good profit from 2 previous holdings of CLLN.

Cheers. Martin U

[haywards26] 07/12/2016 13:21

Apparently setting very high priced sell orders stops your online broker being able to loan out your shares..

[this_is_me] 07/12/2016 13:03

lab305 Use a broker that enables you to hold your shares directly in CREST rather than a nominee company and then they can't loan them out. I use Charles Stanley direct.

[ny boy] 07/12/2016 12:06

Good news came out today as well!


Carillion Canada subsidiary, Rokstad, has been selected by Manitoba Hydro as the preferred provider for the next phase of its Bipole lll high-voltage transmission line project, which has an estimated revenue value of GBP120 million.