Carillion Share Discussion Threads

[123trev] 24/2/2017 13:03

Personally I think this could bounce at some point but in the end multi year lows are coming here for sure the shorters aren't retreating.The irony is if this company makes the tuff calls the share price will rise I'm sure,a rights issue needs to be done and that's what them shorters are waiting for.

[123trev] 24/2/2017 12:50

Well the debt I think will be slightly worse obviously they have mentioned that!reducing one part of your debt and increasing another if it's result is bigger debt perhaps means you should stop paying the kind of dividends this company pays and giving the shorters the ammo they need.It might be more prudent to inject more than £7 mill into your company as it did last year.It could be argued that the share price has gone down because of the interest and debt resulting in a higher yield for new investors with an appetite for huge risks! Ps just because a share was X last year and you think nothing's changed and now it's far lower dosent mean its a bargain it could well be a value trap.

[jaf1948] 24/2/2017 12:21

123Trev,

'the interest and debt are huge and that's why the yield is so high here'.

Not strictly speaking accurate. The interest and debt position is no worse than it was a year ago when the share price was £3 and the yield was 6%. The yield has only gone up because the share price has gone down, not because of the interest and debt.

We will know more on wednesday.

[123trev] 24/2/2017 12:00

Kiwi,with respect the interest and debt are huge and that's why the yield is so high here and part of the problem especially in any future downturn,if profits fell substantially in the future and the market looks a couple of years in the future then you see why the shorters are in control and continue to be right.With regard to intangibles even in accounting this is a very grey area regarding true value and financial reality is very different,are name is worth this!,are orders are worth this!are people are worth that! This company has far to many intangibles backing it imo.

[zoolook] 24/2/2017 11:11

Hi red

re post 3851 on book value
Latest number that I saw is 0.92. Under 1 is considered low, by any standard. Bby is 2.29 in comparison


Just had a check - if you take out intangibles of £1.6bn they have no asset backing so on the face it so the investment case seems to be a business with inherent contractual risks with low margins without a cash pile to fall back on vs a low PE and mega yield

Not followed BBY for some time but their construction business unraveled spectacularly and unexpectedly not that long ago IIRC.

[kiwihope] 24/2/2017 10:26

RC,

I don't have any view other than the company has said the average debt will be up and year end debt down. The most important is average debt because year-end can be manipulated (eg, pay creditors late).

123,

I don't agree with your choice of words. The interest and debt are not 'huge'. They are probably too high but finance costs (~£52M) are covered more than 4x by underlying profits. The dividend costs about £80M which is covered almost 3x by underlying profits. Regarding the intangibles, if they weren't worth their balance sheet value the auditors would insist on write-downs. So I think your are exaggerating a bit...

[kcsham] 24/2/2017 10:18

I believe my comments above is a bit conservative.

[kcsham] 24/2/2017 10:15

kiwihope - good comments!As I said before, I don't expect the share price will go through the roof on result day.However, I don't believe the share price should be at 8 years low either. If the result matches to the company's Dec. 2016 update statement, the share price will go back up to 235 in days . If the shorters buy back to cover their short before or soon after the result day, the share price could back to 245 or even 250 in couple of weeks.If all happen as mentioned above, I will not be surprised the share price will back to 270-275 in a few months time. Of course, this is all IMHO.

[123trev] 24/2/2017 10:00

The shorters here are forcing the company to face some stark realities the interest and debt are huge and continuing to pay such dividends is crazy given the uncertainty in the future.i think the divi will be maintained again but for the last time at such a yield and a big question is just what are those intangibles really worth?

[rcturner2] 24/2/2017 09:53

kiwi, what's your view on the end year net debt figure and how it seems to be at odds with the average figure during the year?

[kiwihope] 24/2/2017 09:43

I don't think next week's results are going to be a panacea. We know what they are probably going to say - anything significantly different from the last trading statement and they should have told us by now.

No, the results will come and go and probably not much will change. Sentiment in construction and support services is fairly negative at the moment. Brexit is hurting (re: future investment) and poor results from Serco, etc haven't helped.

IMO Carillion need to tough it out and keep trying to consolidate, i.e no more acquisitions and work on reducing debt and improving margins. I think the pension deficit might sort itself out over time as interest rates slowing rise.

So there's no quick fix, just a slow improvement. This won't please short-term holders. But if this happens, at some point the shorters will realise that they have backed the wrong horse and leave. When this happens it could be quite sudden. But it needs and improvement in the fundamentals over time...

[garycook] 24/2/2017 09:04

Heading for £2,until results next week.

[kcsham] 24/2/2017 08:51

RC - the chart indicates there is still a lot of people affected by the negativity being spreader around. Because it is so close to the result announcement day, the trend will not be changed easily. Now it all down to the result. I am not a trader, I am not too concerned about short term trend. If I believe a company is a good investment, I put my money in it. I buy a share based on its fundamentals and management. I use charts to time my in and out of the share. I don't try to pick the peak or the lowest point but leave 10% for the others. It is not because I am generous, it is simply impossible.Provided the company is not going to disappear (no 100% or 99% or 98% guarantee or even any guarantee) I often have my rewards. I don't spread information or opinions that I don't believe it is true and I cannot stand those people who do otherwise. RC - this could be your last question that I both to answer. Behave yourself and good luck to your investment!

[rcturner2] 24/2/2017 08:13

kc, what are the indicators you monitor saying for Carillion?

[kcsham] 24/2/2017 07:23

All investors will only put their own money in a company that they believe has good fundamentals and a team of management.

[kcsham] 24/2/2017 07:17

Candid investor - don't be worry that I am going to ask you for reference on you posted information because I won't. I know what you said is true, absolutely true because I used charts for decades.I use 20, 50 & 200 days SMA, 7 & 21 days RSI and MACD & Signal line graph to monitor all the shares that I own in my investment.You are right to say that traders don't care about the fundamentals of a company that they put their money in (more true to say not theirs money in). What they care is the trading momentum of a particular share. Traders and shorters don't go to site visits......traders wait for their moments while shorters create their moment by spreading negativity as far as possible.Thanks for your excellent posting.

[rcturner2] 23/2/2017 22:10

The wikipedia article on hedge funds is a good read.

[edmundshaw] 23/2/2017 22:05

Hedge funds don't just hedge. The name is really not appropriate.

I picked out 3 before but there are dozens, of big failures like Amaranth in 2008 and of course the famous LTCM debacle. Even nobel laureates aren't clever enough to win all the time...

[m4rtinu] 23/2/2017 21:48

Final thought: If Hedge Funds were so sure of their bets, why would they need to hedge?

[spoole5] 23/2/2017 20:54

No more posts here till March 1st!!!

[edmundshaw] 23/2/2017 20:52

Forbes. But of course they might be making it up too... seems to be a lot of that going around at the moment...

[rcturner2] 23/2/2017 20:16

Vic Reeves said that 83% of statistics are made up on the spot.

Presumably you have a source for the "average hedge fund fails within 3-5 years"?

[edmundshaw] 23/2/2017 19:58

99% is of course too good to be true. So is 80%. Any advance on 80%?

The average hedge fund fails within 3-5 years (usually long after it should have wound up). Hedge funds have a huge range of strategies, and are always trying new ones, but there are fundamental problems in getting started and getting big enough to be effective. Then in maintaining successful strategy without anyone else noticing. Then having that strategy survive an unexpected shock... they are unregulated and sometimes turn out to be Ponzi schemes (Bayou), unable to cope with shocks (Crusader Fund), not spotting fundamental problems (Beller: subprime mortgages), I could go on.

I think I shall hold on to my shares for now thanks.

[shroder] 23/2/2017 19:40

It strikes me as a very high risk trade for hedge funds if un-hedged, not to mention overcrowded.

Some discussion on HFT thread around this.