Cls Share Discussion Threads

[skyship] 19/9/2002 17:21

Glad to see the Company is now back in picking up its own stock at these crazy prices. The quoted Real Estate market is really weird - flat on its back when the physical market is sooo strong. My finger is twitching over the buy button on a number of the plays from earlier this year - HMSO & SLOU in particular are getting to very tempting levels. Can Real Estate (UB86) detach from the wider market. Any views ACOL? (Still holding HNN incidentally)

[skyship] 12/9/2002 23:25

Well ACOL - we may be an endangered species around here - but with results like today I'm quite happy to be in the minority & with that NAV it looks as though we are well on course to hit my 425p yr end target - no wonder they put on 7% against a 3% fall in the FTSE!

[kenny] 25/8/2002 09:37

From the Guardian 24.08.02

"Among the smaller stocks, property group CLS Holdings marked time at 204p despite whispers that chairman Sten Mortstedt, who already owns 43.3% of the company, is planning a management buyout. With the CLS trading at a steep discount to its net asset value, estimated at somewhere in the region of 350p, traders believe there could be some truth in the speculation."


Looks like things may get interesting!!

[acol] 24/8/2002 12:25

titonboy

I can confirm that your analysis (post 20) is incorrect. One of the trades @ 204.4p was mine and was most definitely a 'Buy' Enjoy your "jollies".

[skyship] 24/8/2002 00:45

WARNING: For Investors only – not for Traders……;..

It is possible that a large line of stock over-hanging CLS Holdings (CLI) is about to clear (see below), in which case this is a property company likely to show a good return over the next few months. I’ve collated and updated a few of my comments on the old FreeBB thread, so as to make the case easier to follow:

I remain very much a commercial property bull, as really it is only in the City and London West End that rental value falls have not outweighed the increasing values arising from lower yields. CLI has actually pulled back by 21% from the May peak of 260p to the current 204p. At this level it stands at a 44% discount to the historic (31/12/01) 365p NAV; and a 49% discount to a concensus 400p NAV for the end of this year. Each year the NAV is marginally enhanced by the policy of share buybacks instead of dividends - these give a yield equivalent of 5.4%.

However, even though the "FRS 13 Fair Value" adjustment knocks 16p off the NAV, I believe that concensus figure will be left far behind. ING Barings estimate 416p, but even that doesn't allow for:

1. The effect of the Euro appreciation on a property portfolio historically 42% on the Continent (France-22%; Sweden-20%; UK-58%); but apparently now much nearer 50%.

2. The likely rise in commercial property values in H2

Having such a high %age exposure to the Continent is now viewed by many property followers as a significant benefit. Property yields are considerably higher across the Channel; and the sector as a whole is viewed as "under-played". It is interesting to note that of last year's £30m revaluation surplus 36% came from France; 39% from Sweden; and just 25% from the UK.

Being a family controlled company, CLI has historically traded at a larger NAV discount than its peers; however the Swedish Mortstedt family adopt a far more open and approachable policy than their British counterparts. Also, CLI is a freely marketable stock being now quite a large company with a 31/12/01 Year End portfolio value of Gross £728m and a Market Cap of £197m. The 76 page Annual Report is commendable in its detail; and well worth a detailed read.

I think there was a very good reason for the recent decline, essentially Govett Strategic I.T. (GVS) was a forced seller in view of their winding-up/restructuring. We know they sold 740,000 @ 220p; and they must remain the favourites to have been the rather crass seller of another 1.75m shares @ 188p on 15th July - 12.5% below the then market price! It may not have been them of course, but whoever it was, it wasn’t a smart move as CLI was and is in a closed period, so unable to buy-in the stock. If they'd thought of that they could surely have sold the line back to the Company on 30th June - CLI is a confirmed buyer-in of the Company's shares.

Such poorly handled transactions present profitable opportunities. To my mind the market-maker who took the stock will remain a tap seller until the Interims next month. The results will clear the way for the Company to buy-in loose stock and for the Market as a whole to be reassured as to the Company's value. HOWEVER, the loose stock may not be around much longer, as a look at the ADVFN Trading history shows (according to my allocation of the Trades) that since 2nd August the market has sold no less than 1.56m CLI. All this stock comes from the GVS "forced sale" of 740,000 @ 220p on 21st June & the further sale (possibly GVS again) of 1.75m @ 188p on 15th August.

Assuming the 740,000 were absorbed by the market between 22nd June & 1st August (and I haven't the trading history to check that), then the astute market-maker who took the cheap stock @ 188p may now be down to his last 200/- shares; in which case we could be in for a run sooner than anticipated. Still anchored @ 202-206 today.

With gearing @ c.100%, I have a personal target of 425p for the y/e NAV; and a share price target of 255-260 over 6 months. For me this is a core long-term holding. With solid support evident @ the £2 point , the potential upside shows the right sort of multiple to the downside risk. Looks like a safe BUY.

[skyship] 24/8/2002 00:00

I should have done this earlier, but anyway....Today I went back over the past three week's trades (ADVFN 21 day history); and the result is that according to my allocation of the Trades, since 2nd August the market has sold no less than 1.56m CLI. All this stock comes from the GVS "forced sale" of 740,000 @ 220p on 21st June & 1.75m @ 188p on 15th August. (NB - The latter may not have been from GVS, but a £ to a p it was "The Bozo Fund")

Anyway, assuming the 740,000 were absorbed by the market between 22nd June & 1st August (and I haven't the trading history to check that), then the astute market-maker who took the Bozo stock could well be down to his last 200/- shares; in which case we could be in for a run sooner than anticipated. Still anchored @ 202-206 today.

[tiltonboy] 23/8/2002 23:28

SKYSHIP,

Sorry to disagree, but I think you will find that the deals at 204 and 205, over the last couple of days, were actually sales.

Irrespective of how much stock is in the market, if CLS come up with the goods, then a re-rating should occur.

I am on my "jollies" next week, but will follow events from a distance.

A good weekend to all.

tiltonboy

[acol] 23/8/2002 19:50

Skyship

Unfortunately there are very few 'value' posters on this board and consequently you can end up talking to yourself when you post on such stock. Years ago I posted on London & Associated and Bourne End Properties - both of which attracted very few comments. Nowadays, I tend to lurk because I rarely seem to find the time to post.

These last few weeks I have been cautiously dipping my toe in the water trying to find under valued stock. I too feel that this stock is unlikely to go much cheaper - a comment that does not apply to many stocks, as we all know too well!

I think the only other property stock trading at a similar discount is LAS. However, that stock is very illiquid and I am less happy with the retail property sector. Family ownership is an even bigger problem than CLI.

I share your enthusiasm for this stock and bought on Wednesday @ 204.4p thru ideal. The following day the buy price had edged up to 206 - although doubtless you could have got a lower price using a non-internet broker.

This recent market rally could run out of steam at any moment - in which case the downside of CLI is limited. However, the upside could easily take the share to 250p and beyond and it would still be good value. I think that is a good risk/reward ratio.

PS I also bought into DNX the other day and I am sure I have noted one or two other mutual interests.

[skyship] 23/8/2002 16:54

Tiltonboy - I read today's trades @ 204 as purchases; as with the 110,700 @ 105 yesterday. Looking back over the past 3 weeks I estimate that practically all of that 1.75m sale on 15th July has now been absorbed - possibly just 200/- odd left. If so, then clearance of a stock overhang usually brings a fillip to the price. Posted as such on that new PremiumBB thread. Yes, interesting to see yet another property company go private (Grantchester). Wouldn't mind betting that tiddler ESA will be the next.

[tiltonboy] 23/8/2002 14:48

SKYSHIP,

I have been chipping away at the overhang, but it appears that stock was replenished yesterday with a couple of large(ish) sales.

MLSB, initially, had the "cheap" stock, but HSBC now appear to be able to find stock. This is where we have been picking up stock the last few days. With a 4p touch I would normally expect to deal inside the price, but MLSB and HSBC have been resolute in their offer price.

Interestingly the other MM's have been bidding for stock, and not even wanting to match the offer.

Providing there are no nasty surprises, in the figures, I also believe the stock will enjoy a run. The company will no longer be in a "closed period" and may well take the opportunity to "buy-in" a line of stock, as well as offering a tender to shareholders.

I can't see any reason why there should be any nasty surprises, but in these markets, share price weakness makes me a little nervous.

Yet another property company succumbed to a takeover this week, namely Grantchester. I am sure further consolidation, in the sector, is going to happen. Lets hope CLS is one of them.

All IMHO and always DYOR.

tiltonboy

[skyship] 15/8/2002 16:25

Tiltonboy - likewise, I await the next set of Interims with keen anticipation.

[tiltonboy] 14/8/2002 14:13

Skyship,

Some very informative and helpful posts.

I have also done some limited research on the company, and concur with your findings.

I have made this one of my core holdings for clients, and though I got the timing wrong( started buying them at 250p) I am happy with what I see. We previously held, and did well out of Saville Gordon, which was our previous Property play.

In these difficult markets it is difficult to find value. I believe this is as close as it gets.

You mentioned about the Mortstedt family not taking the company private. In fact, they are, by stealth. It will be a long process, but each time the company buys in shares for cancellation, their stake grows. Folkes Group(another successful play) did the same, but ended up mopping the balance up in one go.

The results can not be too far away now. I await with interest.

Any other good ideas?

tiltonboy

[shawzie] 06/8/2002 23:24

Skyship
Your posting is as usual interesting and although I have made good capital gains over the past 3 or 4 years in British Land, Brixton and CLS Holdings I have pulled out of the property sector. I did have a holding in Citadel at one time but when CLS Holdings bought out the minority shareholders in Citadel I actually lost on my investment.
If the share price continues to decline do you think that the Mortstedt family
will take the company private and delist? In which case there may be no mileage in investing in this company.

[skyship] 27/6/2002 17:34

This market shake-out provides all sorts of buying opportunities for the long-term investor with a CASH cushion looking for a home. To buy this week is not necessarily foolhardy; after all Warren Buffet himself favours buying into sharp falls!

I remain very much a commercial property bull, as I have often explained on other threads (the reasoning is linked to Pension Fund Asset Allocation). To my mind the recent fall in the Real Estate index is a healthy retracement back from the overbought 2500 level.

One particularly attractive stock - CLS Holdings (CLI) - has actually pulled back by 14% from 260p to the current 223p. At this level it stands at a 39% discount to the historic (31/12/01) 365p NAV; and a 44% discount to a concensus 400p NAV for the end of this year. Each year the NAV is marginally enhanced by the policy of share buybacks instead of dividends - these give a yield equivalent of 5.4%.

However, even though the "FRS 13 Fair Value" adjustment knocks 16p off the NAV, I believe that concensus figure will be left far behind. ING Barings estimate 416p, but even that doesn't allow for:

1. The effect of the Euro appreciation on a property portfolio 42% on the Continent (France-22%; Sweden-20%; UK-58%)

2. The likely rise in commercial property values in H2

Having such a high %age exposure to the Continent is now viewed by many property companies as a significant benefit. Property yields are considerably higher across the Channel; and the sector as a whole is viewed as "under-played". It is interesting to note that of last year's £30m revaluation surplus 36% came from France; 39% from Sweden; and just 25% from the UK.

Being a family controlled company, CLI has historically traded at a larger NAV discount than its peers; however the Swedish Mortstedt family adopt a far more open and approachable policy than their British counterparts. Also, CLI is a freely marketable stock being now quite a large company with a portfolio value of Gross £728m and a Market Cap of £224m. The 76 page Annual Report is commendable in its detail.

With gearing @ 102%, I have a personal target of 425p for the y/e NAV; and a share price target of 300p as the NAV growth becomes apparent. For me this is a core long-term holding. With solid support back in the 200-220 range, the potential upside shows the right sort of multiple to the downside risk. A safe BUY.

[shawzie] 24/4/2002 12:34

skyship
thanks for your helpful comments

[skyship] 23/4/2002 13:34

shawzie - By & large earnings for property companies are pretty irrelevant - you need to be sure you are comparing like with like, as profits can vary enormously according to the timing of "Trading" property sales. You need instead to look at the declared diluted NAV and the timing of asset revaluations so that the NAV you are seing is a realistically "true" figure. If you look at the DJAN thread for instance, you will see that a substantial part of their property portfolio is only revalued once every five years!

Also be aware that the NAV discount for family controlled property companies (CLI, CNP,DJAN, TOPS etc)will inevitably be far higher than the larger, infinitely more liquid companies. Though I personally think that increasingly these companies are going to have to take more notice of minority shareholder wishes; and they may well even begin to question the need for a public quote - hence buy-ins may be on the cards.

Most of the information you will need is here on the ADVFN threads & NEWS. But do also contact the company for a copy of the last Annual Report

[skyship] 19/4/2002 14:51

CLI up today on both the increased tender price and the IC "City Views" piece. This latter states that ING Barings are looking for a 416p yr end NAV (v. current 365). Even allowing for a 16p reduction for the "Fair Value Interest" adjustment, this would still compute to a 38.7% discount @ the current 245p offer price. IMHO the 31/12/02 NAV will be slightly further ahead in view of the continuing "private investor" inspired rise in commercial property values. So I take the view that the NAV discount is still 40% at the current price.

A good long term BUY, esp. if you want some of your assets more closely tied to the EURO.

[cat] 19/4/2002 09:40

interesting statement today and some big buyers appearing.

[oldgeezer] 15/3/2002 11:31

Been holding these for a couple of years now @184p.
Its been somewhat frustrating seing the price rise and fall, however i believe that it is now gaining some recognition and with increased rents and revenues this will move above £3.00 in the medium term (imho).

[artois] 15/3/2002 11:09

Rich indeed it must and therefore is extremely important to make fellow investors aware of this grossly under valued company.

Regards
A

[richshi] 15/3/2002 10:47

it must be sheer co-incidence that your comments co-incide with the publication of Trader quoting those exact same statistics amd comments yesterday!