Fisher (james) & Sons Share Discussion Threads

[illiswilgig] 07/6/2021 11:50

Hi Boule,

Sorry, not yet seen today's yo-yo. So can't comment. Been busy with my head deep in company reports.

I think the 22% stake referred to by Elsa is the Sir John Fisher Foundation, a charity established in 1979 by Sir John and Lady Maria Fisher. The charity funds charitable endeavours primarily on the Furness peninsula. I don't know if any of the Trustees have any family connection, it's not clear. Seems unlikely given today's rules on Trustee's but even if they are their activities are very much regulated by the Charities Commission (the latest report to 31st March 2020 is available on the charities commission website). The foundation does meet with the company directors twice a year, after the release of each set of results. Again likely very much constrained by the rules for both company directors and charity trustees.

If any family members are still shareholders they are well below the 3% declarable limit as the company website lists all major investors down to Mawer investment management at 2.18%

According to wikipedia the company listed in 1952 and since the 1960's the company has been managed by directors with no links to the family.

For what its worth my opinion is that the charitable foundation is a good thing. Whilst its trustees cannot directly influence the company board I am sure that the board is mindful (in todays jargon) of the dependence of local charities upon the companies dividend - likely to have something of a restraining effect upon them, possibly explains the relatively quick return to dividends and helps to prevent an opportunitistic takeover bid at a depressed share price?

I can't answer your question as to why the share price is so low, and has not recovered. It's been going down whilst others have been going up - which doubles the pain?

Lack of news flow is one possibility. As Elsa says the upcoming capital markets day could be an opportunity for that to change. If I was managing the company I'd want to have some good news to release around that time?

What they need to do to revert to a rising shareprice trend is crystal clear, and I agree with Rosemary Banyard on this - they need to reduce debt and invest in their most profitable businesses to reverse the decline in ROCE which has been apparent over the last few years?

Over many years the company has a great track record of acquiring companies and profitable growth. They have exited low growth markets and entered higher growth markets. Most recently turning around the offshore oil division. In the last couple of years they spent relatively large sums on very poor acquisitions in the marine support division (which I called out at the time). These have been completely writen down but resulted in debt ballooning from 120m to 200m in the recent results. That has to be fixed.

I don't blame the new management for this. The acquisitions were made in early 2019 and the new CEO joined in October 2019 well after poor decisions were made. And immediately announced a strategic review. Which to me is code for Oooops!

6 months later the world shut down and oil price halved. I could suggest that to come through this with such high debt without going bust or having to raise more capital and restoring a dividend so swiftly (though I would prefer that debt is paid down - as I see this as key to the shareprice rising) is to the credit of the new CEO. Long story short. It could have been much, much worse! It's also to the credit of the performance of the companies that make up James Fisher which gives me optimism for the future. The FD and the Chairman who also took part in the failed acquisitions have also just left which I believe is a good thing. The new management should now be able to reduce debt and invest with a much more objective eye?

Sadly. This can't happen overnight. But a clear and measurable plan to do so coupled with a little bit of good news could easily have the shareprice back up to 1200p.

In the meantime I am looking for a good price to buy a few more in the next couple of weeks, very tempted right now, but holding out for a little lower. As I've consistently bought this stock too quickly in the past (my purchase last year at 750p excepted). It's trading on 11.7x FY22 earnings, which pretty much tells me the market is discounting a return to growth, and the broker forecast is for 1314p shareprice which is why I think it could rebound quite swiftly when (if)good news arrives.

cheers

[bouleversee] 07/6/2021 11:02

Thanks, Elsa. Good to know thst my memory isn't even worse than I realised. Isn't there also a charitable trust that the family set up with Fisher shsres which they presumably control and will want to do well? It isn'all that longbsince a family member retired from the board, is it? He presumably still has shares.

Ilis: I think my previous post makes clesr my concerns. I don't understand why FSJ is doing so badly compared with other holdings who were badly hit by the pandemic but have recovered a lot since. I wonder what today's yo-yo was all about.

[illiswilgig] 05/6/2021 10:36

Hello boule,

Hope you are well?

You asked for it, and I am happy to oblige......

'You are wrong and just depressed.'

There. Hope that helped?

Though sadly I rather suspect it didn't.

May I enquire what leads you to be so disappointed with the new management? Would you be happy if the shareprice waa higher or is this something the new management has done or not done?

Also which remaining family shareholders? I am not aware of any.

I do share your concern with the current shareprice. Though I try to see it more as opportunity than disappointment. So far I have been very poor at calling the bottom. I am convinced that on one occasion I will be right.........I just don't know how many more times I will have to try....

cheers

[elsa7878] 04/6/2021 21:48

Capital day. End of the month. Time for them to show us the light.

[bouleversee] 04/6/2021 20:17

They seem to be more concerned with dishing out huge amounts of free shares to the directors, incentivised from present extremely low s.p.. than doing anything for investors or communicating with them in a reassuring way. Am extremely disappointed with new management. Clearly no longer a family firm. I have been extolling its virtues to friends and family for years and feel very let down. I'd love to know what remaining family shareholders think about them. Of course, it could be a deliberate ploy to manipulate the share price lower in order to get their LTIPs starting from the lowest possible figure. Tell me I'm wrong and just depressed.

[r2oo] 29/4/2021 07:45

Some nice large buy trades going through on the news this morning.

[illiswilgig] 29/4/2021 06:48

Yes, I've had that sinking feeling recently - it will be interesting to see how this 'steady as she goes' statement goes down.

Great to get some feeling for the type of new contracts being won - as there has been a dearth of RNS statements. A difference between the old management and new perhaps? But then I prefer underpromising and over-delivery.

As they are in the middle of rationalising marine support - selling or restructuring some operations - it makes sense to hold back a little and perhaps we can expect more news flow once this completes?

I sense that this year is going to be one of consolidation - FY22 could be the one to watch for?

cheers

[elsa7878] 29/4/2021 06:39

In line with the March statement. Q1 seems weak on the revenue side but I guess we were back into lockdown and the prior year they were only for the last week in March. 15% fall mirrors revenue reduction across 2020 so not weakened. Agree forward statement looks more promising.

[our haven] 29/4/2021 06:34

In line with expectations I see that the results are for Q1. However the pipeline with new contract wins looks very promising. Hopefully market will like, I do.

[roddiemac2] 19/4/2021 11:09

Time will tell. I think it is worth remembering that the sea is the last frontier , and that many of the specialist services that the Co. offers are in long term growth areas.

[bouleversee] 16/4/2021 17:59

Thanks, Illis. I shall try to be optimistic. Let's face it, it's not going to make much difference to me personally anyway. It's just those grandchildren trying to get on the housing ladder in a few years time I worry about, and don't like to see the shares I have given them lose in value. At least I had a good dividend from Rio today which will be a great help in paying the bills. Have a nice weekend.

[illiswilgig] 16/4/2021 17:20

boule,

to be fair - when asked what was the most risky share she held - she answered that she only had 6 shares with any debt, then said that James Fisher was one of the most risky as it had made some bad capital allocations and needed to reduce debt by selling underperforming businesses - which she said she thought it would achieve.

She didn't actually say it was THE most risky. She clearly doesn't do high levels of debt.

You could see it as good that she invested in Fisher despite its high levels of debt and that she thinks it will get its act together?

Take your pick

With respect to selling - yes a lot harder than buying!

cheers

[bouleversee] 16/4/2021 13:03

I haven't looked at the video yet but did read the podcast summary and noted that she regsrded FSJ as the most risky. So sad to see what has happened to what was my best investment. When will I learn to take profits before they disappear instead of falling in love with the holding?

[illiswilgig] 16/4/2021 10:43

Tomps - thank you. A fascinating interview and well worth watching the whole thing. I use Piworld quite a bit now but probably would not have had reason to watch this without your prompt. Thanks.

I agree with the concerns expressed over FSJ level of debt and some recent capital allocation decisions. And what remains to be done to reduce debt levels - probably getting rid of some businesses - to focus upon the growth areas.

To be fair they were the decisions made by the previous CEO - yes those dive boats I keep banging on about, and the middle eastern fiasco - but who did also achieve a lot but things went a bit off piste in his last year or two - and the soon to be ex-chairman who should have been able to do a much better job of steering the strategy.

What I find positive is that she invested in Fisher despite the debt concerns - so she must she something there that she rates highly? I note that Fisher is not one the top10 holdings in the fund - but large enough that the rise in share price in February was the largest positive contribution to the fund in that month according to their latest factsheet.

cheers

[tomps2] 16/4/2021 09:06

James Fisher (FSJ) mentioned at 32:40 in the latest Piworld Interview by Rosemary Banyard which, she holds in her VT Downing Unique Opportunities Fund.

Watch the Video here:

Or Listen to the podcast version here:

[illiswilgig] 14/4/2021 09:51

Actually the shareprice has been in a down trend for a month now having peaked at 1270 on 15th March.

I'd expect around 1070 to be the low of the current cycle - in the absence of bad newflow and accordingly I've bought a small tranche on top of my core holding in the expectation of a short term rise on positive newsflow.

But it could go either way, we'll see, I have habit of timing this kind of thing wrongly.

cheers

[bouleversee] 13/4/2021 21:45

Rather strange goings on re Kilpatrick's departure being so abrupt that the AFM agenda had to be altered. What do you make of it all, Roddie and Illis? I have to say I have rather lost confidence in the company and the market doesn't seem to be giving them much of a backing either.

[our haven] 15/3/2021 15:33

Very good day today. Onwards and upwards with the new team

[r2oo] 14/3/2021 19:19

A classic case of what the great Peter Lynch coined as Diworsification.It has some great underlying businesses so we can just hope the new CEO and CFO strip out the dead wood and focus on what they are really good at and the more profitable segments.

[illiswilgig] 13/3/2021 10:40

Hello Roddie,

Good to hear from you and all good points.

In my view the board and the CEO - having just completed his first full year, and what a year - are carrying out a kitchen sinking exercise. Getting all the bad numbers out in view, and potentially being over conservative. But thats no bad thing if it means that more bad news is less likely once the good news starts to flow? I would do the same in their place.

The bad debt provision and the write down on the dive support vessels are a part of this exercise?

In the 5 years to 2014-2019 (not including the recent results) revenue has grown at 7% whilst eps has only grown at 4% a year - the wrong way around? Profit margins have fallen from 12% to 7% and the return on capital employed (ROCE) from 17% to 8%. At the same time net debt has more than tripled from 62m to 199m.

We have been repeatedly told by the board that it's all sorted - but it hasn't been.

If that makes me sound negative - I am not. I am surprisingly positive. I think the group comprises some great quality businesses in growth markets with leading technologies and people.

But how to square this with the worsening perfomance figures?

It seems to me that the best businesses are at risk of being suppressed and starved of cash and capital by increasing levels of 'bloat' surrounding them? It has been clear for a couple of years that investment decisions in marine support have been off the rails - just by the effect upon margin and return on capital contained in the reports. Fixing it seems to have been more difficult than expected as well?

I have read the CEO's report in some detail and agree with his strategy - as far as it goes at the moment. The pandemic provides the CEO with an opportunity to turn the ship around and overhaul more radically than would normally be the case? This is happening across many industries. In which case I anticipate/expect that a leaner, more efficient group will emerge in the medium term.

The new CEO is due to be joined by a new Chairman shortly - I expect the focus on the key performance metrics will only be enhanced by this.

I will be watching progress and news flow very closely for signs of success,

cheers

[roddiemac2] 12/3/2021 13:50

Hello illis,

Positive news flow:-- I note that they intend to explain their strategy in the first half of this year ( Capital Markets Day ), So not too long to wait for that.

It seems clear that they are considering divesting themselves of some of the less profitable parts of the business. They have made a large impairment charge against the two dive support vessels bought in 2019.

The £17m goodwill impairment ----Does that suggest they might not get paid for some of the money owed to them ?

A positive note :-- The fourth quarter was 7% above the previous quarter

Decommissioning gets mentioned several times. We discussed the scale of decommissioning rigs in the North Sea some time ago.From memory, decommissioning involves the government encouraging the necessary decommissioning through a tax incentive . The government is not in a good place to do that now--?

Take care

[illiswilgig] 11/3/2021 12:58

Results.

First impression? Glass half empty. Seems a bit disappointing, even though the figures are slightly less worse than they could have been.

But on further inspection I can see indications that the glass is actually half full.

It's not really a surprise that parts of the business had grown increasingly inefficient and mistakes had been made in capital spend.

The pandemic has probably brought some of this forward, and made some of the damage more visible than it otherwise would have been? Perhaps thats made it easier to drastically prune where necessary which should mean a more efficient group emerges capable of investing more capital where it can grow more sustainably.

Even the lack of a final divi is a good thing if the cash is better put to use patching the holes and reinflating the balance sheet to allow more acquisitions. Though lets go back to the profitable ones with leading positions in niche markets now please?

Also has something of a flavour of a 'kitchen-sinking' or perhaps I should say 'dive-support-boat-sinking' exercise. In that we've had all the bad news - but just the tease of better things to come?

So overall, slightly disappointed, but not surprised and just a little bit pleased with the approach being taken to the strategic review and future allocation of capital.

Though there is plenty of good news in the price already - currently trading on 24x statutory profits (exc exceptionals) and you can see why they like to use adjusted figures - more like 14.5x underlying operating profits.

Need to see some positive news flow sooner rather than later, otherwise this will just be treading water for a while?

cheers

[dodkins] 11/3/2021 10:30

Decent results? I can't see any reason this won't get back to pre-COVID levels in 2021, and well beyond given the oil price expectations for a next cycle.