Mears Share Discussion Threads

[simon gordon] 16/10/2008 12:03

P.S.

The Gold Bugs are all expecting inflation (hyper), thus precious metals rise.

I think they are wrong.

[simon gordon] 16/10/2008 11:44

Hosede - like you say the CDS unwind is horrific. As the PE and LBO's deals default the CDS losses will be crippling. Roubini has gone from $1 trillion to $3 trillion in total losses. I expect him to raise this as the economic devastation hits hard. I just don't see how you can quickly reliquify and reflate when the primary assets of the consumers have crashed and their savings are at historic lows. They will hunker down and save. We are entering a different era - post the 25 year bull run. I think the fundamental point that will create deflation is that the housing market is collapsing - ponzi like - and the bedrock of consumer capitalism is withering in value. Financialisation as an industry is bust and this industry will rapidly decline in size in America and the UK. Both countries have big deficits and will be forced by their creditors to cleanse the bad money out of the system and rebuild a strong balance sheet. Deflation or inflation that is the big macro trade.

[hosede] 16/10/2008 11:25

Simon
I think Paul, Bernanke and also Gordon Brown and the Europeans are absolutely determined NOT to let it be like the 30s or the Japanese slump and will rescue anything and everything just by printing money in an attempt to avoid this. Whether they will be successful remains to be seen, but if they are then we will risk hyperinflation I read Roger Wiegand an Arch Bear if ever there was one and also Chris Laird (prudent squirrel)- he doesn't think there is enough money in the world to unwind the CDS mountain. I Find it all on the Kitco site

[simon gordon] 16/10/2008 07:59

I still think CNT is a beautiful short - I think a lot of Small and Mid Cap. fundies are hiding in it = 17x. I can see it down at £2.00. I am not short as I am not a trader.

By the way, I've got a new macro thread:



Good luck.

[simon gordon] 15/10/2008 13:05

Coming to Britain soon:

'Irish Finance Minister Brian Lenihan said he plans to raise income tax for the first time in a quarter century and slash public spending as the economic slump opens a hole in the public finances.'

----

Hi Hosede,

How are you doing?

I've gone into Cash and Long Dated Gilts.

Looking at the Yen, Euro, Dollar and Swissie.

Seems to me government debt and currencies are the only long term trades to play as the bubble explodes and trillions are vapourised.

What are you up to?

[joshalexander] 14/10/2008 11:57

hosede

Disagree.

The MER share price has been rock solid in the context of the UK Stock Market performance.

LA's are awarding ever larger contracts to fewer high quality providers.
If anything the current climate will lead to greater out-sourcing rather
than in-house provison.

The Domiliciary Care sector, in particular, will be a very large net gainer over the next few years as LA's utilise this increasingly as an alternative to more expensive residential care. Bob Holt chooses his Markets well.

Heard all this before over the years with MITIE (MTO)
all proved unfounded and MTO has continued to make many people very rich.

[polopolo2] 08/10/2008 20:51

Soon be on the up again. Minor glitch old boy.

[hosede] 08/10/2008 16:23

Well at last it seems investors are beginning to see that the massive coming squeeze in public spending means that MER may not be as immune from the bear market as has been assumed. I was right to get out - but I mistimed it.

[protean] 25/9/2008 09:52

Good to see Legal & General upping their stake to above 3%. They must have confidence in the share price continuing to rise.

[geovest] 24/9/2008 08:17

Bergster,
If you check the Annual Report (or RNS announcements) you will note that MER made a large strategic investment by buying Careforce for around £22m effective +- June 2007. Details of the reasons for acquisition, strategy etc were set out in the AR and RNS. This is the primary reason for the variances in your Q1,2,4. Q3: MER always manages their working capital very tightly, look at the cashflow statements.

[crickley] 23/9/2008 15:00

Usually the price will tell the story first since the market is a discounting mechanism.

The big fund guys with all the research capabilities at their disposal will find out miles before private investors if there are fundamental problems with a company. And in response to this information they sell. And so the price falls. Usually the PIs are the last to find out, and by this time the price has already fallen back substantially.

Fundamentals are certainly useful in telling you how the company has done to date. But unfortunately they can't tell the future since there is so much that could change to alter the situation e.g. economic conditions, sectoral conditions, legislation etc.

So personally I tend to use fundamentals as a guide to how well things seem to be going with the company, but use price action to dictate where the market is headed based on what investors are actually doing.

With MER then in my view the best we can say is that the company is doing well and that investment concensus is bullish as manifested in an upwards trending share price, which is especially notable since the overall market trend is down.

If at any stage the big guns discover problems with growth etc. then a falling share price will alert us PIs to the fact that something is amiss.

Until then, let the trend be your friend.

[bergster56] 23/9/2008 13:18

Thanks. I was wondering however, if there were any fundamental issues within the company responsible for some of the number issues above. Of course I apreciate that numbers only tell part of the story.

[crickley] 23/9/2008 12:44

If you have so many concerns, then you'd be better looking for another investment which meets your criteria.

As it stands the company is showing excellent relative strength moving upwards in a bear market which shows that the overall concensus of the investment community is bullish.

If the sum total of investors in MER shared the same concerns that you mention then the price would be going down. However since demand seems to be pushing the price upwards you can reasonably deduce that these concerns are not stopping investors from buying.

[bergster56] 23/9/2008 11:46

Hi, I'm thinking of investing in this one, but after a financial analysis have a few queries:

1. Why has the return on capital employed dropped from 30%+ in 2004 to 18ish percent in 2008?
2. Why has asset turnover dropped from over £7 in 2004 to £3.8 in 2008?
3. Regarding working capital, the current ratio has remained around 1 for the past 4 years. Any concerns there? The latest value is something like 1.22. When you calculate the Acid ratio, it actually falls to 1 exactly. Any concern?
4. Why has return on sareholder funds dropped from 27% in 04 to 11.5% in 08?

On the face of it, the company seems great. I was however expecting better numbers on closer inspection. The sales margin is also around 4% which isn't great.

Any views?

[protean] 19/9/2008 16:50

more volume at the finish, crickley. 2 huge trades at the end at 330 and well over the offer as well as a decent rise on a big volume day bodes well for Monday.

[crickley] 19/9/2008 15:51

Naked Trader has topped up again.

"Mears (MER) continues to be a great stock - not only proving defensive but going up on up days too. Nicely in profit and topped up with some more, 1,500 at 317.28. Target 350 stop 300. There appears to be some bigger buyers hoving in the background which is interesting."

[crickley] 19/9/2008 14:21

Plenty of volume going through today with a couple of large institutional trades helping things along.

Once we move a couple of pence more upwards there should be a revisit of the 340 level fairly quickly imo.

[hosede] 17/9/2008 21:44

Josh
I think it is the UK's business model which is going to be called to account not MER's!

[joshalexander] 17/9/2008 13:10

The share price has been solid as a rock as is their business model IMO.

[hosede] 15/9/2008 14:58

Whizzy1 I think the spending will continue for the moment as Labour keep borrowing irresponsibly to try to save their skins. The big hit will come in 2010-2011 when the Tories have to try and clear up the mess - unless the IMF get called in first of course

[hosede] 15/9/2008 14:54

Well at least we should soon get Merril Lynch posters off our patch!!!!!!!