Melrose Industries Share Discussion Threads

[redips2] 03/8/2015 11:55

Absolutely agree magpie .

[cisk] 29/7/2015 20:39

Haha Dozey you are right about that. If only I'd cut the losses and run the profits in the past. But time is an excellent teacher and I've learnt from previous errors...

So now winners tend to have a holding period of forever - unless the story changes of course.

Suspect the price will drift until there's news on how much debt is left and the next acquisition.

Best luck all...

[dozey3] 29/7/2015 19:47

Cisk, agreed the sale is in line with policy, and not a bad price so shouldn't complain. Just that I've sold so many holdings too early and fear that this is a case where two years down the line it will be seen to be a steal. Some people are never satisfied.... :-)

[bodgit] 29/7/2015 07:19

Cisk, fwiw, I agree your post. Clearly MRO put the Elster businesses on the radar and Honeywell have bought at what looks like a decent exit price for us. Melrose therefore had improved Elster to the extent they needed. I await the next acquisition news with interest - maybe something else in the Eurozone given the strong pound at present? Good luck all.

[cisk] 28/7/2015 22:19

Dozey, interesting comments re: Smiths. Never owned any shares so took a look.

Two standout thoughts:
1) what a diverse mix of businesses with no obvious symmetry. Why are they together?
2) all divisions have had declining revenue. And they're in supposed growth industries.
Wtf? Sounds like management need a huge kick up the backside. Saw that ex CEO of Gkn has joined so maybe that will change.

Will do more research to see if I add them to my monthly investments.

Anyway, back to MRO: I think any bid for a quoted company will end up costing too much.

Maybe bidding for a componentry company would be good. Wires, machines, equipment etc. defo something that's not end consumer facing.

Back to your comments about not getting shares in Elster spin-off: it's not MRO's MO to do that. They prefer a clean exit. I believe they were offered a great price earlier than expected and they took it. I can't argue with that strategy. I think the rump of the business is now undervalued - very dependent on how much debt they are left with. Don't write off brush.

However I'm certain of the view that they have something planned. And are releasing cash to do the deal. It's in their nature to find something and improve it. Maybe they improved Elster as much as they wanted.

[topvest] 28/7/2015 21:14

Thinking of targets. Rolls-Royce would be a good one, but probably too big.

No doubt they would do a better job than existing RR management though!

[essentialinvestor] 28/7/2015 19:36

I have also mentioned Smiths previously, that is the stand out buy for
the MRO treatment IMV, but may be too big.

[cisk] 28/7/2015 17:17

SOG, agree - I certainly wouldn't want to call the bottom - in fact I only have a very small holding in a small resource stock left...

I'm just can't see the situation where prices of minerals start to recover in the near term - cant't see the drivers.

I've held GKN and Senior for some time now - both quality companies. Good deal for GKN announced today, I agree.

[sogoesit] 28/7/2015 16:30

Sure, eipgam and Cisk, I wasn't referring to E&P companies but thinking more the likes of Fenner or Weir. But, even here these companies are highly dependent on resource prices.
Weir is down 45% over 12 months and Fenner down 55%. Would anyone be willing to call a bottom in these kinds of sectors right now where the big unknown is China?

Aviation, I agree, that's interesting. GKN just bought Fokker; announced today.

[cisk] 28/7/2015 16:30

I hope any purchase is from a non-listed company, have no interest in engaging in a bidding war.

The board seem very disciplined in what they pay - witness the Charter deal when they refused to overpay.

I suspect DIA's issues are more in terms of increased competition and not having a unique product - but I don't follow them closely any more.

Personally I would be very happy if they make the company much smaller and concentrate on a series of small acquisitions - far easier to double our money on those!

[eipgam] 28/7/2015 16:17

Thanks SGI,

£1.31 would be good. Although I am not sure they could attract that sort of money for Brush who, I seem to recall, were recently reported as loss making, or was it reduced profit?

I understand your thoughts on the oil and mining sectors. By the way, i was not suggesting E&P cos, more the hardware supply although yesterday yet another seemingly unrelated company reported reduced sales because of woes in that sector (DIA)

Their purchase may be a division of a big PLC, I suppose, like the recent Toshiba/Kone transaction perhaps.

[cisk] 28/7/2015 16:15

Sogoesit - I agree with you that those sectors are complete traps in terms of mining companies / E&Ps - a certain way to lose bundles of cash.

However supplying the machinery to keep them going can be a profitable venture, and certainly it will have a cheaper entry point than it has had in the past.

Brush will recover I'm sure, they'll take out more costs and move it into break-even / profit soon.

Personally I like aviation as a sector, maybe we'll see some action around that.

[sogoesit] 28/7/2015 15:52

What's Brush worth; maybe £650m+ (it generated £65m in "headline profit" in 2014)?
There's about £787m of debt on the balance sheet; not clear whether some of this will go with the Elster sale.
Anyway, let's say that's a wash between Brush and Debt leaving them with £3.3bn less £2bn distribution which equals £1.3bn. Which makes 131p/share pre-any consolidation, imv.

I sincerely hope they don't try and delve into the oil&gas or mining sectors, eipgam. These resource sectors are death-traps even for, or maybe because of, their poor managements. Not to mention risks that outsiders would find it difficult to quantify.

[eipgam] 28/7/2015 15:40

Investec have given a £3 tp today... anyone know if that was before or after todays news?

[eipgam] 28/7/2015 15:26

I've been reading the press.... divi maintained, although the company is now loss making with only Brush to provide revenue. Most of the pension fund liabilities have now gone (which removes a bit of doubt, I suppose). They say they are not going to be too adventurous (no ship or plane building!) but with only Brush to keep them busy (When oh when will they be able to flog that?), then they must have an idea about the next purchase.

WE should have a sweepstake...

I think they will be looking for a company that has a good reputation, but has fallen on hard times because of their market (oil, mining etc could be a sector?). There must be opportunities to buy a company that is not necessarily a sector leader but can be given the right TLC. They are obviously not afraid of competition, as taking 2 or 3 percent of sales off each of them can make a massive difference to your own company.

WG. perhaps?

[eipgam] 28/7/2015 13:00

I sort of answered your question before I read it! Brush is still left, plus £1.3bln of cash , and their debt of course.

[bigalan3] 28/7/2015 12:46

Many thanks. I remember holding Wassall - forgot to buy into Melrose - big mistake - so have got on board.

[eipgam] 28/7/2015 12:41

By their own admission, the company will be much smaller. The market is now valuing MRO (ex Elster) at 80p. The directors have, in effect, paid in excess of £1 for the same asset. I think the value is in the prospects of the board buying well again. I wish I could tell what the market was valuing Elster at before todays announcement. Then we could tell if there was a premium.

The good thing about this sale, however, is that the BOD have outperformed their indicated actions... ie we were only expecting to see Water go, but the BOD have sold the entire Elster business.

[bigalan3] 28/7/2015 12:39

What remains after Elster? Anybody tell me. Thanks in anticipation.