Melrose Industries Share Discussion Threads

[typo56] 09/8/2016 08:15

MRON

When in doubt, stick an 'N' on the end (and miss out a vowel if it's a four letter ticker).

[miti 1000] 09/8/2016 07:55

what is the ticker for the nil paid rights ?

[sogoesit] 09/8/2016 07:39

Not forgetting, of course, that there is the other side of the coin:
Take profits and sell out all together (old shares plus Nil Paid Rights).

That evaluation will depend on your original purchase cost, net of returns, compared to returns on the sale compared to view of current value versus forward returns. In my case original cost, net of returns, has been 290p/old share. There is, therefore, an incentive to sell-out as well!

My quick estimates of current "fair value" (at £1.30/USD), based on EV:

Nortek: £2.230 billion
MRO post rights (theoretical at current 780p/old share):£2.786 billion
Less Brush at 300p: £0.819 billion
Net of Brush: £2.567 billion
"Surplus" currently attributed to Nortek: £0.219 billion (or 11.6p/share).

(Barring mistakes; feed-back appreciated).

Question: does 11.6p give fair value for future prospects on Nortek (i.e. could share price move further up)?
See Nortek's Q2 Report issued yesterday for clues.

DYOR

[bscuit] 08/8/2016 14:23

On the face of it taking up in full looks a good investment suggesting a post take-up in-built profit and a good market perception for the future?

[typo56] 08/8/2016 14:12

It may be more than a small rump, given holders will have to find 1140p per existing share in order to take up their rights in full.

Lapsed rights normally seem to get placed at a fair price. I'm not sure you'd be any worse off than selling existing shares to fund taking up the rights. Probably just down to luck in the timing.

[steeplejack] 08/8/2016 12:20

"Or you could take up all the rights you can afford and let the rest lapse? "

Yes,some will do that,hence you can expect a small rump to be placed with institutions when the rights concludes.

At 765p,you're looking at the nil paid opening at somewhere around 51p.

[ursus] 08/8/2016 10:57

All well with you I hope, Miss Jones. Will you be arbing away when the rights are tradeable?

[typo56] 08/8/2016 10:25

sogoesit: "Expect to take-up but will fund part from sale of some rights."

Or you could take up all the rights you can afford and let the rest lapse? With MRO currently at about 760p you might expect to received at least 50p per nil paid rights share? Prices will of course change at bit by the time they are fully paid.

[steeplejack] 08/8/2016 08:40

It's surprising that buyers didn't finesse their purchases by waiting for the nil paid to float.Afterall,it would be marginally cheaper and there shouldn't be any shortage of stock given the it's a 12 for 1 rights.However,clearly the institutions have been caught short and didn't reinvest all the returned cash in the months before the deal was announced.When the dust settles,I'll be fascinated to know what sort of rating the stock stands on.I remember in the 80s,anything BTR did (led by Owen Green and Norman Ireland) was applauded with sharp share price rises.Of course,Jock Miller used to work for Hanson who similarly enjoyed star studded status.What goes around comes around.

[meanwhile] 06/8/2016 22:56

In response to ali47fish, if we had the ability to answer this question of timing correctly, we would be millionaires already and unlikely to be posting on this site.

[sogoesit] 06/8/2016 17:20

Rights theoretical pricing for current 680p:



These are respective prices assuming current valuation of 680p attributed to the company (including an assumed pricing for the value to come).

Theoretically the Nil Paid rights should trade at 45p.

The only way you will be able to judge the value is to analyse Nortek and what they will do with it in the future. They say they expect to extract a better than 20% IRR so you can use that to judge the returns from its current state.

Alternatively you could say that at 95p the rights discount of about 30% is appropriate and anything better than that, i.e. an ex-rights price of less than 140p approaching 95p would be a better deal than the current valuation.

[ali47fish] 06/8/2016 13:08

i am none the wiser from the comments above - can someone say when it is likely to be best to add to a holding- on x rights day, before or thereafter? many thanks from anyone who understands how this works?

[sogoesit] 06/8/2016 12:30

Action kicks-off next week for the nil paid rights on 9th.
Expect to take-up but will fund part from sale of some rights.
In all honesty I cannot figure out the value attributed to the shares now; so the nil paid rights premium is going to look pretty hefty to me and tempting for partial funding.

If, as you say ursus, there is a sell-off ex-rights then that might be a better value timing to purchase.

[bscuit] 04/8/2016 01:09

Well I have held through two disposals and doubled my holding on the announcement as I expect to be rewarded in the long term so a short-term markdown doesn't worry me.

[ursus] 01/8/2016 11:54

Well - I'm continuing to hold and intend to take up the rights. But I have a lingering memory that there was quite a bit of selling when it last went ex rights... Anyone else recall?

[eipgam] 01/8/2016 11:35

£7!!!

Who would have thought it when the share price was rattling around at £2.65 ish not so long ago. I sold at £5.53, so missed out on a wee bit but not too much compared to the ROC's I've enjoyed.

[dav1dc2] 15/7/2016 06:35

Ref. 1703; timetables and the figure of 68% plus are referred to in the prospectus.

[meanwhile] 14/7/2016 19:00

Same here, Steeplejack. Sold around half mine at 540-560, too soon.
However, we need to just think that having done this, the higher they go, the more we make on the ones we kept and the new shares we take.

[steeplejack] 14/7/2016 10:03

Mesmerising stuff.Thought I'd been clever selling some of my holding in the run up to six pounds.Not so.The shares are walking on water.

[sogoesit] 14/7/2016 09:21

Yes, steeple, MRO's historic IRR on investments has been over 20%; not a bad return for relatively low growth (secure) type of industry they invest in, coupled with USD protection against GBP.

Also maybe many are holding their cash return for re-investmet at the rights issue, as I have?
I will probably part sell some of my rights, 'tho, to finance my re-investment depending on the premium.

[steeplejack] 13/7/2016 10:06

Quite a leap in the stock this morning.The assumption must be that the institutions have been caught out by recent news.Oodles of cash returned to shareholders some months back has yet to be reinvested in Melrose stock and they're buying back in to get those rights pre the record date on the close of business on 4th August.So,you have something of a perfect storm for a firm share price which is unlikely to abate before the rights is done and dusted.

Dealings in the nil paid commence 9th August.

[sogoesit] 11/7/2016 11:21

Thanks for thoughts M/W.
I thought I read in the prospectus that 68+% of shares are (irrevocably?)locked-in to sell to MRO by principal shareholders but haven't seen details of this agreement.