Melrose Industries Share Discussion Threads

[tournesol] 16/3/2020 09:43

Getting/Yertiz

I got caught out by the .com crash in 2000/1 and lost 66%. (In my defence, I had delegated management to an advisor and was very ill at the time, so perhaps I should say "he was caught out" but it was definitely me that lost.) Hard to come back from that but I managed it through good luck and hard work.

I was caught out by the 2008/9 crash and lost 50%. I was over confident and under-cautious. My own fault that time. By that time I was already dependent on draw-down, so partly because of that, and partly because of having less good luck and doing less hard work, my portfolio has never regained its pre-crash level. (If you factor in the 11 years of drawing my annual living expenses, it's done OK)

As someone who invested mostly in oil companies for 20 years there have been 2 or 3 occasions since 2009 when I have sold everything and moved into cash because a collapse in the price of oil was either happening or appeared likely. I was not always right but I avoided serious losses and lived to fight another day.

With the US market seriously overvalued (according to the Buffett Indicator), with the oil price war and with CV19 looming, I went 100% into cash in February just gone. I was not confident that my concerns would be realised, but I considered it easier to deal with the consequences of selling up and then finding the expected crash did not happen, than to stay in and take a major hit. I am feeling very fortunate to have dodged the current bullet.

Who knows when it will be the right time to re-enter? Nobody can possibly know that until afterwards. But I think it could be a surprisingly long time off.

[gettingrichslow] 16/3/2020 09:05

Yertiz, For once I disagree with you. Look at the exponential curves of cases and deaths - this is becoming a calamity for the world and I don’t know why you would think MRO shares wouldn’t be collapsing as a result? My brother is a GP and one of my best friends is a surgeon in the NHS and both of them have sold everything at any price. So far they have saved 20 or so percent of their life savings as a result of their bold decisions.

[yertiz] 16/3/2020 08:16

Melrose/GKN getting absolutely slaughtered this morning. There will be an end to the madness but it's not visible yet. Media generated panic driving the herd mentality - don't let the facts get in the way of a bad news story.

[gettingrichslow] 15/3/2020 17:47

hxxps://www.washingtonpost.com/graphics/2020/world/corona-simulator/

This is really worth watching in the context of trying to judge what is happening with the virus (and therefore what the future holds for MRO) - I’d be interested in people’s views once they’ve had a go at watching the simulations. I was sent this by my surgeon friend who has also sold out of all his shares.

[tournesol] 15/3/2020 16:07

Looks to me like markets are taking a breather before falling further. It might take a year or even longer before a robust recovery gets under way.

[essentialinvestor] 15/3/2020 15:50

Bought a very small amount on Friday before the close,
but as newsflow for the airline sector appears to have markedly worsened
over the weekend, my timing on that may be very poor!.

[1jezza] 14/3/2020 14:44

Interesting change on the MRO Register on Friday with Capital Group, and 31 million shares traded. It may be that, with the disappointing absence of post GKN disposals, the Biter will be Bit.

[gettingrichslow] 13/3/2020 23:41

That’s right Meanwhile, I’m the stupid one, even though I’ve spelt out to you exactly why your understanding of rights issues is flawed. I remember explaining similar points to my nephew when he was 17 and he grasped it within 3 minutes.

[meanwhile] 13/3/2020 22:54

yertiz,

Yes, I wish we could all just get along.

But I'm afraid that 'Bargain of the Century' getting, is just so stupid in not accepting simple arithmetic around the proceeds from buying and selling shares, that we have no chance of just getting along.

[yertiz] 13/3/2020 20:48

Now now, can't we all just get along?

[meanwhile] 13/3/2020 19:53

Not even worth a comment.

[meanwhile] 13/3/2020 17:56

getting,

I'm ready to give up with you.
I will have one last try.

An investor buys 100 MRO shares at 240p in 2015. A 12 for 1 rights issue at 95p is announced in 2016 to buy Nortek. His 100 shares rise to £8 each on the news. He sells 60 of these, raising £480, to buy the rights on the 40 he still holds, that is 480 (12x40) new shares at 95p. He has a little cash residue of £24 which he banks.
When the new shares open, the MRO price is around 150p but 3 months later has climbed to £2.

At this point he has 520 MRO shares value £1040 + £24 cash. Now to my mind he's made good money. He's lost a little on the 40 old shares he still holds but he's made a lot on the 60 he sold at £8 and on the 480 rights shares, now £2.

This is all fairly straightforward.

Sadly, You've driven me to reveal your true class, in your post of 7th January.

gettingrichslow
7 Jan '20 - 08:49 - 15237 of 16811 Burford
Just bought another £60k of these at 753-755. Bargain of the century.

[gettingrichslow] 13/3/2020 17:25

Meanwhile, your post again reveals you don’t understand the mechanics of rights issues. The price you paid for the original share is completely irrelevant. Secondly, the fact that the share price rose significantly during and after the rights issue isn’t because of the rights issue itself. You seem to think that rights issues offer ‘free money’ to existing holders and that simply isn’t true. I believe that the reason you mistakenly think this is because of the use of the words ‘discounted price’ in rights issues which you seem to equate to a discount that might be offered by Tesco’s when you buy 6 or more bottles of wine! It’s a common misconception as you’ll see if you look at the RPC thread where I, and others, corrected numerous posters who then admitted they had misunderstood the terms of the rights issue. If you go on Investopedia you’ll see a whole article about this: 1. company offers ‘discounted217; shares in a rights issue; 2. Uninformed investors say ‘hey, it’s my lucky day, I’m getting something for nothing’, clearly they don’t think ‘errr...so who’s money am I getting for nothing’!!!
You’ll thank me later when you realise the dilution has actually hit you more than you realised, but if you want to stay ignorant that’s up to you - ignorance is bliss they say! 🤔

[essentialinvestor] 13/3/2020 16:59

M,you are too kind!. Hope you are keeping well.

I'm in PRU at 10.66 average - ouch!.

[minerve 2] 13/3/2020 16:55

MEANWHILE

Getting isn't still obsessed with Burford is he?

Almost as bad as me with the outsourcers! 😜

[minerve 2] 13/3/2020 16:53

Essential

"Don't laugh, I've bought a very small amount."

I'm sure, knowing you, it is a very astute purchase. ;)

Good luck with that. :)

[meanwhile] 13/3/2020 16:41

getting,

Now you be careful with your response to me on the Rights Issue. Please don't annoy me with your continued lack of understanding. If you do, I might have to highlight your much-boasted-about 'Purchase of the century' last month on Burford at 753p.

In my case, maybe Barclayshare made a huge arithmetical error in my account.
I hope they don't find it out.

[essentialinvestor] 13/3/2020 16:30

Don't laugh, I've bought a very small amount.

[minerve 2] 13/3/2020 16:28

Still plenty of pain and fear to come IMHO, Covid-19, Chinese, Russkies, Arabs and Yanks have an awful lot to answer for.




Absolutely. Completely agree.

Hold fast folks.

[meanwhile] 13/3/2020 16:26

getting,
as I've said before, you don't understand what happened in 2016.

A holder of MRO shares before the announcement of Nortek, could, on the announcement, sell a proportion of his shares, at 550-850p, (the price the existing shares rose to in the days following the announcement), to finance the purchase of the 12 for 1 new shares at 95p. So a holder who took up the full rights in this way had one old share (which in my case was bought at around 240p) and 12 new shares bought at 95p.
The old share was indeed heavily diluted by the new but if you held it prior to the announcement, then you probably paid around £2 and the dilution was fairly minimal.

This is the only explanation I can find for the £350,000 increase in the Barclayshare valuation of my MRO shareholding following the issue of the new shares and the first few month's trading, when they topped £2.
I couldn't dispute it if I wanted to because it's there in black & white.

[yertiz] 13/3/2020 13:30

This dead cat bounced fairly high this morning but is gliding gently back to earth. Still plenty of pain and fear to come IMHO, Covid-19, Chinese, Russkies, Arabs and Yanks have an awful lot to answer for. Agree with you Meanwhile on our exit from the EU madhouse. There's a disaster movie waiting to be made.

[gettingrichslow] 13/3/2020 13:13

Meanwhile, you got the new shares at 95p but to compare that number against today’s share price isn’t a like for like comparison, because you haven’t factored in the value dilution on the existing shares you held as a result of the increase in the overall number of shares following the rights issue. I’ve given you a worked example before because I know you find the maths a little tricky, but I’m happy to give you another worked example if that helps?

[sliotar] 13/3/2020 12:23

US Futures looking strong. Turning point or another bounce for the dead cat. Same old question for a high Beta stock like MRO -- Sell into strength or buy on further weakness?