Melrose Industries Share Discussion Threads

[gettingrichslow] 01/8/2020 18:29

You didn’t answer the first two questions of course. You never do. I wonder why?

[minerve 2] 01/8/2020 18:15

I'm making the right calls _most_ of the time. But seeing as you, thankfully, don't live with me, you will not see that.

[gettingrichslow] 01/8/2020 18:11

What exactly was the uneven risk/reward judgement I was making when I exited MRO as we entered a global pandemic? That judgement was what’s known as common sense. And it was the right call.
What exactly was the ‘home run’ I was trying to hit when I bought gold instead, a well-known safe haven? That was the right call too.
The reality is Minny, that for all your waffle, you haven’t made the right calls have you?

[gettingrichslow] 01/8/2020 17:25

You don’t need to ‘keep reminding’ me of anything Minny. When I sold out of MRO on 02 March I was making a risk/reward call and it worked. When I bought £200k of gold ETFs in May I was making a risk/reward call and it worked. Seems like your judgement is a bit ‘out’ so maybe instead of waffling on about DCFs and WBSs and reading books about steam engines you should focus on making some more successful judgements? We are all here to make money after all aren’t we??

[meanwhile] 01/8/2020 17:07

Now, come on now. Come on. Now, now on.

Why can't we all just get along?

[minerve 2] 01/8/2020 15:47

Reference AA:

Agreed Essential.

Having said all that though it has all the Hallmarks of a sustainable competitive advantage. Also, it isn't a typical company in which administration - forced by creditors - follows the typical path. It is what is called a Whole of Business Securitisation (WBS) where control passes to the debt holders - and not the administrator (in this case, not sure about others) - who are motived in keeping the business as a going concern. I actually think this reduces chances of rights issues and total loss for equity holders as the bond owners will just extend debt maturities for their increased cake in the future. As I keep on reminding getting it is all about return vs risk. AA could easily be a 400%/500% return on a lower risk of total loss than what a brief analysis may suggest.

[essentialinvestor] 01/8/2020 15:32

The primary issue with AA is and has always been, the net debt. PE geared up the balance sheet and sold the business. It's a well worn path.
The business itself is arguably solid, but they were hugely hampered by their borrowings.
It increased operational gearing of the business, meaning any revenue reduction
would have a disproportionate impact on the P&L.


Bodycoate gives exposure to the same markets MRO service, however they are an added services business(heat treatment) rather than a primary manufacturer. Unlike MRO they have both negligible
net debt and pension deficit. May be worth a look sub £4. Very well run, but they are still between a rock
and a hard place atm.

[minerve 2] 01/8/2020 14:55

By-the-way folks, I started to read the book on GKN I bought a while ago. Very interesting couple of first chapters so far. Based around Merthyr Tydfil they were one of the most productive iron works in the world. Reading the history of GKN the first chapter of its life is liking reading the who's who of our industrial revolution - particular steam power. GKN had a private tram way using the world's first steam locomotive invented by Richard Trevithick. They installed one of the first steam driven bellows using a steam engine invented by Boulton and Watt. They consulted with Isambard Kingdom Brunel on rail roads and were one of the main suppliers for rail in the UK and exported to Russia as well as the US. Interesting stuff. And they were about to lose it all because of a landlord until he died shortly before the lease ended.

And all that effort over 250 years down the tubes for it to end-up as cash cows for three amigos who are not even fit to tie the shoe laces of those giants.

Great, wonderful.

[minerve 2] 01/8/2020 10:48

getting

I've been doing this for 30 years. I don't get them all right, and neither do I profess to. When I was a business angel I lost £500,000 once so small holdings that might not work out in my portfolio don't really hold me back that much financially or mentally. If you don't make mistakes you will never learn. ;)

I don't really need you to teach me anything getting. I learn from the essays and words of Buffett, Munger, Lynch et al.

I think you should stop socialising so much and get your head in some of these books during weekends. You will suddenly start to realise how stupid you sound.

[gettingrichslow] 01/8/2020 07:47

Yet it’s exactly what has been happening isn’t it? The share price HAS continued to drift lower in the absence of any clarity of outlook! And what’s more, gold HAS continued to reach record highs exactly as I predicted. And Amazon absolutely CRUSHED the forecasts that you would have had plugged into your discounted cash flow calculation didn’t they?! So, yes, perhaps you should be following this type of view Minny? Alternatively, you could keep buying dogs like Kier, AA and Rolls Royce! Hahaha

[minerve 2] 01/8/2020 00:15

Ah, yes, I can see now where I could be going wrong. This is the type of quality instruction I need to be following from now on:

“I don’t think you could say that it’s not a buy at any level, but I suspect it could go quite a bit lower until we get to a point where there’s some sort of clarity of outlook. While the forward guidance is non-existent it’ll probably drift lower in my view. Of course you could get lucky with a punt, but if you’re going to do that you may as well bet on dog number six at Walthamstow.”

ROFLMAO!

It won’t make me the millionaire that I currently am but it will go along way with my Little Englander gammons down the pub at the weekend.

Guffaw guffaw.

[gettingrichslow] 31/7/2020 17:37

Minny, I’m impressed that they taught you about discounted cash flow analysis at Pontypridd Poly. Would’ve thought you’d have been learning how to wire plugs and that sort of thing in a Poly. But as you know, in DCF analysis, the present value that you arrive at is only as good as the numbers you put into your spreadsheet, and those are only forecasts. From my experience of you, your judgement isn’t great when it comes to interpreting broker forecasts or a company’s own forward guidance. In other words you get a bit ‘led’ by others with their own vested interests rather than thinking independently. No offence, but that could explain many of your poor decisions and why you’ve become so bitter and twisted.

[gettingrichslow] 31/7/2020 17:23

“Something smells bad in here now.”

Yes, that’ll be since Minerve returned!

[npp62] 31/7/2020 16:15

I'm out at a loss. Something smells bad in here now.

[minerve 2] 31/7/2020 14:52

getting

AA has always been a play on a pseudo debt for equity swap and in that regard there is no change. If you think the sustainable competitive advantage of the AA isn't damaged sufficiently enough by its debt the opportunity is still there.

Kier is a turnaround stock and in that regard there is no change also.

They both offer prices below intrinsic value if AA pays down its debt and Kier continues on its path of turnaround.

With Rolls Royce its share price also offered price below intrinsic value based on projections of flight numbers going forward and its improvements within including computer simulations of engine improvements and its new range of engines moving away from being loss making at point of sale.

I was a computing/electronics/general engineer before being a full-time investor, so I know about these things! ;)

Of course COVID has thrown a spanner in the works.

With your investments it has ALWAYS been 'be part of the herd'. I bet you don't do any thorough business analysis of the underlying shares, if you do it is not enough. I bet you can't even compute simple DCF analysis.

You rely on the Greater Fool Theory which looks marvellous when the herd is in full swing - empowered by QE, serial low interest rates and silly government handouts. Just wait until the magic money tree runs out of steam and then watch your favourite shares look for their intrinsic values. You will not be able to see that originating in a Chinese province, it will just happen.

Terry Smith you momentum traders are not. He is unique.

You know there is one side of investing that you numpties always seem to completely ignore! That is risk. Return should always be measured by the risks you take. Most of you herd numpties take on more risk than you realise because you have no idea of what the real assets and cashflows should be valued at. You only realise the risks you have taken when it is too late. You never know, you might be one of the lucky ones who never gets to learn the lesson. Some how, I doubt it though.

I've seen your type come and go over 30s years of investing. I'm still here and I'm still doing well. Better stop being a prat, pretending to be something you are obviously not, and start learning from the pros.

[gettingrichslow] 31/7/2020 10:55

But you’ve also thought the market has been wrong on numerous other shares too Minny. The AA, Rolls Royce, Kier etc - the list is almost endless - yet the market was right on those wasn’t it? And your holdings collapsed as a result.
Moving into online giants and gold is hardly hindsight by the way - we were in a global pandemic for Christ’s sake when I moved into both of these safe havens! Is it really a surprise that they have both shot up? I don’t think so!

[minerve 2] 31/7/2020 10:26

"The market is up if you’re in the right areas Ammu - SGLP, AMZN for example..."

Define 'right area'. To you it just seems the hindsight view of recent momentum.

My definition is in shares of value not in shares that rely on "The Greater Fool" theory. IT is very easy to look like a clever investor when you are sat in the herd making money. One day the music will stop, the greater fools will disappear and then you will be left with an asset that is overpriced relative to the forward cashflows it will bring you. The market will come to its senses and the share price will adjust downwards. Some of them in large downward movements.

Give you an example. Imperial Brands currently yields 10% dividend. More importantly, the asset is generating 20.83% FCF per share to shareholders. That means if the stock market closed tomorrow - and assuming tobacco sales hold up medium term - shareholders would get back their initial investment with free cash flow in less than five years. Anything over that is forward profit. The tobacco revenue pool is actually expected to grow going forward because of NGP. So I think it is one of the best investments on the FTSE ATM. Do the herd think so? No. They buy into other stocks where forward sales are generally unpredictable but they are the glory boy shares so who cares? Wait for the greater fool right?

[gettingrichslow] 31/7/2020 09:57

The market is up if you’re in the right areas Ammu - SGLP, AMZN for example...

[scepticalinvestor] 31/7/2020 09:04

that 13k buy at 87 odd is mine.this is a lovely share to trade

[ammu12] 31/7/2020 08:59

So gettingrichslow shows his face when markets goes down and melrose follows lol....

[gettingrichslow] 30/7/2020 23:43

You win some you lose some Minny. I acted pretty early on Burford too after the MW attack. Bought back in the low 300s. But what about gold eh? Not bad - $1,500 an ounce in March, now $1,960?

[minerve 2] 30/7/2020 23:31

Shame you didn’t have the same prophecy with Burford, eh?

LOL!

[gettingrichslow] 30/7/2020 23:26

I’m not sure which part of what’s happened so far with MRO is something anyone should be surprised about? Let’s look back at what happened. The coronavirus story started emerging in mid-January. By mid-February it was the main news headline. It was already pretty obvious at that point that there was a really big problem brewing. Wuhan was in its lockdown, cases were popping up in ski resorts, on cruise ships etc. At this point, the share price was still c.245p!!
A week later I was in a pub in London watching the news where every single item was about this virus spreading fast and engulfing Iran and Italy. I sold all my MRO the next day at between 214p and 204p. Everyone I was with that night (all experienced investors) agreed at that point that airlines and anything related would be stuffed and that this virus was clearly becoming a pandemic with disastrous consequences. So I do struggle with anyone saying this was hard to predict??