Melrose Industries Share Discussion Threads

[roguetraderuk] 01/4/2022 15:18

at low end of days range doesnt look constructive to me. spx sold off so could bounce 1st of month but ft100 has held up v well today and never participated in yest downside so im wary there.

[essentialinvestor] 01/4/2022 14:58

Bought back a small amount under £1.25.

[essentialinvestor] 31/3/2022 11:55

rogue mentioned £1.21/22 yesterday on the SHA board as possible
buy areas on Melrose.

[essentialinvestor] 31/3/2022 11:43

1just, an 8% plus move in a day, as we just saw, is more likely to garner comments. There were multiple posts on the big downs days in early March, from memory.

[roguetraderuk] 31/3/2022 11:30

1justine, i wouldnt say so. staying in the mkt long term is what makes you the money. but everyone is susceptible to trying to reduce losses or compound gains when they can. doing it too often doesnt work in the long run. you try to pick your spots. besides i run a v lrg cash element to my portfolio at over 50%, so i try to generate some alpha that way.

[1justine] 31/3/2022 11:03

Interesting Psychology here. When the MRO price goes up, people pile in with comments and analysis. When the price goes down - silence. Cognitive dissonance or what?

[essentialinvestor] 29/3/2022 18:05

rogue, also out of BOY, that was under 1.300 shares.

Selling some in the hope of buying back lower will not keep working indefinitely,
so aware of that risk.

[roguetraderuk] 29/3/2022 17:51

EI, yes that or a part of rr. that overlaps. share price is an issue but not so much if deal smaller as they have cash on hand. not sure senior would be easy catch as other have tried and failed.

[essentialinvestor] 29/3/2022 17:45

GKN's defence contracts appear to be a problem area which Melrose are still
extricating the business from. I don't think that is a focus market.

Senior would be a nice size, if they wanted more sector exposure.
CEO has mentioned US HQ'd companies a more likely acquisition target,
obvs that can change.


As they are highly likely to issue shares to pay for a % of any acquisition,
MRO arguably need a significantly stronger share price first.

[roguetraderuk] 29/3/2022 17:43

EI, i sold my trade too, didnt like the us reversal which seems like it might gain legs as yield curve proper (2s and 10s) about to invert. we got a marginal invert in summer 2020 but that gdp drawdown was managed by printing. i think any recession will be technical as they will be cutting. but its something new for them to price in and that 4590 on the spx is a huge pivot. you gotta go at least 100 points higher or it wont go at all.

[roguetraderuk] 29/3/2022 17:40

yes darrin you are right gkn was bigger. and there are some areas where they work together on the engines and defence. its not beyond the realms of possibility. the thing about rr. after covid that there was the assumption they will need 1-2bn in a rights. not sure mro is able to do the bid (would need some cash element) and raise enough to provide the enlarge group with the balance sheet it needs. needs plenty of work on the numbers.

[essentialinvestor] 29/3/2022 17:17

Sold the remainder of my shares bought yesterday before the close,
hopefully can add those back again under £1.30 pence.

IF we get positive news on Russia/Ukraine talks then MRO trades comfortably Above £1.40
would expect.

[darrin1471] 29/3/2022 17:09

RR. Pay per air mile or any other service model would have been equally hard hit by covid as less flying = less servicing. These once in a lifetime events happen quite often in aviation. Financial crash, volcanoes, engine flaw and covid.
RR has a decade of visible service revenue on existing built engines which will return as flights resume. Having defense and industrial divisions helps RR survive the stormy waters. Good for the employees if not shareholders.
From memory there were activist investors calling for a shake up 4-5 years ago when RR had Trent 1000 design issues. They saw more value even when the share price was £10+(pre dilution)
As the government has a golden share there would be few buyers for RR. Backers may be willing to bankroll a MRO purchase if they see MRO management being able to realise the value in RR. Post brexit the government may be open to a big UK industrial conglomerate like GE or Siemens.
Again I am not sure, but from memory GKN was a much bigger fish than MRO when they launched a hostile takeover.
Holding both MRO and RR, I am inclined to move more from MRO to RR.

[jackdaw4243] 29/3/2022 15:55

With RR the sum of the bits will exceed the current valuation and pay as you use the engine has been a disastrous business model with Corvid and air travel.

[essentialinvestor] 29/3/2022 13:17

Nice, continues to outperform on risk on days.

[roguetraderuk] 28/3/2022 21:05

fully agree but they do have some common ground on the rolls engines and also defence side so its poss they might be interested in an arm or two. anything they can pick up in terms of defence to bulk up gkn (or merge with a gkn arm to then spin off later) i can see good things for. as i said before it has been assumed rolls needs 1-2bn still so it might be a deal that works for both sides. pure speculation on my part of course. i know nothing and whenever i think i know something i tell myself i actually dont!

[essentialinvestor] 28/3/2022 20:50

Would need to pay a minimum of £12-14 bn to get hold of RR, with debt on top,
Melrose not in that league, particularly with the MRO share price near current levels.

[roguetraderuk] 28/3/2022 20:05

EI, you can argue that defence over the next few years is much clearer to f/c and that is nowing making up more than half of sales along with the power unit. the civil side is long haul/wide body mostly and even with covid on the back foot, will take longer than short haul to come back although its now a smaller part of the business. but id say its not the worst time for someone to look at that from an outlook stand point, given that they now wont need to raise quite as much money as before (now that defence likely to pick up strongly). however i dont think mro is in the right position to take it on. maybe rolls is considering spinning something off that would be a consideration for mro and others but as i say i read recently that mro are going to start looking towards the end of the year although if they have decided to hold onto their cash it could bring that forward i suppose.

[essentialinvestor] 28/3/2022 18:40

rogue, hope they would not go near RR!. Very complex business with those engine
service/maintenance plans etc.

And yes too big in any case.

[roguetraderuk] 28/3/2022 17:24

after mkt news of 575m share placing of barc shares around 150p. if you think rates are topping thats one way of doing it.

[roguetraderuk] 28/3/2022 17:22

rr are prob going to need a yard or two in capital at some point, i think its fair to say. mro has a few bob which it was to pay out but has decided against. they did say they would start looking at the end of this year. mkt cap wise its a lot to ask imo at this stage given the valuation of mro isnt historically high. although i am sure they would be well placed in theory to make it work.

[darrin1471] 28/3/2022 17:04

Rogue and EI
RR to big for MRO to swallow?

[essentialinvestor] 28/3/2022 16:37

Under £1.19 is my next buy price.

Very large scope for upside if we return to anything like normality in civil aerospace.

GKN auto perhaps the gem in their current portfolio.

MRO likely to take a hit IF markets turn lower again, my bullish view is
on a 2-3 year basis.

COVID clearly delays disposal gains on the GKN business units.

[roguetraderuk] 28/3/2022 12:19

bought some mro last week. think a lot of bad news is priced in. recession would lead to more downside but mkt looks 6-12 months fwd and any recession likely to be purely technical so i dont think youll see too much more. id be surprised to see covid lows taken out given world was ending at that point and mkt was quite emotional. youve got a couple of gaps at a pond and then the high 80's, thats as far as id expect youll see them go in a worst case.

[darrin1471] 28/3/2022 12:15

RR share price jumped near the close of business on Friday by 20% without any obvious story. 100m shares traded in last half hour. Speculation was that BAE may be interested.
What about MRO?
Too big to swallow? MRO £5.5b mkt cap. RR £8.4b
GKN debt repaid
"Ahead of plan, the opening net debt(1) of GBP3.4 billion at the GKN acquisition has been fully repaid in less than four years"
UK government RR golden share reduces the number of possible bidders.
I hold MRO and RR.