Pendragon Share Discussion Threads

[typo56] 16/9/2016 12:29

There's going to be a bit of volatility in PDG around now, due to exiting the FTSE 250 index tonight. Don't be surprised to see a large uncrossing volume (perhaps 10m-20m) in today's closing auction as funds adjust their investment weightings.

[ed 123] 15/9/2016 14:53

Selling is continuing today. The other motor traders have come back a bit recently but PDG still edging down. Any thoughts? Negatives? Worth a nibble at 30p? Goes interim ex-dividend next week. Approximately 5% full year dividend yield.

[tintin82] 02/8/2016 06:26

Very solid results all things considering! Odey certainly confident.

[jeffian] 08/7/2016 09:32

Well Odey still likes it. His holding up over 17% now.

[mister md] 07/7/2016 10:55

buybacks continue. Added a few at 28.5p

[jeffian] 03/6/2016 14:39

It's hard to tell. It may just be up on the fundamentals.

[mister md] 03/6/2016 11:27

well, whatever people think of the buybacks, at least it is helping to increase the shareprice ...

[jeffian] 20/5/2016 17:55

I always think "If you don't like it, sell" is a rather lame response. Managers don't own the business. Why should shareholders be bullied out of their stock? The point is that managers don't control the share price, the market does. They hope that by artificially boosting eps and nav, the share price will reflect that but, as my ETI example above shows, they can't control that. They are taking real cash and spending it in a way that it could easily disappear in a puff of smoke. There is an argument for buying in your own debt if it is trading below par or equity if it is trading below asset value, but that is not the case at PDG where they are paying a premium to the NAV of 27p/share (and that includes a good slug of goodwill). They're paying £1 for 77p. If shareholders feel they've had value from this 'investment', good luck to them.

[riskvsreward] 20/5/2016 11:32

Simple, if you guys don't like the buyback and think you know better than the company, sell it to the market now that the buyback perhaps offer you a better opportunity to sell. Personally, as long as the management is prudent and it can leverage reasonably cheaper long term debt at much lower cost than equity, say it can borrow on 5 years or more at lower than 4-5 % interest, it is better than the current equity capital cost at almost over 10% with a pe lower than 10.

[jeffian] 20/5/2016 10:52

I hate buybacks. They masquerade as a "return of value to shareholders" but they are nothing of the sort. They return all the value to some of the shareholders - who are promptly no longer shareholders! Of course, the reduction of shares in issue inflates both the Earnings Per Share and Net Asset Value per share (a cynic might wonder if these are metrics for Directors' performance bonuses!) but whether that is reflected in the market value of the shares we continue to hold is questionable. Enterprise Inns were the worst culprits, blowing £1bn (yes, really) buying shares up to £8 which went as far down as 26p. They're doing it again now - they're spending £25m (equivalent to a 5p dividend) and the share price is lower than when they started! If companies consider that they have 'excess cash' and want to return it to shareholders, they can pay it out as a dividend, pay it out as a return of capital, or make a free scrip issue of additional shares. THAT is 'returning value to (all) shareholders'. Buybacks are not.

[ed 123] 20/5/2016 08:41

Yes, it's only £20M. At an interest rate of, say, 5%, it means they'll only waste £1M of shareholders' funds each and every year going forward. The company is not in a net cash position; it has borrowings. On the other hand, buying up freeholds is good for shareholders, as it increases eps while keeping hold of the asset value.

[tintin82] 20/5/2016 07:40

Exactly, it's £20 mil, perfectly manageable. Not generally a fan of buybacks, but comfortable here due to lack of acquisition opportunity as stated.

[ed 123] 20/5/2016 07:31

alanjames999 True, but what would you think if a China meltdown (or whatever) brought a recession and PDG shares traded at under 20p again? That cash would have been very useful. Looking for the positives, at least it's only £20M. It could have been more.

[alanjames999] 20/5/2016 07:26

At least the buy backs were at a low opposed to mid 40s :)

[ed 123] 20/5/2016 07:22

tintin82 I disagree. The buybacks will increase debt and put the company more at risk in the event of a downturn. The usual line about improving balance sheet efficiency does not impress me at all. Buybacks, in the near term, boost earnings per share, which is often a bonus related kpi for the directors. The buybacks also boost the income of the company's advisers/brokers (so, how clean is their advice?). The major shareholders go along with it because, either they want some strength to sell into, or they like the short term share price rise because it makes their figures look a bit better. Imv, the company should have held onto the cash.

[tintin82] 20/5/2016 06:23

Excellent news, quite happy with this buyback, the balance sheet can certainly afford it. A bit of momentum now would be nice.

[ed 123] 29/4/2016 23:41

Are you on commission? Nope. He's on tracks. https://www.youtube.com/watch?v=g0ZKpSfiHLU

[jeffian] 29/4/2016 22:38

thomasthetank1, I can't help noticing that every single post you make seems to link back to research-tree.com Are you on commission?

[thomasthetank1] 29/4/2016 12:10

Read Arden Partners's note on PENDRAGON, out this morning, by visiting hxxps://www.research-tree.com/company/GB00B1JQBT10 "Valuations in the UK motor retail sector have de-rated as the market speculates that the UK is reaching a mature stage of the new car cycle... Consequently, we believe the market has meaningfully underestimated the longevity of the demand cycle which, alongside the evolving retail proposition at Pendragon, presents a significant value opportunity. We continue, therefore, to challenge the rationale of modest sector valuations ..."

[jeffian] 29/4/2016 09:46

"underlying EBITDA ratio continues to be significantly below our target range so we are assessing the best use of funds." Well they could always return it to shareholders as a dividend or return of capital! 8-)

[grabster] 28/4/2016 07:18

Good update. The headline 'expected to be inline" doesn't sound impressive, but the rest of the detail all sounds better. The predicted softening in new car sales might sound negative for the car sales sector, but Pendragon's focus on aftersales leaves them better balanced than some peers.

[jaf111] 28/4/2016 07:16

IMS seems fine....Historic eps 3.7p underlying 1st Q profits up 8.7% so seems reasonable to expect full year eps to rise to 4p....so PE ratio of just 8.5?

[tintin82] 26/4/2016 09:09

Agreed, just doubled down, expecting a solid update.