Serco Share Discussion Threads

[dealy] 10/1/2015 11:14

They raised money at 320p just 8 months ago. A sale of the whole company could easily achieve that (synergies etc.). The whole small and mid cap market is trading at depression levels. Not just this stock. Great opportunity for investors at this level.

[pictureframe] 09/1/2015 13:30

looks like this is ready to break out

[deanroberthunt] 17/12/2014 08:44

next leg down....could halve and still not be cheap.

[alphahunter] 12/12/2014 23:50

This company is fundamentally overvalued, not to mention the risk of having Labour in Downing Street next year and seeing the outsourcers hammered.

Thing is so much of the share capital is currently borrowed, and the active fund managers who reduce their shareholding first have to call the borrowed shares back in order to sell them in the market - forcing some temporary short covering in the market.

There are plenty opportunities for non-technical fundamental short elsewhere - but Serco remains on my hit list.

[dealy] 10/12/2014 07:32

Nice contract win. This company is worth more than the current market cap.

[dealy] 27/11/2014 13:52

The PE ratio has no place in valuing companies in transition. It only works for steady state companies. The way to value the company is the NPV of the DCF. Whoever downgraded this on the back of PE ratio is a complete numpty.

Also, if the company sells itself (to another firm that uses a DCF calcuation) or sells part of itself then it won't need to do the rights issue. I think in that scenario 250p or so should be achievable which is much higher than the PE multiple merchants assume now that it is worth.

[alphahunter] 27/11/2014 00:03

"It's going down sub £1.40 coz PE of 9 is way too expensive! Euh no, it might go up as well coz why not and PE of 20 is alright...Euh, wait a minute, in this case the opposite scenario is not validated and we have to wait for confirmation, unless of course, it reverts to the initial scenario which is... Euh, well the other way round. Anyway, I'm always right!"

LOL too.

[james smith] 25/11/2014 12:46

Well, even if it were random you would be right half the time so it's not that clever to guess which way a share is going to go. LOL

[mallorca 9] 25/11/2014 12:33

Why am I always right ?

[mallorca 9] 25/11/2014 09:35

I get the feeling that this may now be turning upwards.

[mallorca 9] 21/11/2014 16:56

It was all down to the RNS re the Financial Director buy.
This will be shorted right down sub £1.40

[alphahunter] 21/11/2014 15:05

Got stopped out at a 3.0% loss on the run from 165p to 176p in barely 15 minutes.
Second day it happens, as some traders close their positions before end of the day - again with 15% of shares on borrow.

So won;t touch it again, this is big money and hedge funds playing around in the order book with first hand info and rumours which matter more than "20x PE" at this stage and I'm no trader.

I made ~40% profit shorting on fundmentals, I'm not to give 37% back on trading against these guys ahead of the issue, even if the fundamentals don't stuck up.

Or was it JS's cat Alfie who pressed the buy key again?

[undervaluedassets] 21/11/2014 13:33

I think it is a short even at this level. . .

[deanroberthunt] 21/11/2014 11:00

jeez, fully diluted and still a per of over 20!!!

....price target 85p

[deanroberthunt] 21/11/2014 10:45

yep, so cap in hand to shareholders yet again.....

[hvs] 21/11/2014 10:00

Think they are in real trouble with lenders.

Even a rights issue may not help.

[alphahunter] 21/11/2014 09:33

From the good old FT this morning:



Last updated: November 20, 2014 7:24 pm
Serco hurt by cash call concerns

Bryce Elder

Serco’s unusual move to pre-announce a cash call looks to be backfiring.

Serco warned last week it intends to launch a fully underwritten £550m equity issue in March, when it completes a strategic review. The risky strategy was intended to ease worries about Serco’s stretched debt covenants and give management a stronger hand in asset sale negotiations. But uncertainties over the level of dilution required have sent the government outsourcer spiralling to a 10-year low, down 7 per cent to 179p on Thursday.

Credit Suisse reckoned that by pre-announcing, Serco will be able to get its rights issue away at 28 per cent below the prevailing price, which would be a tighter discount than average. Using Thursday’s closing price, 2016 earnings would be reduced to 6p per share, the broker forecast.

So, fully diluted, Serco shares still trade at a price-to-earnings ratio in the high 20s for 2016, which is too expensive given the uncertainties facing the business, said Credit Suisse. It cut the stock to “underperform”.

“After the unveiling of significant onerous contract provisions and the risk of more to come, we see huge uncertainty around the operational cash flows of the business,” the broker said. “Free cash flow is set to be negative in 2014 and 2015 and we believe there will be no dividend until 2016.”

[alphahunter] 21/11/2014 09:22

Dean,

Is that the talk on the floor?

[kristini2] 21/11/2014 09:22

this is trading like it is going to bust

[deanroberthunt] 21/11/2014 09:20

cos I don't like Mondays

[deanroberthunt] 21/11/2014 09:14

looks like the rights could be beow 100p

[deanroberthunt] 21/11/2014 09:10

someone is dumping big .....