Thalassa Share Discussion Threads

[interceptor2] 04/10/2014 11:18

First I must apologize for posting about a company that I haven't held for some time, I try not to comment about stocks where holders may still be suffering.

But after the excellent points made by sigala, saucepan and caradog, I can't help but make some observations.

As saucepan said the technical's here are something to learn from, Stan Weinstein approach would have worked very well, the 150ma is certainly an area where taking some action is important. Normally selling at least part of the position imo, or at the very least forming a more defensive mind set. Sometimes a stock can rebound and leave you wishing the stock had been held, but it often saves holding a stock during a painful stage 4 situation.

Caradog, you make an excellent point about being cautious about companies that have some type of financial complexity that is hard to understand. I prefer companies that have an easy to understand balance sheet, if I have to work too hard trying to understand something unusual, then this is a red flag to me also.

Kind regards to holders here, hopefully a large contract will be announced soon.

[caradog] 04/10/2014 11:05

I don't doubt that, but spectacular success can be followed by spectacular failure if the board doesn't have checks and balances, and the non-execs don't have backbone. I wouldn't want Mike Ashley looking after my life savings any more than I would like him to run my football club.

[rcturner2] 04/10/2014 10:47

Sports Direct is a funny example to use though as the long term share price returns have been awesome!

[caradog] 04/10/2014 10:43

I quite agree with Sigala and saucepan. I have learnt to distrust financial complexity. It is rarely in the shareholder's best interest. Simon Thompson recommends Thalassa. I read his column with interest, and have profited from it, but I feel he is overly reliant on analysis of numbers, and does not take sufficiently into account the nature of the business and the probity/competence of the people running it. Just look at the Silverdell fiasco. He is currently recommending Inland Homes, on paper a thriving company, but I sold out when I realised I did not understand the company's relations with Inland ZDP plc or why land deals went through privately registered companies. Similarly he recommends Camkids, without considering why a company with all its workers, premises, management, suppliers and customers in China choses to be registered in Jersey and floated on AIM.
I like companies with simple structures, financed by equity and borrowings. I understand the basics of these. If a company complicates things financially, you have to ask, why? and who benefits?

I am also wary of companies dominated by one individual. Just look at Sports Direct where the majority shareholder is punting on Tesco and Debehhams with company money!

[sigala] 04/10/2014 10:18

Saucepan,

Yes - I can understand you view.

The actions of THAL's BOD have definitely triggered the "if in doubt, stay out" clause in investors minds.

Regards

[sigala] 04/10/2014 10:13

21 - yes, they should be courting sophisticated long term investors who will back the company. These recent arrangements by the company will do a good job of scaring off that type of investor.

THAL, almost seem like they've become a Jekyl and Hyde company. In their first few years they really impressed me, and DS seemed to be more than fair to the company in his actions. He seemed to bend over backwards to give his fledgling comlany a chance. He invested lots of his own money and often waived his fees. It seemed to be the actions of a man of integrity.

But gradually they have brought in changes that are not explained and which seem confusing.

This discretionary trust is the main one for me.

DS is the trustee, and the trust is said to be separate from the company, but has been entirely financed by millions of pounds of loans from the company which it has not paid back. We don't know when that money might be paid back.

As a private trust we are not told who it awards the shares to, or why. It currently has over 12% of all the shares in issue.

My own guess is its some form of tax "optimisation" scheme. Maybe it has been created with the best of intentions, but its lack of transparency now means it is completely counterproductive, I think, because investors mistrust any lack of clarity.

One could argue that the bod have just been too clever for their own good with these fancy financial arrangements and related party transactions. But I think they need to stop, otherwise many will suspect the worst.

AIMHO

[saucepan] 04/10/2014 10:07

Yes, excellent post sigala - but I personally am not siding with a benevolent interpretation.

The only other point of possible interest that I wish to add is that Thalassa is a stock where the chart has been very helpful. It was very clear when an uptrend was ending, a top was forming, and the 'good times' were over. I was glad (lucky?) to have heeded those signals.

There is a lot to be said for holding a stock while price is above a rising 150-day moving average, and selling when price falls through the moving average and/or the moving average starts rolling over (an approach of investment guru Stan Weinstein).

As can be seen, that worked beautifully for THAL:

[21trader] 04/10/2014 08:43

Good post sigala

Just read yesterdays Rns the nerve of some people they really treat investors
like idiots in some stocks don,t they :-))

[sigala] 04/10/2014 08:31

This company has really got me scratching my head.......which probably means it is too uncertain and I should move on and look for an alternative.

When I have read through THAL's listing document and annual reports then everything looks fine. Management come across as prudent, resourceful and very capable. In the early days DS made a large loan to the company and waived his fees and interest on his loan I think. He has also subsequently had a portion of outstanding fees paid as shares at the market rate.

When the company was just starting out it was the big crash of 08/09 and the oil industry slumped. DS put the company into hibernation and used its money to invest in other companies at the bottom of the bear market and thereby generated a spectacular investment gain over the first one to two years of the company's listing.

Since then THAL have succeeded in buying almost all of WGP who seem very competent in their field. THAL, through WGP have won some impressive work with blue chip clients such as BP and Statoil. They have also stuck some interesting Joint Initiatives.

The problem with their Russian contracts is unfortunate, but that's business at the end of the day - full of twists and turns. No-one could blame THAL for that.

But then we have the unsettling aspects to THAL.....

- BVI registered
- THAL discretionary trust. I really think they need to be far more transparent about this given its huge relevance to the company. I suspect it is an, ahem, tax "optimisation" scheme for employees perhaps in line with others we have seen recently. If so, then I'm not particularly happy about that from an ethical point of view. Certainly THAL seem only prepared to give the minimum information about it, which is getting a bit bizarre because it now holds over 12% of the shares of the company, which incidentally were paid for by millions of pounds of loans from the company (still outstanding).

The discretionary trust is "apparently" completely separate from the company, but DS is the only named trustee. Where on earth is the transparency in any of this?

And you get extremely awkward situations like when DS sold £2.5m of his shares to a Trust independent of the company of which he is the only disclosed trustee and the whole transaction was settled by money loaned from the company.

What on earth is going on?

For the sake of argument, lets give THAL the benefit of the doubt and say that it is all a bit of quick footwork but it's for the long term best of reasons.

But it all looks so dodgy. And therefore should be avoided.

I don't know what piece of fancy financial engineering they think they are doing with this arrangement but I would stop it if I were them, because if investors can't understand a situation they will quite rightly give it a wide berth.

There has never been any view offered when the discretionary trust will make good on the money it owes the company which now runs to millions of pounds and is a very significant item on the balance sheet.

- And now, most recently we have the company signing a 10 year lease to rent offices in a property owned by a company belonging to the chairman. Now perhaps it is a suitable property and a competitive rent- I don't know - but again what impression is this sort of transaction suggesting to shareholders? It will ring a lot of alarm bells for many.

Being generous, one could say that the BOD have just been a bit too clever for their own good. They've been in the financial industry for so long, they know all of the short-cuts and tricks of the trade - and they are moving fast with unconventional arrangements but they know what they're doing and all of it is in the best interests of shareholders.

If that is the case I think they're got a bit dazzled with the financial devices they're employing.

Lack of transparency is not a good thing, even if it is done for the best of reasons, and they should stop all this financial jiggery pokery.

That would be the charitable explanation for what they're doing.

As for the alternative explanation, well...............it wouldn't be a good one.

AIMHO,

no advice intended

[steptoes yard] 04/10/2014 07:25

He was very charismatic and credible Jane at the investors meeting earlier this year. I am reminded of the expression beware the wolf in sheeps clothing [ wall street banker masquerading as technical service provider ]

[sigala] 03/10/2014 18:05

Unfortunately they've made themselves a laughing stock with this rns.

Really quite surprised, because they seemed a class act previously. A bit of success may have gone to their heads.

So much promise as a company, but what does this deal say about corporate governance?

[cfro] 03/10/2014 17:51

What a shame its come to this. I had such high hopes for this company back at the beginning of this year.

All credibility is now completely lost.

[steptoes yard] 03/10/2014 17:48

Appalling display in the name of transparency. Shame on you DS, an extensive search of SW England ...

[saucepan] 03/10/2014 17:30

Dear oh dear. In 2013, THAL was one of the most transformational stocks I have ever held. I have followed with interest since then, with a thought of getting back in, but I won't be touching it with a bargepole now. Sad.

[jmf69] 03/10/2014 14:05

That Mr DS sounds like a well dodgy geezer

[cockerhoop] 03/10/2014 11:02

Yes, MUBL and Newcastle Utd pre Ashley spring to mind.

[cockerhoop] 03/10/2014 10:35

Graham Cole, a Non Executive Director of Thalassa said: "We are delighted to have entered into the leases on this new campus which was chosen after an extensive search throughout the South West of England.

How Mr Cole could say that with a straight face is beyond me.

[pyemckay] 03/10/2014 10:17

deals like todays stink, Im not a holder but would avoid companies where directors feather their own nest like has been shown today.

[pj 1] 03/10/2014 07:22

Until last year at Newark on Trent, excellent links A1, A46, A52. A17 plus mainline Rail

£5.50 per sq foot.(excluding Rates and Insurance and Service Charges)

Just for infom ,maybe comparing apples with oranges

Prob is Co are not likely to reply to any queries are they? :-//

[sailing john] 03/10/2014 07:03

Guide price £1.25m for 13400 square feet and 9 acres