Venture Life Share Discussion Threads

[apad] 01/5/2017 12:42

BOO had a net operating cash flow of 29.5 and an Investing Cash Flow of 29.4.

It'd better deliver!

apad

ps
Who'd believe the popularity of LEGO!

[discodave4] 01/5/2017 12:03

Off topic, always loved scalextric as a kid but could never afford one, who knows what the future holds though:hTTp://www.bbc.co.uk/news/technology-39741094DD

[apad] 01/5/2017 11:54

Not too keen on absolute numbers folks, and there are a few definitions of free cash flow, I've found that digging the numbers out of the reports is the best way to focus on a few parameters as one notices the unusual.
In my opinion it is one's personal experience of creating a way of looking at the numbers, warts 'n all, that is important, not an absolute way of doing it.

I use:
FCF = Operating cash flow - interest - tax - capex - preference dividends
also known as FCF to Equity.

The beauty of FCF is that it avoids having to deal with the accountants playground of amortisation, depreciation, etc. I know it doesn't really but life is too short and I won't pay for Sharepad, etc.

These are my headings:
Shares Issued (m)
Dividend (p)
Net Operating Cash Flow (£m)
Tax & Interest (£m)
Investing Cash Flow (£m)
Free Cash Flow (£m)
Free Cash Flow per share (p)
Free Cash Flow Yield per share
Net Cash (£m)
ROCE

After that it all becomes a blur!
apad

[discodave4] 01/5/2017 11:08

APAD,I also look at share price to cash flow per share, anything less than 15 is cheap, BVXP is 28 and ACSO is 44.Don't go by PE too much now, especially for growth companies where IMO PEG is more relevant.DD

[jamielein] 01/5/2017 10:12

You mentioned BVXP FCF yield was 3.5%, compared with ABC at 1.5% so BVXP are cheap in comparison.
How do you know what the 'right' yield should be?

PRSM has always been a mystery to me - I don't know how to value it so I've avoided it.

[modform] 01/5/2017 10:06

Lauder, I posted it because of the article about WEIR, which some of us are long term holders.

[apad] 01/5/2017 09:59

pps
I'm not much impressed by PER either.

[apad] 01/5/2017 09:45

"New and old industries can each reward and disappoint investors – what really matters is the price at which you buy into them"

I differentiate between industries that have some control or special characteristic (e.g. a brand), whether these companies are old or new.
In these cases timing is not so important as it is with routine industries in a highly competitive environment.
Bad timing soon becomes an historical irrelevance.
Hence, no banks or supermarkets.
That doesn't mean that those of us with better timing than I can't make a fortune from LLOY, because iff it becomes a divi generator than a lot of the sideline money will flood in.

apad

[jamielein] 01/5/2017 09:28

APAD, can I ask why you believe that BVXP is still cheap? They're on a forward PER of 23 and earnings are expected to be broadly flat in 2018 (so no growth).

My gut feeling says you're right but my usual measure of value (PEG) disagrees. I like to see consistent earnings growth. I'd like to learn why I'm probably wrong, as you seem to be very good at picking long term winners.

[redartbmud] 01/5/2017 08:10

New and old industries can each reward and disappoint investors – what really matters is the price at which you buy into them

At the start of the 20th Century, notes the 2017 Credit Suisse Yearbook, “virtually no-one had driven a car, made a phone call, used an electric light, heard recorded music, or seen a movie; no one had flown in an aircraft, listened to the radio, watched TV, used a computer, sent an email, or used a smartphone. There were no x-rays, body scans, DNA tests, or transplants, and no one had taken an antibiotic”.

In short, the world was a very different and far less technologically advanced place than it is today. And yet, of course, the discoveries and inventions of the 19th Century laid the foundations for so many modern industries, including electricity and power generation, automobiles, aerospace, airlines, oil and gas, pharmaceuticals and biotechnology, telecommunications and information technology.

The telegraph sector in 1900 was considered every bit as high-tech as Smartphones are today while it is hard to overstate the importance of the railroad industry 120-odd years ago – in the UK and, even more so, in the US. To underline that point, take a look at the following charts, which compare the composition of the UK and US stockmarkets by industry value, in 1900 and in 2017, and note rail’s dominance in the upper pair.

If these four charts look familiar, it may be because we used the 2015 versions in Track record when – among other things – we argued they served as a warning against investing too closely in line with a particular stockmarket index. Clearly industries change – as the Credit Suisse Yearbook points out, the 1900 list of companies includes the world’s then-largest candlemaker and the world’s largest manufacturer of matches.

By the same token, in 2017, a significant proportion of companies by value – 62% in the US and 47% in the UK – operate in sectors that were either tiny or non-existent back in 1900. Heading in the opposite direction, meanwhile, rail has slipped from 63% of the US market to less than 1% and from almost 50% of the UK market to almost nothing.

Focus on the new or stick with the old?

All of which begs the question as to whether investors should be focusing their attentions on the potentially exciting growth of the new or sticking with the old – after all, food, beverages (including alcohol), utilities and tobacco were all around in 1900 and a number have been among the world’s more successful industries in the years since.

Two years ago, the Credit Suisse Yearbook made the case that “both new and old industries can reward as well as disappoint”. What matters, it said, is not whether a sector involved a racy new technology or something rather more dependable but “whether stock prices correctly embed expectations” – in other words, whether investors buy into stocks when they are overvalued (bad) or undervalued (good) by the wider market.

Once again, the rail industry helps make that point. As we saw earlier, railroads have been, as the Credit Suisse Yearbook puts it, the “ultimate declining industry” in the US since 1900. Yet it adds: “Over the last 117 years, railroad stocks have beaten the US market, and outperformed both trucking stocks and airlines since these industries emerged in the 1920s and 1930s.”

The Yearbook goes on to argue: “If anything, investors may have placed too high an initial value on new technologies, overvaluing the new, and undervaluing the old.” And it concludes “an industry value rotation strategy” can help “lean against this tendency” and has historically generated superior returns. And yet, if the world is such a different place from 120 years ago, how has value remained a successful investment strategy?

It is because, over all that time and through all that change, one factor has remained the same. Us. As we put it in All in the price: “Human beings are the constant – markets are cheap when we are fearful; and they are expensive when we are greedy.” In a world where everything else is in a state of flux therefore, human beings are systematically exploitable – and value investing is the system.

Andrew Williams - Credit Suisse.

General, but relevant to some on the board. Article on Citywire.

red

[redartbmud] 01/5/2017 08:06

Lauders

Thanks for that. I prepare my order for champagne ready to celebrate the re-rating.
It is only a matter of time.

Confident from Carlisle.

red

[apad] 01/5/2017 07:58

BVXP is still cheap, in my opinion.
ROCE is 50+ and the free cash flow yield is about 3.5% (6.5% in summer last year)
ABC is about 1.5%, by way of comparison.
I guess the issue is that it is difficult to build up large positions in a £90m company. Also, it is relatively low profile compared with some hardtoavoid small caps.
apad

[lauders] 01/5/2017 03:15

Red - One for you. Just remove the dots/stops between i i i:



But the broker does not stop there. As is their wont at Barclays, they also set out an 'upside' case, predicated on "faster improving returns from higher revenues and lower provisions as a result of a better-than-feared outcome on economic uncertainty in the UK following the [Brexit vote]".

That upside target, they say, stands at a mega 115p – two-thirds higher than the current share price.

Here's the risk

But their base case is what we are more concerned with. They expect Lloyds to sustain close to a 15% underlying return on tangible equity (ROTE), generating enough cash to return around a quarter of its current market cap (just shy of £50 billion) to shareholders over the next three years.

[lauders] 01/5/2017 00:50

Wish I had more BVXP too!

modform - that link is blocked where I am based. Any other companies mentioned apart from Sirius Minerals or are you a fan of the the company?

[modform] 30/4/2017 20:15

BVXP , profit margin is a bit higher around 79% , never ever come across any company like this. It's almost unrealistic

[apad] 30/4/2017 17:26

Just had another look at BVXP's financials (it's raining).

God's bones I've never seen another company like it (e.g. Profit margin is 76%). Any more dips like that a fortnight ago and I will not be able to resist (even allowing for the loss of an income stream).

apad

[apad] 30/4/2017 11:09

It does look as if that Bloomberg report is what stimulated RSW.
apad

[discodave4] 30/4/2017 10:41

Thanks APAD for doing the numbers..............mine are consolidating!! haha.Well done dacian, dibbs and your good self (your top 5).DD

[apad] 30/4/2017 10:03

Sailing, J.
Often abbreviated to 'blowing a hooly'.

Traipsing through the ROCE figures in my portfolio I find that I am something of a ROCE junkie (or would be if I used financial metrics to choose shares).
The Market is about 16. FEVR is about 63 and RWS about 53.


apad

[janeann] 30/4/2017 09:21

I think it was 3 that helped - prsm + also arc and especially acso. The latter on an all time high; in fact not far off a 100 bagger now if one starts with LOQ at 20p - although I wasn't in that early Im afraid!! But as some have said the wall of worry is mounting especially Korea.

ps where did the hooligan come from - its an expression I am very familiar with?

[apad] 30/4/2017 09:04

Thanks, j. It's not much effort - most is automatic. PRSM galloped to your rescue, I believe.
FTSE isn't a useful parameter really. I'll change it to the 250 when I need some displacement activity.
apad