Venture Life Share Discussion Threads

[hydrus] 04/4/2018 18:31

Bought an opening stake in AIEA a couple weeks ago - looks like it will only ever be an opening position as James Halstead bidding for them. Shame it's not a bigger position oh well

[big7ime] 04/4/2018 17:57

Amer really dragging my pfolio and comp entry down
If they're making as much as they've intimidated then the shrs will be on a silly low rating, but not sure what I believe any more
Boo looking sick Apad, falling knife could be sector lead and Whilst still learning a lot about charts if 140 breaks onto 120 and if that doesn't hold it looks like £1 might be on the cards which would bring it to a less expensive but still high rating

[big7ime] 04/4/2018 17:05

Imo share buybacks are done to make eps look better and are for the benefit of director tgts and therefore bonuses and have little value to shareholders
I'd much prefer higher divs or reinvestment into the business

[apad] 04/4/2018 16:48

Selective quote, red.
apad😊

"PTSG starting to look like a BTFD 28-Jun-18 ex div 20-Jul-18 payment.
Looks like the increase in cash outflow to revenue has affected sentiment - could be a longer decline."

[apad] 04/4/2018 16:43

PRV suffering because it sells to chinese aluminium makers.

ZOO & FFX are up 😡

7 entries in the Comparison are up YTD.

apad

[redartbmud] 04/4/2018 16:10

APAD

Good luck BTFD on PTSG

One free with your packet of Cereal next week? -)

red

[attrader] 04/4/2018 14:13

Noted, red. Now back to reading Charter Communications Annual Report.

[redartbmud] 04/4/2018 13:54

The market value of a business today is different from yesterday and tomorrow.
A significant world event can change the value significantly.
A significant event in the market sector..
A significant event within the company...

Trade war USA vs China.
BP - Gulf of Mexico incident - Sp £6 to share price £3.50:-(
WPP - tintins opinion on internet competition and the the Martin Sorrell 'goings on.'

Buying shares back, based on multiple of 17, considered to be normal, but that falls to 12.
Interest rates rise, the company needs capital - borrow at higher rates.

Not a simple issue, but a complex answer that has varying degrees of success over a term.

IMH too many do not show benefit, except in EPS used in Remuneration calculations.

Cynical from Carlisle.

red

[attrader] 04/4/2018 13:36

Interesting discussion on buybacks, goodwill and acquisition multiples. Makes total sense to buyback when shares are undervalued. However, intrinsic value in itself is difficult to calculate as it depends on future prospects of a business... But then again having discipline to try to assess intrinsic value will improve results..

[al101uk] 04/4/2018 12:57

My view of share buybacks turned in to an ungodly mess when I tried to write it down, so I'll leave it to an expert who puts it far better than I even could...

Share Repurchases

In the investment world, discussions about share repurchases often become heated. But I’d suggest that participants in this debate take a deep breath: Assessing the desirability of repurchases isn’t that complicated.

From the standpoint of exiting shareholders, repurchases are always a plus. Though the day-to-day impact of these purchases is usually minuscule, it’s always better for a seller to have an additional buyer in the market.

For continuing shareholders, however, repurchases only make sense if the shares are bought at a price below intrinsic value. When that rule is followed, the remaining shares experience an immediate gain in intrinsic value. Consider a simple analogy: If there are three equal partners in a business worth $3,000 and one is bought out by the partnership for $900, each of the remaining partners realizes an immediate gain of $50. If the exiting partner is paid $1,100, however, the continuing partners each suffer a loss of $50. The same math applies with corporations and their shareholders. Ergo, the question of whether a repurchase action is value-enhancing or value-destroying for continuing shareholders is entirely purchase-price dependent.

It is puzzling, therefore, that corporate repurchase announcements almost never refer to a price above which repurchases will be eschewed. That certainly wouldn’t be the case if a management was buying an outside business. There, price would always factor into a buy-or-pass decision.

When CEOs or boards are buying a small part of their own company, though, they all too often seem oblivious to price. Would they behave similarly if they were managing a private company with just a few owners and were evaluating the wisdom of buying out one of them? Of course not.

It is important to remember that there are two occasions in which repurchases should not take place, even if the company’s shares are underpriced. One is when a business both needs all its available money to protect or expand its own operations and is also uncomfortable adding further debt. Here, the internal need for funds should take priority. This exception assumes, of course, that the business has a decent future awaiting it after the needed expenditures are made.

The second exception, less common, materializes when a business acquisition (or some other investment opportunity) offers far greater value than do the undervalued shares of the potential repurchaser. Long ago, Berkshire itself often had to choose between these alternatives. At our present size, the issue is far less likely to arise.

My suggestion: Before even discussing repurchases, a CEO and his or her Board should stand, join hands and in unison declare, “What is smart at one price is stupid at another.”

[redartbmud] 04/4/2018 12:53

attrader

McKinsey are very smart, but very ruthless cookies. I have crossed swords with them in the past! There knowledge is first class.
Worth looking at the example in the article. Buy shares back = reduced cash.

Goodwill is another matter.
The difference in the value of hard assets acquired and the premium price paid for the business. Normally takeover bids are calculated multiples of years' earnings. eg at current earnings it will take 7 years to get your money back.
The value of goodwill is subjective when held in the balance sheet. If the business nose dives, at what point, and by how much should you write down goodwill?
Personally, I think that there is a case for depreciating goodwill on a formula, as you do plant & machinery, patents etc. If there is a residual value when fully written down then fine. In the case of a company being taken over, having goodwill on the balance sheet, or not, would not necessarily influence the price offered or accepted. It is the meet in the middle number.

red

[attrader] 04/4/2018 12:13

On PTSG & ROCE, i asked their CFO if they include goodwill from previous acquisitions in calculating ROCE, he said no.. Surely goodwill should be part of equation for an acquisitive company.. If i a buy a business for £1000 with operating assets worth £500, and it generates £100 annually, then my return on capital should be 10% not 20%.. no?

[attrader] 04/4/2018 12:08

Thanks Red, just erad Mckinsey's article..More confused now.. If a company's shares are trading below intrinsic value and if it buys back the shares thus reducing the balance sheet, that should create value for remaining shareholders as same profit is distributed to a smaller group of investors, no? .... Reading the article again !!

[redartbmud] 04/4/2018 11:50

'nor do I like the Bob Morton'

Indeed....

red

[apad] 04/4/2018 11:49

"I’m also a little concerned that founder Bob Morton has a somewhat chequered investment past. He is still involved in the company as a Director of Hawk Investment Holdings Limited, a company that owns 15% of PTSG.

Mr Morton has been reprimanded by the Takeover Panel multiple times and found himself on the receiving end of its worst possible sanction back in 2017 – the ‘Cold Shoulder’, which prevents FCA regulated bodies from acting for him for a number of years.

I do not wish to deride Mr Morton because I have not studied his career in great detail, but I would recommend that anyone interested in PTSG take his presence into consideration before making an investment. "

[apad] 04/4/2018 11:43

Reply from Paul Scott

"In my opinion, Premier Technical Services (LON:PTSG) looks superficially attractive. However, I don't like the unexplained high debtors, nor do I like the Bob Morton connection. So not one that I plan on revisiting."

[redartbmud] 04/4/2018 11:35

attrader

hxxps://www.mckinsey.com/business-functions/...and.../the-value-of-share-buybacks

red

[attrader] 04/4/2018 11:22

I wrote a long post on measuring profitability of a business. After going through my own thinking it all became clear..

Basically, i use net assets + long term debt to calculate return on capital employed. That gives an indication of how much capital a business needs to generate profits.. High ROCE indicates a capital light business.

The only thing i am confused about is buybacks. For instance, if a business has bought back 50% of its shares and cancels them, would you take that into account while calculating capital employed ?

[redartbmud] 04/4/2018 11:20

Yes, double edged sword. Your portfolio is off the highs, but you want to see falls so that you can add.

Looking at Bree and Rws for trades, but both need to fall a little more before my toe hits the water

Perverse from Poole.

red

[attrader] 04/4/2018 10:52

Thanks gsbmba, think Singulex will be IPOing at some point.

I noticed ULS CEO has defected to MAB today.. One on my watchlist..

More tariffs from China, trade war brewing up.. For selfish reasons, it would be good to see a market downturn so i can get quality businesses at good price..

[gsbmba99] 04/4/2018 08:54

BVXP - in the results presentation Peter mentioned that Siemens were excited about the potential for Troponin testing beyond A&E with the new, lower limit of detection. I've previously posted this on the main bvxp thread - . The post does a good job of explaining potential wider applications from more sensitive troponin tests. It was written after attending a Singulex event. Singulex offer single molecule counting (no idea how) and their limits of detection are a fraction of Siemens. Nevertheless, if Siemens think the current hs troponin test is good enough for broader application, that seems positive.

[apad] 04/4/2018 07:56

I own ZOO shares
2006 ZOO Digital Publishing, PAL region publisher for titles such as Alien Hominid TM and Premier ManagerTM, has today announced it is to separate from parent plc ZOO Digital Group.

I do not own KWS shares
KWS is an acquisitive group providing services to the video game industry, e.g. art creation and translation/dubbing ("localisation").
42 studios in 20 countries dubbing video games.
Massive number of jobs on offer.

I wonder if KWS is vulnerable to the ZOO approach with film?

apad

[apad] 03/4/2018 17:34

PTSG starting to look like a BTFD 28-Jun-18 ex div 20-Jul-18 payment.

Looks like the increase in cash outflow to revenue has affected sentiment - could be a longer decline.

apad
"You can observe a lot by watching"

[apad] 03/4/2018 16:29

Watching Bloomberg and CNN discussing the Tesla fairie.

Very entertaining.
Who needs fiction when facts can be so fictitious?

apad😊