Volvere Share Discussion Threads

[eezymunny] 30/5/2019 16:19

I'm only bad tempered when I read total drivel zoolook.

In real life I'm the happiest bunny in all of Gotham.

[zoolook] 30/5/2019 16:03

Hi cfro

Meet EezyMunny

He's a bad tempered badger (who happens to be right most of the time)

[cfro] 30/5/2019 14:17

Please forgive me for sticking my nose in here as i am not a holder..

I just don't get this tender offer nonsense. I mean, surely what shareholders really want is a special dividend.
So, they will potentially "return" up to £16.6m through buying back shares off of shareholders for the price of £12.90. I note that shareholders are not allowed to vote on the matter. But how many shareholders are really happy about this situation?

The price of £12.90 looks to be perhaps below the true NAV of the company as a whole so i guess most shareholders will refuse to take up this offer as they believe the company to be worth more. But by setting a price the management are effectively saying that this is the price they believe the company to currently be worth thereby putting a cap on the price.

Looking at the positive side, assuming a large take-up of the offer would mean that the shares in issue get tighter which in turn put the NAV per share up. That much is obvious.

On the negative side, what happens if their next deal turns sour and NAV then falls? Those that don't take up the offer will be kicking themselves.

This seems to me a very strange way to return cash to shareholders that can potentially lead to some very strange outcomes.

[rivaldo] 30/5/2019 11:29

I did say the other day "I doubt they'll spend more than say £10m on a single acquisition", and that seems to have been proven correct.

With an "appropriate" cash pile of £20m+ post-buyback, that leaves sufficient headroom for an acquisition up to £10m, working capital support for investees, plus a buffer for more buybacks or further small acquisitions.

Graham Neary has commented in his small cap report today (VLE is his largest holding) - it would be interesting to know his conclusions:

[jaf111] 30/5/2019 10:49

....well that opportunity didn't last long....1290p now to buy.....
But a nice turn for those who bought earlier!

[jaf111] 30/5/2019 07:45

just purchased some more at 1250p ish.....makes it easy to decide on the tender or not question!

[zangdook] 29/5/2019 15:33

I wonder what will happen to the share price when the offer closes. I'd be inclined to tender some in the hope of buying them back after, but I wouldn't put it past the company to bring out some good news and mess up my cunning plan. If I'd had 10% here like some clever people it would be easier, instead I have ~3%.

[dsct] 29/5/2019 15:24

The tender offer is at 1290p and official spread is 1150p/1300p - an 11.5% spread !!! Although the 'real' spread seems to be a slightly better 1190p/1275p.

I did mention in March that it would be nice to know what they were looking to do with the £30M+ cash, and at least we know what is happening to half.

I sold 20% of my holding in March at just under 1070p, but at least someone else is enjoying the subsequent profit on those :o) VLE is still my largest holding at over 10% of my folio.

With regards to the recent discussion on here re Shire Foods:

I'm more than pleased that they've not just 'splashed-the-cash' on any potential turnaround, and see benefits for them either buying add-ons to Shire for the economies of scale etc., or for the move into a different sector so they're not reliant on the food-processing industry. Which of those two is the better, is anyone's guess, but I'll leave my faith in VLE :o)

I doubt I'll be selling any into the tender-offer.

[simso] 29/5/2019 14:50

I think our share price has closed at a peak of £11.50 mid on 5 separate occasions since November 18...and looks like we should close at an all time high tonight.

[zoolook] 29/5/2019 14:46

It’s a longer tender period than normal and a decent price making it a bit trickier to decide what to do. Currently feel I want to stay fully invested. Not sure.

[simso] 29/5/2019 14:42

As legendary commentator Sid Waddell said: "One word for that. 'Magic Darts' "

[yamaha865] 29/5/2019 14:20

Wow...nice. mixed feelings in a way, if it was a lower price that would retain more value for remaining shareholders. Have to figure out whether to participate

[rivaldo] 29/5/2019 14:16

RNS - up to £16.6m buyback at 1290p :o))

[rivaldo] 28/5/2019 11:37

Around £75,000 of shares traded so far today. This is almost becoming a liquid share :o))

It'll be interesting to see what happens if/when VLE make their next acquisition.

In some cases a cash pile is seen as a dead weight on a share price. For the first time VLE are in a position to make a really meaty acquisition. Given the Landers' disposition I doubt they'll spend more than say £10m on a single acquisition, but hopefully this level of spend would still excite the market given the potential multiples on offer from the Landers' track record.

The defensive aspect of the currently almost £37m cash pile would obviously reduce, but I'd have thought the former would outweigh the latter. We might even see the share price start to rise nearer to parity with the true NAV.

[zoolook] 26/5/2019 08:21

I’ve yet to sell a single Volvere share and as stated it’s 30% of my portfolio value.

I thank you for your points on this thread overcoming my initial confusion about Volvere and leading me to be comfortable about being overweight and making it my best investment ever.

Until it approaches a reasonable sum of parts valuation I’ve no intention of selling down. In fact I’ve recently toyed with the idea of topping up. Hardly bearish about Volvere, just food manufacturing as a sector.

I’m not going to post any more on the subject as it seems that whilst trying to be clear what Im saying is misinterpreted.

[eezymunny] 26/5/2019 06:38

My word people can be miserable and bearish for no good reason.

There are so many companies to be bearish about why not be optimistic about a company that has delivered the goods in spades for 20 years?

[zoolook] 25/5/2019 22:36

The feature that makes it different that I was alluding to is it’s moat / barriers to entry. Any business that lacks that is inevitability going to have low margins if not now then sometime soon. Yes you need good management to exploit the potential of a good moat but if you haven’t got one then you can’t make a silk purse out of a sows ear.

I’m not pointing out anything radical by saying that food manufacturing isn’t a high quality business to be in. That’s not to say that money can’t be made in it but you’ll always be on the back foot with a contract based business with a monopolistic customer base, volatile commodity prices, lack of control of minimum wage labour costs and potential hygiene/health risks. It’s a hard space to operate in. There are easier business sectors to make money. That’s all I’m saying.

Fortunately the Landers aren’t in it for the long term though Shire has been on their books a long time. The latest update suggests them hanging on to Shire for a while longer and bolting in complementary businesses and having economies of scale.

Personally I would be happier with an acquisition that makes them more diversified. I am willing to hang on and see but being a proxy investor in food manufacture doesn’t excite me greatly. I hope the Landers haven’t fallen in love with Shire.

[cockerhoop] 25/5/2019 20:46

As we both know Games Workshop was languishing before Kevin Rountree took over leadership of the company - nobody suggested selling plastic models to geeks & goths in the computer age was an attractive sector to be in. He's revitalised the Warhammer experience by providing what the customers were crying out for. Good management in action - traits which the Landers share ;-)

[zoolook] 25/5/2019 20:00

The conversation was about the food manufacturing sector in general. Shire specifically I’m sure will be developed and sold on for good money. I only say that because of the Landers proven good judgement. If Shire was a stand-alone listed business I would be less interested in it as an investment. Volvere as an investment is attractive because the market cap is not far short of its cash and the Landers make good decisions. Shire might be a good business compared to its peers in the food manufacturing sector but it sure ain’t no Games Workshop ;-)

[cockerhoop] 25/5/2019 19:16

Zoolook,

You could argue that there's been sector headwinds in Car Retail over the last 3 years - it hasn't stopped the Landers doing exceptional business with Impetus.

They've a record of being great allocators of capital over many years in a variety of sectors - I imagine due to the difficulties the food sectors faces, distressed assets with a clear turnaround path are more readily available.

[eezymunny] 25/5/2019 11:44

Of course zoolook. It was just the dismissal of the food sector that made me laugh. Just look at Beyond Meat and see how it can be as daft as any other sector:)

[zoolook] 25/5/2019 08:33

There is a difference In sure you are aware of but I’m going to spell it out anyway :-) as Shire is further down the ‘food chain’

Nestle is mainly a brands marketing and distribution business. They could in theory outsource their food manufacture (to the likes of Shire) and maintain that turnover and potentially the profitability depending how efficiently they do it in-house. The customer would be none the wiser.

[eezymunny] 25/5/2019 08:22

Nestle. Turnover c £72 billion. Pretax profit c. £10billion. Food n beverages. Rubbish business to be in.

VLE have a ways to go to catch up... :)

[rivaldo] 24/5/2019 09:56

Commentary today from Graham Neary, who is rightly full of praise for the Sira sale, and from memory has VLE as his largest holding. I'm not a subscriber, so it would be useful if someone could post the remainder of the text from this part available for free:



"Some great news from Volvere last night.

I appreciate the fact that they released it after 6pm, so we had plenty of time to digest it last night. It would be wonderful if more companies did this, wouldn't it? I don't think there's a rule which says that announcements have to be released at 7am!

Anyway. the news is that Volvere has raised £2.55 million (£3 million before bonuses to executives and transaction costs) from the sale of Sira Defence, its small CCTV software subsidiary. The buyer is a large company called NICE.

The multiples achieved by Volvere on exit really astound me. Sira earned revenues of £300k and PBT of £60k last year. Selling it for £3 million tells me that Sira must have developed into a very high-quality business over the years, with a lot of potential, and/or that Volvere is particularly good at finding buyers for its subsidiaries.

You might remember that Volvere's previous disposal generated £31 million (gross), for a consulting company which generated PBT of £3.3 million in the prior year. The multiples for that transaction were impressive, but the Sira multiples are on another level.

The return on investment is also quite good. The RNS yesterday says that Sira was purchased for "£0.005 million". Scrolling back through the archives, the RNS from 2006 says that £30k was the purchase price for Sira and its sister company.

A couple of working capital loans have been extended over the years but the ROI is spectactular whichever way you look at it."