Good Morning, with the market taking priority there will be
no future apologies for the tardiness of updates nor urgency placed on any messages enquiring what time its going to posted.
Morning Mumble: The diets begin in earnest... and the
FT runs with Oil projects worth billions put on hold. The high impact
drilling has always been questioned even at circa $100, quite why Premier
Oil (PMO's) entered into Rockhopper’s Sea Lion on
the economics is a question not of hindsight but of value for shareholders that
shouldn't have been completed at this time. PMO's share price has gone only
one way since Sea Lion Farm In, pre-the oil drop.
PMO's all-in-costs from there trading and operations update will offer safety to a
lot of oil investors. With some alleged low risk drilling (Falklands
& Indonesia) and debt without the immediate concerns or RBL criteria, PMO is
likely to have some potential upside. Personally, save for
intra-day it’s difficult to justify any oil holding in the current market until
the market has digested the changes. (See TLW).
Tullow (TLW) today have come out with similar, giving
clearer guidance on costs, albeit one would be wise to revisit their year-end
accounts and work through the costs (limited time today). Tullow Oil plc - Trading Statement & Operational Update with
write-off's of circa $1.2B and potentially more, one will wait to see what
Tullow do next with murmurings in the market this morning. Over to Exxon
Mobil (XOM) to acquire on the cheap with limited options for
shareholders, the time to strike is "near." having cast their eye
over this company before with the upside potential even in today's market. Do not expect the update to do much in the market, without some validated gossip of TLW losing its independence.
With Game Digital (GMD) showing how margins
and sales were impacted by Black Friday (Compete or
Retreat), Home Retail Groups (HOME) update was with no hope of
an improvement in comparison to GMD.
With Associated British Food (ABF) trading update today endorse repeated debates for divesting the food divisions, declining margins (as expected). The Sugar
alone EMC Food Prices would impact and the EMC Duncan Fox ABF summing things up nicely. The
company's trading outlook promoting (read as selling) the company nicely:
Trading outlook
This year we expect Primark's expansion to
continue and Grocery, Ingredients and Agriculture to make
further progress in operating profit on the back of their very positive
performance last year. With the fall in EU sugar prices and weakness in
the world sugar price, we expect a further large reduction in profit from AB
Sugar, but this will put much of the effect of the structural changes in EU
prices, seen over the last three years, behind us. We expect a decline
in adjusted operating profit for the group but the
impact on earnings will be mitigated by much lower tax
and interest charges. Sterling's strength against most of
our major trading currencies will also have a negative effect
and we now expect a marginal decline in adjusted earnings per
share for the group for the full year.
It will be interesting to see how my view on the not
to short from November pans out! With my belief
previous news being totally validated. (Disc: Long) Bold is mine. The
market is now ignoring the Sugar and Ingredients divisions, so will
look solely at the positives of Primark's performance the star
in the group and making valuations difficult for traders. Closing on
the news for the myopic trading and banking profits (myself). With
little upside on the current SP, it’s wise not to carry profits much
past the news. Under review for the short, now January 2015 has arrived.
It would of course be rude not to mention Atlas Iron (ASX: AGO),
some of the dedicated have correctly spotted the shorting opportunity post-Christmas.
As always, comments on AGO will be published if there are no
obscenities and relevant. It is with pleasure that two significantly underwater holders
decided to short post the Christmas nonsense appreciation, and have
actually banked a break-even on their investment. Having held for their near 3
years from AU$3 they have actually broken even on shorts...have they been
converted. Kudos! One hopes lessons have been learnt.
With Crude Oil finding support (and copper), it’s no
wonder there's some hope for the obvious leveraged candidates. Brent
and WTI both trading near par at $47.40/bbl (approx.). So
today, the warning was on the door, the flags were waving, LGO Energy
(LGO) conducts a placing to raise £1 million raised for Goudron, and Cedros update. Surely
not, EMC LGO & Copper Coverage (Fumes) (Diet begins in
earnest) seeing the writing on the wall, today I close my short and await the
"constant" news flow again. LGO's Nomad
and Brokers will obvious assure us no one knew about the placing and it
wasn't broadcast far and wide and there was no selling down to fund the
placement. Strangely no matter what they say, LGO has
yet again performed predictably. Whatever happened to LGO's credit facility?
Staying with the LGO theme, Alecto
Minerals (ALO) placing, congratulations to whomever got this
away...judging by past performance. Who'd have thought it with the importance
of ALO's Completion of Analysis of Historic Drilling Results at
Kerboulé Gold Project, Burkina Faso. Can anyone identify what
regulatory news is contained within the 6 January 2015 announcement. The company today announces a placing to
maintain working capital (read as sustenance) whilst discussions progress on
potential joint ventures. ALO could have saved some RNS costs
and updated the market on the Burkina Faso issues both with Government (CNT
(no joke) and disturbances stopping operations for the Karma Mine operated by True Gold. Obviously other
companies would be wise to update the market accordingly, after all gold is
highly portable, such as Avocet (AVM) and Amara Mining
(AMA), whom I'm led to believe operate not far away or have licenses near. Centamin Egypt (CEY) really need to bring the cosh out and put ALO out its misery...no premium share based takeover. The shareholders would immediately benefit.
The final thoughts without reading too much into it
the third quarter results of Mothercare (MTC)
is why do they have shops? Investors should be considering graphite within
the lithium squeeze, no cryptic messages just common-sense.
Its always pleasing when investors re-read announcements and come back to
reality, ZIOC (ZIOC EMC 30th September 2015 with ZOIC typo).
(Disc: no positions short now.) Sirius Minerals (SXX) disappoints
today with an update harbour facilities application. Perhaps the company
can consider the difference between approvals and applications. This decisions
is surprising seeing as there is the potential within the process to modify the
application. Impatience will punish...
Atb Fraser.
