Morning Mumble: Dee Effe Esse, China's Steel Mills (No news), PMO Zebedee BOING! & APR Energy (the Fluke)

Good Morning,

Following on from the EMC February comments on DFS Furniture (DFS), today we are informed (with no surprise) the management and owners of DFS are running for the door selling around 25% of the company. Advent will still hold between 50-55.9% of the company, so those realists will be wise to remember the rules of illiquid stocks at least until the stabilisation facility has been finished!

With Li Keqiang (and as such the Chinese Government) acknowledging the downward pressure on the Chinese economy intensifying. China have finally utilised the over-capacity and pollution to justify the closure of the mills. It’s positive for the Chinese as they're openly stating iron ore demand is reducing and there is currently over-capacity in steel mills even with the closures. With the extended trading hours on the DCE (Dalian Commodity Exchange), the price reacted very positively (for the shorts), dropping 3%. 

We should initiate the Atlas Iron share price watch again, with those holders knowing full well the bounce at Christmas was the time to get out! Only 10% ish off its lows, the holders can fill mailboxes with the abuse despite knowing the realities. Of course it has nothing to do with cost of production and the supplied market. We'll ignore the facts of Russia exports being enticing for India on the back of their currency debacle. As Russia languishes in a mire of contemplation and ignorance, what better time for military exercises (FT). Often children find comfort in playing with their toys after being on the naughty step....

With both WTI and Brent sat on levels of support, one assumes the bulls will return with the ECB printing presses, at least on Brent, whilst WTI focuses on shipping America to Asia to meet demand. Later today I hope to catch up with a shipping chap about the current health of rates and demand. Will update in due course, the delay surely cannot be on the basis it’s his turn to pay (not that one is counting having paid for the last 4!)

Premier Oil (PMO) are getting busy with the drill bit, so the fanfare will no doubt be out for Rockhopper (RKH) over the next few weeks. Wasn't Zebedee a child's spring type character well before my time? RKH Zebedee announcement.

APR Energy, by sheer fluke being short on technicals alone, APR Energy aided EMC et al with a market update. Time to press that button on APR, with a trading update/market update not the best timing with discussions with their banking syndicate in full flow. Its pleasing to see a number of positions utilise yesterday's spike to sell near break-even, how prudent to sell positions. 

One would be wise to consider how much cash APR banking syndicates will expect shareholders to stump up. That alleged offer late last year isn’t looking so speculative and cheeky now is it! The EMC Christmas Card list is bordering on the who do we not send them to. 

Limited time to cover GLIF’ s investment, in Open Energy Group, and the dull performance of Inspired Capital (INSC) not to be confused for those fat fingers with Inspirit Energy (INSP). Both a longer-term hold since circa 2013/2014.

Atb Fraser

No comments required on Afren (AFR) due to the obvious there. The quote of the day goes to one fund manager with, "whoops." 

Morning Mumble: January dieting...Associated British Foods, Atlas Iron (wonders would...) and Oil. ALO forgot to tell the market about

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.