It wasn't that long ago I was being berated in London by one investment fund chap that disagreed with my view BBY (Balfour Beatty) was a stonking short. He'd allegedly read my views about BBY via FTML in April and May 2014 and it was "apparent to him I am negative anything even quality stocks." This, unsurprisingly, lead to a discussion about what one perceived as quality, with my reasoning being BBY was at the start of a wave of bad news, with FX currency losses and trading far from being in line.
Well today validates my call, with January Trading Update (Australian Issues in Professional Services), Balfour Beatty Final Results "significant deterioration". May Trading Update (Group pre-tax profits for 2014 are expected to be significantly lower than previous expectations, in the range of £145 - £160 million); May 2014 Trading Update (expect a £30 million shortfall in our UK construction business in 2014); One could have hoped that May was the worse, it wasn't as it plainly hadn't resolved the issues within sector or department, with July compounding my statements which only came about by the January update.
With July 2014 Trading Statement (We have seen a further worsening in the trading performance of the mechanical and electrical engineering (Engineering Services) it was not looking rosy. The final nail in my trade plan was today with a further profit shortfall of approximately £75 million in Construction Services UK. Worse, from an investing perspective and one for which I take issue with is the managements apparent lack of understanding in the business that they have to appoint outside eyes to evaluate /and or focus on commercial controls, on 'cost to complete' and contract value forecasting and reporting at project level (namely KPMG). For anyone holding long, you need to be asking yourselves why? what for? Better still, how many warnings do you need before you see the dire position.
The Nigerian Lottery, for which allegedly I am a regular winner, has more chances of success when the 3 rules of deterioration in trading are announced. Today will mean the closure of most of my positions, as 600+ points is not to be sniffed at and certain CFD intermediaries can have their stock back at 178 pence as I type.
My thought goes to Mr X, whose fund saw BBY as a safe haven of long-term growth and prospects. He knows my number if he wishes to phone up and apologise for his derogatory remarks about my trading and market understanding...or perhaps lunch and olive branch:-) (you can pay!).
Due to the demands of being the the mop, the cleaner and dogsbody currently whilst other parties swanning off around the globe, I was going to cover LOND (London Mining), but I think the RNS sums up the position when the Iron Ore price dropped. London Mining financing update. Does not bode well for being on one side of the table negotiating.
Now for the longs on GBPVs.AUD, perhaps its wise to take some profit now it's hit the target. Mainly on the back of Chinese and Iron Ore weakness having travelled significantly quicker than envisaged. near 1000 pts in a month. Forward trades are still in the region of $1.88 to £1 currently, but all the same with such swings and banking/liquidity issues in China stimulus is their only option (read as lack of banking reform) which will be positive for the Aussie Dollar.
After discussion (offers of proof reading haha) and messages, my posts are generally written in 3 mins, if parties do not like the basic typos, poor grammar and mistakes, please utilise the X button at top right of the screen. :-).
Re: a question about Fresnillo, the pure silver negative play is Hochschild with Fresnillo a trade but with more resilience. Silver slipped another 10c over the weekend, which doesn't bode well for any producer, trading around $17.50 (+/-5c). Expect a contraction in the supply and some support around this level in an attempt to support the price and change the trend. With apparent blind and ignorant support for the silver producers, perhaps the investors think the metal is at $30/oz.
Gor those people trading Uranium up near 50% from its lows trading (pending on quotation) around $36/lb expect some news of some trading desk disposals shortly. Its amazing how long the market took to wake up to the deals being completed in Japan.
Atb Fraser
The weekend was filled with being in Bristol and Bath (Business), a fabulous time with a visit to Cheddar Gorge (pleasure) and seriously needs some investment. Dining out in a lovely small restaurant I had visited some 4 years ago. The service was just as slow, but the food was fabulous. The detox continues without interruption! It's either 3 weeks or 4 pending how you twist the calendar! Its likely I may have to stay in Bristol for 4 weeks soon, god help them!
Cheers for LGO Fraser it aided me in recovery my stupid losses on stocks I will not mention. Lessons are being learnt quickly and costly. Keep up the fantastic work with little in the way of marketing or campaigning about being everyone's saviour there is defo a niche. Even at a recent investors night/pr your ID came up. You are getting people thinking about how or who they invest in. I cancelled ADVFN so add me to the list of 30+ a month saving with lower losses and higher returns on the little profits. Thanks Antony.
ReplyDeleteFraser!!!!!!!!!!! was waiting for you to mention BBY you saved a good part of my pension thank you. Saw your work on BBY markets live. I sold QFI after you as well for higher & Beatty thanks looking @ getting back in soonish. Awesome work, thank you. Will have a drink for you as you are detoxing. Cheers for LGO as well up 6 fold. thanks RRoss
ReplyDeleteThanks for the above. All I can reiterate is do your own work and pay attention. For those following the Fortescue Metals short, please note the SP now with little support even 50c sub $4. Atb Fraser
ReplyDeleteNews out http://www.sapetro.com/our-operations/nigeria/ have bougt 3% stake in Afren. The derisking of operations via the support/investment of South Atlantic Petroleum (SAPETRO) is happening. Isn't an update of the investigation due today or tomorrow? Holdings RNS for SAPETRO http://www.investegate.co.uk/afren-plc--afr-/rns/tr-1--notifications-of-major-interests-in-shares/201409290837568347S/ AtbFraser
ReplyDeleteInvestors would be wise to look whom is funding SAPETRO including what acreage and deals they have already completed. SAPETRO is far from small fry and well financed with good local nigerian connections. Something validly raised by Leggie as a risk, albeit one I do not see as this was disclosed immediately, and from what I can make out was to enable developments for Afren. Atb Fraser
DeleteFraser- good spot as usual with BBY- do they need to reconsider the Carillon offer now and would they get the revised deal based on the continued mismanagement of their business. I guess the only risk here is that Carillon can still see past the brown stuff to the fan... not sure if they want to buy a fan, but BBY keep throwing the brown stuff at it so perhaps the image here is along the right lines... what a bunch of cowboys...
ReplyDeleteRe AFR- yes, all waiting for the update re the investigations- they said the investigations will conclude in 9/14 so this week they should update us for sure. The key risk is the local reaction to the cessation of incentives. I guess they wont like it, given the culture... may be they need you level of luck re the local lottery....
Re AMA- nice update re stronger dynamics here, which promise well for the 12/14 update and the big one, the Q1 2015 PFS- The old IRRs of 23% at $1,100/oz and 36% at $1,300/oz should both be tweaked upwards and the project looks great even with low gold prices.
Re RGM- big surprise, they place... well I guess they had to as they didn't want to wait until the whole of the Gatwick area is soaked in oil later in the week, did they ? :-))
Have a fun week away. Cheers. The Leggie
Thanks, Fraser.
ReplyDeleteAs always a very informative read.