Just the other day I had nefarious thoughts about Europe. It comes as no surprise that Putin seeks 'statehood' talks on east Ukraine (Aljazeera link). It’s well-timed on a psychological and economic level as well and shows the complete disregard for the European 'footprint'. If one was to consider the other side for a while, if a certain element of the Ukraine want to be Russian, why stop them and just get back to peaceful harmony even on a faux level.
The EU have two choices, continue wasting resources and letting the sanctions also impact on listed companies which may be resource focussed or actually get some common-sense and resolve it quickly. It would appear there's a bigger agenda above and beyond Ukraine which in time will show itself.
China’s ‘bad banks’ back in the spotlight (Via FT) demonstrates the concerns and risks within the sector. It validates the requirements of more prudent borrowing requirements that China have been lapse on. Whilst speaking to a Chinese trader (with a US Passport) it was no surprise to learn that credit restrictions are tightening despite the Chinese Government's demands to speed up lending and mortgage applications.
What China can ill afford is unsubstantiated lending like in the past when they were decreed by the local communist agent/representative. China have some tough choices and one of those is the realisation of bad debt rather than the rolling forward. The analysts appear ignorant of this requirement. The commodities are tracking the obvious realities of stimulus, those short would be wise to keep abreast of actual new stimulus measures to maintain growth as if China wish to maintain this growth forecast actual new stimulus is required.
It was tempting to login yesterday and write about the Fears for Lesotho's future after 'coup' (Mail & Guardian South Africa) but it soon became apparent things are not clear. SADC, SANDF and the Lesotho coup that wasn't. What it does mean is concern for the listed Diamond entities on AIM Gem Diamonds (producer), Firestone Diamonds (developing asset) and Paragon Diamonds (looking for finance) but as yet alack of market reaction. Lesotho will deter investors if they wish to start infighting.
Phones4U did not have the news they were expecting today either as Vodafone are not reviewing their agreement. One assumes they've been having discussions with other operators at the same time (surely!)? BC Partners might want to be IPO'ing sooner rather than later to get their cash out. This has significance on a number of levels, also for Dixons Carphone.
No doubt the brokers will be about showing the positives of the Dicks Phone model, but the fact is, mobile Operators need to adapt and cut out as many middlemen as possible. This is just the tip of the iceberg and one will expect similar news from Dixons Carphone in due course about the impact on margins. Albeit there should have been good news with the longer term contracts for 4G.
For myself, having a bias to a blackberry I see no need to fast broadband on a mobile simply because I would never stop working! Having been long on Dixons Carphone purely on the basis of a market belief of jam tomorrow I have elected to close today. For those looking longer term I would monitor the situation, but selling into highs is never a bad thing. Albeit the price may hit 389 (my previous target assuming Phones4U got a renewed Voda contract).
It was comedy watching the positioning in Tesco's today with the knife catchers being caught in early trading. The Comedy was some of the buys and sells were so close together it looked as though retail punters were catching the knife with little confidence and bailing minutes later! My thought process is finding it hard for the Gov+t to find an issue with a merger in the sector due to the current dynamics. This is opens the door to Morrisons being hoovered up by a larger entity but could LIDL or ALDI be in the running?
A reverse takeover, but a significant play to be had in Morrisons currently priced at the also ran. Surely there have not been discussions about a joint LIDL ALDI bid to break the company’s portfolio up and improve their offerings of product, economies of sale. After all, its surprising that near 70% of MRW customers utilise ALDI/LIDL.
One does not have time to cover the Red Rock and Regency Mining Items nor the Perform Offer, which is somewhat low but allegedly going through irrespective of whether 260 is too low. PER will have caught a few technical shorters on the back foot namely Blackrock! Unless of course its being utilised to a hedge a position.
Atb Fraser
Fraser- Hi- Good weekend? Just catching up after early morning errands.
ReplyDeleteYes- supermkts looking friendless and appearing on my buylists daily, albeit Im still seeing the figures period after this Xmas as being the nadir so my position of less than 1% of my v long portfolio in this area will probably expand in a major manner over the next 6 months. The End Is Nigh sandwich board painted up for me to wear on my regular walks to the local MRW :-)) I still cant see the PE guys getting too excited but they are a funny bunch and they are probably reassessing deals at these lower share price levels. The property position with MRW is unusual for the sector so perhaps some financial engineer will find a way of getting an acceptable IRR but I cant from here.
Re ALM- nice move again this am- the Yanks must be driving this forward and they are probably annoyed it wasn't listed in the US, but clearly Invesco had other ideas re their major stake and liquidity.
Re BZM- so its costing $375k per week to keep it afloat from todays RNS. Not sure what the point is apart from the directors gravy train of course. The End Is Nigh is v apt here.
Re COOL- as above- the figs were horrific and the bail out seems doomed to fail as the monies seem to be heading for the board here too. Have these guys no sense of shame?? Obviously not. Luckily they were on one of my watchlist and the red flags kept me away, but they have made an art out of how to mess up a business here.
Cheers. The Leggie
Ps- Im pretty sure the move has stopped your blog being emailed out daily. Worth looking into.
Hopefully thats cured the emails updating issue leggie, format and changed the code for the updates. It appears it was still linked to views on Churchill Mining. Thank you for that! Pepople have to resubmit their details in the above link at the top of the main page. Atb Fraser
DeleteWeekend was fab thanks Leggie, with an evening Cruise as well! I'm on a detox until October now, short gin and wine stocks.
ReplyDeleteSupermarkets might need to rebrand as markets! I banged on about BLT's BHP Billiton's divestment for years and it finally happened. So, I shall perhaps beat the drum.
ALM Allied Minds, it appears every man and his dog has a position there very illiquid so not for the over trading personality. BZM I had considerable equity in at one time the Chinese will no doubt get the "asset" for free. At current prices its amazing they're bothering, but these decisions often take a significant amount of time to unwind (realisation of bad investments).
COOL. Continental Shelf springs to mind, rather than Coal!
I've been playing with the Car Retailers recently short/long, I wonder if the cheaper credit will come to an end for car sales With Vertu acquiring premium brands is it time to separate itself from the competition in terms of a rerating?
I have found the problem with the email updates, it appears my typing in Word (as a backup) and pasting to blog creates a format issue that stops the email. Thanks for letting me know!
I hope the cricket went well! I see England are doing 'not' so well!
Atb Fraser
Fraser- Yes- Good weekend for cricket, the last full weekend for my local club and the heavy jumper was forced into action, which is v rare for me. A good thing as the main mower was spitting out plastic cogs as it ground to a halt too. The long winter awaits us both now :-))
ReplyDeleteI have Vertu as a small holding and Ive not really paid it much attention recently so a bit of homework for me this week. My ALM is a long lock away for me- the guys behind it are super smart and no doubt a NASDAQ listing in due course imo. I wonder if BLT will have the humour to name the spin off Billiton- I guess not but it would be a good description of the unwanted assets. No signs of what Mick the Miner has lined up at this time but some cheap shovel ready assets out there, as we both know.
Cheers. The Leggie
Its interesting to see you dipping into the car sector Mr P !
ReplyDeleteThe usual suspects, PDG, LOOK,INCH, VTU, are all trading in line with the increase in sales. what was interesting was PDG looking at expanding more into the US where they currently are pulling in 20% of profit from 5 dealerships ! (I bet they wish the UK operations gave them that from 5 dealerships !). Given Mr Finn also believes that £100m of debt is about the correct mark, more expansion on the cards due given a better return by investing capital. Still, PDG wise, the 1.45 BILLION shares always puts me off, that's what you would expect out of a small cap miner on Aim....
LOOK are trading well and they I do like the board. When you take Mcminn and Bramall, two industry heavyweights, theirs a lot of experience their which gives a lot of confidence.
VTU looking to expand with more purchases on the horizon, again with Messrs Forrester and now Mr Jones coming aboard at the end of the year, its wouldn't be a surprise to see a re-rating.
New vehicle PARC is expected to top out in March next year, so I would imagine one would want to keep an eye out on Service plan penetration and service performance which will be key drivers for all players in the sector. Used cars are expected to increase 10-15% this year so Id be surprised to see people below this (make that alarmed should that happen)
Also be sure that increased capex by groups to meet manufacturer standards are being absorbed in the current increase in bottom line, it certainly is driving brands stronger but capex per dealership is certainly multiple 5 figures. CSI (customer satisfaction) will now be a dictator on dealerships and their expansion with partners....those performing not to par may find themselves loosing franchises, or partners entirely...
I also wonder if a retailer will be exited (not exiting) from a certain eastern partner, one to watch..
I also wanted to say with regards to the whole car financing business, the main bulk of new cars these days are through PCP (yes, that isn't the old dust of the angels !)(Personal contract plans)
ReplyDeleteIt appears now that I am somewhat left as a traditionalist, i.e, I like to own something tangible for my hard earned money; it appears most people just like better cars for a monthly payment that they don't actually own in 36 months time....
One should consider that its not the manufacturer who will end up with the vehicle if the consumer sees through the said pcp deal(or even if they don't) because mostly, this is peoples trade in`s that a dealership will have to settle and buy, so its not like the manufacturer is taking back said vehicle in 3 years time.
Dealer groups have their targets too hit, if your currently on a PCP deal and are 6-9 months in to it, Ill bet you my last £ that you can walk back into the dealership you bought the car from, get a brand spanking new car, and not have to shell any more money out that your paying for your marque per month...rinse, repeat every 6-9months.
Equally, given the way new car manufacturer targets are, a lot of the manufacturers appear to be offering "byes" on "renewing" their vehicles for certain categories of consumers, so instead of having to wait 9-12months, manufacturers looking for the volume appear to issue "waivers" in certain key months.
New car manufacturers (and I`m not thinking some southern manufacturers) but perhaps those with a more robust product to sell, have been picky for a decent length of time. Its worth taking note that when the crash hit, certain manufacturers who provided their own financing on their marques, didn't experience the defaults that a lot of others did. Why ?
Well, because these manufacturers only lent to blue chip people in the first place,who in turn were on and even now are, on decent rates as opposed too anyone who may have wished to have bought their cars.....its all in the lending criteria....
I`d also go as far as to say right now, its quite comical, the segment is booming, but, suprisngly, and this is where I guess the FCA comes into play, acutally lending criteria appears to not be as easy as it once was.. For every used vehicle sold, possibly..... another 2 peoples deals fall through due to being knocked back for the credit...
One thing to remember that is key up sell to the industry is Insurance sales, ie GAP products
It should come as no surprise that their possibly is some potential for groups to stop selling this product very shortly if the FCA should have its way.
Lastly, one has to consider conquest business in the sector. It appears the bulk of business in the sector now is conquest business (Probably 60-75%). Conquest business is that where its not down to repeat consumers, but down to marketing whether local or on the internet.
Imagine, every month, you have to go out and get 60-75% of business to new consumers.....if you can retain them, and reduce the conquest business, perhaps theirs a winner their !