South Atlantic Petroleum (SAPETRO) Notifications of Major Interests in Shares in Afren comes with little surprise and enabled some significant trading on Afren. So thanks to the scaremongers that clearly were not reading the statements that were made by the company and ignoring the large buyer (SAPETRO)
There are some lessons here for traders and long-term investors with Afren. This should, without a doubt, be considered a warning in terms of news announcements but also when the company has been very specific in their wording that warning should be embraced (buying opportunities), mid-term in respect of longer term capital and long-term in whom replaces the now departed. Also acknowledge the risks in respect of how this occurred over so long including the geo-bribery issues that is the perception of operating in Nigeria (and Africa per se).
The investigation is very precise in its terminology and is a broadside against what is rumoured/alleged to be certain lawyer conflicts going on in the background. One would be wise not to price in too much of a recovery in any monies. We'll leave it for Afren to summarise the results of independent review and the dismissal of CEO, COO and Associate Directors
Ironically, on the flip side, parties will know I'm short on Hargreaves Lansdown (HL.) for obvious reasons, increased competition, lower margins and the general pension outlook. Never-mind that most SIPP investors reduce their pensions via poor investing (read as declining returns and charges...) People would be wise to get hold of Sanford Bernstein's assessment of HL. They have a target price of around 745 pence which could be argued as the top end of target prices. For those not in the know Sanford Bernstein are sell side and have had some very decent calls!
It would be wise to look at the costings (marketing & enticements) for these new customers in all companies in this sector. With share trading competition hotting up expect some M&A in this sector very soon. HL. is too big in my view to be acquired, but should/needs to acquire to reduce costs. You should be forgiven to think that the results are good, but they certainly do not justify (save for any change in trading) any market capitalisation above £3.5 billion (circa 740p a share). One the trading side, with 8 days until PLUS500 update on Q3 Trading active customers might not be the best measure of success!
Some hooray for Anglo Pacific (APF), with a Kestrel Royalty License Update which shows a more hope for the company. APF has not got the best spread of investments and the assertions of a big deal are slowly being put down to myth and legend. Their current asset base in a perfect world would encourage a sensible person to invest, but alas that's not happening any time soon unless one starts drinking in the mornings! The news is positive but it does not change the outlook for the company unless costs are reduced and returns are improved. With my view compared to the wider market expect some advancement in the stock (read as opportunity to get out/short-term trading).
Caledonia Mining (CMCL) have updated with more revisions, as such the company has not met this target either that they had the opportunity to set on the 15th July, which was heady anyway. My best estimate was around 43k/oz. this year now it's been guiding to 40K/oz. with lower grades. The valuation does not justify the risk now so today was the last position to go. Such high hopes, but with risks of looking more like a serial disappointer.
With Tesco (TSCO) a few days away from their update expect some uncertainty and volatility in the SP. What is expected if a revision of guidance, some clarity on strategy and how TSCO will leverage off their market share to improve the situation/rewards. TSCO, with the monopoly on supermarkets/sector, have some leverage and position that has not been utilised fully yet. Expect a significant shot across the bow of the others in terms of price war, pricing and pricing perception. The key is the latter.
Research is already suggesting the shopper is travelling less to buy their shop, with TSCO 's 25-28% (pending how you read it) market share, you should see some improvement. Less travel means the shopper will go to their nearest supermarket with 1:4(1:4.3) being a TSCO, it could certainly be one to now start buying; LIDL & ALDI's growth is likely to be weighted to the high end of new stores rather than acquiring customers because of price.
With recent IT and Phone issues, I'll gain Roger's view in due course if he hasn't already emailed, it is a shame parties send me reports/views/analysis without permissions to share. Its like having a chocolate fire-guard!
With the shorts closing on Premier Food (PFD) ahead of their update, how bad will the news be? AO World finally finding some support in its share price...if you're a long holder from the highs, I have spare mirror for you to have a long hard look at yourself.
The final thought goes to Orogen Gold PLC Further drilling confirms continuity of gold zone, quite why anyone would hold this stock is beyond me...& congratulate yourself if you don't own Anglesey Mining (AYM).
It was a pleasure to be nearly having a mobile phone again, albeit EE for some strange reason sent 6 phones yesterday. This saga has gone on too long, no wonder Vodafone is performing how it is with their service at the dire end of the market. The CEO apparently does not have time to respond to "customer woes."...Porting allegedly takes place at 2pm today, so if I've not replied don't be too offended!
Atb Fraser
Fraser- hi- 6 phones does seem a bit excessive, even for a man as busy as you.. perhaps one was to left permanently as a hot line for Ians MOG updates.... :-))
ReplyDeleteRe AFR- yes, nothing that wasn't expected there today. There was no reason for them to not kitchen sink the bad news in their previous RNSs but clearly some who should have known better expected worse news to come out in due course. The SAPETRO buying continues- it was a clear buy signal when it started a few weeks ago, as they would have a good idea if the licences and AFRs assets were under real threat. Im long and happy to ride this out now, subject to Ian being on the board by Xmas... :-0
Re CMCL- they have lost a few friends this am as they had a few earlier opportunities to change guidance a few months ago but they stuck with a v v ambition figure for 2014. I nearly bought in the summer, but had 50p as fair value but this will know doubt drop when I next get a chance to reprice. The dividend supports, so the damage will be limited but there are better gold plays out there at present, CEY and AMA being two completely different angles (one producing now, the other with PFS in 3/15 and then funding needed, but strong numbers so far and good iis on the books) Im long both.
Re TSCO- my fair value is currently £1.68 here but I may dip in pre my predicted nadir in 1/15 if the opportunity arises, albeit their mkt is v fluid so I will probably have to reprice again in a weeks time. You are right in saying that low pricing perceptions by the general public are the target for TSCO and the others in this area. No real price war is likely- the overall cake wont get any bigger, and TSCO just need to stabilize mkt share and rebuild trust. Simples....
Cheers. The Leggie
I think Ian's got more chance in running Afren than completing the MOG item! There's been many a bet made on recovery, SAPETRO just perhaps has a better understanding of the Nigerian issues. Expect some board appointment very soon!
DeleteWeather dismissal today!
Morning
ReplyDeleteAPF - not one I know a huge amount about. Small office (13 people) that owns mining concessions and receives royalties from the likes of Rio and BHP. Familiar with the name as it often gets mentioned as a 'value stock'. Presumably getting hurt by the coal price. Worth further investigation, or fully priced on today's Kestrel update?
HL - great business but expensive, agree with your argument.