Good Morning,
It wasn't so long ago in a meeting about 'where to
invest' in a low oil price environment, I found myself recommending
short oil/associated products including washing powders and the like, whilst
longing holiday companies and retail leisure.
Next's validation will come shortly on Thursday (Preliminary
full year results) with the "beat" being reported as a head of
consensus. Perhaps not all blue sky as the market is becoming more active,
expect margins after this quarter to go under-pressure again. Simply put, if
BOO and ASC can do it, then NEXT should be staggering.
The debacle of BHS, has no doubt been amusing for the sector
pundits, but if the journo's don't have a clue, then we hope those fronting the
company do. So whilst at the races, there was speculation from those in the
industry that BHS has been acquired by a subsidiary of Iconix China Group and
the daughter of Silas Chou, Veronica.
Whether Iconix or the Chou's are the reality behind
BHS or not, its speculation based on Silas Chou/Veronica Chou alleged
desire for a UK acquisition. For myself, if they're behind big brands, why own
department stores? Those of you like I thinking,...who, what, where is Silas
Chou, being swiftly told off on Friday, apparently they’re behind the IPO (2011)
of Michael Kors and the purchase of Tommy Hilfiger in the late
80's, Karl Lagerfeld and Pepe Jeans. Clear as mud to I, but if I'm honest,
not something I will be keeping an eye out for.
Staying in retail, it looks like Richard Chase is exuding
confidence in AO World (AO) stock slotting
5,583,475 shares at £1.80.
John Roberts (Chief Executive Officer) assures the market John
Roberts, Chief Executive Officer, said: "
The share sale by Richard
Rose follows the expiry of the post-IPO lock-up and will help to further
increase liquidity and the number of shares in public hands. Richard remains
committed to the Company, both as a shareholder and as its Chairman."
If one thinks selling 85% (circa) of your stock (a sizeable
holding) is commitment and confidence, then this week I shall spend a few hours
applying for Chairman type positions of stocks that are stonking shorts.
Richard Chase has unknowingly made the Christmas card list of every shorter in
AO.
Kefi, the amazing performing Gold stock, you'll note the
sarcasm, gives an update on
Tulu
Kapi. KEFI are apparently only having to find $20m to obtain $100M in debt
financing. They have a number
of possible sources currently being
assembled, including financing from contractors and equity at the project or
parent company level. Over to the International Finance Corporation (IFC)
to stump up sum (poor!)! if the equity is at the parent company level, one
hopes the current shareholders (including yours truly) do not need a snorkel
for the impending dilution!
Ian was discussing his long in HOC (Hochschild Mining) over
the weekend. Having spent so much time away from technology, its apparent he's
incapable of differentiating between a long and a short. Today, with silver
finding
significant support its wise to close any shorts on
HOC, not for fear of a change in trend but to lock in significant profits since
the Christmas Silver bounce. They're also announcing their annual results on
the Wednesday, and they
might not be as bad as the market
expects. One hopes there all in sustaining costs of circa $17/oz. is much
better! The common-sense coverage of HOC via
EMC from November 2014.
It would be rude not to consider oil and shipping rates, WTI
at $44.26/bbl, and Brent at $54.20/bbl. these prices are likely to impact on
shipping rates as speculators exit their floating storage rates. These rates
have continued under pressure with Suezmax Tanker Spot Rates into Q1
2015, dropping near 20% from the start of the quarter having peaked at
$80K+/day down to $47K/day, Aframax Tanker rates fairing much better at
circa $38K/day. LR2 Tankers rates at $26k/day. All classes all (excluding Suezmax)
are near 50% above the rates of 2013/2014 and Suezmax up near 100% on
2013/14).
The industry men describe the current rates as very strong. Based on the oil
price being low, with continued strong demand (Asia from Arabia) and
stockpiling (surely there can't be much more), and the rates benefiting from
the storage speculation (albeit reducing). The market has missed the
reduction in Russian export duties (circa 40% lower), where oil
producers/exporters delayed shipments to save a few $$. So more oil out of the
Black Sea, Mediterranean and Baltic! The weather is impacting on the Turkish
straits, delays near 6-8 days.
With the maintenance schedules coming up at refineries
around the globe, this will push higher inventories and impact further on the
prices. Will the trend in rates encourage speculation in fleet growth
depressing the industry? Oh yes, tanker/shipping rates are likely to come under
significant pressure end 2016 into 2017.
There's been contracts placed on around 49 long-term Very
Large Crude Carrier (VLCC) and Ultra Large Crude Carrier (ULCC) in the past two
weeks, giving a floor to the rates and removing excess capacity from the
market. All boding well for the tanker market rates but limiting the spot
market delivery capabilities.
Afren (AFR) down another 20% today, perhaps holders have smelt the roses? Don't be silly...over to GKP!
Atb Fraser