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Value Share thread (Read 11581 times)

shark

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Value Share thread
February 23, 2022, 10:52:35 am
Pete’s thread about investing is focussed on high growth companies which can do spectacularly well or the opposite.
My investing focuses more on companies where the upside is less exciting but seems to limit the downside typically from tangible assets held by the company.
If this is of interest to say a dozen or more I’ll post a bit more about value investing. If not I’ll delete the thread.

MischaHY

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#1 Re: Value Share thread
February 23, 2022, 10:55:09 am
Definitely interested in learning about what less volatile options you find interesting.

abarro81

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#2 Re: Value Share thread
February 23, 2022, 10:58:33 am
I'd be interested.. I've never invested until this year, now beginning to dabble. Mostly trackers but also some funds that invest in companies owning/developing renewable energy assets (which may fit with your preferred style).

shark

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#3 Re: Value Share thread
February 23, 2022, 11:00:25 am
Definitely interested in learning about what less volatile options you find interesting.

Value shares don’t take into account volatility as a measure. There is a measure (VIX) that does focus on it as a measure if that’s your key criteria.

petejh

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#4 Re: Value Share thread
February 23, 2022, 01:33:36 pm
Pete’s thread about investing is focussed on high growth companies which can do spectacularly well or the opposite.

I feel this is quite a profound misrepresentation actually Si.
If I *was* invested in high risk growth shares I’d be invested in stuff doing very poorly at the moment, typically tech growth stocks on Nasdaq and elsewhere. I’m not invested in a any stocks on the Nasdaq, and my portfolio this year is beating the S&P500, Nasdaq and FTSE - all are suffering corrections while my commodity investments are doing well.

There’s a big difference between thinking something is a growth stock because it actually is, versus not understanding certain sectors as they pertain to your preferred investing style. Maybe ‘riskier’ is a more apt description?

The investment thread title is supposed to be tongue in cheek btw ‘buy the dip sell the rip’ sounds gung-ho but the reality for me at least is very different and boring, hrs and hrs of reading.

I invest predominantly in the following:

One major gold producer (Agnico Eagle, formerly Kirkland Lake). A ‘value’ stock in these times if ever there was one.

I invest in two major tin producers (MLX and Alphamin). Again these are value investments to make any value investments that should make all value investors take notice. I mean they really are the definition of a value approach to investing in that they’re profitable but undervalued and they have a very solid fundamental asset backstopping their market value.

High quality resource exploration/development companies in the nickel and copper sector, that are in the stage of either early exploration or development. You ‘could’ class these as high risk (certainly), and growth..
..but knowing what you’re doing in this space can make it the most rewarding of all investing. To be clear - there is a whole ‘explorer/developer sector jam packed full of speculative shitco’s being ‘promoted’ by.. ahem.. cunts.
This is not that.
I’d like anybody to review the exploration companies recco’s  I’ve made public and see how they’re doing in this current correction, since the date I mentioned them on the thread.
My point being, if these were growth stocks by the common understanding then they’d be tanking. They aren’t, because the commodity thesis sitting behind them and the quality of the asset they’re developing is solid.
Currently still holding:
- Filo
- Meridian Mining
- Centuras Metals

There are two or three other explorers I’m invested in that are doing excellently but are at a stage before I’d feel comfortable mentioning on the investing thread.

Then there’s the periphery stuff, which yes you would class as growth stocks - a medical device developer at FDA approval stage (Polarean), two battery developers (GMG graphen aluminium, and Ilika solid state). One company that manufactures lightweight printed wiring harnesses - growth certainly but potentially at that point where growth turns to good levels of sustainable revenue.

Finally there are the recent things such as US fertiliser investments - CVR Partners, Mosiac Company, and CF Industries. These are again the very definition of a value approach to investing. I’ve mentioned these but not bought.

The common theme in my investments is tangible assets. A producer or developer/explore with a high quality defined resource of tin, copper or nickel, now more than ever, are pretty much the OG of tangible asset : )
So yeah I feel a bit misrepresented there by being categorised as someone who invests in ‘growth’. I think you have a fundamental misunderstanding of the sectors involved.

All said in good faith btw. No issue with a value investing thread - fertilisers a great one, tin producers another.  ;)
Just wanted to correct your assumption.
« Last Edit: February 23, 2022, 02:04:47 pm by petejh »

petejh

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#5 Re: Value Share thread
February 23, 2022, 02:07:53 pm
Edit: Double post

What I also meant to say regarding risk..

Maybe ‘riskier’ is a more apt description for the sectors I invest in but even that concept isn’t really accurate, what’s riskier at the moment - holding a supposedly ‘lower risk’ fund tracking the ‘wrong’ sector or holding a well chosen individual stock in a ‘good’ sector?
« Last Edit: February 23, 2022, 02:18:32 pm by petejh »

kelvin

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#6 Re: Value Share thread
February 23, 2022, 09:08:43 pm
Can someone define value shares for me please?
I've a few different definitions in my head.

shark

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#7 Re: Value Share thread
February 23, 2022, 10:12:38 pm
Can someone define value shares for me please?
I've a few different definitions in my head.

Great question!

In the generic sense every shareholder believes that there is sufficient value in their investment that the share price will rise otherwise they’d sell.
However, value investing has a more specific meaning and weighs up the value of the tangible assets owned by a company (cash, property etc) it’s dividend payout, its earnings (profit) record and its level of debt. The key metrics are P/TNAV (share price to tangible net asset value ie assets minus debt) PE (share price to earnings) and Dividend Yield (share price to dividend).

shark

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#8 Re: Value Share thread
February 24, 2022, 10:48:21 am
Ok - reached a dozen in the poll - just!  :lol:

I’ll try and do a blog post each rest day on my thoughts about investing in individual companies

I’ll start with my own investment history. I think with investing you have to find a style that suits your mindset and it takes several years of successes and failures to find what suits you.

Most people stick with choosing trackers and funds which are the collective investments that make up corporate pensions rather than get involved with investing in individual shares. There are fees and costs associated with funds and trackers but with trackers in particular these are minimal these days.

In effect with buying a low cost FTSE tracker (or similar) you are buying the market and into its long term compounding growth.

I first started investing when I transferred a smallish company pension into a SIPP (Self Invested Pension Plan) about 20 years ago. I can’t recall what prompted me to do it at the time but I posted on a forum called the Motley Fool asking which was the lowest cost tracker to get.

On the thread someone posted suggesting looking into buying individual shares. I said that I had no knowledge and I thought it was gambling. However, I was pointed to another board on the forum called the High Yield Portfolio (HYP) as an alternative approach to a tracker or fund which was devised by one of the Motley Fool writers Stephen Bland. I posted questions on the Board and read Bland’s articles which related to the HYP approach and also his articles on Value (Sadly the whole forum was closed 7 years ago though a copycat forum was started)

The semi-mechanical HYP approach was to buy a dozen of the largest listed FTSE companies that produced the highest (secure) dividend yield with each company representing a different sector as sector diversification offered some risk protection. If for example you buy a FTSE100 tracker the dividend yield is currently 3.4% so by cherry picking the largest yielders like Glaxo (5.2%) and BP (4.3%) for your HYP you can boost the overall yield either for income or for the beautiful effects of compounding.

The other ‘rule’ was once you’ve bought your HYP was to never trade to keep costs low and for the observable fact that most investors make lousy traders.

For reasons I’m happy to discuss dummy and live HYP portfolios outperformed the FTSE over the long term in terms of capital gain because yield is a value indicator (though not the strongest value metric) which is a point I’m happy to discuss. 

Surprise, surprise I became a regular poster on the Motley Fool and also opened Share ISA’s and increased the money I put into the stock market and tinkered with the HYP approach.

A couple of years later I lost what represented a lot of money for me at that time which I’ll post about next time.

If anyone has questions about the High Yield Portfolio approach fire away.


steveri

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#9 Re: Value Share thread
February 24, 2022, 01:24:29 pm
most investors make lousy traders.

Data point here. In my younger days, I thought investing was an evil capitalist conspiracy and I was too pure for that. Slightly older, I realised I needed to think about saving for retirement and putting stuff away. All pensions are in bed with The Man, ergo purity lost. I then had a dabble with individual shares, made some ok and some poor decisions. Put some money into tracker funds so I don't have to think about it.

I've also got a small handful of stocks and because of point 1 above, I look at dividends and diversity. If I can get a bit back every year, regardless of what the share price does I'm ahead. I usually reinvest if a DRIP is on offer, its free money after all. If I get some or all or more of my stake back on selling all good. But I don't tend to sell.

Hopelessly naive but the more research I do, the more mistakes I make. So now I'm basically just throwing darts, given the above.

seankenny

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#10 Re: Value Share thread
February 24, 2022, 01:36:30 pm
“Just one in four active fund managers that invest in large US-listed companies beat Wall Street’s S&P 500 share gauge in 2021, as stockpickers again struggled to match the returns delivered by cheap index trackers following the US equity market.”

https://www.ft.com/content/d1f96d83-1a72-47d7-a4af-2483bd49b024

shark

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#11 Re: Value Share thread
February 24, 2022, 01:44:17 pm
I don’t think you are being naive and the approach you are taking of insuring diversity and dividend income and not selling are the same principles championed by the HYP approach

Hopelessly naive but the more research I do, the more mistakes I make. So now I'm basically just throwing darts, given the above.

The point you make about research is excellent. It’s very easy to get your head turned by opportunities in a sector or being impressed by what a Director has to say about their companies prospects. I also think that in depth research can create a narrative in your head that can lead you to be too emotionally wedded to share.
I recall Stephen Bland writing an article about ‘strategic ignorance’ where he wouldn’t try to guess a companies prospects but would make his investment decision on the current numbers - but he was an accountant by training. On the other hand I know someone who has been amazingly successful by schmoozing with Directors, attending Board Meetings and arranging investor events and clearly loves that shit. That’s what I mean by finding an investment style that suits and works for you.

shark

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#12 Re: Value Share thread
February 24, 2022, 01:56:35 pm
“Just one in four active fund managers that invest in large US-listed companies beat Wall Street’s S&P 500 share gauge in 2021, as stockpickers again struggled to match the returns delivered by cheap index trackers following the US equity market.”

https://www.ft.com/content/d1f96d83-1a72-47d7-a4af-2483bd49b024

I think you should use longer time frames than a year when comparing fund performance to market indices but yes funds in general don’t do as well as you might expect - Ive never invested in one.

To be fair fund managers have a lot of baggage to deal with that compromise their performance. First of all the internal fees and costs will be a drag on performance. Second they are managing large sums of money so can move the market with their purchases so can’t build or  sell a stake as cheaply as a private investor. I’m sure politics comes into play as well - dumping stocks that they might still personally believe in but have a hard time justifying holding to clients. The most successful investors by definition make decisions that are contrary to the market and institutional fund managers aren’t predisposed to making contrarian decisions.

shark

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#13 Re: Value Share thread
February 24, 2022, 02:32:23 pm
I'd be interested.. I've never invested until this year, now beginning to dabble. Mostly trackers but also some funds that invest in companies owning/developing renewable energy assets (which may fit with your preferred style).

See my post above re Funds. Given your day job it could work well for you to listen out for successful, growing companies in the sector that are listed on the stock market then having a look at their debt/asset position and P/E level relative to other companies in the sector. Also factor in how vulnerable their business is to changes in government policy.

abarro81

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#14 Re: Value Share thread
February 24, 2022, 04:07:08 pm
I've wondered this before (with respect to my job) - I have a good (IMO) view on which companies are likely to do well, but what I've never delved into is how to understand how much of that's already "priced in", if that makes sense.. I guess thinking in terms of yields and not stock price may partly be the answer to that. Main problem is mostly it's Chinese stocks so I suspect harder to trade (based on an idle assumption!)?

shark

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#15 Re: Value Share thread
February 24, 2022, 04:32:55 pm
I’d give Chinese stocks a wide berth in general. There have been a number of Chinese companies that have listed on the FTSE AIM market in the last few years that have been recommended by reputable writers whose accounts have turned out to be largely bogus and duly gone bust.

kelvin

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#16 Re: Value Share thread
February 24, 2022, 05:35:23 pm
Can someone define value shares for me please?
I've a few different definitions in my head.

Great question!

In the generic sense every shareholder believes that there is sufficient value in their investment that the share price will rise otherwise they’d sell.
However, value investing has a more specific meaning and weighs up the value of the tangible assets owned by a company (cash, property etc) it’s dividend payout, its earnings (profit) record and its level of debt. The key metrics are P/TNAV (share price to tangible net asset value ie assets minus debt) PE (share price to earnings) and Dividend Yield (share price to dividend).

On that count, then Pete's recommendation of Alphamin completely fits the bill. Being in the DRC might be against it but as far as being a value stock, it's bang on and everyone received their first dividend last week.

Value is everywhere, even junior miners it would seem.

shark

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#17 Re: Value Share thread
March 01, 2022, 11:09:59 am
Not very racy but VLE (Volvere) is a cautious turnaround operation with a great track record of buying distressed companies cheaply turning them around and selling them for multiples of the purchase price. They have recently raised a lot of money through a placing so have a sizeable war chest to take advantage of the current market conditions. There is a lot of downside protection as their market cap is roughly equivalent to their ‘true’ NAV. There is a great thread on ADVFN if you want to look into it further. Because of some recent stupid rules it’s classed as a complex investment (it isn’t) so you can’t buy it in an ISA. I hold mine in a SIPP. It’s by far my largest holding.

Good results from Volvere today and it’s up 7.5%.

It’s main investment (80% holding) Shire Foods has increased revenue
by 13% to £30.6m, and PBT is up a 18% to £2.14m - an excellent result in the face of general rising raw materials, energy, logistic and staff costs

It’s more recent smaller turnaround investment - Indulgence - increased revenues by 21%, but made a £1m loss so still work in progress.

They have cash of £21.9m for new investments and the Shire investment is likely to be worth in excess of £18m against a market cap of £31m so plenty of downside asset protection and upside opportunity when they flip Shire but patience is required.
« Last Edit: March 01, 2022, 11:15:14 am by shark »

AJM

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#18 Re: Value Share thread
March 01, 2022, 01:23:03 pm
Not very racy but VLE (Volvere) is a cautious turnaround operation with a great track record of buying distressed companies cheaply turning them around and selling them for multiples of the purchase price. They have recently raised a lot of money through a placing so have a sizeable war chest to take advantage of the current market conditions. There is a lot of downside protection as their market cap is roughly equivalent to their ‘true’ NAV. There is a great thread on ADVFN if you want to look into it further. Because of some recent stupid rules it’s classed as a complex investment (it isn’t) so you can’t buy it in an ISA. I hold mine in a SIPP. It’s by far my largest holding.

Good results from Volvere today and it’s up 7.5%.

It’s main investment (80% holding) Shire Foods has increased revenue
by 13% to £30.6m, and PBT is up a 18% to £2.14m - an excellent result in the face of general rising raw materials, energy, logistic and staff costs

It’s more recent smaller turnaround investment - Indulgence - increased revenues by 21%, but made a £1m loss so still work in progress.

They have cash of £21.9m for new investments and the Shire investment is likely to be worth in excess of £18m against a market cap of £31m so plenty of downside asset protection and upside opportunity when they flip Shire but patience is required.

Yeah, I saw these results come through earlier on. I have a small amount in this one - still sitting on a loss currently, but todays rise has tempered it a bit and it looks promising enough that it might be worth topping up, especially if it dips for unrelated reasons the next time the market flutters.

Mine is in an ISA, by the way, so you can get it in one.

shark

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#19 Re: Value Share thread
March 01, 2022, 03:15:30 pm
Mine is in an ISA, by the way, so you can get it in one.


Yes - my bad. Some providers don’t - notably IWEB.

Think the market is confused about VLE thinking it’s like an investment trust (when it’s more like a Venture Capital business) and so judge it by the declared asset value which doesn’t take into account the increased worth of Shire as it grows revenues and profits. Consequently it’s long been the case with them that the share price lags until an investment is sold. I doubt they will repeat the level of success they had with Impetus (bought for £1.25m and sold after 3 years for £31m) but it demonstrates how much upside is possible. However, they’ve had Shire on their hands a long time now and haven’t made a significant acquisition for years - though have said that the market for buying businesses to turn around is improving.

shark

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#20 Re: Value Share thread
March 10, 2022, 11:48:33 am
I mentioned above about my early adoption of the High Yield Portfolio (HYP)  where you take an equal stake in a dozen or so shares within the FTSE100 different sectors.

The diversification of sectors helps reduce sector specific risk ie changing government regulation in the utilities sector or a collapse in oil price for the likes of Shell and BP. The shares are also screened in terms of having sufficient cash generation or dividend cover that a cut in the dividend is unlikely at least in the short term. This provides a higher than average dividend income and a portfolio constructed like this usually outperforms the FTSE in terms of capital gain too.

Why should an HYP outperform in capital gain? I think it is because the market in the short term is schizo overly marking down shares that are boring, have gone ex-growth or subject to negative news flow. If a share price goes down then it’s dividend yield goes up. A higher than average dividend yield for a company in a particular sector is a reflection that it is out of favour with the market for whatever reason.

Another similar but older approach was ‘Dogs of the Dow’. You picked a selection of shares that had performed the worst for the previous 12 months and then dumped them at the end of the next 12 months and did the same again. This approach over the long term outperformed the Dow due to the markets excessive pessimism at one end (and also excessive optimism at the other). The market doesn’t always get it wrong and sometimes the pessimism proves to be justified which is why a portfolio of shares is a good idea to spread the risk.

I was sold on this approach initially selling my trackers in a SIPP to buy high yielding shares and then ploughing more money in via ISAs and normal trading accounts.

At this time the banks and building societies were yielding high and I went overweight in this sector. It seemed a safe bet. The banks balance sheets were on the face of it strong as their net assets (assets minus debt) were often in excess of their market capitalisations (the whole market price of their business ie share price x number of shares).

Then word of a ‘credit crunch’ started circulating. Stephen Bland who invented the High Yield Portfolio was dismissive of the credit crunch thinking that the market was over-reacting. He was wrong of course.

The use of derivatives and leverage had made the financial institutions more profitable but more risky. Some banks such as RBS and Northern Rock ran out of cash when confidence collapsed and the music stopped in a worldwide game of musical chairs when banks and other institutions stopped lending to each other. A lot of the assets were far more risky than the credit agencies rated them and worth less - The Big Short is a great film explaining how incestuously fucked up the system was.

Governments had to bail out the banking sector before the economy collapsed and the whole process of unwinding has taken a long time.

On a personal level my shares tanked but weirdly my recruitment business continued to do well until Lehman Brothers collapsed. Recruitment is sensitive to the ups and downs in the economy and after Lehman’s none of our clients were interested in recruiting for a period and I ended up folding the business leaving as in a precarious financial position.

I remember discussing with Sonia about whether to dump the non-SIPP shares so we had some extra cash to hand. We weren’t sure and considered flipping a coin. Tommy who was 6 or 7 at the time came in and Sonia asked him to choose ‘stick or twist’ and he said ‘stick’ (“because I like sticks”). So I stuck at it and subsequently more than made up for those early losses.

I abandoned the HYP approach as I was too much of a tinkerer and trader by inclination to stick to a semi-mechanical approach. Instead I went down the route of using value principles to invest in smaller listed companies following the views of commentators and posters who thought the same way but were far more experienced.

So going back to dividends - yields can be a value indicator but are not as strong as tangible assets. Those juicy bank dividends were cut and investors saw their share prices collapse or even go to nothing with the likes of Northern Rock.

A problem with banks in evaluating them in terms of their assets is that the net asset value is just the relatively small difference between two very large set of numbers because that is the nature of their business - borrowing and lending on a massive scale.

As low debt is a preferred requirement for value investors it is arguable whether a bank can ever qualify. I’ve not invested in one since.

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#21 Re: Value Share thread
March 10, 2022, 12:22:12 pm
Si do you read the 'moneyvator' weekly blog/website? I imagine you're well aware of it. But if not, it's the best generic commentary on investing I've come across for a UK audience.
As well as overviews the site has weekly links to other excellent commentators so you can go down holes learning more about whatever investing niches you like. The search feature brings up various useful articles on value investing, also some good in-depth articles on the pros/cons of investing for yield versus investing for growth (yield approach traditionally far more popular in the UK versus N.America due to the make-up of the ftse).

https://monevator.com/



shark

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#22 Re: Value Share thread
March 10, 2022, 01:38:35 pm
No I haven’t Pete. Will take a look

shark

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#23 Re: Value Share thread
March 10, 2022, 07:00:37 pm
Guess I’m talking to myself with regard to boring value plays but further to previous posts on LDG the proposed changes to the investment policy and the share buyback has been approved.

An exemption has been approved such that the reduction in shares from the buyback won’t automatically trigger a takeover requirement for DBay and concert party if the threshold is crossed. The proportion of equity held by them is a concern and the risk of a future stitch up for private investors is concerning but given their activities reputational damage is important.

The announcement has triggered a small rise today but only to 13.8p whilst the current cash per share stands at 18.7p (I think). That cash per share figure will rise as they buyback shares at a discount to cash.

The change in investment policy now gives DBay in its role as investment manager virtual free rein to invest in a wide range of sectors in unlisted and listed companies. Their track record in this respect is excellent. If the buyback clears out disaffected shareholders such that the gap closes between the market SP and the Cash per Share then I’ll most likely sell out. If not I’m happy to wait and see how they invest the remaining cash.

LDG announced today their first investment since the investment policy was broadened. £6million in a large listed care home operator where management have announced an intention to take the business private. It’s unclear whether this is an opportunistic punt or they are looking to build a stake. It’s hardly dented the cash pile but good to see they are acting quickly. Modest rise in the share price to 15p today. So far they have bought back 10m shares of their own shares as part of the large buyback.

I have inadvisably large stakes in this and Volvere mentioned above together representing about 80% of my portfolio which is very unwise but given the levels of cash per share the downside protection could scarcely be better. I’m promising myself that I will be more diversified when I sell down these holdings.

shark

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#24 Re: Value Share thread
March 22, 2022, 02:09:07 pm
Took some profits by halving my holding in VLE at a fraction under 16p. The buyback is happening quickly and at the current rate the permitted shares allocated for the buyback will have been bought (and cancelled) before the end of April. It is possible that the shares might not reach fair value of ~17/18p before then and slip back after the buyback. Still retain an uncomfortably large holding.

shark

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#25 Re: Value Share thread
April 04, 2022, 05:26:07 pm
Some interesting developments at LDG who’ve confirmed that they now hold 1,974,130 CareTech (CTH) shares, representing approximately 1.74% of CareTech's issued share capital.

The CTH MBO vehicle increased its offer from 715p per share to 725p a share. DBAY today has piled in and made a cash offer of 750p for the whole company! I don’t know for sure but suspect this would represent their largest ever acquisition if it goes ahead.

The market price for CTH has jumped to 740p per share. LDG are sitting on a decent and quick paper profit but it is unclear currently whether more of LDG’s cash pile will be used to help fund this takeover assuming it goes ahead. The ball is now in the court of the CTH MBO team as to whether they are going to up their offer or not. LDG shares still trading at ~16p.

shark

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#26 Re: Value Share thread
April 06, 2022, 06:11:40 pm
LDG published its final results for the year ending Nov 30 which provides a good summary of the companies transition.

https://www.ldgplc.com/ldg-final-results/

There have been some big trades today suggesting that the buyback is nearing completion. Once completed the SP might drift back a bit which is crazy but the way markets work.

shark

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#27 Re: Value Share thread
April 07, 2022, 09:03:07 am
Buyback complete confirmed. The exercise helped close the gap on the cash per share as intended but not by as much as I expected. Price will likely stagnate or retrace until there’s news flow on new investment.  :popcorn:

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#28 Re: Value Share thread
April 07, 2022, 09:22:04 am
It’s still quite a substantial gap isn’t it - 15.5 versus assets of about 19. Hopefully once things shake out a bit with Caretech and what’s happening with that it might trigger a bit of a reappraisal, although I could easily see the gap remaining just from a higher assets per share number.

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#29 Re: Value Share thread
April 07, 2022, 01:55:58 pm
SP down to 14p now! The NAV might be more like 20p now from the buyback and increased value of the CTH holding. I expect the SP will always trail the NAV for them as they typically do with Investment Trusts but the discount is silly so may end up increasing my stake again if this over reaction continues.

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#30 Re: Value Share thread
April 08, 2022, 12:59:12 pm
It would appear that DBAY itself was the big seller yesterday which used up the final tranche of shares allocated to the buyback which is a surprise. I wonder if this sale was a surprise to the LDG board too?. I didn’t get the impression that they were privy to DBAYs bigger ambitions on CTH.

The shares have dropped back to 14p which is nearly at the levels prior to the announcement of the buyback despite the value of the NAV of cash + CTH shares will have increased on the last reported figure of 19p per share. That’s a big discount probably reflecting DBAYs dominant ownership and role in the company and perhaps the lack of strategy.

I’m concerned about the conflict of interest but also think that getting a slice of DBAYs private equity magic at a discount to cash is a great opportunity as long as you can live with their investment recommendations where they might be playing bigger games behind the scenes. With the CTH purchase it has certainly played to LDG’s advantage - at least so far.

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#31 Re: Value Share thread
May 11, 2022, 12:26:22 pm
Not mentioned Quarto QRT before mainly because it’s a bit more complicated than the others I’ve mentioned.

Bought some a year ago without looking into it too much and it has doubled in value since then although dropped back a bit in the last week. Having recently looked into it some more which has been an education and invested more. I’m told it is one of cheapest shares out there based on cash generation as a metric and fair value should be in the region of £4/5 rather than current £1.50. I really should look into and understand this metric more as it’s going to be a more reliable value indicator than the more usual price earnings (PE) figure when the Earnings bit can be legally played about with by clever Finance Directors.

Anyway - why is it so cheap? According to this article it’s because there is a danger of it being taken private.

The story is that veteran investor CK Lau took a large stake as well as the Executive Director role at QRT (an underperforming book publisher) and successfully turned it around. He has been buying up more shares which along with their good results has driven up the price and he now has a 50% stake.

Because QRT is domiciled in Delaware it is not directly subject to UK company law even though it operates as a UK company - so for example it is audited as if it was a UK company. However, it is not subject to the UK takeover code where exemptions have to be obtained if a person’s holding (and any associated parties) exceed 30%.

Last year the FCA reduced its requirement for a listed company from 25% to 10% of shares being in public hands (the free float). There is another 20% owned by a vehicle associated with another Director so the free float currently is 30%. Therefore Lau can still potentially still buy up to another 20% stake before breaching listings rules. It is also possible that he could take just another 5% and come to an agreement with the investment vehicle to use their combined 75% vote to take the company private. The fear here is, as the linked article points out, that you are left with untradeable shares. However, normal practice is to make a reasonable offer to minority shareholders and Lau (I’m told) has a good track record in this respect.

My take is he will keep buying the shares whilst he thinks they are a good price and that in turn will help keep pushing the price up 🤞




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#32 Re: Value Share thread
May 12, 2022, 03:03:03 pm
Noticed that CTH which is subject to two competing bids at 750p can be had for 706p. One of the bids is from management and the other from DBAY (talked about above) so almost certain to go through and a remote possibility of bid going a little higher. 6% return for a few months wait.

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#33 Re: Value Share thread
May 24, 2022, 12:51:24 pm
Bonds.  :yawn:

But....  SSE has a bond that's due to mature in September 2022. It's a 5.78% yield. Is my understanding of bonds correct:

- you invest (min £1k for this one).
- you get fixed returns as laid out in the prospectus (twice yearly for this one)
- If you want out early, you get the market rate of the bond, currently falling as interest rate are rising

However, seeing as there are only 3 months left, you'll be riding this to maturity so that matters not? 

The reason I'm looking into this is that I saw a recommendation of this to buy online, but I wanted to better understand the fundamentals.

I just worked out that (based on HL stock transaction fees) investing £1k would result in an overall loss of 0.53%.

£5k would be 1.069% gain

£10k would be 1.269% gain

Seems like a virtually guaranteed but quite small return. Only risk is SSE default?

I'm more interested in my errors in calculation / understanding than whether or not this is a good choice.

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#34 Re: Value Share thread
May 24, 2022, 04:56:02 pm
Well if you had not ruined it by wearing them out you could have been cashing in by now......
https://www.outside.co.uk/climbing-gear/climbing-footwear/rock-climbing-shoes/five-ten-anasazi-lace-v2-white-climbing-shoe.html

This will only make sense if the link is not updated soon!

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#35 Re: Value Share thread
May 24, 2022, 05:37:03 pm
Well if you had not ruined it by wearing them out you could have been cashing in by now......
https://www.outside.co.uk/climbing-gear/climbing-footwear/rock-climbing-shoes/five-ten-anasazi-lace-v2-white-climbing-shoe.html

This will only make sense if the link is not updated soon!

Wow.. I still have three pairs unused in the boxes here..  :greed:


Fultonius, if that's really the correct return then you might do better putting into a zero risk Chase instant access account and getting 1.5% per annum, interest paid monthly. That's where my spare cash currently resides.

I'm far from well clued up on bonds, if rates keep rising they could be a consideration but I'm very glad I didn't try to balance the risk of my portfolio by having a bond allocation over the last few years. They've done terribly in this *bear market and it was quite predictable with rates currently having to rise from historic lows, versus a more historically typical case of there being room for rates to fall (thus bonds to raise). As I understand it there could be an inflection point coming though where the locked-in return makes bonds look attractive...

* US market, not the UK which has done 'OK'... so far

Moneyvator:

Quote
Prior to a sharp bounce this week, the picture was even worse. And people really hate seeing their bonds go down. Much more so than stocks.

Understandable. For years no long-term investor has bought bonds expecting much in the way of a return (even though that’s actually what they got, at least until recently).

Rather, bonds were for buoyancy in the bad times. Yet now they’ve been taking on water – just when we’d want them to float.

Unfortunately this was pretty inevitable.

Global yields hit multi-century lows after the financial crisis. Sooner or later they were likely to rise.

The snag was everyone who ever said ‘sooner’ was wrong – up until the past six months. Now we have to pay the piper.

Worse, the same issues roiling the bond market are also what’s pulling at least some of the strings of the stock market. Hence shares and bonds falling together.

The good news is lower bond prices mean higher yields, and hence higher future returns.



That’s little comfort if you already own a bunch down big. But the declines are starting to make government bonds half-attractive again, and reinvesting your bond income will help eventually.

All presuming, of course, that central banks get inflation back under control.
« Last Edit: May 24, 2022, 05:43:20 pm by petejh »

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#36 Re: Value Share thread
May 25, 2022, 08:00:39 am
Pete, isn't he giving a 3 month return til the bond matures and you an annual return? I.e. between now and Sept he'll get nearly 1% more in the bond if he puts in 10k

I wasn't quite sure whether you were quoting similar numbers over different time periods or whether your point was that it wasn't worth the faff for that little extra (£100 tops plus you have to then put it somewhere else in Sept).

Agree more widely, if you're not holding to maturity and therefore indifferent to market value, or using it to hedge something, it's not been a pleasant ride in bonds of late!

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#37 Re: Value Share thread
June 07, 2022, 12:42:42 pm

Fultonius, if that's really the correct return then you might do better putting into a zero risk Chase instant access account and getting 1.5% per annum, interest paid monthly. That's where my spare cash currently resides.


I found out about this account via Money Saving Expert and its great; I'm a mug for not having my savings in there for years  :slap:

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#38 Re: Value Share thread
June 07, 2022, 01:15:56 pm
I found out about this account via Money Saving Expert and its great; I'm a mug for not having my savings in there for years  :slap:

You're not - they only opened the 1.5% saver account in March of this year  ;D

The current a/c (needed to open the saver a/c) opened autumn last year.

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#39 Re: Value Share thread
June 07, 2022, 02:14:30 pm
Well, thats something at least; but I definitely am as until last month my savings were sitting in a totally useless Barclays Everyday Saver account doing nothing for me and had been for years. I am not savvy when it comes to these things and had sport of presumed that the only real alternatives would make the money hard to get to, which wasn't an option as I needed it accessible in case my car broke etc. Lesson learned!

I don't use the Chase current account but i gather it has a good cashback offer for the first year so perhaps i should.

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#40 Re: Value Share thread
October 13, 2022, 03:39:55 pm
Well I've got £25 of raw profit burning a hole in my account thanks to Shark's Caretech tip up there. If anyone has any other surefire ways of earning a dishonest pound I'm all ears. One of my 'value' stocks (back on topic) Persimmon has fallen like crazy this year. Come on housing market revival, build some more! Currently sits on a (historical) dividend ratio just short of 20%. Probably hanging on because I'm enjoying the insanity.

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#41 Re: Value Share thread
April 18, 2023, 10:04:12 pm
Filo, Alphamin. Top value share investment ideas: https://www.oldwestim.com/_files/ugd/718a37_8cee40a0b4ec4b4486478e0b2e0d32be.pdf

https://www.oldwestim.com/strategies

Remind me again Simon the point of starting this separate thread?  :P

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#42 Re: Value Share thread
April 18, 2023, 10:17:25 pm
All my investments have been doing fine notably VLE
(60%+ of portfolio value) LDG and QRT in terms of reported results although value has been far from outed.

Seems like a lot of companies now trading around or below P/TNAV. Starting to take an interest in investing again. Some investment companies well below historical NAV which are probably worth looking into if I wasn’t so indolent.

Sorry what’s the question Pete?

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#43 Re: Value Share thread
April 18, 2023, 11:34:18 pm
Pete’s thread about investing is focussed on high growth companies which can do spectacularly well or the opposite.
My investing focuses more on companies where the upside is less exciting but seems to limit the downside typically from tangible assets held by the company.

My focus is actually somewhat on value investments, using the same definition that you use. It's just that the value suggestions I post about are in a sector of the market, resources, that you're unfamiliar with. When you posted the above quote^ as an intro to this thread I thought at the time it was a mischaracterisation of the other thread and a bit of a presumptuous and misleading comment.
Hence linking the investment managers' note above, who follow the 'Benjamin Graham' value-investment philosophy as you're trying to, and who pick Afm and Filo as 2 of their top 10 value investment picks. Your characterisation of the focus of the other thread was inaccurate, which I knew and this proves.


[arcane discussion]
A significant proportion of the investments I bang the drum on in that thread are, by definition, value shares because they're mature owners of tangible assets at a discount to NAV or NPV, either in or not very far from profitable production or a buy-out (not that buy-out can ever be predicted with certainty, only probability). See Ecora, Adriatic, Agnico, Whitehaven - value company of the decade? (Afm the second..), the aforementioned Afm, Filo, ALS, amongst other value shares. 
I do also mention some other high-risk longer-term 'growthy' type stuff-  but not many, and no tech growth. Even the more high risk growthy stuff are companies with tangible assets usually at a stage of about to enter commercialisation - e.g. GMG and POLX - these are also 'value' propositions at a discount to relatively near-term earnings; not stupid tech company growth narratives with valuations based on very long-term future earnings predicated on a highly benign low-rate economic environment.
(I actually keep most of the higher risk stuff to myself; things I mention on ukb are things I usually have a higher degree of confidence in, otherwise I'll make clear).
[/arcane discussion]

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#44 Re: Value Share thread
April 19, 2023, 07:41:48 am
I wouldn’t know whether they fit the value criteria that I look for because as you point out it’s a sector that I don’t understand / have no interest in however your thread title indicates  the kind of exciting get-rich quick, news and rumour driven approach trading tips that I wanted to distance myself from as it is a style that is the polar opposite of boring and simple value investing.

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#45 Re: Value Share thread
April 19, 2023, 10:21:59 am
The thread title is tongue in cheek.  The content of the thread matters more than the title - book/cover etc.

The title of your website is UK Bouldering.


(edit, btw Connor Maguire on twitter is a good follow for value plays: 'Value Sits' is a paid-for service (that I don't subscribe to), but he throws a few tidbits out on twitter, April 17th tweet on Alphamin:  https://twitter.com/ValueSituations/status/1647893364463792129)
« Last Edit: April 19, 2023, 10:29:05 am by petejh »

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#46 Re: Value Share thread
April 19, 2023, 10:46:01 am
Is the difference here that Shark doesn't want to have to worry about the timing of buying and selling, rather just choose shares that can be expected to perform in an undramatic but generally positive manner long term?

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#47 Re: Value Share thread
April 19, 2023, 12:09:49 pm
Quite possibly, I can't speak for Shark. However, that isn't really how it works in the real world without an extremely loooong outlook and an extremely placid attitude towards sitting on losses. (Which, if you're doing it right, should be exactly your attitude and timespan for some of your investments).

I'd just point out a general principle though...and this principle applies to virtually ALL stock market investments, whatever their 'style' e.g. 'value', 'growth', or 'income' or a mix. However unexciting (aka volatility) is the part between buying and selling. The example below is the last 5 year's price action for VLE and LDG (since start for LDG). Tell me if you see no need to be concerned with timing your buying and selling. For e.g. you could have bought over 2-3 years go at an inopportune time and be down 20% today. Alternatively you might have bought at a low 2 years ago and be up 50% today. Timing matters a lot, getting it right is very hard though, even with 'unexciting' shares. 






More to the point of the title of this thread - if you were to buy at a top that turns out to be a top for a length of time longer than works for your purposes, you aren't really value investing! In the long run we're all dead etc. But dying before your investments do well isn't the goal for most people.

(tldr: there's no need to be concerned about timing when you buy or sell *IF* you're happy to potentially buy at the top of the market and then sit on a paper loss for potentially many, many, many, years to eventually sell for a significantly smaller gain then you might have by buying and selling at a more opportune moment).

Btw this is not at all intended as any slight on Shark or any investment he's mentioned - I have no opinion, as I'm unfamiliar with the sectors he invests in and I'd never do that to anyone anyway - I admire anyone who tries to make their money work for them through considered investing.

My gripe is more to do with the other thread being misrepresented by Shark as if 'value' investing is something different that he does, and that is also much lower risk. You can see from the price action this isn't a very accurate distinction.

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#48 Re: Value Share thread
April 19, 2023, 05:21:10 pm
Are you just randomly labelling peak prices of VLE and LDG as when they represented value?

I wouldn’t have bought LDG prior to 18 months or so ago when they became a cash shell having sold their only operating business and traded at a discount to cash. I sold most at 16p when they did a buyback. The story since then has become a little more complicated but I accumulated some more since the previous buyback finished and the price dropped a bit. They’ve announced a new buyback and if the hit close to 17p I’ll probably sell out (the NAV is 21p).

Volvere I started accumulating at 800p and then sold all my holding when they did a tender offer following the sale of one of their turnarounds which seemed attractively priced at 1350p and so the value was largely outed. It then dropped back and I started accumulating again as it was good value compared to their assets. I am considering trimming my holding as whilst it is still good value having 60% in one fairly illiquid small cap is overweight by any measure.

So no I don’t buy and forget and I do trade if I think the value has been realised or has gone wrong or the money is better deployed elsewhere. I would also say that volatility doesn’t equate to what I mean by unexciting. Companies that do pedestrian things (rather than promise the earth)!where you weigh up their value on the usual mix of Assets and Earnings compared to price is what I mean by unexciting. Volatility of a share price can be just an expression of how a market place works with a whole host of psychological and macro economic factors.


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#49 Re: Value Share thread
April 19, 2023, 05:53:07 pm
Are you just randomly labelling peak prices of VLE and LDG as when they represented value?


You mean dips? No.
I'm using it as a simplistic illustration in reply to JB's point about buying and holding without worrying about timing. To show that simply buying and holding can lead to very different outcomes depending on when you buy - timing is always important, just difficult to get right. The labels value/not value are just a very simplistic illustration showing that a share that one person calls a 'value' share isn't *always* good value. Obvious to you and me I know.

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#50 Re: Value Share thread
August 29, 2023, 10:28:42 am
Bombshell re my main holding Volvere VLE as the CEO Jonathan Lander has died (only 55!) Really sad. His brother Nick who focusses on Operations takes over as CEO.

The share price has dropped 7% on the news and is currently ~£11. The stated NAV of mainly cash is £13.90 but this also understates their assets as their only holding - 80% of Shire Foods - is valued on the books at only £6.2m yet generates £2m cash so if sold on should fetch vastly more.

Unclear at this point as to whether Nick will continue the business or wind it up returning proceeds to shareholders. The SP may drop further on uncertainty. I cut back on my holding a few months ago as it got ridiculously large. Will probably sit it out and maybe add if it falls below £10.

Generally I’ve taken a far bit out of the stock market recently to help pay down a mortgage which was getting expensive.

Still in at LDG. Also QRT though did sell at the spike to 192p then bought back in after it dropped.

Probably quite a few bargains out their on value metrics in the current depressed market.

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#51 Re: Value Share thread
August 30, 2023, 12:40:42 pm
Half year results out at QRT with significant drop in revenues and profit and therefore share price (down 20%)
However, they’ve moved to a net cash position and still cheap on value metrics.
Not a good week though.

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#52 Re: Value Share thread
November 30, 2023, 08:03:11 pm
Not mentioned Quarto QRT before mainly because it’s a bit more complicated than the others I’ve mentioned.

Bought some a year ago without looking into it too much and it has doubled in value since then although dropped back a bit in the last week. Having recently looked into it some more which has been an education and invested more. I’m told it is one of cheapest shares out there based on cash generation as a metric and fair value should be in the region of £4/5 rather than current £1.50. I really should look into and understand this metric more as it’s going to be a more reliable value indicator than the more usual price earnings (PE) figure when the Earnings bit can be legally played about with by clever Finance Directors.

Anyway - why is it so cheap? According to this article it’s because there is a danger of it being taken private.

The story is that veteran investor CK Lau took a large stake as well as the Executive Director role at QRT (an underperforming book publisher) and successfully turned it around. He has been buying up more shares which along with their good results has driven up the price and he now has a 50% stake.

Because QRT is domiciled in Delaware it is not directly subject to UK company law even though it operates as a UK company - so for example it is audited as if it was a UK company. However, it is not subject to the UK takeover code where exemptions have to be obtained if a person’s holding (and any associated parties) exceed 30%.

Last year the FCA reduced its requirement for a listed company from 25% to 10% of shares being in public hands (the free float). There is another 20% owned by a vehicle associated with another Director so the free float currently is 30%. Therefore Lau can still potentially still buy up to another 20% stake before breaching listings rules. It is also possible that he could take just another 5% and come to an agreement with the investment vehicle to use their combined 75% vote to take the company private. The fear here is, as the linked article points out, that you are left with untradeable shares. However, normal practice is to make a reasonable offer to minority shareholders and Lau (I’m told) has a good track record in this respect.

My take is he will keep buying the shares whilst he thinks they are a good price and that in turn will help keep pushing the price up 🤞

Announcement today that it is to be taken private with a Chairman’s statement that the intention is to buy back shares at 150p in a tender offer after delisting (usually it would be before). Potential there to be screwed over royally but the risk seems remote.

Currently trading with a very wide spread. The opening RNS didn't state the mooted tender price which led to some unfortunate investors selling out below 60p before the mooted tender price was publicised and the price bounced back over 100p. I’ve talked to the Company Sec in the past and he is pretty dopey so not altogether surprised this happened.

I was fortunate to sell out completely at over 190p but then bought back in at 153p, 156p then a more substantial purchase at 113p after their previous poorly received trading update so will do pretty well if I’m able to tender all my shares at 150p 🤞

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#53 Re: Value Share thread
January 18, 2024, 03:27:16 pm
The squeaky bum time is over. QRT delisted today and the tender offer at 150p per share has been released so very glad I held my nerve.

I was pretty confident this would be followed through based on reports from the meeting which nudged me to buy a further large amount yesterday at 133.4p. Feeling smug but it could all have ended differently but the balance of probabilities of this working out was high.

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#54 Re: Value Share thread
February 03, 2024, 08:01:51 pm
If anyone happens to hold these and are participating in the tender offer be aware you can elect to receive the distribution in different ways (that could affect how you are taxed) which may require you to instruct your provider. The relevant form is this: http://www.quarto.com/public/pdf/investor/20240118_063542_Form_Section_302_certification.pdf

 

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