[shark]

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]

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]

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. 

[AJM]

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.

[shark]

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.

[shark]

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.

[shark]

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 🤞

[shark]

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.

[Fultonius]

Bonds. 

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.

[Teaboy]

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!

[petejh]

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.. 


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:

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.

[AJM]

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!

[spidermonkey09]

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 

[petejh]

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 

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

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

[spidermonkey09]

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.

[steveri]

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.

[petejh]

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? 

[shark]

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?

[petejh]

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]

[shark]

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.

[petejh]

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)

[Johnny Brown]

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?

[petejh]

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.

[shark]

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.

[petejh]

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.