On The Way To Damascus…

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Damascus, garbage stocks, natural resource stocks, quantitative easing

Some people may have got the impression that I hate natural resource stocks..?!

Not true at all! In fact, natural resources in the ground are maybe one of the few things in our history that politicians and central banks have not been able to debase. You should definitely grab some (more) for your portfolio, especially now the Fed seems hellbent on reflating the US, and the entire world. (I recommend you watch this quantitative easing primer – v precise, and hilarious too!).

But if you stray from the industry giants, buying into the oil & gas/mining sectors is like entering the lion’s den. Be wary! The old quote ‘A mine is just a hole in the ground with a liar on top‘ still holds true far too often, except now the miners have such cushy numbers they actually believe their own hype…

How About Another Catalyst? (Part VI)

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ABC Arbitrage, activist investors, Biglari, Bourbaki, Carl Icahn, Christopher Mills, Crystal Amber, Damille, GPG, Harbinger, Laxey, Risk Arbitrage, Ron Brierley, Sherborne Investors, Terra Catalyst

Continued from here:

I’m not suggesting you swap your whole portfolio into an activist tracker portfolio! There are some websites/blogs out there suggesting this approach, but I’m not convinced. This probably just reflects my (mild) aversion to ‘mechanical’ investing approaches. I also think if you actually tackled this kind of project in the manner it deserves, you’re probably a pretty experienced and disciplined investor already!

The other problem is that many activists, by definition, are often taking on poorly performing companies, possibly with equally poorly performing management. (Another reason activist hedge funds always have their eye on the clock!). Or they invest in a situation where, for the life of me, I can’t see any apparent value. Do you really want to coat-tail on an investment like that?

The Great Irish Share Valuation Project III

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Allied Irish Banks, Bank of Ireland, First Derivatives, ICON, IFG Group, Independent News & Media, Irish Life & Permanent, ISEQ 20 ETF, Karelian Diamond Resources, Kenmare Resources, Kerry Group, singing dancing duck, Wile E. Coyote

Continued from here:

Right, let’s work our way through another batch of 10 stock valuations. As usual, I’ve updated market prices (and any relevant FX rates) for all stocks covered to date, so remember that each new file published will be a dynamic snapshot of each stock’s upside/downside potential:

The Great Irish Share Valuation Project III     (xlsx file)

The Great Irish Share Valuation Project III     (xls file)

ICON (ICLR:US):   ICON’s at a very interesting point right now. In 2009, they pretty much hit the wall, probably a reflection of the mid-life crisis that most of the major pharma companies are suffering right now. This is a pattern I’ve seen before – and forget to check up on nearly every bloody time (and, of course, it’s far easier to spot with hindsight!):

How About Another Catalyst? (Part V)

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activist investors, Bill Ackman, Carl Icahn, Chapman Capital, Daniel Loeb, Eddie Lampert, Free Capital, Guy Wyser-Pratte, IIU, Laxey, QVT, SEC Edgar, TVC Holdings, Weiss

Continued from here:

iv) Activist Investors are the next catalyst I’d like to highlight. Obviously, there’s no well-defined timeline involved here, but considering the approach of most hedge funds (who comprise the majority of activists) and their return expectations, a timeline of 6 months to 2 years.

Activists targeting asset discounts/realizations will tend to have a shorter holding period, while activists seeking operational change are usually forced to adapt to a longer investment horizon. With the multitude of investment trusts and companies listed in London, activists have generally focused on the former type of operation, while elsewhere in the world they focus more on significant operational changes/improvements to a business.

The Great Irish Share Valuation Project II

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Alkermes, CPL Resources, CRH, Datalex, DCC, Donegal Creameries, Elan, FBD Holdings, Grafton Group, Great Western Mining, IIU, Liberty Mutual, Monaghan Mushrooms, Produce Investments, Sherlock, TGISVP

OK, folks, let me throw another dozen stocks into the mix!

The Great Irish Share Valuation Project II     (xlsx file)

The Great Irish Share Valuation Project II     (xls file)

A couple of housekeeping items, if you’ll take a look at the first (Wexboy) sheet:  I’ve added a Blog Link column to the right – if I’ve written about a stock already, you’ll find the link there. I’ll bold any stock (see FBD, for example) where I’ve disclosed an ownership stake. I’ve also added some averages at the bottom of the sheet. I’ll discuss these in more detail when there are valuations for a majority/all of the shares listed, but they’re pretty self-explanatory and already look interesting.

Would Groucho Marx Join This Club?!

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AIM Soiree, AIM stocks, Gulf Keystone Petroleum, Hot Tuna, Leed Petroleum, logorrhea, natural resource stocks, penny dreadfuls, Petroneft Resources, Philip Fisher, scuttlebutt

You may have noticed I added a new AIM Soiree link – I see Philip O’Sullivan fell for this site also! I found it last year, and (a bit of a surprise to me) have enjoyed visiting it regularly since. Take a look, I recommend it – the design has a ’50/60s cartoon vibe (unusual for a finance website!), and it (rather smartly) ranks the Top 10 (& 100) AIM Stock Discussions from across the web.

Why the interest? Well, I’m fascinated at what pops up! Yeah, you guessed, it’s stuffed to the gills with natural resource penny dreadfuls! Oh Lord, fuck a duck… Not too much of a stretch to assume the most discussed stocks are also the most popular stocks to invest in (occasionally to short, but for the overwhelming majority it’s to go long)? And trawling through a few boards, it seems like there are plenty of people out there who believe they’ve got a well-diversified portfolio simply because they own 5 different resource stocks (not all oil stocks, you know ;-))!?! This idea’s even more insane than the stocks themselves. Got any friends like this? Can you help ’em out, buddy, please?!

How About Another Catalyst? (Part IV)

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Expected Value, Greencore, IFG Group, IRR, Margin of Safety, offer premium, preliminary approach, recommended offer, Risk Arbitrage, takeover offers, Takeover Panel

Continued from here:

iii) Takeover Offers are a catalyst with a much shorter duration than Liquidations or Wind-downs, usually within 2 to 8 months. In the UK, for example, Takeover Panel rules keep things on a fairly strict timetable. In terms of risk, they probably fall somewhere between the two: Your Gross Return is reasonably stable/well-defined, but price volatility and the chances of failure are a lot higher.

It’s not so prudent to give examples of current takeover offers, as price volatility and news flow can change things all too quickly. But I’ll give a brief update on a current Risk Arb situation in which I’m investing, and share my own observations and approach to this type of catalyst:

TGISVP – Now, What About Your Contribution?!

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TGISVP

I’m glad to see there’s plenty of interest to date in my last post on The Great Irish Share Valuation Project (TGISVP)! And shocked to witness the huge jump in the 2 most undervalued shares: AERL +12.5%, and BKIR +15.3%. Wow! Yeah, yeah, I know…blind luck!

And some disagreement about my valuations already…with the most passion over the natural resource stocks – no surprise there! Let me just repeat: These are not buy/sell recommendations! I’m really only comfortable providing those for stocks I’ve researched in much greater depth and that I actually own.

The Great Irish Share Valuation Project I

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Abbey plc, Aer Lingus, Allied Irish Banks, Aminex, Bank of Ireland, Conroy Gold, Continental Farmers Group, CPL Resources, CRH, Irish shares, Irish Stock Exchange, Irish value investing, stock screener

Time to take a little breather from Catalysts..! I’ve finally got ‘round to beginning a project that’s been top of my to-do list ever since starting this blog:

Yes, I wanted to identify all the listed Irish companies out there, (re)acquaint myself with their business fundamentals and financials, come up with a rough and ready valuation for each stock, and thereby come up with a list of the most potentially under- and over-valued Irish stocks.

Seduction…and Neglect?! How About a Catalyst? (Part III)

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Avanti Capital, delisting risk, Dhir India, Eurovestech, GPG, Gresham House, IRR, JSM Indochina, Liquidations, LMS Capital, Mazars, Ottoman Fund, Private Equity Investor, Siteserv, South African Property Opps, Spark Ventures, Trading Emissions, Trinity Capital, Veris plc, wind-down

Continued from here:

i) Liquidations are top of the heap for catalysts! They’re usually only announced after a company has sold all/the majority of its assets (or occasionally its business(es)). They offer the best prospect of a highly certain final asset value, to be realized within a reasonably short/well-defined timeline. They’re usually concluded within 6 months to 2 years, and any decent BoD/management will provide an estimated total distribution amount (net of all expected liquidation expenses) and schedule.

Of course, if they’ve an ounce of sense, they’ll be as conservative/pessimistic as possible with their forecasts, so any surprises should hopefully be positive… (In fact, they should recast the B/S with all future expected liquidation expenses included as a provision – i.e. accounting on a liquidation basis, not a going concern basis). In aggregate, these features mean that liquidations have v attractive IRRs and Expected Value Returns!