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Monthly Archives: March 2014

2014 – The Great Irish Share Valuation Project (Part VI)

31 Monday Mar 2014

Posted by Wexboy in Uncategorized

≈ 7 Comments

Tags

Aryzta, GameAccount Network, Green REIT, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, iShares MSCI Ireland Capped ETF, Kentz Corp, New Ireland Fund, Origin Enterprises, Permanent TSB Group Holdings, TGISVP, The Great Irish Share Valuation Project

Continued from here:

[NB: Worth revisiting Part I if you’re a new reader, or you’d like a refresher on TGISVP & my approach to the whole project.]

Company:   Green REIT

Prior Post(s):   2013

Ticker:  GRN:ID

Price:   EUR 1.20

Since I first wrote about Green in August, not a lot’s changed fundamentally. But boy, it’s been a fun ride! The share price actually traded up to a EUR 1.479 high since then, an astonishing 53% premium to NAV. In fact, I’m bemused to see GRN’s all-time closing high (of EUR 1.442) was set on December 31st. [And has suffered a steady decline since. Same for Hibernia REIT (HBRN:ID)]. It’s so obvious, it’s laughable… Hmmm, if you already owned a decent slug of shares, wouldn’t it be sooo tempting to spend just a little more driving the price higher? Sure, it would raise your average entry price marginally, but also do wonders for your year-end mark-to-market! 😉 Unfortunately (or fortunately!), the Irish market’s a good venue for this type of fun & games – prices can sometimes be pushed around with surprising ease. It’s not like anybody expects the Irish exchange will ever bother doing anything about it…

Then there’s the problem of over-enthusiastic & naive investors. God forbid I compare property & junior resource stock investors, but sometimes I wonder… When it comes to real assets, too many investors seem to think something magical happens when they’re acquired by listed companies. A resource CEO throws together a rag-bag of exploration licences (acquired for a few million), IPOs the company, and minutes later the same assets are worth 50 million plus! As for property, there’s the old joke: ‘Yeah, they just bought it for X million. Wow, that’s an amazing property, you won’t see another like it…I wonder how much it’s worth?!’ Yes, I actually get emails like this: ‘The Green REIT portfolio’s on a tasty 8.7% yield – what do you think it’s worth?’ Er, pretty much what they fucking paid for it three months ago, I would think!

[I’m really not trying to mock Irish/UK investors here. The real lunatics are in the US, of course – where investors are willingly sucked into that other great blood funnel, the REIT/MLP machine. All too often, valuations bear little relationship to actual asset values, but nobody cares… Kennedy-Wilson Holdings (KW:US) is a great example – now a much-vaunted name on the European side of the pond, but how many investors have actually checked out the parent company listing? It trades on an astonishing 2.3 times book!]

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2014 – The Great Irish Share Valuation Project (Part V)

21 Friday Mar 2014

Posted by Wexboy in Uncategorized

≈ 2 Comments

Tags

Bank of Ireland, Datalex, Falcon Oil & Gas, Galantas Gold Corp, Great Western Mining Corp, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, Ormonde Mining, Petrel Resources, TGISVP, The Great Irish Share Valuation Project, Trinity Biotech

Continued from here:

[NB: Worth revisiting Part I if you’re a new reader, or you’d like a refresher on TGISVP & my approach to the whole project.]

Company:   Trinity Biotech

Prior Post(s):   2012 & 2013

Ticker:   TRIB:US

Price:   USD 26.55

First up, I should remind readers TRIB used to be a large holding for me. And I bloody well hung on for as long as I could – bailing out of my final tranche of shares last August, with a near 700% gain on my average net entry price & almost an 1,100% gain on my initial purchase price. Of course, I ended up leaving money on the table – it’s rallied another 30% since then! But I’m not sure I understand the investor who’s buying at today’s price… I much prefer being the investor who bought TRIB at a tenth of the price, when it was truly despised & neglected! But let’s keep an open mind – what’s a sensible valuation for the company today?

In reality, Trinity’s transformed itself (& its investor base) from value to growth in the past couple of years. Most of its cash pile has now been spent on acquisitions. [But it remains in rude financial health – generating healthy cash flow, with $22.3 million of cash & zero debt]. The Fiomi Diagnostics acquisition is coming to fruition – the company’s now ramping up sales & marketing for the actual/expected European & US approvals (in 2014/15) of its Troponin I & BNP cardiac tests. In 2013, they added a UK-based blood bank screening business & Immco Diagnostics, a US (autoimmune) diagnostics company. These are complementary businesses, they add another $16.5 M of revenue, and Immco’s business/pipeline can be quickly leveraged up (using TRIB’s existing resources) to a 20% pa growth trajectory.

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Cheap & Interesting!

14 Friday Mar 2014

Posted by Wexboy in Uncategorized

≈ 8 Comments

Tags

blind stock valuation, cheap and interesting, fear and greed, growth investing, growth vs. value, investment writeup, reading, stock ideas, value investing, worship the spreadsheet

There’s one category of email I receive ’bout every second day. A typical example will thank me for the blog (yes, always good to hear!), stress they’re a regular reader, often cite a share we own in common, but then we reach the real meat – usually a somewhat impassioned plea:

Please tell me…where & how exactly do you come up with your ideas?!

All appear to be from genuine readers & investors – I certainly don’t think anybody expects some kind of get-rich-quick answer. [Though it gives a taste of how such a desire is so regularly exploited by the unethical & downright criminal]. I suspect this plea reflects a pretty common frustration for investors – where & how do I find new ideas…and how do I know if they’re actually bloody good ideas? Of course, I’ve no magic short-cut to offer here. My definitive answer’s still:

Read, read, read & then read some more…

I covered this ground in ‘Why I Read…’ (Parts I, II, & III – probably my most popular blog series ever). [‘Why I Write…’ may be a useful companion piece]. Looking back, I think these lines (from my final post) nicely sum up the challenge & benefits of reading:

‘I’m talking about territory where the greatest opportunities, and the greatest investors & traders, reside….For them, you can probably chalk it up to pure innate talent. For the rest of us, I think huge swathes of reading is the inevitable toll you pay to get there – however you go about it:

But reading annual reports will give you the figures. Reading non-fiction gives you the facts (& the right context). And most importantly, reading fiction allows you to recognize the fear & greed in yourself (& others), and enables you to see & imagine the world very differently.‘

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2014 – The Great Irish Share Valuation Project (Part IV)

04 Tuesday Mar 2014

Posted by Wexboy in Uncategorized

≈ 20 Comments

Tags

CPL Resources, Glanbia, Grafton Group, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, ISEQ 20 UCITS ETF, Papua Mining, Petroceltic International, Petroneft Resources, San Leon Energy, TGISVP, The Great Irish Share Valuation Project

Continued from here:

Company:   Grafton Group

Prior Post(s):   2012 & 2013

Ticker:   GFTU:LN

Price:   GBP 665p

Revisiting last year’s post, I see this prediction: ‘don’t be surprised to see Grafton suggesting a GBP re-denomination later this year…they might just go the full hog & dump their Irish listing in favour of the UK.’ Six months later, that’s exactly what they announced! Which makes sense really – over 75% of Grafton’s revenue now comes from the UK. On the other hand, you’d think the bloody Celtic Tiger was back, considering how the share price has behaved – a triple in just 18 months!? I was pretty bullish originally on Grafton, but my valuation estimate’s certainly been marking time ever since…

In the latest trading update, FY-2013 revenue reached GBP 1.90 billion & like-for-like sales were up nicely across the board. Recent reports suggest the 4.2% operating free cash flow (cash generated from operations, less net capex) margin’s still running well ahead of underlying operating profit – let’s assume that’s still the case on a FY basis. And I continue to believe Grafton will, in time, revert to its prior 7.0% peak operating FCF margin. For valuation purposes, averaging the two seems fair – a margin of 5.6% still deserves a 0.5 Price/Sales multiple, in my opinion. With net interest hovering ’round 15% of operating profit, no further debt/cash adjustments are necessary. [At this point, I don’t believe a P/E multiple’s a practical (or effective) valuation alternative to also incorporate here]. Which gives us:

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