TGISVP – H1-2013 Performance

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alpha, Alpha Portfolio, Beta Portfolio, Clontarf Energy, Continental Farmers Group, DCC, Elan Corp, Fastnet Oil & Gas, Glanbia, Greencore Group, Irish shares, Irish value investing, ISEQ, junior resource stocks, muppets, Petroceltic International, Petroneft Resources, portfolio allocation, portfolio performance, Smart Alpha Portfolio, Smart Beta Portfolio, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas

Time to wrap up the mid-year review(s) – let’s finish with The Great Irish Share Valuation Project. To recap:

– A total of 73 Irish companies are included this year (same as last year – but US Oil & Gas (USOP:G4) & Fastnet Oil & Gas (FAST:LN) were subsequently listed, so I added them later in the year, increasing the 2012 total to 75).

– Each company’s been individually reviewed & valued, some time between Jan & May, and I’ve kept a record of all share prices (at time of evaluation) & price targets to properly assess performance.

– I’ve made no subsequent changes to the file, except: i) to adjust for DCC (DCC:LN) migrating to a London-only listing & for Petroceltic International (PCI:LN) consolidating its shares 1 for 25, and ii) Continental Farmers Group (CFGP:LN) will continue to be included at its GBP 36p takeover price (the Saudi bail-out came in the nick of time, just before the cash ran dry!).

– Since my TGISVP review/valuation phase was spread over 4 1/2 mths, we need to adjust our benchmark (the ISEQ) accordingly. Like last year, I’ll take the mid-point (in terms of companies valued) of this phase – i.e. Feb-25th – as the most appropriate start date for the index.

I’m bemused to see I’ve apparently become more bearish this year! Last year, I was bullish on 48% of all stocks, while this year that’s now dropped to 40%. But consider the unique nature of TGISVP, which includes an extraordinary selection of junior resource stocks, complete with assorted incompetents & cowboys! Not surprisingly, I’m bearish on pretty much all these rubbish stocks – so stripping ’em out, it’s fair to say I remain bullish on Irish stocks. 🙂 OK, perhaps a little less so today, but with the ISEQ up +17.1% in 2012 & another +16.7% this year, that’s no great shocker..!

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2013 – The Great Irish Share Valuation Project (Part IX)

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Allied Irish Banks, Bank of Ireland, Biogen Idec, Dalradian Resources, Datalex, Elan Corp, ELG Scheme, Fastnet Oil & Gas, FBD Holdings, IIU, Irish shares, Irish value investing, Pageant Holdings, Permanent TSB Group Holdings, Prime Active Capital, Royalty Pharma, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas

Continued from here. [If you’re new to the series, I recommend you re-visit my first 2013 TGISVP post].

Company:   Elan Corp

Prior Post:   Here

Ticker:   ELN:US

Price:   $11.61

Last year, I had Elan pegged for a significant fall – which definitely appeared to be on the cards with the share price falling 25%+ to sub-$10 levels in Dec & Feb. In the past 2 months, however, they’ve certainly pulled a rabbit from the hat with their recent Biogen Idec (BIIB:US) deal. This hands full control of Tysabri back to Biogen, but in return Elan receives $3.25 billion of cash, and a 12-25% royalty on future global net sales. Post-restructuring, Elan was almost entirely dependent on Tysabri – so this deal transforms the company into a highly attractive pot of cash, and a low cost/high margin royalty stream.

Unfortunately, management didn’t quite grasp this was shareholder’s money – they acted like all their bloody Xmases had come at once! They’ve promised a share buyback, but their main plan is to use the majority of the proceeds & royalties to acquire a brand new portfolio & pipeline. This is coupled with a projected reduction in annual operating expenses to (only?) $180 million per year! This has lured Royalty Pharma out of shadows, to offer shareholders an interesting alternative: An $11.00 per share bid.