TGISVP – One Last Yr-End Snapshot

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Donegal Investment Group, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, NTR plc, Petroneft Resources, REACT Energy, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas, Zamano

Now we have 2014 closing prices, let’s begin the New Year with The Great Irish Share Valuation Project: As you survey your year-end portfolio (and ponder potential 2015 buys & sells), an updated Irish stock ranking might prove useful – in terms of current share price vs. my TGISVP target price (i.e. current Upside Potential).

Since completing my usual valuation phase (as of end-May), I’ve added just one new stock write-up (NTR plc) & updated three stock valuations – Petroneft Resources (PTR:LN), Prime Active Capital (PACC:ID) & Fyffes (FFY:ID) – therefore, please be aware target prices in this post are now up to 11 months old. So while intrinsic valuations mostly tend to change quite gradually, pay close attention to any subsequent news & results (and possible valuation implications) – and, notably, to the potential impact(s) of the H2-2014 collapse in the Brent/WTI oil price. [Though let’s not overestimate this factor…I’m always amused by muppets who fondly entertain the notion a gyrating oil price is somehow relevant to the actual prospects of their favourite (but hopeless) junior resource stock!?]. And while we’re at it, I should also highlight our Irish stock universe is now down to 77 listings, after four H2-2014 market exits:

– Kentz Corp (KENZ:LN) was taken out by SNC-Lavalin Group. This acquisition was already locked down by the time the oil price started to slide (Petroceltic International wasn’t so lucky…), so this ultimately turned out to be a beautifully timed deal (and at a beautiful price & premium) for KENZ shareholders.

– TVC Holdings (TVCH:ID) distributed its stake in UTV Media (UTV:LN) to shareholders, and delisted shortly thereafter to continue its residual wind-down in private.

– REACT Energy (REAC:LN) has been suspended, pending clarification of the company’s financial (i.e. funding) position. That’s a shame – REAC’s yet another potentially good/great business undermined by insufficient funding. [I did see upside potential for REAC, in asset terms, but warned ‘Of course, the big problem here still is funding’]. This is a common hand-to-mouth complaint for many small(er) companies, but unacceptable when it comes to public companies – it seems an obvious fiduciary duty for management to scale (back) operating & capital expenditure plans, if necessary, to match the funding their company actually has available.

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

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Ardmore Shipping, Chiquita Brands International, CRH, Fyffes, IMC Exploration Group, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, Kenmare Resources, Keywords Studios, Mincon Group, Paddy Power, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas

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:   Fyffes

Prior Post(s):   2012 & 2013

Ticker:  FFY:ID

Price:   EUR 1.27

Seems like I picked the wrong horse, choosing Total Produce (TOT:ID) instead of Fyffes…but I can live with that, you can’t pick ’em all & TOT’s been good to me. But maybe not good enough – because FFY popped 46% in early March, on the news of a definitive merger with Chiquita Brands International (CQB:US). [CQB also closed 11% higher on the day – since then, on average, each stock’s held onto its gains]. I think we can comfortably assume the deal will go ahead (unscathed):  Shareholders love it, the DoJ doesn’t give a damn what happens in Europe, and the Irish Competition Authority is presumably asleep at the wheel, as per usual. [A study confirmed the ICA has a rejection rate of just 0.7%!] Anyway, what deal dissenter would relish the possibility of mercenaries dropping in for tea & a little chat..?! 😉 At this point, let’s just rely on the merger terms for our valuation:

USD 12.25 CQB Share Price * 0.1567 CQB Share (per 1 FFY Share) / 1.3841 EUR/USD = EUR 1.39

Fyffes is marginally undervalued – it offers an attractive arbitrage for the big boys, or a cheap entry price if you’re interested in going long the new ChiquitaFyffes.

Price Target:   EUR 1.39

Upside/(Downside):   9%

_

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

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Abbey plc, Aminex, Andor Technology, Connemara Mining Company, DCC, Irish shares, Irish Stock Exchange, Irish value investing, ISEQ, portfolio performance, Smurfit Kappa Group, TGISVP, The Great Irish Share Valuation Project, UDG Healthcare, US Oil & Gas

Thanks, I’ve received some great feedback & encouragement from readers in the past couple of weeks…so why not, let’s rock this TGISVP bitch all over again! Despite the exclusive focus on Irish stocks, I’m also hoping to see a lot of international readers checking in (& commenting) on these posts. For two good reasons, I hope:

i) Regardless of my individual price targets, many readers have highlighted their appreciation of the wide variety of valuation techniques & perspectives I’ve employed here across a broad spectrum of companies. I’ll try to place even more emphasis on the valuation process this year, so hopefully this project will prove interesting to a far wider readership.

ii) I mean, have you noticed the Irish market – it’s bloody on fire! The ISEQ was up +17.1% in 2012, and nearly doubled that return in 2013 (+33.6%) – um, like wow! And to top it all, my TGISVP portfolios actually out-performed the index, across the board in 2012 & on average in 2013. Uhoh, I think I’m scaring the value investors away…

However, it’s worth remembering I’ve been bullish on Irish stocks for a couple of years now – but a lot of investors really only started to pay attention last year. And much of the overseas interest to date, for example, has been primarily focused on (distressed) property & loans – rather than equities. So, arguably, we may only be reaching a point now where sentiment & interest in the Irish market’s fully blossoming. It’s also worth highlighting the rather unique economic & fiscal abyss the market’s rallying out of – in fact, the ISEQ remains 55% below its May-2007 highs.

Now, I hasten to add – I’m not actually making a specific ISEQ call here. I usually don’t think about indices in that manner (& often find the main indices too expensive anyway). I prefer to get comfortable with the current macro backdrop – as opposed to making macro predictions. [A fool’s game – noting current growth forecasts, and historical error ranges, all those highly-paid forecasters are really telling you is that developed market growth may be positive…or, um, negative!] Presuming a market passes enough macro hurdles, I’ll usually ignore the index & simply focus on stock-picking. Exactly as I’ll be doing here – though it will surely prove tempting to draw some overall market conclusion(s) near the end of the valuation stage (of this project).

TGISVP – 2013 Portfolio Performance

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Alpha Portfolio, Beta Portfolio, Great Western Mining Corp, Independent News & Media, Irish shares, Irish value investing, ISEQ, Karelian Diamond Resources, Papua Mining, portfolio allocation, portfolio performance, Prime Active Capital, Smart Alpha Portfolio, Smart Beta Portfolio, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas

OK, a second year of The Great Irish Share Valuation Project is now complete – for reference, here’s my mid-year review, now it’s time for the real post-mortem!  Let’s take care of a little housekeeping first:

– Between Jan & May last year, I published individual reviews/valuations for 73 different Irish companies, and kept a file recording each share price (at time of evaluation) & price target to properly assess performance.

– Post mid-year, in Aug-Sep 2013, I published (& recorded) some additional reviews/valuations for 3 new Irish IPOs:  Green REIT (GRN:ID), Keywords Studios (KWS:LN), and Ardmore Shipping (ASC:US).

– Since mid-year, I’ve made no other changes to my TGISVP file, except: i) Donegal Creameries (DCP:ID) changed its name to Donegal Investment Group (DCP:ID), while United Drug (UDG:LN) became UDG Healthcare (UDG:LN), ii) Kedco (KED:LN) changed its name to REACT Energy (REAC:LN), and also consolidated its shares on a 1-for-50 basis, iii) Grafton Group (GFTU:LN) migrated to a London-only listing, iv) Elan Corp (ELN:US) was acquired by Perrigo Co (PRGO:US), and finally v) TVC Holdings (TVCH:ID) paid its shareholders a EUR 0.495 special dividend.

– Since the (major) review/valuation phase was spread over 4 1/2 mths, my benchmark (the ISEQ) needs to be adjusted accordingly. I’m going to reference the mid-point (in terms of companies valued) of this phase – i.e. Feb-25th – as the most appropriate start date for the index.

2013 – A Game of Two Halves

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AIM stocks, Alternative Asset Opportunities, Asta Funding, benchmarking, correlation, fear and greed, hedge funds, home bias investing, KWG Kommunale Wohnen, Petroneft Resources, portfolio allocation, portfolio performance, Richland Resources, Saga Furs, Tetragon Financial Group, Titanium Asset Management, US Oil & Gas

Yup, it’s that time of year again… [For reference, here’s my mid-year 2013 performance report, plus my FY-2012 report]. Right off the bat, I have to admit assessing annual performance isn’t my most favourite of activities (as I’ll explain). It also reminds me how easily our (personal) fear & greed equation can magically transform itself as we finish an old year & head into a new one. While most traders tend to start a new year cautiously, investors often set out brimming with over-confidence – which can prove pretty hazardous…

The UK’s AIM market, for example, has enjoyed significantly positive returns in 14 of its last 18 Januaries. This annual love-fest is even more remarkable when you realize the AIM index has declined 17% since its 1995 inception. [Growth and value investors, take note!] My favourite muppets provide a more ludicrous example: Shareholders of US Oil & Gas (USOP:G4) (I’m presuming no new suckers are buying at this point) hailed the new year by immediately buying/running up the price 60% from its yr-end close! Sure, hope springs eternal…but with most USOP investors having lost 95%+ of their investment to date, this kind of new year exuberance is wildly irrational.

Thinking about & tracking your stocks (& portfolio) on some kind of calendar basis is yet another fixated version of tracking individual stock gains/losses. And that’s how fear & greed grabs hold & encourages you to play the ‘if…‘ game. I’ve already recommended you Forget Your Purchase Price – now I recommend forgetting your Year-to-Date Gains. Free yourself of those deadly anchors, and you’ll be forced instead to look afresh at your holdings every single day. For each stock, that’s an exercise in assessing upside potential (i.e. current share price vs. your latest estimate of intrinsic value), and then weighing that reward against the level & range of risk(s) involved. Which boils down to one simple question for each of your portfolio holdings:  Should I buy, sell or hold this stock today? And your cumulative or calendar gains/losses on a stock are irrelevant to that question – no matter how small, large or goddamn painful they might be…

The Great Irish Share Valuation Project – Some New Arrivals

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Ardmore Shipping, ASC, Baltic Dry Index, Green REIT, GRN, IPO, Irish shares, Irish value investing, Keywords Studios, KWS, shipping sector, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas, video game sector

I finished the valuation phase of The Great Irish Share Valuation Project in May, but we’ve actually seen a grand total of three Irish companies IPO since then. Seriously, that’s a bit of a bloody record – one of them even listed on the ISE! I’ll be taking a closer look at each company in this post, and including them in TGISVP for the rest of the year.

[btw I can’t help but remember it was about this time last year I first sat down, took a look at US Oil & Gas (USOP:G4), and promptly fell off my chair. It was a bit like meeting Paul Calf for the first time – I laughed, I cried, I was horrified… I ended up predicting an ultimate TGISVP price target of 3.5p (a 99% price decline). Not surprisingly, this was greeted with outrage  – with multiple muppets going out of their way to explain, in great detail, why I didn’t have a f***ing clue! Oh, how right they were, and how wrong I was – USOP’s now trading at 32p, a share price decline of only 95%..! Clearly an apology is warranted – perhaps I should suck up my pride & make it?! ;-)]

Well, maybe I can’t promise you anything as exciting as USOP, but let’s see if we have any bargains or disasters on our hands:

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..!

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.

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

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Aryzta, Austevoll, Bank of Ireland, Bill Ackman, Continental Farmers Group, Galantas Gold, Gillian Bowler, gold, Herbalife, IMC Exploration Group, Irish shares, Irish value investing, John Teeling, Liam McGrattan, Nial Ring, Origin Enterprises, Permanent TSB Group Holdings, Petrel Resources, TGISVP, The Great Irish Share Valuation Project, Trinity Biotech, US Oil & Gas

Continued from here.

Company:   Petrel Resources

Prior Post:   Here

Ticker:   PET:LN

Price:   GBP 16.75p

We should include at least one John Teeling company in every TGISVP post, eh?! Believe it or not, Petrel’s been around (in one form, or another) for 30+ yrs now! This long-term chart covers less than half that period, but I think it neatly summarizes the company’s progress – or rather, lack of fucking progress, over its lifetime:

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

Tags

Bank of Ireland, Grafton Group, Great Western Mining Corp, Irish shares, Irish value investing, Karelian Diamond Resources, Kentz Corp, Risk Weighted Assets, TGISVP, The Great Irish Share Valuation Project, US Oil & Gas, USA Graphite Inc.

Continued from here.

Company:   Karelian Diamond Resources

Prior Post:   Here

Ticker:   KDR:LN

Price:   GBP 0.525p

Seriously, is this a company, or a joke?! It’s literally held together with spit & baling twine… I shouldn’t be surprised: It’s another Dick Conroy vehicle, and he runs it as tightly as John Teeling does his companies. The company had a mere EUR 10 K on hand at end-May 2012 (no results since!?), EUR 1.0 mio in loans, and EUR 0.8 mio in accrued director compensation. And it goes without saying the company has nothing tangible (in terms of reserves & resources) to show for its exploration efforts…