Good prospects, and undervalued..

I have a problem with anything that isn't in value territory, ie trading below asset value, or relatively undervalued if its a good company with good prospects, unfortunately Game was neither until it dropped to .94gbx.

As for peripheral strategies such as surveying director deals, I don't see any value on their own but as a peripheral confirmation, if any at all.

As for the future of GMG, it's a complete gamble, you may want to hold on and see if the directors did see something, you will however have to make 140% back now to get back to starting capital, which is why you can't understimate the rule 'don't lose money'.

Hope the drawdown wasn't a substantial amount of your net capital.

Regards
 
scose-no-doubt said:
Not really lol.

The next gen move to downloadable content is going to ar5e rape retail out of existence.
Click to expand...

Completely agree, when I say a gamble, I refer to the business decisions of Game, they have somewhat of a brand, and if they can convert that into a virtual empire is yet to be seen. I remain extremely sceptical as the penetration of this space will prove, what can one say, an entirely different game to the retail space.

As with everything, I like to have the odds firmly in my favour with sound analysis. Here the odds are against, hence I refer to a gamble as opposed to an investment.
 
While I agree in principle, I think there's no way but down. Sales are going to take a tw@ting whatever happens.
 
Well luckily it only accounted for 5 percent of my portfolio so it wasn't so disastrous. However I'm pretty annoyed that I sold out on Tuesday since the price has just gone up by over 240 percent from when I sold it :(
 
I am pleased to hear you diversified.

Moves like this happen all the time, never dwell on a missed chance, and never chase it.

The trick is to avoid this situation in the future, you must have a sound basis on which to place your valuation on and be patient, I have sold out of ECM, VLX and GMG when they reverted to what I call their true value, they're still rising, but this does not bother me as I know the margin of safety has gone, and all of us should be sticking to the rule 'don't lose money'.
 
Tesco has now moved out of absolute value range, if it comes back to under 325gbx it is still a good time to load up.

As for targets, we are pretty much risk free moving up to 379gbx, however, I think we look good for a longer term holding if you're looking for the income.

Regards
 
We've had quite a rally, and at some point this year we will most likely get a pull back as in almost every other year.

I'd just like to put forward an idea now and some later when I have time, for some of you looking to take advantage of this pullback.

Smith & Nephew (SN) would be trading at a deep discount in the 550gbx area, they are a fantastic company with very clean cash statements, obviously those in search of rapid growth will not get much fun out of this trade, but as we should all be protecting our principal, SN. would be a good place to park your capital should the price approach this area.

Regards
 
If people have come across an interesting opportunity and want me take a look at it, please post and I will do my best to render it not investable, or put a buy price on it.

Regards
 
james1989 said:
If people have come across an interesting opportunity and want me take a look at it, please post and I will do my best to render it not investable, or put a buy price on it.

Regards
Click to expand...

How about International Personal Finance?
 
aparoid89 said:
How about International Personal Finance?
Click to expand...

Hello Aparoid,

I looked at these just recently and looked at the institutions that have been picking up large quantities of shares, some reputable names who do very well year after year.

However, I personally do not like the look of the recent cash statements, particularly operational, hence would not invest in them, apart from that they seem to be doing fine.

I will value these as they are certainly not a bad company and my analysis will most likely be wrong, but I reside on the conservative bench when investing.

Value-wise, they are currently trading in value territory, however, they are undervalued by 11% or so, I would personally want to buy in at around a 23% discount or pricewise in the region of 226GBX.

I hope that helps Aparoid, any more questions and I will be more than happy to help.

Regards
 
French Connection (FCCN) is trading at an absolute bargain thus I have bought in this morning.

The situation at the moment leaves FCCN with enough current assets to pay off its entire liabilities.

FCCN is also generating cash and paying a dividend, why it is sitting at this valuation is beyond me. You are buying the long term assets and the profit generated for nothing, a free lunch indeed.

Regards
 
james1989 said:
French Connection (FCCN) is trading at an absolute bargain thus I have bought in this morning.

The situation at the moment leaves FCCN with enough current assets to pay off its entire liabilities.

FCCN is also generating cash and paying a dividend, why it is sitting at this valuation is beyond me. You are buying the long term assets and the profit generated for nothing, a free lunch indeed.

Regards
Click to expand...

Revenue is still below that of 2008 while profit is about 43% higher than that time.
Negative earnings in 2009 & 2010. Surely there are more fundamentally sound companies with similar P/E to FCCN?

This is not meant to be a negative comment, just wondering what the reasoning is as I feel I may be missing something. On the plus side, the most recent financial year is the first since 2006 that the dividend looks sustainable but with a market cap of £45m I wonder if there are better options for ones money.

What do you make of the situation at the moment with Randgold? I'm waiting for below 5100 to commence buying.

I recently invested some dividend income into FDP (1ST Derivatives), it's a small company (mkt cap approx £80m) but I think there is quite a good potential for growth. Additionally they're paying a growing dividend and are not overpriced for their earnings. I'm majorly concerned that they haven't released their most recent annual report as they usually announce by end of March.

PS nice thread
 
mpat89 said:
Revenue is still below that of 2008 while profit is about 43% higher than that time.
Negative earnings in 2009 & 2010. Surely there are more fundamentally sound companies with similar P/E to FCCN?

This is not meant to be a negative comment, just wondering what the reasoning is as I feel I may be missing something. On the plus side, the most recent financial year is the first since 2006 that the dividend looks sustainable but with a market cap of £45m I wonder if there are better options for ones money.

What do you make of the situation at the moment with Randgold? I'm waiting for below 5100 to commence buying.

I recently invested some dividend income into FDP (1ST Derivatives), it's a small company (mkt cap approx £80m) but I think there is quite a good potential for growth. Additionally they're paying a growing dividend and are not overpriced for their earnings. I'm majorly concerned that they haven't released their most recent annual report as they usually announce by end of March.

PS nice thread
Click to expand...

Hello mpat89,

I understand your point of view here regarding FCCN, however, the position was not initiated for business quality, trading at less than its net current asset value provides a margin of safety like no other. As far as i'm concerned the business might as well be finished, i'm not particularly concerned with earnings or growth, but it is still generating cash and giving me the long term assets for nothing, such as property, leaving plenty of space for upside and little downside.

The question is, would an owner sell you the business and give you all the long term assets and future cash generated for free? That is what the market is offering right now.

As for Randgold, I believe it to be speculative due to its reliance on a commodity and its relative valuation, meaning you must then predict the price of gold, which in my eyes is far from clear. There is however no doubt that the company is the best in its sector and it has healthy cash statements. But let me make it clear, I would never allocate capital in such a manner. If I was to consider buying this issue, I would look for a price around the 4100 area.

First Deriv's appear to be doing very well, I would not buy in now based on valuation grounds, sector, and due to their size, but if you're holding them from a previous buy, they may have a good couple of years ahead, more speculative than I would like but they're not showing any signs of weakness yet. The annual report appears to be released towards the end of May.

Some good intelligent questions here mpat89, should you have any other questions, please don't hesitate to contact me or post it up here.

Regards
 
Last edited:
james1989 said:
Hello mpat89,

I understand your point of view here regarding FCCN, however, the position was not initiated for business quality, trading at less than its net current asset value provides a margin of safety like no other. As far as i'm concerned the business might as well be finished, i'm not particularly concerned with earnings or growth, but it is still generating cash and giving me the long term assets for nothing, such as property, leaving plenty of space for upside and little downside.

The question is, would an owner sell you the business and give you all the long term assets and future cash generated for free? That is what the market is offering right now.

As for Randgold, I believe it to be speculative due to its reliance on a commodity and its relative valuation, meaning you must then predict the price of gold, which in my eyes is far from clear. There is however no doubt that the company is the best in its sector and it has healthy cash statements. But let me make it clear, I would never allocate capital in such a manner. If I was to consider buying this issue, I would look for a price around the 4100 area.

First Deriv's appear to be doing very well, I would not buy in now based on valuation grounds, sector, and due to their size, but if you're holding them from a previous buy, they may have a good couple of years ahead, more speculative than I would like but they're not showing any signs of weakness yet. The annual report appears to be released towards the end of May.

Some good intelligent questions here mpat89, should you have any other questions, please don't hesitate to contact me or post it up here.

Regards
Click to expand...

Thanks for your reply. I hadn't considered the balance sheet aspect of FCCN. On the grounds you have mentioned it becomes a bit of a no brainer. Now it becomes a question of management and if there is a possibility that they behave recklessly or chase a solution to their income issues too aggressively. As you say though, there is a pretty big margin of safety. I'm impressed by this find because it's so black and white. May I ask how you came across this; are there any screeners or similar that you used to find this?

RRS - what you're saying makes sense, thanks.

FDP - It is worth noting that previously their services have been used mostly by the financial sector. They have designed their platform so that it can be implemented across many sectors and they now seem to be in a position where there is a possibility that their services are taken up across a wide range of companies outside the financial sector. On the other hand, I understand what you're saying and don't blame you for taking that view. I've invested less than 3% of my portfolio in this one.
 
Absolutely Mpat89, I have two valuation methods, the balance sheet as above, and the relative used on the previous such as ECM and TSCO. The balance sheet method draws up companies who are, let's say, struggling, while the latter filters for quality growth.

I find companies such as FCCN by searching for those who have had steep declines, for example 52 week lows, you can find these at websites such as Morningstar® Integrated Web Tools I then manually analyse the balance sheets from ft.com.

A calculated diversified approach to investment is important in most cases and it's reassuring to see you are doing so, the only reason I am so critical is due to my lack of diversification hence choosing the very best of companies, if I feel confident I will allocate 40% of funds to one investment.

Regards
 
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aparoid89 said:
How do you feel about Kazakhmys or Vedanta Resources?
Click to expand...

Hello Aparoid,

I find valuing business which is so reliant on a commodity very risky, there is always that component of valuing the underlying commodity, which is impossible.

Just a quick look at both companies reveals very volatile earnings, you should be looking toward good stable business in steady industries.

Unfortunately I can't provide valuations on this occasion due to Kazakhmys exhibiting growth spurts which distort sensible evaluation and Vedanta not adhering to business quality criteria.

On the whole the market is presenting very little opportunity right now, so I would personally sit tight for a greater pullback, it will come sooner or later, the key is patience.

Regards
 
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