The best performer in my portfolio this week was UBC Media, and as reported in the FT yesterday it was also the best performer on the stock market with a share price rise of 96.2%. The current market cap. of UBC is now around £12.5m and it's already been a spectacular performer for me, but I won't be selling. To listen to my reasoning click the audioboo link below:-
https://audioboo.fm/boos/1688042-ubc-media-further-investment-in-audio-boo
As ever, no advice intended or given.
Sunday, 27 October 2013
Saturday, 26 October 2013
Densitron - still no good reason to re-invest
Densitron, a company that I have commented on in the past, released a statement this week concerning the settlement of a claim made against the Company by the landlords of a property in Newcastle previously occupied by a former subsidiary, Densitron Ferrograph Limited.
In the past I have held shares in Densitron, but decided to sell when this case appeared to be dragging on and trading had deteriorated. Below you can see my comments back in August:-
http://michae1mouse.blogspot.co.uk/2013/08/updates-ubc-media-densitron-ddd-group.html
"Densitron was a company in which I held shares, but I did sell in June following a poor trading statement. You can follow my reasoning in the blog below:-
http://michae1mouse.blogspot.co.uk/2013_06_01_archive.html
Following Friday's interim statement, I have no appetite to repurchase any shares in this company.
Revenues decreased by 6% whilst orders booked fell by 7% and the company reported a £315,000 loss.
Whilst the company sounds positive about the second half, has a reasonable balance sheet and is paying an interim dividend of 0.1p, I am nervous about the outstanding writ against the company. This matter has been dragging on for many months despite their attempts to resolve the matter out of court. A date has now been set for the trial on 8th December. This suggests to me that the Landlord has a very strong case, and any settlement either inside or outside of court could (imo) be very punitive for Densitron.
I'll continue to monitor the situation, and never say never, as the saying goes, but allied to recent inconsistent trading this one will remain on the monitor."
Whilst the management state that "the settlement is in the best interests of the group", no financial details have been disclosed and it appears that Densitron are still lumbered with the lease payments until an agent can find a suitable tenant.
I am guessing that the settlement is a hefty one, and then of course they will have incurred legal fees and are still liable for the rent of an unoccupied property.
In response to the news, the share price did move up a few percentage points surprisingly, but whilst Densitron's market cap. is very low, I can't see anything to get excited about and it will be interesting to see their balance sheet when they release their finals.
I really find it most odd that they state:-
"It was agreed that the details of the settlement would remain confidential but in essence the Company
has agreed to a settlement amount and the rectification of the lease at the current market rent. "
Are they hoping to keep it secret forever? Will they just ignore it in their final results?
Perhaps they've forgotten that their shareholders are part owners of the company. Bizarre.
Personally, I wouldn't touch this company with a bargepole in the future following this fiasco.
In the past I have held shares in Densitron, but decided to sell when this case appeared to be dragging on and trading had deteriorated. Below you can see my comments back in August:-
http://michae1mouse.blogspot.co.uk/2013/08/updates-ubc-media-densitron-ddd-group.html
"Densitron was a company in which I held shares, but I did sell in June following a poor trading statement. You can follow my reasoning in the blog below:-
http://michae1mouse.blogspot.co.uk/2013_06_01_archive.html
Following Friday's interim statement, I have no appetite to repurchase any shares in this company.
Revenues decreased by 6% whilst orders booked fell by 7% and the company reported a £315,000 loss.
Whilst the company sounds positive about the second half, has a reasonable balance sheet and is paying an interim dividend of 0.1p, I am nervous about the outstanding writ against the company. This matter has been dragging on for many months despite their attempts to resolve the matter out of court. A date has now been set for the trial on 8th December. This suggests to me that the Landlord has a very strong case, and any settlement either inside or outside of court could (imo) be very punitive for Densitron.
I'll continue to monitor the situation, and never say never, as the saying goes, but allied to recent inconsistent trading this one will remain on the monitor."
Whilst the management state that "the settlement is in the best interests of the group", no financial details have been disclosed and it appears that Densitron are still lumbered with the lease payments until an agent can find a suitable tenant.
I am guessing that the settlement is a hefty one, and then of course they will have incurred legal fees and are still liable for the rent of an unoccupied property.
In response to the news, the share price did move up a few percentage points surprisingly, but whilst Densitron's market cap. is very low, I can't see anything to get excited about and it will be interesting to see their balance sheet when they release their finals.
I really find it most odd that they state:-
"It was agreed that the details of the settlement would remain confidential but in essence the Company
has agreed to a settlement amount and the rectification of the lease at the current market rent. "Are they hoping to keep it secret forever? Will they just ignore it in their final results?
Perhaps they've forgotten that their shareholders are part owners of the company. Bizarre.
Personally, I wouldn't touch this company with a bargepole in the future following this fiasco.
How much longer before the current Bull Market runs out of steam?
Well it's full steam ahead for the current Bull market which has been running for five years now. Surely it's time for a correction. Well possibly, but as I commented back in February, I think that this Bull run might continue well beyond some of the most optimistic forecasters predictions.
Why do I believe this? For very simplistic reasons. Firstly, the 2008-2009 market capitulation was extremely severe. Stock prices were pummelled so much that some quite ridiculously low valuations were created by investor panic and forced selling. At the time, I stated that I believed that this had created the investing opportunity of a lifetime, and for many investors this has certainly been the case.
Whilst some stocks are clearly running ahead of themselves, and it's becoming more difficult to find outstanding bargains, they haven't completely disappeared and with a few exceptions, valuations of many UK companies are relatively modest. Euphoria is still some distance away.
Significantly though, true global economic recovery is yet to appear, and when it does earnings for many UK companies may rise significantly. During the recession, companies that survived have become leaner and more efficient and some have benefitted from competitors going to the wall.
Furthermore, low interest rates still prevail. Where else do you invest your money? Gold, coins, wine...? No thanks.
Finally, bears will argue the risk comes from the withdrawal of quantitative easing in the US and interest rates rising sooner than expected. Surely these circumstances will only occur when it is clear that economic recovery is assured and sustained. Doesn't this bring us back to improving earnings for many of our leaner and meaner companies? Indeed many companies on modest earnings ratings may look cheap again as recovery takes a stronger foothold.
Anyway, we shall see, and as stated in a previous blog:-
http://michae1mouse.blogspot.co.uk/2013/02/datong-up-for-sale-markets-overheating.html
"As a long term investor and stock picker I'm only ever concerned whether or not the stocks I hold are undervalued or overvalued, if it's the former then I continue to hold and acquire and if it's the latter then I sell."
There is a good article written in the FT today by Dominic Picarda.
http://www.ft.com/cms/s/0/9e8d7730-3c97-11e3-86ef-00144feab7de.html#axzz2iqAZvLz8
"I would not be at all surprised if UK equities produced double-digit annualised returns over the coming five years".
Anyway, it's a bit of a mugs game predicting the direction of the markets and my next blog will stick with my stock picking experiences and news stories that have been released recently.
Why do I believe this? For very simplistic reasons. Firstly, the 2008-2009 market capitulation was extremely severe. Stock prices were pummelled so much that some quite ridiculously low valuations were created by investor panic and forced selling. At the time, I stated that I believed that this had created the investing opportunity of a lifetime, and for many investors this has certainly been the case.
Whilst some stocks are clearly running ahead of themselves, and it's becoming more difficult to find outstanding bargains, they haven't completely disappeared and with a few exceptions, valuations of many UK companies are relatively modest. Euphoria is still some distance away.
Significantly though, true global economic recovery is yet to appear, and when it does earnings for many UK companies may rise significantly. During the recession, companies that survived have become leaner and more efficient and some have benefitted from competitors going to the wall.
Furthermore, low interest rates still prevail. Where else do you invest your money? Gold, coins, wine...? No thanks.
Finally, bears will argue the risk comes from the withdrawal of quantitative easing in the US and interest rates rising sooner than expected. Surely these circumstances will only occur when it is clear that economic recovery is assured and sustained. Doesn't this bring us back to improving earnings for many of our leaner and meaner companies? Indeed many companies on modest earnings ratings may look cheap again as recovery takes a stronger foothold.
Anyway, we shall see, and as stated in a previous blog:-
http://michae1mouse.blogspot.co.uk/2013/02/datong-up-for-sale-markets-overheating.html
"As a long term investor and stock picker I'm only ever concerned whether or not the stocks I hold are undervalued or overvalued, if it's the former then I continue to hold and acquire and if it's the latter then I sell."
There is a good article written in the FT today by Dominic Picarda.
http://www.ft.com/cms/s/0/9e8d7730-3c97-11e3-86ef-00144feab7de.html#axzz2iqAZvLz8
"I would not be at all surprised if UK equities produced double-digit annualised returns over the coming five years".
Anyway, it's a bit of a mugs game predicting the direction of the markets and my next blog will stick with my stock picking experiences and news stories that have been released recently.
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