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Petrofac (PFC)

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Bouleversee
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Re: Petrofac ( SFO)

#200664

Postby Bouleversee » February 11th, 2019, 7:45 pm

BristolDave wrote:I think in the end Tesco only paid out £101m if I remember correctly which was a lot less than originally claimed, don't know how to check this though and I may be wrong. I have just checked the short positions on short interest tracker and Petrofac are 6.18% shorted as of today against Marks and Spencer at 11% for example so I am not sure even the institutions believe that this will go much lower. We will wait and see what happens this week.

Disclosure: - I hold Petrofac having bought after the drop 18 months ago and maybe considering buying a few more if the yield increases further :lol:


However much/little, as someone who has 2 holdings (ISA and certificated) I , in however small a way, helped to pay for that. I think it was the same with Lloyds. I really can't remember if I would have qualified to join the action in either case, but it didn't seem right to do so and that I would have been suing myself. Perhaps I missed out.

BristolDave
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Re: Petrofac ( SFO)

#200676

Postby BristolDave » February 11th, 2019, 8:49 pm

I agree with you and also didn't claim for my Tesco shares. What I was trying to say is that the legal action may not come to much and Petrofac seem to be taking a stance against it. My understanding is that the claimants will need to prove that the sales manager acted with the knowledge and approval of the company so there is no certainty that it will succeed and even if it does the final settlement is likely (hopefully) to be a lot less than the £400m being claimed so unlikely to affect the company too much.

The main thing to watch in my opinion is reputational damage which would affect the companies ability to win contracts going forwards. This doesn't seem to have been the case so far and I personally believe there is still a good investment case for the company - but you have to make your own decision what to do.

Bouleversee
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Re: Petrofac ( SFO)

#200677

Postby Bouleversee » February 11th, 2019, 8:56 pm

Understood and am inclined to agree and sit tight, as I did with CLLN & IRV :cry:

BristolDave
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Re: Petrofac ( SFO)

#200697

Postby BristolDave » February 11th, 2019, 10:18 pm

I also lost money on Carillion mainly due to doing nothing and hoping for a recovery, learned a valuable lesson there !. But I don't think there is any suggestion of false accounting with Petrofac and the owners the Asfari family have major skin in the game holding over 18% of the company. My understanding is that they are paid with the dividends so have a major interest in keeping the company on a sound footing.

I think this situation is more similar to Rolls Royce and their Saudi Bribe scandal, I also seem to recall there was a similar situation with a BAE director and the middle East a while back. It hasn't seriously affected either company as far as I can see and I hold both. I am also in sales and unfortunately this is par for the course with doing business with the Middle East and parts of Eastern Europe. The trick is to distance yourself through intermediate companies and paying commissions :roll: , but without condoning it in any way that's the way you do business in these areas of the world.

Clitheroekid
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Re: Petrofac ( SFO)

#200852

Postby Clitheroekid » February 12th, 2019, 3:41 pm

Bouleversee wrote:I can never get my head round this sort of legal action.

That's because such litigation is primarily for the benefit of the lawyers who promote such action. It's one of the many undesirable imports from the US, where such class actions are a thriving industry. Fortunately, English law is less generous to such claimants than many US laws.

Nevertheless, I personally see most such actions as unethical, as they usually result in one small group of shareholders (and their lawyers) being enriched by extorting money from the large majority of shareholders who aren't in the group.

However, in purely practical terms I can't see it representing any significant threat to a company the size of PFC. They will almost certainly negotiate a nuisance settlement of maybe £50m - £100m, which is in reality neither here nor there.

Likewise, I view the reaction to David Lufkin's guilty plea as overdone. For a start, neither the company itself nor any of its current employees have even been charged, let alone convicted, and the SFO's track record is pretty poor in similar cases.

There's also been talk of reputational damage if there are further convictions, but again I suspect the harm that would result from such convictions has been overestimated. It's an unfortunate fact of life that nearly all companies that trade in sunny places full of shady people have to indulge in a certain degree of corruption simply to keep trading there. I'm quite sure that people in the oil industry are far more concerned about whether the prospective partner can do the job competently and at a decent price than whether they've greased a few palms here or there.

In the meantime, the yield now appears to be over 7%, with dividend cover of about 2.7.

So although it's certainly not a widows and orphans share I've concluded that at around £3.75 the upside outweighs the downside and it's too good a bargain to be missed. To be perfectly honest, I'll be happy to sell if, as I anticipate, the price makes a significant short term recovery, but if not I'll be equally happy to hold on a long term basis, as I think that yield looks pretty safe for the foreseeable future.

monabri
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Re: Petrofac ( SFO)

#200908

Postby monabri » February 12th, 2019, 6:54 pm

Reputational damage? Nah! ( proven not to be so....look at the history in the last 18 months).

daveh
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Re: Petrofac ( SFO)

#201117

Postby daveh » February 13th, 2019, 5:14 pm

I topped up with a very small purchase today using some accumulated divis as it was a cheap dealing day. Unfortunately I was 2 minutes too late and missed the cheap dealing and didn't notice when I pressed the accept deal button - bother!.

monabri
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Re: Petrofac ( SFO)

#201634

Postby monabri » February 15th, 2019, 6:53 pm

I see that visible shorting levels have reduced back down to 5.7%.


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