Added Micro Focus (MCRO)

[teecee90]

I've just added Micro Focus International (MCRO) to my HYP. Dithered a bit over this one due to its price volatility and what looks like relatively high debt levels, but pulled the trigger none-the-less. Forecast yield is well into HYP territory, good cover and good history of rising dividends. Finger crossed.....

Anyone else tempted?

[IanTHughes]

I've just added Micro Focus International (MCRO) to my HYP. Dithered a bit over this one due to its price volatility and what looks like relatively high debt levels, but pulled the trigger none-the-less. Forecast yield is well into HYP territory, good cover and good history of rising dividends. Finger crossed.....

Anyone else tempted?

If you will excuse the pun, I did put Micro Focus International PLC (MCRO) under the microscope a few months back. In the end I rejected it due to reducing revenues I believe. This was re-iterated in March 2019 when they issued a sales/profit warning, and again a couple of months ago in August 2019:

RNS: https://www.londonstockexchange.com/exc ... 05524.html
News Item: https://www.theregister.co.uk/2019/08/2 ... ales_tank/

They seem to be having some trouble in the digestion of their last purchase of Hewlett Packard Enterprise, or was it a merger?

I do wish you all the best with your purchase but they are just a bit too racy for me right now


Ian

[idpickering]

Not one for me, much for the reasons mentioned by Ian in his post above. You don't have to have a finger in every pie. Good luck with your purchase though.

Ian.

[NeilW]

I'm not going anywhere near MCRO until its details show up on HYPTUSS

[MDW1954]

I have a modest holding, and may well top up.

MDW1954

[teecee90]

An interesting, if somewhat superficial, recent article on TMF

https://www.fool.co.uk/investing/2019/10/02/2k-to-invest-here-are-two-ftse-250-dividend-stocks-i-like-yielding-8/

Regarding the profit warnings..."Micro Focus has a history of issuing trading warnings but, for the most part, it has then gone on to outperform."

I'm obviously hoping history repeats itself again!

[johnhemming]

I ran a screen in September looking at high yields with cover. MCRO and REDD both came up (because of profit warning driving the price down). With MCRO I saw directors selling and with REDD I saw directors buying. Hence I discarded MCRO and bought REDD.

[kempiejon]

I ran a screen in September looking at high yields with cover. MCRO and REDD both came up (because of profit warning driving the price down). With MCRO I saw directors selling and with REDD I saw directors buying. Hence I discarded MCRO and bought REDD.

http://sharestobeclosed.telegraph.co.uk ... ?epic=REDD

Name Redde Epic REDD
Sector Specialty Finance ISIN GB00BLWF0R63
Market Capitalisation (m) 343.07
Dividend Yield (%) 10.42
Dividend cover (x) 0.97
Redde plc (formerly Helphire Group plc) was founded in 1992 and works predominantly with insurance companies, insurance brokers, prestige motor dealerships, and large national fleet owners the Group provides a range of accident management, incident management and legal services. The Group is one of the market leaders in its fields of business; it delivers accident management solutions to motorists ensuring that they remain mobile until their own vehicles are repaired or until they are put in a position to obtain a replacement and it provides legal services ensuring that they are properly compensated for their injuries and losses. Legal services also include wills and probate, family law and employment law advice. The name Redde is associated, in Latin, with the concept of restoration.

I've not checked the figures from other sources and I'd really like more cover and market cap.

[johnhemming]

I set my limit as being below a PE of 12. I have slightly different figures on forecast dividend (lower) and cover (higher). Obviously I do concern myself with liquidity, but at times I buy into the minnows. My best deal in terms of substantial return was a minnow. Directors sales are always something that I think are worth considering (hence my exclusion of MCRO).

[IanTHughes]

I set my limit as being below a PE of 12. I have slightly different figures on forecast dividend (lower) and cover (higher).

It would make it much easier to understand this comment if you were to clearly identify which Share or Shares you are talking about. Also, when saying your figures differ, it would be very helpful if you were to inform the board what your figures are and whose figures they differ from and by how much.


Ian

[johnhemming]

The limit of PE of 12 applies to the screen. Hence it does not apply to any one specific share.

This thread is about MCRO so I am referring to MCRO unless I specifically identify another stock.

Sharecast have these figures for MCRO
https://www.sharecast.com/equity/Micro_ ... ernational

Forecast dividend of 7.7% with cover of 1.9 and PE of 8.4

Stockopedia forecast 7.79% with cover of 1.85 and PE of 6.93 (for 2019) and similar figures for 2020.

Stockopedia forecast 10.4 dividend 1.14 cover and pe 8.43 for REDD.

[monabri]

The main seller was Mr Loosemore (now departed back to De La Rue).

July 2019

"Kevin Loosemore, who has held the chairman post since 2011, sold 650,000 Micro Focus shares in two tranches last Wednesday and Thursday at a discount to the company's share price, netting him £11.6m. "

https://www.telegraph.co.uk/technology/ ... -personal/

He subsequently left and rejoined ...De La Rue ( coincidentally today's top FTSE fallers ).....out of the frying pan etc.

Dod's nose will be wrinkling big time ..

https://www.thisismoney.co.uk/money/mar ... m-pay.html

[PinkDalek]

The main seller was Mr Loosemore (now departed back to De La Rue). ... He subsequently left and rejoined ...De La Rue

I haven't read either of the articles you reference but I did read this when it was released on 2 September 2019 and which was discussed elsewhere on TLF:

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/MCRO/14209174.html

As far as I am aware he continues to fulfil his obligations as Executive Chairman of Micro Focus and his ongoing directorship of Micro Focus International PLC is confirmed here:

https://beta.companieshouse.gov.uk/company/05134647/officers

PD (continues to hold and reinvested most of the recent capital return back into MCRO)

[carioca]

I have a small-ish holding in MCRO, which I purchased in September 2016. Soon after, I considered that decision a mistake, but the bad news and subsequent price falls came in such quick sucession that there was no "suitable" moment to ditch the shares. Last time I looked, I was down roughly 60% on the share price (I know that this is secondary for a HYP). The income side looks better, mainly because there were returns of capital in 09/2017 and 05/19.

The reason I consider this purchase a mistake has nothing to do with the regular business of Micro Focus, put is the legacy of a company called Autonomy Corporation plc. That Company produced software for the analysis of large scale unstructured data. The shares were originally listed on EASDAQ and became only later available on LSE. There was a lot of hype about the capabilities of this software and the owners managed to persuade HP to buy Autonomy in October 2011 at a huge price (£7.4 billion) with a premium of around 79% over market price that was widely criticized as "absurdly high".

The bickering started as soon as the ink had tried. There were accusations that Autonomy had grossly overestimated future growth. The man on HP's side who had closed the deal was eventually fired. But Autonomy continued to be a major headache for HP. When Micro-Focus purchased HP in 2017, Autonomy became Micro-Focus's headache. That might have been a good point for moving out of Micro-Focus, but I was asleep at the wheel. If you prefer you can call it Strategic Ignorance.

Anyway, I hope for myself and anyone who holds MCRO that the company soon recovers, but I would not recommend a purchase.

[Wizard]

The main seller was Mr Loosemore (now departed back to De La Rue).

July 2019

"Kevin Loosemore, who has held the chairman post since 2011, sold 650,000 Micro Focus shares in two tranches last Wednesday and Thursday at a discount to the company's share price, netting him £11.6m. "

https://www.telegraph.co.uk/technology/ ... -personal/

He subsequently left and rejoined ...De La Rue ( coincidentally today's top FTSE fallers ).....out of the frying pan etc.

Dod's nose will be wrinkling big time ..

https://www.thisismoney.co.uk/money/mar ... m-pay.html

Presumably the fact that Loosemore has now gone has nothing to do with the fact that despite the extended deadline to September 2020, the chances of that bumper payday now look rather remote with the shares trading at just above 700p.

https://www.thisismoney.co.uk/money/mar ... lunge.html