Carillion post-mortem

[monabri]

He's not dead ...he's just restin'!

[Bouleversee]

In recovery position?

[Wizard]

I've just noticed in ADVFN's evening market report that CLLN is up 14.38% today. Anyone know why?

IMHO for exactly the same reason as I said when you previously asked why it had fallen 3.7% on 30th August, it is volatile at the moment and just bouncing around in the 40 to 50p range.

Terry.

[Bouleversee]

Or it could be something to do with this:

https://www.ukconstructionmedia.co.uk/n ... nterprise/

LOL.

[monabri]

The award was announced on the Carillion website 25th August.

https://www.carillionplc.com/news-and-m ... erprise-2/

There was a big buy of 1 Million shares(*) early on today. This caused the price rise. It is possibly a closing of a short position ( I'm guessing Marshall Wace as they are reducing their position). We will need to wait until tomorrow and review the short positions.


(*) In 1 hit

[monabri]

The current ( reportable at 0.5%) shorting is about 22% but the stock out on loan is ~30% ( less than 0.5% does not need to be reported to the FCA). So, there is still 30% of 430 Million shares out on loan that will need to be purchased and "paid back". The shorters do not seem to be in a rush to close out their positions - they are either waiting for further share price falls or they simply don't know how to close out their positions without causing the share price to rise. It's a bit of a gamble. If Carillion were to announce a plausible way forward then the share price should recover substantially ( I hope) .
Of course, there might be no good news and then this would offer a way out ...but they still need to buy back 130 million shares and look what a bit of 1 Million shares has done to the sp today! Is a rights issue viable at the current share price...the offer would need to be perhaps 30p (?) a share to make it attractive.

[Bouleversee]

The current ( reportable at 0.5%) shorting is about 22% but the stock out on loan is ~30% ( less than 0.5% does not need to be reported to the FCA). So, there is still 30% of 430 Million shares out on loan that will need to be purchased and "paid back". The shorters do not seem to be in a rush to close out their positions - they are either waiting for further share price falls or they simply don't know how to close out their positions without causing the share price to rise. It's a bit of a gamble. If Carillion were to announce a plausible way forward then the share price should recover substantially ( I hope) .
Of course, there might be no good news and then this would offer a way out ...but they still need to buy back 130 million shares and look what a bit of 1 Million shares has done to the sp today! Is a rights issue viable at the current share price...the offer would need to be perhaps 30p (?) a share to make it attractive.

Sounds good to me. I'd love to see them get their fingers burned.

[tjh290633]

Lorna, yestrday looked like someone buying stock steadily, a short unwinding perhaps? Today it has gone down so far.

Anybody's guess.

TJH

[UncleEbenezer]

OK, what happens with the shorts if there's a rights issue?

The shorter has sold the borrowed shares, so the lender loses his rights. Does the shorter then have to acquire the "rights" shares for the lender, and "return" them at the rights price?

[monabri]

This came in under the radar a week or so ago ..... I did not see a RNS release.

"Carillion has confirmed it will build a major £300m mixed-use scheme in Manchester being brought forward by its development arm Ask".

It's not as though it is a small contract at £300m of work in Manchester.

https://www.constructionnews.co.uk/comp ... 37.article

[Wizard]

Looks like a bit of a clear out.

Carillion plc ("Carillion" or the "Company") announces that Zafar Khan, Group Finance Director, has left the Company with immediate effect...

...Emma Mercer is appointed Chief Financial Officer with immediate effect. Since joining Carillion in 2008, Emma has held several senior positions, most recently Finance Director of the UK construction business prior to which she was Chief Financial Officer and Senior Vice President of Carillion Canada.

Full list of changes in the link.

http://www.londonstockexchange.com/exch ... 57546.html

Terry.

[moorfield]

The FT today adds a little more meat to that:
https://www.ft.com/content/d11d6cae-96b ... e3f882dd7b
(edit: the link worked ok for me when left clicking from google)

Look out for key phrases like "deeply discounted rights issue".

Shareholders being softened up before the kitchen sinking?

[OLTB]

Yes, Mr Market seems ambivalent about the announcements.

Cheers, OLTB.

[moorfield]

Another excellent article from Phil Oakley in Moneyweek today in which he picks over the bones of Carillion - well worth a read.

http://moneyweek.com/how-to-shock-proof-your-portfolio/

[Bouleversee]

I distinctly 'remember when I started investing, a very long time ago, that there was a writer in either the FT Money section or Investor's Chronicle who said the optimum buy signal was a yield of 7% and a P/E ratio of 7% also. The combination was not easy to find, however. I noticed he said "these days". What'sI changed exactly? don't think pension fund deficits were ever mentioned in those days.

[Dod1010]

I distinctly 'remember when I started investing, a very long time ago, that there was a writer in either the FT Money section or Investor's Chronicle who said the optimum buy signal was a yield of 7% and a P/E ratio of 7% also. The combination was not easy to find, however. I noticed he said "these days". What'sI changed exactly? don't think pension fund deficits were ever mentioned in those days.

Was that not Jim Slater's famous PEG of 1? I don't remember what the G stood for but I am pretty sure he looked for a PE/Yield of not more than 1.

I think though the actual yield is not really the point. The point is surely that if the market average (say the yield on the FTSE100) is say 4% then a yield on a given share of 7% puts it into danger territory but a yield of 5% would probably be acceptable. I use anything more than around 50% over the market average as a sign to be very careful and circumspect. Today I guess that is anything over around 6% maybe a bit less. I know for instance that the oil majors' yields are very high but Shell at least will probably struggle on. As for SSE, I think their dividend has been questionable for some time but they seem to manage a little more each year. Meanwhile I enjoy the yield. You can worry about all your shares but sometimes you need to just get on with life.

Dod

[DiamondEcho]

Was that not Jim Slater's famous PEG of 1? I don't remember what the G stood for but I am pretty sure he looked for a PE/Yield of not more than 1.

PEG Ratio. http://www.investopedia.com/terms/p/pegratio.asp G is for Growth. It ties growth onto the p/e to identify growth stocks.

[Bouleversee]

No, it wasn't Slater. May have been Bearbull but I don't think it was him either. Someone who wrote a regular column under a pseudonym.

[Bouleversee]

P.S. to previous:

I have to confess I didn't know what the G stood for either. So what PEG should we be aiming for ideally?

Dealing with my late husband's portfolios has shown me that the buy and forget policy doesn't work. It was full of shares which were a good buy when he bought them but have gone downhill since or have been taken over by such as RPC which did not get a favourable mention in the linked article. But who has the time to monitor a large portfolio and the knowledge to study and interpret the accounts in the detail mentioned in the article? ,Certainly not me. So if the oiles, the pharmas, the service companies, the utilities, the supermarkets, the banks, the miners. the telecoms and now the builders are no longer flavour of the month and doing the business, what the heck should we do with our money? It seems to me that long term investing has had its day and the money is to be made now with trading, shorting, algorithms etc. which are anathema to me. Apart from all that, there are special situations and specialist companies involved in such things as gene editing - I really do believe that in the next decade medical treatment will undergo a fundamental change, relying less on drugs and more on such things as stem cell therapy and gene modification - but I daresay some in the field will prosper and others will fail and how are we to know which will be which? Even Woodford, with his Patient Capital Trust (in which I have a small investment) is not doing well so what hope have we when we pick individual stocks?

[Dod1010]

I have just googled Slater's Zulu Principle and it was he alright. G stands for Growth but he was taking the ratio of PE/Yield as I said and looked for a ratio of 1 or less.

However reading your latest post Bouleversee, this is the HYP Board. Oilies, Utilities pharmas and so on are doing the business as far as income is concerned so I do not get your point. I think you may be getting unduly depressed by a number of unfortunate disasters. There are still a lot of shares churning out the dividends as witness the number due this coming week from the usual suspects.

Cheer up!

Dod