Category Archives: Value Shares

CAPD – Capital Drilling – Added

I forgot to post that i added to my CAPD position 2 days ago. Fortunately as the trading update i was pre-empting came out early – today! I read it as good and so did the market – up nearly 10% today.

http://m.londonstockexchange.com/exchange/mobile/news/detail…

The key points are:
There was a slowdown towards end of yr, ‘but fear of decreasing capital expenditure by miners is over done here:

‘We have also received confirmation of drilling activities from clients representing approximately 90% of our forecast revenue for 2013.”

They have planned reduction in capex 2013 which was 30m this yr. So next year if revenue is anything like this years, they will be throwing off cash, enough to fully pay off the modest 22m pounds of debt.

It was on a p/e of under 4, so its still cheap. I’m aiming for this to double and am happy to hold this long term.

Cyclically Adjusted Price / Earnings – CAPE

Here is a good article explaining CAPE. CAPE is basically a way of telling how reasonably priced the whole market is. At the top of a bubble CAPE will be high, and in a slump, low.

If this was boiled down to one lesson it would mean to take caution when CAPE is high, be greedy when others are fearful ie when CAPE is low. This is because historically CAPE returns to its long run average.

http://www.ukvalueinvestor.com/2013/01/an-alternative-to-stock-market-forecasts.html/

UK Value Investor is a great site for those wishing to beat the market investing in large FTSE companies but with little effort. I think there might be a small subscription charge but Johns Kingham’s methods are pure common sense.

Trinity Mirror (TNI) – Superb value, just when to buy?

A favourite value share amongst private investors is Trinity Mirror – owner of the Mirror newspaper and various regionals.

The share price has languished in the twenties this year before taking off and reaching the seventies. The funny thing is, this company is still stupidly cheap with a P/E of just over 2! A great write up can be found here, it’s a little old but the value case still holds true. So why not pile in?

My only quibble is the emergence of phone hacking allegations against the company. Until now TNI has not been prosecuted of sued for these claims. Very recently a lawyer has launched civil claims representing a handful of minor celebrities against TNI. The financial damage is likely to be small, especially when compared to TNI’s cash flow but the fresh allegations sent the share price down 20%. It has since recovered most of that but I am nervous to buy in now, knowing that developments in these allegations could present even better buying opportunities in the coming months.

I’m waiting on the sidelines with interest.