Nostra Terra Oil – NTOG – Punt

I bought in to Nostra Terra on a punt today at 0.45p. Naughty i know but a well known private investor was tipping on twitter and after a cursory review of the investment case i jumped in. Essentially they had positive well results today and are expecting expecting well results for nearby drills very soon (next month). NTOG have a higher stake in nearby drills. If there is read across then the nearby drills will be successful and this will be a strong catalyst.

Buying miners – Snappy Intro Series

Buying miners

What i’ve learnt

  • Firstly, help yourself to a large dose of scepticism. Seriously. Small mining companies and explorers seem to constantly over exaggerate potential, timescales and underestimate costs. This leads to the market being dissapointed and confidence in the company reduced. It also leads to cost over runs, running out of cash and having to refinance/take on debt/issue more shares – all bad news for shareholders.
  •  Explorers are speculative, with timescales being in years before a mine goes through all the required tests and gains the required permissions.
  • There are mega caps like Rio Tinto (more correlated to global output/need for raw materials)and there are of course tiddlers with perhaps one mine somewhere they are pinning their hopes on.
  • Miners are correlated with commodity prices. if the company mines copper, then expect its share price to correlate to the price of copper over time.
  • Finally i have found some interesting looking miners, only to later discover some complex and confusing financial arrangements that exist where profit or assets are shared/split/part owned by another entity. Far too confusing for anyone other than an expert and often the financial arrangements may be hidden in RNS stories from way back.

There is an interesting article over on Investors Chronicle about mining companies and how such a small % are successful.

In summary, i’d have to have some very compelling reasons to invest in small miners. Hopefully i’ve dampened any mining risk taking tendencies you may have – just as i did(do!). It’s far to had to judge the risks and potential rewards unless you are experienced in this sector. My only mining position ever is Frontier Mining who i believe are priced cheaply due to poor expectations management/communication with shareholders. They are just starting to produce and i’m hoping i bought in on a low with plenty of upside as they increase (hopefully) production. I couldn’t find any nasties lurking but you never know…

Snappy Intro Series – Introduction summaries for the aspiring investor

I have been interested in shares and investments for a couple of years now. I have learnt a tremendous amount but am still fresh enough to remember the ignorance of my beginnings and the biases I unknowingly held. That’s not to say I’m free from bias, but certainly less so.

I want to set out a series of posts on different sectors of the market and summarise what I’ve learnt from my own experiences and from what I’ve read on the web. I hope they are succinct, snappy and mostly an accurate assessment .
I’ll be starting with mining companies…

PVCS – PV Crystalox Solar – BUY!

I’ve bought £500 at 9.1p. I was looking to buy when they were at just over 8p but dithered and missed my possible entry point by a penny! Their recent interim management statement hints at a return of cash to shareholders. I’ve writtenabout this company before and their massive cash pile. They have been crippled by low prices for their products and their strategy was to conserve cash, cut costs and limp along until prices picked up, perhaps in a few years time. The latest statement shows a marked change of tone: http://www.pvcrystalox.com/scripts/php/rns_viewer.php?id=20506230

 

“The Group has a strong net cash balance and the Board is continuing to reorganise the Group, to enable the return of cash to shareholders.  The Board expects to make a further announcement before the year end. ”

Briliant news and an expected catalyst by year end for share price movement (year year or financial year i wonder). Best case scenario for shareholders is a winding up of the busniess and redistribution of all cash – worth twice the current share price. Worst case, who knows, but just 20% giveaway could be 3.5p.

Ms International – MSI – Half year report

Half year report out today. Share price reacted well to the news.
http://www.digitallook.com/news/rns/20516659-12869/MSI-Half_Yearly_Report_html

239p £44m market cap. 10m cash. Healthy asset sheet.

Profits lower than H1 2011 but they have 25% higher value of orders on hand than H2 last year (i wonder if this means they think revenues will be 25% higher than H2 revenues). If so then profit could take a small jump and P/E currently perhaps around 8 would fall to maybe 6 or 5!

Vague I know but I can’t find accurate forecasts and this is a quick glance.

The chairman finishes with a caveat.
“All matters considered, the Board has a good measure of confidence as to the full year outlook for the Group, subject to there being no further deterioration in the global economy that could adversely affect our two industrial engineering divisions.”

PV Crystalox Solar PVCS – Ready to give out cash?

(Figures in Euros unless otherwise stated)

Solar panel maker that has been savaged by cheap Chinese competition. I can’t recall the details of what’s gone on in the industry but essentially there has been mass over supply. At the half year point they had 122m cash. And at a glance about another 100m of assets too. Their strategy seemed to be  to cut costs, reduce production and limp along until prices recovered – using their cash pile slowly. Of course shareholders might like the company to voluntarily fold and cash to be distributed.

First half loss was about 12m. Market capitalisation is £35m.

In the management statement released yesterday ( from the ‘outlook’ paragraph):

‘’The Group has a strong net cash balance and the Board is continuing to reorganise the Group, to enable the return of cash to shareholders. The Board expects to make a further announcement before the year end.’’

From the half year report ‘outlook’ section:

‘’While the Group continues to believe in the positive long-term outlook for PV, it is mindful of the intensely competitive environment which is likely to persist in the short to medium-term and which has already led to many companies exiting the industry, either voluntarily or through insolvency. The Group has a strong net cash balance and the Board will make the necessary decisions during the remainder of the year to serve the best interests of shareholders.’’

This looks like a change of attitude within the company. Just how much cash they might return is a guess at the moment. Of course with a dividend payout the share price will fall but if a payout is announced, then I expect the SP to jump before the ex div date.

Hosting Problems – Sorted!

I’ve had a few problems with my GoDaddy webhosting lately. This site has been up and down and i even lost a few posts. With any luck it’s all rectified now, expecially as i may be branching out into offering some freelance webdesign services myself!

 

Zoltav Resources – Oddball

I have been reading Tom Winnifriths opinion that Zoltav Resources is in his opinion a short sell down to 0.25p. To sum it up they have enough cash to last them until mid next year having received a loan from their biggest shareholder.

I had a quick browse of the financial statements and it seems they have under a million pounds of assets/investments and cash. Their market cap is £15m. Their business strategy as far as I can tell is about acquiring resources licences/opportunities. How can they acquire anything with bugger all money?

So to me this seems a doomed company but I’d be reluctant to short it as some vaguely positive news could give a short term spike upwards in the share price and stop you out. And surely the bad news is priced in and all the sensible investors are sold up right (leaving the stubborn cavalier few)? I get the impression with companies that are on the verge of failure often attract some fanatical/cavalier investors who imagine that because it has gone so low, it will rise at least somewhat. Maybe that’s anchoring or filtering bias.

Tricorn Group (TCN)- Fall after contract loss overdone?

Tricorn Group (TCN)- Fall after contract loss overdone? TCN revealed the loss of a contract to Rolls Royce at the end of last week. The contract will not be renewed past the end of this year. Price dropped further over the weekend as investors sold and it currently sits at 19p from around 28p a week previous – just over 30% drop.

A poster on the Motley Fool message board posted his opinion that the fool may be overdone:

http://boards.fool.co.uk/you-may-well-be-right-about-avingtrans-taking-over-12677594.aspx

A quick glance at the balance sheet from March 2012 shows roughly £6m assets not including good will of which £2.47m is cash. Compare this to the present market cap of £6.28m. However with £1.7m forecast profit before tax for year ending 2013 and £2.18m for year end 2014 I’m wondering what effect this will have on profit forecasts. Note, the contract has not ended yet so will contribute to this years profit.

It does seem like a large fall for a contract that amounts to 11% of the groups revenue. I don’t have the knowledge to assess just how much this will impact the bottom line so I’m not going to dive in.

First Group (FGP) Half year results Wednesday

A little rally from FGP in the last couple of days as we get closer to half year results on Wednesday. I bought these after their drop on news their West Coast franchise win had been revoked due to problems with the bid process. The drop seemed too much and at 190p seems to be the floor for the past 6 months. Forecast EPS puts them on a low P/E rating of around 6.9 which seems too low for a very large profit making company. The yield is large and in the last trading statement 2nd October the board affirms its commitment to continue increasing dividend by 7%.

“…the Board remains committed to its current policy of dividend growth of 7.0% through to the end of the financial year 2012/13.”

This was said only a month before half year results and declaration of the interim dividend. The risk of course is that with lower profits the dividend cover has dropped. Historically it looks like it’s been covered about twice over, at present this looks to be about only 25-30% cover.  I am hoping for half year results in line with expectations and a dividend increase of 7% maintained.

Prudent management perhaps would focus on paying back some of the large debt rather than maintaining a progressive dividend policy. Perhaps this signals management confidence. Either way I am looking for a rise over the next month before I sell.

Also, Trinity Mirror (TNI) interim management statement on Thursday. I want to buy and I’m confident long term holders of TNI will make a profit…I’d just rather try and judge how low the share price might go with regard to the phone hacking allegations. I will do some more thinking today about buying in before a potentially bullish management statement on Thursday.