Re: Puzzled I cannot understand why people on this board are incapable of reading or understanding English. The expression 'effectively bankrupt' means that someone will become bankrupt if an unforseeable event happens. This unforseeable event can be the inability to meet one or more mortgage payments. If that happens the person IS bankrupt. On the other hand, if the value of the property exceeds the value of the mortgage and due to and event (possibly unemployment) the person cannot meet the mortgage payments then that person is NOT bankrupt as the property can be sold to pay off the mortgage, leaving the person with net assets. Now do you get it?I doubt you all do. The point, as ever, equates to risk. If a company is highly indebted, such as Melrose, an unforeseen event can always bring it down, such as the fate suffered by Carillion and Conviviaity. Note that my recommendation, Paddy Power, is still going up, while Melrose is still going down.
GKN in India Found this on Advfn . Not sure how they can pay for it?!!!News ReleaseGKN considers new wiring manufacturing facility in indiaGKN Fokker Elmo has been discussing plans for a second manufacturing facility for wiring systems in India during a visit to Pune last week.GKN Aerospaces Fokker Elmo business already operates a Joint Venture for wiring systems in Bangalore. The visit to Pune was aimed at strengthening local links and to enter the next phase of discussions on a potential new manufacturing location in the region, a press release reads.Over the years GKN Aerospace, GKN Driveline and GKN Powder Metallurgy have made significant investments in India. The three businesses operate eight locations in the country with 2000 employees and India is an important location in GKN Aerospaces global business model.Pune offers favourable conditions in the areas of business development, labour, education & training and infrastructure. It also has an excellent location relative to the companys major customers in India, the press release states.The plans also include the installation of proprietary wiring design and manufacturing system, a unique tool that is rolled out globally throughout all manufacturing locations worldwide to ensure the same high quality everywhere in the world.Michiel Barendse Managing Director GKN Fokker Elmo said: Indias growing economy and the presence of leading aerospace companies show that the important success factors are in place and in line with the needs of the aerospace industry. Being close to the customers is part of GKN Aerospaces long-term strategy, we have received excellent support from the regional government and look forward to developing the next stage of our plans.
Re: Puzzled Sound moneyThank you. NB seems to think that having debt means you have no assets and no means of servicing the debt. As it is Nortek and GKN are both highly cash generative and profitable companies.
Re: Puzzled "However, if the mortgage is higher that the value of the property, then the mortgage holder is effectively bankrupt."Yet another misleading statement. He is only in default if he cannot pay the mortgage.This probably explains your antipathy toward Melrose, you clearly don't appreciate the merits of free cash flow in paying down debt.M
Re: Puzzled "Obviuosly anyone, by NB's analysis, with a mortgage and only a salary to pay for it is bankrupt!!"this statement it must be obvious that Pike F has no knowledge of finance; this is probably why he backs Melrose! The key to the above, of course, is the value of the house/flat which is securing the mortgage. In the vast majority of cases the value of the property exceeds the mortgage, so assets exceeds liabilities, so no problem! However, if the mortgage is higher that the value of the property, then the mortgage holder is effectively bankrupt. This was, after all, the route case of the 2008 Financial Crisis. Even in this country you could get 125% mortgages, which was a recipe for disaster.You will always get a better return by investing in companies with little or no net debt. I was challenged to find any FTSE 350 company that qualified. I gave them Paddy Power plc (see May 6 entry) pointing out that a £68.50 this company was undervalued and was a good investment at that price. As of last Friday, Paddy Power was trading at £90.80. Much better return that backing highly indebted companies such as Melrose.
Re: Puzzled Dear DJark,If only you had learnt to read, you might make some real money, instead of wasting your time investing in Melrose, which is going nowhere fast.You don't have to go back far to see one of my 'buy' recommendations. On this board (Melrose) just go back to 6 May 2018 (not far down this page).On the close of business on Friday May 4, Melrose shares were trading at 231.5p. As I write they trade at 245p, an increase of 5.8%.In that post (it is still there so you can still read it!) I recommended BUYING Paddy Power plc. On the close of business on Friday May 4, this company was trading at £68.50. As I write they trade at £88.35, an increase of 29.0%.Not bad eh, for someone who is allegedly always wrong.
Re: Puzzled Dear NumberbiterYou have to go back 8 pages in your comments to find a 'buy' recommendation...8 pages of unprofitable negativityThat was Kingfisher at the same price it is today.What colour is the sky in your world Chicken Liken?One day you too may learn. A silly and patronising thing to say.DJARK
Re: Share Price Capital Group Companies had no real holding in either GKN or Melrose.
Re: Share Price Good point but it is also true that they have kept the MRO shares so far.
Re: Share Price I didn't look at the large holdings in GKN before the take over, but when RNSs about significant shares come out after a take-over like this, it doesn't always mean the share-holder is buying shares - it could be they had a significant stake in the bought company and the take-over deal has now given them a significant stake in the buyer, without them actually buying any shares.
Re: Share Price Sound moneyI see that yesterday that Capital Group Companies took a 5.1% stake in Melrose.Capital Group is a tiny US fund manager with only $1.7 TRILLION under management. Cant know anything about fund management since they have only been going since 1931. Goldman also at 7%.
Share Price "I am very much looking forward to reading Melrose's consolidated Balance Sheet when the merger is fully complete. Of course, the hedge funds have worked all this out and are working out their strategy as to how to make their millions. I don't expect much action until Melrose's post merger Balance Sheet is published. Within a week of this you can expect Melrose's share price to drop 20%."Share price holding up well despite Numberbiter's predictions of the 25 April. Indeed we have had some reaction the share price has gone up.Of course could just be that the market understands MRO leveraged strategy and is not spooked. Within one week of said balance sheet we will know.M
Re: Puzzled I forgot to say that even with property and the associated mortgage there is a lot of goodwill involved.However, like Nortek and GKN there is an asset.
Re: Puzzled Debt is only a problem if it cant be serviced. If the return is greater than the cost of debt, as in good investments, the sp should rise.Anyway there isnt a straight line correlation between the two, as everyone knows. Lots of companies with debt and no revenue/profit have a high sp. Likewise many out of favour companies that can service their debt have a low sp.Obviously anyone, by NBs analysis, with a mortgage and only a salary to pay for it is bankrupt!!
Re: Puzzled gfy