numberbiter
14 May 2018
Re: Puzzled "What's all the fuss about debt? We like it."One day you will all learn. When Melrose publishes its next full year accounts is my guess. On 15 Decemcer 2017 I posted a 'strong sell' for Luceco, when their shares were trading at 128p. The post is still there, so please read it to find out the reasons for the recommendation. Today the shares trade at 61p.
nick2name
14 May 2018
Re: Puzzled cos we all want it
pike fisherman
14 May 2018
Re: Puzzled Why all this fuss about debt?
nick2name
14 May 2018
Re: Puzzled gfy
numberbiter
14 May 2018
Re: Puzzled Nick2name, You are being totally stupid. If a company has over £99 million in cash and only £100,000 in debt, then that definitely meets my definition of 'a little or no debt'. So Savills plc meets my criteria. If you listened to me, rather than being a pompous xss, you would make some money. On 6 May (look down only a few messages) I said Paddy Power (note another company with net cash) was a good bet as the price had fallen below £70. Today it is £76. You won't get a return like that (8.5% in less than a month) with Melrose.
Lupo di mare
14 May 2018
Re: Puzzled Do tell me you're joking, nick.Half-year debt of £15m. Year end funds £4m.I think that I can quite safely say that SMWH has zero debt - to all intents and purposes.Btw, just popped by to see how MRO are managing, but nothing new. Tara.
nick2name
14 May 2018
Re: Puzzled hl say borrowings of £34 million
Lupo di mare
14 May 2018
Re: Puzzled WHS
nick2name
14 May 2018
Re: Puzzled thanks for sharing thatbutplease name one company in ftse 350 with no debt
numberbiter
12 May 2018
Re: Puzzled Name a FTSE company with little or no debt. As before I am referring to net debt, so if cash is in excess of borrowings, that is OK.Last week I gave you PADDY POWER PLCThis week I will give you another: SAVILLS PLCNick2name, I will give you the name of another company each week, until you get the message that you don't have to invest in highly indebted companies.
pike fisherman
12 May 2018
Re: Puzzle NB, May I also say that accounts are backward looking and at least 3 months out of date and share prices forward looking.In the case of GKN the sp was languishing because the market didn’t think the management could turn the company around. On the Melrose offer the sp rose dramatically because the market thinks the new management can. That is why so many investors originally sold the shares that hedge funds picked up.Having looked in depth at the potential, I believe the GKN board that GKN was worth about £10 billion and hence my assertion that it was bought at a discount.The next accounts will be distorted by the cash that GKN wasted in its defence and paying Dana acquisition fees. One offs.Looking forward, all three GKN divisions have great futures, particularly Driveline and Metallurgy. If you bother to look at all the news coming out of them you should see that. Growing markets, GKN technology and better operating profit margins.In addition, the divisions of Nortek are improving greatly.You cannot treat Melrose as a bulk standard engineering company. It is not.
pike fisherman
12 May 2018
Re: Puzzle NB, had Melrose bought a start-up with no sales and only hope there may be some merit in your argument. The start-up might not get off the ground and fail. Then Melrose investors would suffer. This happened a lot high tech in 2000.In the present case Melrose have bought GKN, to my mind at a discounted price based on its potential for improving operating profit margin and turnover on, a good business.Now, unless you are saying GKN is worthless I really don’t see where your argument and dilution come into the argument. I think your approach is the well known one of “knowing the price of everything and the value of nothing.”
numberbiter
12 May 2018
Re: Puzzle For the benefit of Sound and Pike, I will try to explain in simple language. Melrose's 2017 accounts show Shareholders' Equity of £1,885 million of which £2,238 million is intangible assets. So tangible assets are negative to the tune of £353 million. Net debt stood at £558 million, which is greater than the negative Balance Sheet. What this means is that the investment in intangible assets is not generating sufficient cash to get the Balance Sheet positive. We can accept that Melrose generates free cash flow; what I am saying is that they are not generating sufficient cash to justify the investment. Put another way, they are paying too much for the businesses they are taking over, GKN being a prime example. As you know, the purchase price was 25% above what the shares were worth, based on the market price before the take over.Now because the GKN offer only included a small amount of cash, it is the Melrose shareholders who are picking up the tab because their share of the company has been diluted. Melrose's share price will not collapse until the latest consolidated accounts (including GKN) are published. In the meantime, I read the four main Melrose directors are trousering £170 million in bonuses for winning the bid.Melrose shsreholders are being treated as prize mugs, but based in the comments on this board, they just cannot see it, To work it all out, you only have to research what happened to the Hanson Trust as the end of the day. The only winners were Lord Hanson and his mates.
sound money
08 May 2018
Re: Puzzle Yep puzzled. Free cash flow is generated after all costs paid etc. In itself it has nothing to do with intangibles or debt. Although the cost of debt can eat away at FCF.And of course numby is overlooking Melrose strength , generating FCF.Ah well the banks understand and they have lent the money.M
pike fisherman
08 May 2018
Re: Puzzle Sound money, I am confused by that statement by no too. No sense whatsoever.
