tag:blogger.com,1999:blog-9008707982090470413.post4115686043436777525..comments2024-02-19T18:05:26.513-08:00Comments on Stock analysis and other stuff: CO-OP 5.5555 ... it's not what you do, it's the way that you do itMatthew Earlhttp://www.blogger.com/profile/10684772444875206973noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-9008707982090470413.post-37150832838378442622012-10-22T08:00:58.533-07:002012-10-22T08:00:58.533-07:00Hi,
Yes, good spot. The return potential I have ...Hi, <br /><br />Yes, good spot. The return potential I have detailed is gross. ETX Capital charge me (and I presume others) 2-3% pa for the cost of funding. Accounting for this, I reckon the ROE will be between 5-172% over three years. Overall, I think the likelihood is that at some point the Co-op make a tender offer over the next 12-18 months at 88-90p. In which case, the ROE (post funding cost) will be somewhere between 75-94%. If that happens, I view that as an attractive return over that time frame for the risk involved.<br /><br />On AVN, I sold short after the release of its prelims announcement (10 Oct). I have already detailed my key concerns, which centred on the "conservative accounting" rhetoric and more so the Filiago financing/acquisition. <br /><br />While I have not spoken to Avanti (my prior attempts of communication have been ignored) I have heard that the company has recently advised that no cash has gone to Filiago. I don’t see how this can be the case. In Avanti’s 2011 accounts, it clearly states (within the Investing cash flow section) that there was a cash outflow for £8.857m relating to a payment for “other financial assets and investments.” This would appear to be the loan to a major strategic partner (which now appears to be Filiago). This then turns up on the balance sheet as an “other financial asset”, although it is for £9.135m, and is detailed further in note 13. To date, there appears to have never been a cash flow back from this strategic partner. The cash has been replaced by a business (Filiago) which contributed a £0.5m loss from date of acquisition to 30 June 2012, has net liabilities of £0.763m and has goodwill and intangibles of £9.211m. In short, Filiago had £2k of cash by the time it turned up on Avanti’s balance sheet. The rest of the cash is gone and replaced by a subjective estimate of intangible items.<br /><br />Best, <br /><br />MatthewMatthew Earlhttps://www.blogger.com/profile/10684772444875206973noreply@blogger.comtag:blogger.com,1999:blog-9008707982090470413.post-39106756318418434912012-10-22T04:45:53.122-07:002012-10-22T04:45:53.122-07:00Hi Matthew,
Interesting way of playing this bond ...Hi Matthew,<br /><br />Interesting way of playing this bond ! I'm interested in your calcs/use of ETX, since it appears from your figs that they're not charging you anything for the credit they're giving you (75%)...is this correct ?<br /><br />Also interested in your take on AVN's latest IMS btw.<br /><br />ATBAnonymousnoreply@blogger.com