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Mark Carter
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Mark Carter

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PTEC.L (Playtech) goes into sticky situations fund at 303.25p (FTAS at 2663). According to my highly dubious calcs, unleveraged earnings yield is 38%, and ROC is 207%. If you reject those numbers as being pulled out of my, um ... hat ... then Sharelock shows a PER of 8.7, and ROE of 28%, which looks consistent with other data sources I've looked at. It has net cash of £56m against mkt cap of £736m.

This is the bit I like best, which gives it a nice 'sticky situation' twist: "If there is one thing that investors do not like, it is uncertainty. It was, therefore, not too surprising that Playtech's announcement alongside its first-half figures yesterday that it was deferring its decision on its interim dividend until its full-year results triggered a drop in its share price." The deferral is due to the company seeing potential deals ahead, which it describes as "exceptional ... opportunities".

Also, David Einhorn has nearly a 4% stake in PTEC.

See also DB02/7
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Mark Carter

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Loved this post over at Motley Fool:

A long, long time ago (30 years maybe), I used to go to ACTA meetings (Association of Chart and Technical Analysts) near Moorgate underground station once a month. At one meeting, a well known and respected lady analyst showed two similar looking share price charts with the later bits covered up. She asked the audience for their views on where the shares were going. After some discussion, she uncovered the later price actions. One share went up, the other down.

She said "It just shows that we haven't a clue, but what does that matter as long as we get well paid for our advice!"
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“…funds that concentrate on low beta stocks, small stocks, or value stocks will tend to produce positive abnormal returns …even when the fund managers have no special talent for picking winners.“
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Contrariwise: "we went back to 1986 and, each month, split the Schwab Equity Rating universe of the 3,200 largest-market-cap stocks into halves based on each stock's beta. We then measured the average equal-weighted returns of the low- and high-beta portfolios over the 22½ years through June 2008. As you can see in the "Low-Beta Stocks: Less Return, Much Less Risk" table below, the low-beta portfolio produced a lower average annual return than the high-beta one: 13.3% versus 15.2%. But the low-beta portfolio's returns were significantly less volatile (as measured by the standard deviation of annual returns). "
http://bit.ly/otFRIT
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Mark Carter

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JD.L (JD Sports Fashion) goes into the sticky situations fund.

It took a tumble on Aug 10 when it estimated riot damage will be £10m. Mary Portas, "Queen of Shops" observed "I wouldn't be much of a shop critic if I slated a shop that was full of people."

The gap down is not major, so it's not a perfect fit for my "sticky situations". On my Magic Formula front, it has a ROC of 55%, and a UEY of 24%. I don't think that leases are factored into the ROC at all. Never mind, I like this share a lot, and I'm putting it in.

The share has been remarkably resilient considering the economic uncertainties we face. YTD, the shares are down only 1%, compared to 9% for the Footsie. It goes in at an ask price of 872p. FTAS is 2767.

I own the share in my personal portfolio, and I'm quite a fan of it.
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I've finally watched the final series of Lost. My favourite series of all time. I can't imagine any other telly program living up to it. Battlestar Galactica was good, too, though.
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CPP.L (CPP Group) added to sticky situations at 126.5p. The Company focuses on providing customer assistance during stressful life events, such as the loss or theft of a wallet, purse, mobile phone or keys, as well as providing support in the event of identity theft.

Current PER is less than 7. Yield 5.8% Market cap is £214m, or which directors own £123m (57%). Share price dropped from 282p on 28 March to 148p on 6 April (down 48%) on investigation by FSA into its sales tactics. Barclaycard subsequently requested syspension of sales to their customers.

FTAS is 2578.
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TALK.L (TalkTalk Telecom) gets added to sticky situations fund.

The attraction to it is that it's a demerger from CPW (Carphone Warehouse). It has posted its first trading result, and there is heavy management ownership. Director holdings amount to a whopping £398m. The total market cap is 1219m. So directors own 33%. It is trading on a PER of 9.8, with an EV/EBITDA of 5.3. It's not the cheapest fixed line communication company, but the level of insider ownership gives me a higher conviction than the likes of CW. (Cable & Wireless Worldwide), which is having tremendous problems at the moment.

Earnings projections look good, and there isn't much chatter on the boards (a helpful sign).


As usual, no performance indicators are available yet as I still haven't gotten around to programming the necessary features. Stay tuned.
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Ref DB02 page 3
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Have him in circles
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Mark Carter

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Scarcely anything has been pronounced by one learned person the contrary of which has not been asserted by another, and it would avail nothing to count votes for in the matter of a difficult question, it is more likely that the truth should have been discovered by few than by many.

-- Descartes
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Interestingly, Peter Schiff thinks gold can still go higher. He says that's there's a lot of fear in gold, and that if there really was a speculative bubble, gold shares would be much higher than they are now. In fact, they're only about 10% higher than in 2008.
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ICP.L (Intermediate Capital) goes into the sticky situations fund.

Intermediate Capital Group plc is an independent mezzanine provider with investment portfolios in Europe, Asia Pacific and the United States. It structures and provides mezzanine finance, leveraged credit and minority equity.

Due to the fact that it is in financial services, Magic Formula calcs aren't really applicable. It it trading on a PER of 6.8, with a yield of 7.9%. The current PER looks to be a t 10-year low; which has a median of 12.7. Director stakes amount to about £5.3m. The company has a market cap of 917m. PTBV is 0.75, against a 10-year median of 1.8.

ICP has declined 30% in YTD, compared with the Footise of 10% decline. A director stepped down at the end of July "due to family reasons". I'm going to give them a pass on that. Being in financials, ICP has of course gone down a lot. In mid-July, the CEO reported "We are continuing to
crystallise the value of our portfolio and maintain the strong track record of
our investment funds. We are seeing a healthy pipeline of exits and new
investments, however, transactions are taking longer to complete in the current
volatile environment." Analyst forecast looks robust (2012F +12%, 2013F +15%)

On 10 Aug, there was director buying by Phil Keller to the tune of £150k at about 229p.

There has been a strong decline in share price since mid-July, which makes it a candidate for a sticky situation. Director buying, a meaningful stake, and positive murmurrings in the IMS look favourable. I also think that considering the major clobbering that financials have taken lately, they may be due for a comeback.

So ICP goes in at an ask price of 229.6p. FTAS is at 2769.
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VMP.L Verdes Managment.

According to Google: "X-Phonics plc is engaged in the management of music artistes, and the writing and publishing of songs." In September 2010, it changed its name to Verdes. In a RNS on issue of equity (a bad sign to begin with) http://bit.ly/p1WV4z the company described itself as a "specialist turnaround services provider". OMFG

Difficult to see much attraction in the share. It is about as small as companies get: a market cap of £1.2m. The spread will eat you. Last year was the first year in at least five years that it was able to barely scrape a profit together.

At the end of July, the FD Mike Hosie resigned,together with Janet Rubin, a non-exec director. Those are definite bear points.

IMS on 31 March reports: "Verdes has continued to build on the foundations established at the time of the Company's strategic change in business direction" Also a very bearish indicator. Red flag time. My guess is that the change will be a longshot that wont pay off. It might, of course, but I see no reason to gamble on it. Personally, I cannot fathom how a music publisher thinks it has the capability to become a turnaround specialist.

Management has no skin in game, showing a distinct lack of conviction.

The company stacks up poorly on simple valuation metrics. PTBV is 34, and PER is negative. Net cash flow for the last ye was -99k. Capex has -10k. So that's free cashflow of -109k (yes, that's right, negative free cashflow) It has net cash of 127k - which wont take long to burn through if this year is the same as last.

In summary, this company is an easy pass.
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Mark Carter

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Finger in the air: TALK.L has a free cash flow yield of about 13.2% according to my calculations (which are always dubious).
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