Monday, 21 June 2010

back in the saddle;

Today was the first day back on the perch for the Raven since the LO arrived 10 weeks ago; perhaps a chronic lack of sleep and circadian rythm will be positives for a skeptical trading style? or maybe not so much.

He would review his position notes if he was feeling ultra disciplined, he's not, that and the fact that the world has changed rather drastically in 10weeks mean that his portfolio has radically changed twice. Currently he's long a few UK stocks, a long and short a couple of US stocks, long some bund, short the CAC40 and Eurostoxx, with no volatility, fx or commodity positions.

in no particular order;

Bsky B; Newscorp has made a bid of 700p for the stock, its trading at 705p, management have said they'd look at offers above 800p, its 100d ma pre-bid was 563p and closed at 600p.

Now the Raven had a quick look at this, ok Newscorp have a big stake already so there aren't going to be any other buyers coming out of the woodwork, (however that didn't stop Pepsi recently having to bump its bid for its bottling groups), so its not going to get silly. BUT even at 800p the Raven thinks Murdoch is being a wiley old croc, the cashflow on this asset has been rock solid, its blown its competition out of the water so that it only has the government to fear rather than competitors. The Raven as a Virgin Media customer because he's not aloud a satellite at his flat really can say there is a massive difference and that he'd switch back in an instant based on service, content and value for money. In terms of valuation, well the Raven doesn't think 800p is out of the order (in fact he thinks 900p is more like it).

Dupont; now he doesn't feel as comfortable with this long as it doesn't have a near term catalyst, but it is relatively cheap and he thinks its turned the corner for earnings last quarter. He thinks that it should be well over $50 a share and closed at $38.41. Its next earnings are towards the end of July, so he's just put this on really small, looking to increase over the next couple of months. He does however want to avoid buying too much of this if it starts to tank into earnings, firepower for the day before and enough rope to hang himself will probably be essential in doing a SNDK.

Nedbank; the Raven has no position currently, because he sold it when it was bid up on rumours that Standard Chartered would buy it from Old Mutual. Its still an attractive business in a growing market, however it really doesn't fit with his skeptiscm for financial at the moment, or more precisely doesn't fit enough at this price.

Next; its just recently popped up on the Raven's radar (primarily because he was looking at ASOS). Now this has no catalysts at present BUT it does look pretty decent in terms of valuation, the Raven would like to kick the tyres and have a look at some of the stores as he hasn't really been clothes shopping for years. Its priced with almost no growth and the Raven really doesn't think the UK consumer is going to be that badly hurt. Once we get past the budget and the bluster, people will begin to realize that its not all doom and gloom, the government is taking the tough actions and there will be growth in the future. Ok some public sector jobs will be lost, and government spending will be lower, but for most households this IS positive. It will provide a large deflationary or disinflationary force in the UK, which will the Raven believes keep UK interest rates lower for longer, and stop the BoE from unwinding its QE. As such a large proportion of UK households are on floating rates, this really does make a difference to their disposable income, and he doesn't believe that the fundamental spending nature of the UK consumer has been bludgeoned to death just yet. Its trading at a BEVE (a Raven proxy for EV/ebitda) of 7, Marks and Sparks is trading at 8.5, Tesco at 8, Sainsbury at 8 and HnM at 19. The balance sheet looks pretty good, margins seem healthy, management seem fine. The Raven thinks there is at least 20% upside on discount valuation to start, and probably another 20% if his macro scenario plays out. So he's got a good clip on.

PUB; he's still got a position in this, although he's hesitant using the word still as he's sold 70s and bought 60s a few times in the last few weeks. Viz-a-viz is aforementioned UK consumer punt, PUB looks like pretty good value against book value. It appears Einhorn agrees, who's the Raven to argue (he hit his own hubris alarm bell there).

BP; well he's spent a lot of time looking at this and following the situation. In short, given the size of the liability, risks, etc, etc the Raven wouldn't pay more than 150p a share on a punt in small size. Its not at that level yet.

Firstly Obama has been a total tool for trying to turn a ecological disaster into positive PR. There was absolutely no need to compare it 9/11, that was both disrespectful and weak, as was his attempt to turn the issue into a childish and divisive international spat with one of the US's closest allies, only today the UK has seen its 300th casualty in Afghanistan.

Hayward has made the situation no better, his apparent lack of concern, lack of media savvy and insensitive comments are naive at best, reckless for a CEO earning a fortune from shareholders who've lost billions more than the estimated cost of the disaster thanks to piss poor managment. He doesn't appear to have had a clue as to what happened, hardly appropriate for someone supposedly tech savvy. Of course BP should pay for damage that it has caused, but the Raven is very skeptical of a firm putting money into an indepent escrow account for government to hand out as compensation, its hardly as if you're handing over the cheque book to an institution know for its fiscal responsibility.

But at least both guys got their lives back this weekend, time for baseball, golf and a spot of sailing, its not like they have well paid powerful jobs. Mere mortals work weekends, especially when they are under pressure.

the Raven will be moaning about the EUR tomorrow.. and probably the day after that..

and the day after that..

and the day after that..

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