Monday, 11 July 2011

sky falling in??

There has been more than enough ink spilled over the NOTW scandal; only a few points really need to be said;

  1. if hacking is institutional within NOTW, then it will be present in other papers
  2. the police's role is a much bigger issue, witness Guardian reporters getting information illegally as to where Coulson is being held, etc. venal.
  3. the attacks on news corp are politically driven, as are the attempts to block the bid for bskyb, the bbc moaning about too much media power is ridiculous.
so what though, none of that is going to make me a penny, the price action in b sky b (BSY) share may well do though. They've fallen about 150p down to 700p, what is the price level where one would take a punt then?

Well looking at the pre-bid price of 560p, the 30% return in the FTSE since the bid and the stock having a pre bid adjusted beta of 0.92 that would give 714p as the floor, which its currently trading through. There the very low probability that somehow Newscorp actually get made to reduce their BSY shareholding, or it becomes permanently blocked. Additionally the FTSE isn't a great index to measure BSY against.

Bottom up, fair free operating cashflow of ~£1,300mm, inc growth of 10% a year for the next few years, at we're talking about a forward multiple of ~ 11x, that's not too ugly a price.

Thinking of picking up a clip at 680p, with another at 570p.

The trade that has made money though, has been selling Trinity Mirror shares which popped on the news that NOTW was closing. If anything, from this point forward its only going to be negative news, without even looking at valuation we slapped out a clip this morning.


  1. I grabbed it at £3/point today at 702p as valuation looked good on the recent results.

    That dip this afternoon triggered by guaranteed stop at 366 though! Darn.

  2. did you put the stop in so that you could have a bigger position size?

  3. No, so that I didn't get what's left of my capital spreads account and some more wiped out in the middle of the night. The £800 I had in there lasted me 16 months. It went straight down to £91 and I had it back over £700 at one stage this year. But placed some awful trades, like shorting cotton right near the top but with too smaller stop loss. If I'd used my whole margin I would have made a few thousand buck on that one. I had $12,000 worth of silver in my cfd account at $30 or so before the spike and predicted $50 over at C@W as one of my new year predictions. I closed that $300 up within 24 hours drunk. That one has had me pissed all summer, could have made $7k.

    I'm going back to a normal dealing account, or maybe even a cash ISA for a few months while I repair my balance sheet. I'm a useless spread better. Can't hold the winners and place angry trades when I'm drunk.

  4. why not have a smaller position and wider stop?

    give yourself a really long and difficult random password, that'll make it harder to log in?

    i think you've got some good experience from those trades, what more can you squeeze out of them?