Brief update on Man Group which I wrote up recently in Watching Man a real dog. They have responded to press speculation recently to confirm that they are in talks with Numeric Holdings LLC concerning a possible acquisition, although they say these talks may or may not lead to a transaction.
The FT reported on this in which they suggest Panmure Gordon reckon this could boost their earnings by 20% given it would be paid for out of surplus capital / cash. This would also help to diversify Man's business further as I believe they are mostly a long only Quantitative Fund Management outfit. Indeed in a report on Bloomberg they describe them as "Boston-based Numeric, which trades equities based on signals from mathematical models, manages $13.9 billion, according to its website." So may be they can bring some new techniques to Man Group or teach them some new tricks.
The shares were up 5% or so on the back of this having bounced off the 200 day moving average just above my target level. Still worth watching to see if they can get this deal done and start a recovery from the base the shares have been building. It would also improve the already reasonable 13x rating and help underpin the 5%+ yield - also interesting as it scores 98 (100 best) on Stockopedia's QVM ranking system, see below for an example of this and click the link above for more details of their service and a free trial.
This is one I wrote up a while back and after interims, has today put out a brief year end trading update. This one to be honest, was dull if good value at the time and since then it has certainly been dull as the shares have not really gone anywhere apart from a brief visit to the 900 pence region and have sat there like a pudding as I feared they might.
In the update today they say profits have remained resilient in three of their divisions and that trading is in line with management's expectations. However, they go onto say that demand and pricing for coking coal remained difficult in the second half. They also talk about a production shortfall of £3 million to £5 million in the production division as a result. This was caused by start up delays in the first half and wet weather early in the second half. Not sure how this squares with their in line statement or market expectations - perhaps they have made it up elsewhere? Looks like MR. Market has taken it negatively as he has taken about 4% off the price first thing.
Finally they talk about discussions with Government continuing to progress over potential support from Hargreaves to deliver an orderly closure plan for UK Coal. The share still look cheap on 6x and a 3% yield which should go to 5x and 5% if they hit forecasts in the next couple of years, but then it is involved in coal mining after all. Still you pay your money and take your choice and although this is not one of my better quality selections, I'll choose to run it as part of a diversified income portfolio as patience is not only a virtue but can also be quite rewarding in investing. It is also now near the bottom of it recent trading range so if the coal mining aspect doesn't put you off it might be worth a look if you can raise the enthusiasm and as they say where there's muck there's brass.
Having mentioned Paypoint (PAY) yesterday I thought I should touch on their results today which seem fine. The net revenue came in roughly in line at £113.7 million (+7.7%) v £115 million (F), eps were ahead at 52.6 pence (+16.1`%) v 51 pence (F), while there was a nice beat on the dividend which came in at 35.3 pence (+16.1%) v 33.3 pence (F). They said this increase reflected their confidence in the business.
So some growth in their payment business and expansion in Eastern Europe (Romania) is on going. Meanwhile the Collect+ (Parcel collections from shops) saw transactions up over 76% and is now apparently profitable so will no longer be a drag on profits. So overall it seems OK as they continue to invest in and develop their multi channel payment capabilities (mobile, on line and retail) + click and collect delivery network. They also mentioned that some extra days in last years numbers reduced reported growth metrics by 1% to 3%.
I was sorry to see that David Newlands is retiring but he seems to be leaving it in good shape. So although it seems fine it is one I'll probably continue to watch for now as I cannot bring myself to pay up for it.
I wrote Kingfisher up earlier in the year having got into it as a way of playing the recovering housing market, click the link above for more in depth details. Their trading update today looks good, especially in the UK, which seems to support my thinking on this one. However, France remains weak and they do flag that the numbers were flattered by a very weak comparative from last year. They suggest these comparatives will become harder from now on and that Q1 is generally a quiet quarter any way - so not too much to get excited about there.
On a more positive note they did confirm a special dividend payment of 4.2 pence to return £100 million on top of the £35 million of share buy backs they have done already as part of their £200 million capital return programme for 2014/15, which is part of a multi year programme. So all seemed OK to me but Mr. Market seems underwhelmed by them as he has marked them down by about 5 to 6% this morning - but as a French DIY customer would say c'est Le vie and au re voir.
Tweeted earlier today about the fact that the Church of England is now going to be giving out Financial advice! Apparently to help combat parishioners debt problems and encourage Credit Unions over Pay Day Lenders who themselves are likely to face tighter regulations which might drive some of them out of business and their customers into the arms or Loan sharks. Huh, next they'll be going into Asset Management - no wait they already do that.
Any way on the topic of Money or cash and keeping it topical De La Rue (DLAR) the troubled bank note printer has announced some results today. I say troubled because it has had a couple of profits warnings in the last couple of years or so and parted company with its CEO back in March this year and is currently being run by the Executive Chairman, Philip Rogerson, until a new CEO is appointed. The results today showed some signs of recovery as they are in the first year of a three year improvement plan, you can read the full announcement at the link above. They maintained the dividend for a chunky 5%+ yield, although it is not very well covered and there are a number of uncertainties ahead after the Bank of England said their Australian rival Innovia Security will provide the polymer substrate for its new plastic £5 notes. So it remains to be seen if they can win any future business on this programme and what will happen when their current 10 year contract with the Bank of England comes up for renewal next year. It is not one I am in and given the uncertainties it looks reasonable value (12x and 5%+ yield) so it may warrant some further investigation as a contrarian play - especially as it has had bid approaches in the past, but probably not for me at the moment.
Meanwhile, other forms of payment are increasingly becoming available including using ubiquitous mobile phones, which begs the question - will we need physical notes in the future? Certainly I know I rarely use cash these days. With this in mind an alternative to De La Rue that I have been tracking is Paypoint (PAY), which is a leading specialist payments company, processing consumer payments across a wide variety of markets through its retail networks, internet and mobile phone channels. It also offers something called Collect+ which is for consumers to collect parcels from shops to tap into the whole internet shopping / click and collect trend. However, this one has a higher price tag as it is more expensive on around 19x to 20x but with a 3% to 3.5% yield. The yield is what attracted me initially plus the fact that it scores well on my screens. Having done some work on it I like the fact that it is Chaired by David Newlands, who was FD at GEC under Arnold Weinstock and generally a safe pair of hands. Again this is topical because they report their final result tomorrow, 29th May 2014 - so I'll be watching out for those as again this is not one I currently hold and it has fallen back quite a bit with other mid cap stocks recently despite upgraded forecasts. You can read more about it in the meantime at their investor relations site. Finally, if you prefer more up to date music too then as Jessie J says Its all about the Price Tag!
Read some more interesting research on momentum recently, as it is always good to read things which challenge your views to help avoid confirmation bias. Now as you may know I do pay some attention to momentum factors, especially earning revisions, but I have tended to be a bit more dubious about the benefits of price momentum.
Thus, I forced myself to read a research document by Cliff Asness et al which was in defence of Momentum as a factor and tried to debunk many of the myths and arguments against it. Having read it I realise I will have to continue to force myself to pay attention to it even though it goes against my natural value instinct!
Aside from this I have revamped the site a little bit and added a Check list - which I find useful and I hope you do too.
I have also added so links to some more research papers, including the one above, to my previous reading list page which has now been re-named Resources and combined with the Free Stuff page.