Search

FTAlphavilleFT Alphaville is a 2008 Webby Award Winner

Log in

Register for a free account

Principal content

• Today
• M&A
• Private equity
• Hedge funds
• Capital markets
• People

Markets live transcript 16 May 2008

Markets live chat transcript for the chat ending at 12:08 on 16 May 2008. Participants in this chat were: Paul Murphy (PM) Neil Hume (NH)

PM:

Hello welcome to Markets Live

PM:

Daily stock chat here on FT Alphaville

PM:

Neil Hume is with me.

PM:

We’re just a bit behind

PM:

Reuters guy been here

PM:

We are getting to the root fo our probs …

NH:

Nice day at Lords? Shame the weather wasn’t a bit better.

PM:

PM:

Don’t try that one!

NH:

Wot? You suddenly “got sick” – “eaten something” – on the first day of the Lords test..

NH:

and you want us to believe it wasn’t a sickie.

NH:

At least you had the decency to come back to work – rather than taking a second day off to make it look more likely you really were ill.

NH:

Then again, suspect Lords a bit chilly today. Need an overcoat.

PM:

PM:

I’m not even going to answer that.

PM:

Nor respond to monkey’s comment below

PM:

Look I was ill yesterday and I am still a bit fragile. But I also hate hanging around home, being ill. It’s boring.

NH:

and tell the readers what time you were taken “ill” at

PM:

About 9am

NH:

just in time to get into the Mound stand and have a few drinks before the toss

PM:

PM:

Anyway, I am now out of touch – so fill me in.

NH:

What – you want me to go thru everything that happened yesterday.

PM:

No no. I was not too ill to the site – but you know still get out of touch.

PM:

Where shall we start?

PM:

PM:

Ooh.

PM:

Bear with us

PM:

We are just getting a very interesting story

PM:

it is red raw of course

PM:

Dripping blood

PM:

Untested

PM:

Neil is just having to deal with source

PM:

We can come back to British energy etc

NH:

right go some very interesting RAW

NH:

Trinity Mirror is the name in the frame

NH:

shares moving as we write

NH:

up 9.75p at 253.75p

PM:

That is a move of 4%

NH:

volume looking good 1.8m already

PM:

This is buyer beware tho

NH:

against daily average of 3.1m

PM:

So what is the story — with the caveat that this is rough, unchecked market chatter

NH:

I have to stress that this is really RAW

NH:

it has not been checked

NH:

and has just come straight out of the market

NH:

but here goes

NH:

Alex Springer, the German media group, is looking at Trinity

PM:

PM:

really?

NH:

yep

NH:

Now, I don’t know whether this is something they have looked at and rejected

NH:

or whether this is live

PM:

And we know that Springer probably look at every media property in europe on regular basis

NH:

true, they would not be doing their job otherwise

PM:

Intriguing nevertheless

PM:

and if I remember correct Springer has been linked with Trinity before

NH:

that’s right

NH:

it was a few years ago now

NH:

But the idea was that Trinity Mirror would be broken up and that Springer would come in for one part of the business

PM:

ok

PM:

and could they afford it?

NH:

just had a quick look at the market caps and on the face of it yes

NH:

Trinity is now worth just £640m

PM:

NH:

while Axel, which publishes Bild, Germany’s best selling tabloid, is worth $3.6bn

NH:

however, from what I can see

NH:

Springer has been trying to move away from print into digital media in the past year or so

NH:

not with much success I might add

NH:

so buying Trinity would be a bit of a u-turn

NH:

Axel also entered the mail and logistics business last year

NH:

acquired something called Pin Group

PM:

hang on a minute

PM:

the most recent comments I can find from the boss of axel

PM:

indicate there could be something in this story

NH:

go on

PM:

CEO Mathias Doepfner told shareholders at last month’s AGM that 2007 had been a bad year for the company

PM:

and now it was going to stick to its knitting

PM:

Future growth lies abroad and in digitalisation

NH:

PM:

he went on to point out that the company already makes 1 in 5 euros abroad

NH:

hmmmm

PM:

Can we put any sort of rating on this piece of stock tartare

PM:

?

NH:

well it seems to make sense

NH:

and it comes from someone I rate very highly

NH:

PM:

NH:

but what we do not know is whether this is something that is merely being

NH:

considered as opposed to something that is live

PM:

That’s good enough for me

PM:

NH:

AM - we were just about to come to Enodis

NH:

being told that Manitowoc could return with another offer on Monday

PM:

PM:

no, I though the offer from ITW was a knock out blow

PM:

280p wasn’t it?

NH:

plus a 2p divi

NH:

am being told that MTW will counter at 330p

PM:

Blinken ‘eck

NH:

i know

NH:

sounds toppy doesn’t it??

PM:

well someone seems to believe the story

PM:

Shars in Enodis us 5p at 294

PM:

Way above the ITW offer

NH:

now, I can sort of believe this offer

NH:

MTW needs Enodis

NH:

it must balance its foodservice business

NH:

currently the company is too focused on the cold side - ice machines etc

NH:

it needs the hot side - deep fat fyers etc - that Enodis has

PM:

Neil Hume, burger flipping expert

NH:

the one big problem here is financing

NH:

I did not think MTW could go above 300p

NH:

thought it would be a real stretch

NH:

but if they are desparate they just might

NH:

and remember ITW did not raid the market for stock

NH:

so this could happen

NH:

again, this story is coming from sources with a good track record

PM:

PM:

Well, I must say yiou have been on the Enodis did story since day one

PM:

bid story, even

PM:

Just note that we are now on day 524

NH:

i wish it would end

PM:

NH:

Sorry HH, just got a few more bits of RAW to get through before we get to the proper news

NH:

more bid rumours around in Inmarsat

NH:

talk of a US carrier bidding 600p in the next couple of weeks

NH:

shares up 20.2p at 487.25p

NH:

but beware

PM:

Another good move

NH:

a lot of people saying there is a big bear position in ISA

PM:

So we are cautious on this one

NH:

there isn’t - but there are a lot of shorts to hedge a convertible

NH:

right anothe bit of RAW, hearing about a break up at De La Rue

PM:

NH:

that’s the banknote printer

PM:

REMEMBER THIS IS ALL RED RAW

PM:

BUYER BEWARE

NH:

it could hive off its cash machine division

PM:

READER BEWARE

PM:

ETC

PM:

NH:

shares 17p higher at 876.5p

PM:

Fun stories tho

PM:

11.22 and Neil has burnt out!

PM:

Thanks for all that

PM:

PM:

Let’s look at some of the top movers

NH:

well, the LSE is top of the pile at the moment

PM:

yeah, why is that — late move upwards

PM:

Shars are up 77p at 11.65

PM:

rise of 7% !!

PM:

wots going on?

NH:

well, a note came out from Sanford Bernstein yesterday

NH:

in it they upgraded and said LSE shares were not back at the level where someone could bid for them

NH:

personally I don’t think anyone will

PM:

Now back at a bidding level

NH:

bid for them but it has spooked a few bears and they are covering positions

PM:

But NH cautious

NH:

the LSE has been one of the worst performers in the FTSE 100 this year

NH:

the stock was also pushed up in the options expiry this morning

PM:

Can you dig out this SB note?

PM:

think people would like to see

NH:

was penned by Dirk Hoffmann-Becking

NH:

We are upgrading LSE from underperform to market-perform with a reduced target price of £11.
LSE has fallen 48% since the start of 2008, and we now see the stock as fairly valued, as we believe the
structural and cyclical challenges to their equity trading platforms are now more accurately reflected in
the price.

NH:

Equity exchanges are facing a structural and cyclical slowdown. We continue to believe that the
European stock exchange market is at an inflection point where the last four years’ earnings growth of
30-70% p.a. in equity platforms is going to turn negative, whilst derivatives markets should continue to
grow profits at 14% p.a. (03-07) vs. 19% p.a. (07-10) in the past. LSE is most exposed to this drastic
change, with ~85% of operating profit dependent on equity trading platforms, whilst DB1 is relatively
insulated with only ~19% of operating performance from equities.

NH:

The cyclical slowdown is taking hold. Beyond the decline in structural growth as algorithmic trading
growth is topping out, equity platforms are now also facing a sharp cyclical decline as market valuations
decline and trading slacks as we are moving towards a downward sloping market. 2008 is already
proving challenging for both issuance, which has virtually dried up, and trading, where volumes in April
are down 16% in Borsa Italiana and flat in the UK. May volumes so far have not been encouraging with
SETS volumes down 14% YoY.
• New competitors are making inroads at a faster than expected pace. Chi-X, the first of the major
MTFs (Multilateral Trading Facility) to be operational, increased its market share in FTSE 100 trading to
over 10% in the last two months. This constitutes at least in part a genuine shift of market shares away
from LSE rather than the creation of “new” liquidity, as we see 25-30% of some stocks’ trading taking
place on CHI-X. We have therefore adjusted our forecast to reflect a loss of market share to 27% in 2012
versus 15% previously.

NH:

However, the share price is now more accurately reflecting these challenges. LSE has fallen from
£20 in Jan. 2008 to now just over £10, a decline of 48%. Looking at the valuation of global stock
exchanges as of 12th of May 2007, this pricing level implies a negative 12%-13% EPS growth in fiscal
2009 and a 4% EPS growth for the period fiscal 2008 to fiscal 2011, very much in line with our growth
expectations. One could come to a £7 valuation by using an extremely near term focused view, which
does not reflect the longer term growth prospects of LSE.

NH:

Additionally, at these levels there is upside risk. Looking back at other exchanges that saw dramatic
declines in volumes and market share such as NASDAQ, and OMX, we saw them radically reducing
cost. Nasdaq reduced operating expenses by 46% and OMX by 37% between 01 and 05. With LSE
spending £40m on upgrading TradeElect whilst BATS spent ~USD 5m in building an entire trading
system and LSE (ex Borsa Italiana) employing 448 FTE (full time employees) versus 20 FTE at BATS,
we believe there are significant cost savings opportunities. That leaves an option for LSE management,
an activist investor or private equity to turn the business around. Furthermore, LSE market cap is now
down to €3.7bn, well within reach of Nasdaq and NYSE Euronext as an acquisition.

NH:

We update our EPS figures for new market share assumptions and recent volume data. EPS
numbers change to represent increased market share loss expectations from 15% in 2012 to 27%. Our
fiscal 2008 EPS increases slightly from 70.9p to 71.5p reflecting recent volume data, whilst our fiscal
2009 EPS decreases from 65.0p to 62.0p reflecting increased market share erosion.We expect H2 2008
to deliver strong results given the slowdown in equity volumes only really set in during April 08. LSE
report full year results on 22nd May.

NH:

there you go

PM:

thanks for that

PM:

PM:

Quickly to Iceland (Thanks JC) — had not seen this earlier

PM:

By Adam Cox
STOCKHOLM, May 16 (Reuters) - Iceland’s central bank struck a deal with the central banks of Sweden, Norway and Denmark on Friday that allows it to buy euros with Icelandic crowns, giving the island’s beleaguered currency a strong boost.
Each swap arrangement is for as much as 500 million euros ($774 million), but analysts said it was not the amount that mattered but the deal itself, which underlined how the central bank was actively working on ways to support the currency.
Iceland’s central bank termed the move a “precautionary measure” while the head of Sweden’s Riksbank said central banks had a responsibility to cooperate in times of uncertainty.
“This of course is bound to be positive news,” said Jon Bentsson, economist at Glitnir in Reykjavik.
“In and of itself, it’s not going to solve all the concerns. But it’s a very important stepping stone in displaying that the central bank is willing and has the resources to provide support.”
The crown surged against the euro, with the European currency sliding 4 percent to 115.25 crowns as of 0940 GMT.

PM:

Very interesting I think. Ieland has long had a deal with other nordic countries to bail each other out

PM:

Iceland working to save its currency

PM:

PM:

Anyway — back to UK movers

NH:

OK on the subect of financials ICAp on the move too

NH:

seems to be some bid story around

NH:

ICE, the InterContinentalExchange

PM:

yeah yah — ICAP always volatile

NH:

rumoured to be interested

NH:

I reckon the shares are strong because of yesterday’s update from rival Tullett Prebon

NH:

this was pretty bullish and bodes well for Tueday’s figurs from ICAP

NH:

shares up 26.5p at 661.5p

PM:

Didnt ICE have a big power failure yesterday? Obviously i was at Lords, but I heard some mention

PM:

I mean I was ill

PM:

NH:

er dunno. passed me by if it did

PM:

NH:

Shares in British Airways up 13.5p at 237p.

PM:

Jeepers – I thought they had come out with a profits warning.

NH:

They have – well they have warned about Q1 being exceptionally tough – but that was all in the price.

NH:

What was not wholly in the price was dividend – it seems.

NH:

BAY are making their first payment to shareholders since 2001.

NH:

Of course, it is also warning that revenues are likely to be below previous expectations – or at least at the lower end. But there is a general sense that the airline might be dealing with its difficulties better than previous assumed.

PM:

The stock’s been a dog recently, no?

NH:

Well, relatively dog.

NH:

Have halved from the high at the beginning of last year. Obviously.

NH:

Very weak last week – came down from the 250p level to below 220p before today’s bounce.

PM:

Anyway, the talking point this morning has been the divi – but for a while no one knew exactly how much of a dividend they were actually paying out.

NH:

What do you mean?

PM:

Well, here’s the highlights from the statement:

PM:

Revenue up 3.1 per cent to £8,753 million
Operating profit of £875 million (2007: £602 million)
Operating margin 10.0 per cent (2007: 7.1 per cent)
Profit before tax of £883 million (2007: £611 million)
Full year fuel costs top £2 billion
Two million passengers through T5 since opening
NAPS pension deficit tackled
First dividend since 2001
Staff share in £35 million bonus

NH:

And ??

PM:

Well – british Airways trumpet the “first dividend since 2001”

PM:

But then you have to go to note 16 in the ntoes to the accounts – on page 15 of the release and find “events after the balance sheet date” to find that it is 5p a share.

NH:

That’s a bit daft. Maybe they were embarrassed about the size of it.

PM:

Never mind that. If you haven’t paid a divi for seven years and you say you now will – people want to know how much it is.

PM:

It helps with – you know – valuing the shares. Technical things like that.

PM:

NH:

yes but why has BA paid a dividend with the oil price where it is

NH:

looks like sucicde to me

PM:

Maybe it thinks its a bank — can come out with a rights issue in a couple of months time

NH:

NH:

but seriously

NH:

the oil price is showing no signs of coming down, airlines are going bust round the world

NH:

others are having to merger just to survive

NH:

and in the middle of it all BA pays a div

NH:

I know they promised it to shareholders but

NH:

and will they be able to make another payment this year

NH:

seems to me like Willie Walsh was over a barrel

NH:

if he did not pay shareholders might have gone nuts after the t5 debacle

PM:

I think you are right

PM:

But lets move on

PM:

PM:

Notice Suez is denying interest in British energy

NH:

not affected the price thought, in fact it has gone even better

PM:

This is after news this morning that it has received a range of takeover proposals – including some above the market price.

NH:

shares up 45.5p at 725.5p

PM:

Well, above Thursday’s closing price of 680p.

NH:

People had previously been getting carried away on this one, thinking there was going to be an all out bidding war. That took the stock to near 800p at the end of April.

PM:

Come rattling back since hasnt it?

NH:

yep

PM:

So today’s statement has rescued a few stale bulls.

NH:

well, they are on parole at least.

PM:

And here we were thinking only bears and bank robbers went to jail.

PM:

See that Hector Sants on the box last night.

NH:

Er, no.

PM:

Was on the Channel Four news

NH:

I was at work – in anycase, you must have got back from Lords smartly. Guess the light was dodgy for that last hour.

PM:

ha

PM:

ha

PM:

Anyway, Sants wasn’t saying much that we didn’t already know – other than stating bluntly that the mess we’ve been thru has caused by greed.

PM:

Oh and he had another pop at insiders etc – said the current situation was intolerable and that it was the FSA job to go after people.

PM:

So be interesting to watch that.

PM:

Anyway, back to British Energy, what are people saying?

NH:

Not a great deal – noting that this is just rumbling on.

NH:

But there is the point that the government’s priority here is to get the new nuclear programme organised – and funded by the private sector.

NH:

That’s its priority – not getting top dollar for its stake in BGY.

PM:

Okay — thanks

PM:

NH:

right from hector sants to another popular topic

NH:

estate agents

NH:

looks like one has gone to the wall this morning

PM:

name?

NH:

Humberts

PM:

Oh yes

PM:

Stock had gone close to zero

NH:

been in trouble for a while. One V Tchenguiz a big shareholder

NH:

company put together a resuce package a few weeks ago

NH:

trouble was, the deal was conditional on them making a couple of big disposals

NH:

and guess what - that did not happen

NH:

Humberts Group PLC-Temporary Suspension
RNS Number : 6050U
Humberts Group PLC
16 May 2008

Humberts Group plc

Further to the announcement of the Result of General Meeting on 14 May 2008, Humberts Group plc requests the suspension of its ordinary shares pending clarification of its financial condition.

The Company is also investigating a potential restructuring. A further announcement will be made as soon as practicable.

PM:

pending clarification of its financial condition.

PM:

ie,…

PM:

dead

PM:

This coincided with news from Rightmoe — mentioned below

PM:

Rightmove

PM:

The Halifax are selling their stake through a secondary offer

PM:

16m shares up for grabs — book build at 345p-365p indicated range

PM:

How has that gone down?

NH:

how do you think?

PM:

Like a crashed property site?

NH:

yep

NH:

actually they have rallied a bit from earlier

NH:

now off 15.5p at 370p

NH:

actually we have the term sheet for the placing

PM:

Offering Summary:

Securities offered: Secondary sale of up to 16,230,175 shares subject
to
seller’s discretion

Sellers: Seller is Halifax Estate Agents Limited. If they
opt to
sell the full 16.3m shares, the selldown would
clear their
position. If they sell less than the full amount
there
will be 30 day lockup on the remaining shares.

Bookbuild Range: 345p to 365p

UBS Investment Bank Role: Joint Bookrunner
Timetable:

Pricing/Trade Date: 16 May
Settlement: 21 May

NH:

oh, we have taken a wicket

PM:

NH:

looks like Oram has gone - caught in the slips. Sidebottom the bowler

NH:

just going back to Humberts a minute

NH:

I have tracked down the killer paras from Wednesday’s AGM statement

NH:

The Board notes that completion of the Placing is conditional on a number of conditions and is currently considering whether these conditions will be capable of being met. In particular, the Board believes that it may be difficult or impossible to satisfy certain key conditions principally because:

* The Company has not yet executed sufficient Supplemental Acquisition Agreements to meet the minimum of 60% (by value) of the Deferred Consideration payable to the Sellers of certain businesses purchased by the Company during 2006 and 2007; and
* Early indications are that the aggregated disposal value of certain businesses which the Company was intending to dispose of in order to raise additional working capital is likely to be significantly less than expected, which may have a significant negative impact on the Group’s cashflow forecasts.

The Board is currently evaluating these and other relevant issues and will release a further update as soon as is practicable, including further details in relation to the Share Capital Reorganisation and issue and admission of the Adjusted Consideration Shares.

PM:

ta

PM:

PM:

Hey, I’ve got something for you.

NH:

Wot?

PM:

Citi on UK mining mania

NH:

Ah, yes, saw that

PM:

Super-cycle or super-bubble?

PM:

The new TMT?

PM:

Answer Neil?

NH:

Yes, I wrote that a few weeks ago

PM:

Well Citi have tested your thesis - at length

PM:

bickie

Reminder to readers - if you arrived late and want to stop the dialogue ‘jumping’ as you catch up, hit the ‘pause auto-scrolling’ tab at the bottom right hand corner

PM:

The rise and fall of TMT left its scars on many investors — those that missed
out on the rise, and those that got burnt by the fall. Since then, fund managers
have approached strong gains from within the equity market with caution. Once
burnt, twice shy.

But, Mining (and more broadly commodity) stocks have played a pretty tune
and attracted a growing following of believers over the past few years. Analysts,
such as our own Mining team, have been advocates of a super-cycle thesis.
This has been driven by the structural acceleration in demand from emerging
markets, principally China.

PM:

For both commodities and commodity-linked equities, prices have boomed.
For commodity prices, oil has set the standard. In 10 years oil prices have
moved from US$10 to US$120/barrel. Long-term oil price assumptions used by
analysts in their earnings models have rise from US$20 to near-US$85/barrel
over the same period. Even current consensus expectations for future oil prices
remain substantially lower than prices in the futures market several years out.
Elsewhere, the price of grains, gold, copper and other commodities have all
enjoyed strong price gains — a renaissance for dig-it-out-the-ground
merchants and primary producers everywhere.

Within the equity market, it is the Miners that have enjoyed the biggest outsized
gains of the past few years. This has drawn many non-believers to cast
repeated doubt over the sustainability of these gains. Many have been trying to
pop the commodity “bubble” for some years already. When we looked at this
issue in late 2005, our conclusion on the bubble was “not yet”.

But, more than two years on, have our thoughts changed? Is the super-cycle
now what the new paradigm was in 1999-2000? Is Mining the new TMT? If so,
is this October 1999 or March 2000? We run through a simple bubble
framework based on performance, earnings, valuation and various other factors
to guide us to our answer.

NH:

And?

PM:

Well we eventually – half way thru this document – get to the Bubble Check list.

PM:

I will put this up – btu it might be unreadable.

PM:

I put it up earlier in a promo piece — but attributed to Morgan Stanley

PM:

Sorry about that! will fix

PM:

Figure 44. Bubble Check List
TMT All Resources UK Mining
Share of Market Cap Yes No Yes
Absolute Performance Yes No Yes
Relative Performance Yes Yes Yes
Valuation Yes No No
Earnings Bubble Yes Maybe Maybe
Balance Sheets Yes No No
Equity Issuance Yes Yes Yes
M&A Yes Yes Yes
Total 8 of 8 3.5 of 8 5.5 of 8
Source: Citi Investment Research

PM:

The benefit of hindsight ticks all the TMT boxes. For all Resources, there is
evidence of bubble type behaviour, certainly more so than 2 years ago.
However, not all the lights are flashing. Mining is sending more signs of a
bubble, although again not all lights are flashing. Most importantly, valuation is
still not stretched. There has been no re-rating. This is main reason not be
structurally concerned over Mining and the rest of the Resource space, yet.

NH:

Yeah, but what conclusions are being reached here?

PM:

Well this is wide ranging stuff from Citi– but analysts there are saying it is too early to call time on the mining front.

PM:

But they would not chase either.

PM:

Mining performance has been stellar, and for 10 years. In many ways, the ride
has been more impressive than TMT. Certainly the returns and the duration of
outperformance have been much higher. But, share prices have tracked
earnings. There has been no re-rating. While there are more bubble warnings
now for Miners compared to two years ago, we still feel that it could be too
early to run away from the Resources trade for good. This could be October
1999 for the Resource trade, rather than March 2000.

However, performance in the near-term has been strong, especially for the
Miners. We would not want to chase from these levels.

PM:

PM:

how is barclays donig to day — i rather missed that story yesterday

PM:

INn my sick bed

NH:

up 2.75p at 421.75p

PM:

Helen has done a post on all this – rather coming out in Barclays favour.

PM:

Taking Neil Spratley’s line in the Guardian that Varley and Diamond are right to sweat this one out – and only raise capital if and when they need to.

PM:

We could balance things out a bit with this Citigroup note.

PM:

sorry Citi

NH:

well, we mentioned that yesterday when you were at lords

NH:

till, worth running up the flagpole again

PM:

Still In Denial
 Credit write-downs of 10% remain too low — Despite £1.7bn of write-downs
taken in 1Q08, we believe that cumulative write-downs representing c10% of
gross credit market exposures at Dec 2007 remain too low. We have increased
our full-year estimate for 2008E from £2.3bn to £2.8bn but recognise that if
Barclays were to move closer to market values this would increase significantly.
We do not expect this to happen until a decision has been taken on capital.
 Capital position 2nd weakest in Europe — We believe Barclays will fail to reach
its target Equity Tier 1 ratio of 5.25% without some form of balance sheet
management. We estimate that Barclays needs c£7bn to reach an Equity Tier 1
ratio of 6.5% (assuming no additional write-downs), meaning a rights issue
appears the only practical solution. However, management may still be
considering other options, such as a scrip dividend or the sale of new shares to
a sovereign wealth fund. We have cut our 2008E DPS from 34p to 25p to make
the payout ratio more consistent with our underlying EPS estimates.
 Barclays Capital underlying profits to fall 40% in 2008E — We estimate
Barclays Capital made c£750m of pre-tax profit before write-downs in the four
months to April. Seasonality and weaker trends post 1Q08 mean we forecast
full year profits to fall 40% to £2.1bn. Credit write-downs of £2.8bn offset by a
50% cost reduction mean our reported full year profit forecast falls to £686m.
 We reiterate our Sell (3M) recommendation on an unchanged TP of 350p — We
expect confidence in earnings to remain low until issues over financial
exposures and the group’s capital position have been resolved. We retain a Sell
(3M) recommendation and a 350p target price.

PM:

I cant print it here – but there’s a chart ranking European banks by equity tier 1

PM:

Barclays are not actually the weakest bank in Europe

PM:

CORRECTION: Barclays are not actually the most confident in Europe.

NH:

Who is?

PM:

EFG International

NH:

Who they?

PM:

Well i have to confess….

PM:

EFG Group is an international banking group headquartered in Geneva, Switzerland. It is organized into two subgroups:

EFG International, which is a global private banking and asset management group headquartered in Zurich, Switzerland and listed on the SWX Swiss exchange (EFGN).

Eurobank EFG, which is one of the largest banking and financial institutions in Greece, listed on the Athens Stock Exchange (EUROB), offering all types of banking, asset management, insurance and other related services in Greece and Central and South-Eastern Europe.

PM:

NH:

can we just go back to the miners for a minute

NH:

I want to have a look at a Russian iron ore play called Aricom

NH:

run by one of the Hambros

NH:

Jay

NH:

stock has had one hell of run this week

NH:

gone from 84p to over 100p

NH:

102p at the time of writting

NH:

anyway the story is this

NH:

been chatter for a while that the company owns a deep water port on the Russia/China boarder

PM:

go on

NH:

but there is no mention of it in there results

NH:

so I went digging into the annual reports

NH:

and sure enough there it was

NH:

paid something like $44,000 for it

PM:

44k????????

NH:

*
Main
*
Citations

Sovetskaya GavanRussia
Main

seaport, Khabarovsk kray (region), eastern Russia. Situated on the southeastern shore of a deep, narrow gulf of the Tatar Strait, the port has one of the best natural harbours of far-eastern Russia. Its development began only on the eve of World War I, and city status was achieved in 1941. Its principal economic activities include woodworking and fishery industries. The city received a great impetus when it became the terminus of a railway from Komsomolsk-na-Amure. Further growth followed the completion in 1980 of the BAM (Baikal–Amur Magistral) railroad because of Sovetskaya Gavan’s location near its Pacific terminus. Pop. (1991 est.) 35,400.

NH:

any Jay Hambro was giving a presentation at the Merrill Lunch mining conference this week

NH:

and the port was mentioned

NH:

this seemed to be new to a lot of people

NH:

and the stock has been moving ever since

PM:

How interesting (and terrifying)

NH:

and of course Aircom seems to be a good play on Chinese demand for iron ore

NH:

clearly the chinese are worried about supply, hence their manourvering in Rio and possibile Billiton

PM:

of course

NH:

so having a large supplier on their doorstep will be of interest

PM:

And of real size — this biz — as VP points out

PM:

One to watch

PM:

NH:

just had an interesting email sent over with some short interest figures

NH:

check Trinity

NH:

HMV Group has a short interest of 36.33%, which equates to 49.04 days to cover.
AGA Rangemaster Group has a short interest of 29.5%, which equates to 48.11
days to cover.
Sainsbury has a short interest of 28.89%, which equates to 70.4 days to cover.
DSG International has a short interest of 26.05%, which equates to 26.44 days
to cover.
CSR has a short interest of 25.86%, which equates to 17.41 days to cover.
Imagination Technologies Group has a short interest of 24.39%, which equates to
362.13 days to cover.
Trinity Mirror has a short interest of 24.38%, which equates to 26.86 days to
cover.
Alliance & Leicester has a short interest of 24.12%, which equates to 21.4 days
to cover.
Barratt Developments has a short interest of 23.45%, which equates to 9.35 days
to cover.

NH:

a quarter of Trinity on loan

NH:

that can’t be right unless there is a convertible

PM:

Hmm. Trinity price pulled back since we mentioned it earlier.

PM:

Up 7p at 251

NH:

just had number

NH:

on the phone

NH:

he says the Indie have a story in Trinity Mirror

PM:

NH:

I wonder what that might be??

PM:

Anyway — taht is raw infor — we dont know whether Axal Springer have just had a look at Trinity Mirror — or whether they might be planning an approach

PM:

certainly no indication that they have yet made any move

NH:

yes that’s right, because Trinity have been buying shares back this week

PM:

PM:

right — we are done

PM:

Neil has to do his Saturday column

PM:

I have to sift through a 100 odd CVs — thanks for those

PM:

Need to find someone better than Helen for Alphaville

PM:

Fobbed her off on Lux in NY

PM:

We will be back at 11am on Monday

PM:

Thank you for joining — adn thanks for all the comments

NH:

see ya

PM:

re helen — we ahve to bear with until mid July

PM:

Seeya

This entry was posted by Paul Murphy on Friday, May 16th, 2008 at 11:01 and is filed under Uncategorised. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

1. May 19   7:06 Posted by vinnu [report]

   good mr NH

2. May 16   12:06 Posted by ClueLess [report]

   lol@monkey

3. May 16   12:06 Posted by Baz [report]

   whns she off?

4. May 16   12:06 Posted by Monkey [report]

   Are they photo CV’s??

5. May 16   12:06 Posted by S Simpson [report]

   Odd candidates? Or an odd number of candidates?

6. May 16   12:04 Posted by Chrispy [report]

   GCox - difference here is that Heloc defaults will be realised losses as opposed to the level 3 mark-to-myth kind.

7. May 16   12:02 Posted by wheniwereyoung [report]

   Bloomberg reports “China’s April Gasoline Imports Rise to Two-Year High”

   Meanwhile back at the ranch CSMonitor reports “Congress ….voted overwhelmingly this week to halt purchases of oil for the Strategic Petroleum Reserve.”

8. May 16   12:01 Posted by TheWord [report]

   Still can’t afford a house, even after the falls? Why not move into a luxury shipping container, today:-

   http://www.containercity.com/

9. May 16   11:59 Posted by VP [report]

   Aricom now a £1.1bn co thanks to recent rise.

10. May 16   11:58 Posted by tears for tier 1 [report]

    “the credit crunch is over”
    long live the arangement fee desiccation

11. May 16   11:57 Posted by G Cox [report]

    Evidence of Countrywide asking people to default as they cannot handle any other process at this time. Real threat is post-foreclosure properties being held in fast growing un-declared inventory inside banks and not being put on the market.

12. May 16   11:57 Posted by Baz [report]

    the emperors with no ………………….

13. May 16   11:56 Posted by TheWord [report]

    @Baz, no - you’re wrong. All the people “in the know” (viz. the CEO’s of banks and stuff) are absolutely certain - the credit crunch is practically over.

14. May 16   11:55 Posted by Chrispy [report]

    Don’t know any figs for UK.

15. May 16   11:54 Posted by Baz [report]

    libor 3 mth 5.8488 up slightly credit crunch still here

16. May 16   11:54 Posted by rose [report]

    is there any idea of the state of the equivalent in the UK, just by the weight of advertising I have seen covering schemes like this you’d have to say there must be lots of people who have done this, doesn’t seem like good news….

17. May 16   11:53 Posted by TheWord [report]

    Well, of course it’s a bubble. Unless the Europeans are going to start buying all of the Americans’ shoes, fluffy toys and plasma screens (in other words, spend like Americans on speed), the Chinese will be transforming commodities into expensive landfill…or, they might just stop.

18. May 16   11:53 Posted by hubba bubba [report]

    have you guys heard any more on BUD US ?

19. May 16   11:52 Posted by Chrispy [report]

    Rose -they are, seems the mortgage service companies, such as Countrywide, are so over stretched, that deliquentcies in this area are only now coming to light…witness Dexias last earnings call.

20. May 16   11:51 Posted by wheniwereyoung [report]

    I see Hugo Chavez is halting Gold exploration in some preservation area or other.
    Good for Au bad for US.

21. May 16   11:51 Posted by G Cox [report]

    Helocs are US equity release , except that many o them were put on as second liens even when the first was over 100%.
    Unlike mortgages in most of the US, Helocs are enforceable on the borrower .

22. May 16   11:50 Posted by VP [report]

    LIBOR 5.84875 vs 5.84

23. May 16   11:49 Posted by Harry Hindsight [report]

    6450 = FTSE at start of year

24. May 16   11:49 Posted by Anonymous [report]

    why did my message not print on ENO ?

25. May 16   11:48 Posted by G Cox [report]

    Re roasted bear, it is interesting that over the last few weeks just about every analyst and chartist called the top of a FTSE bear bounce. Such a universal view is unusual and so far universally wrong.

    But US market only 8% below peak now and bond yields are creeping up steadily.

26. May 16   11:48 Posted by rose [report]

    HELOC - are they equity releases? seen lots of adverts offering to ‘free the wealth trapped in your home’ - or remortgage as the rest of us call it, seems like another hotbed of trouble, ppl must be pretty strapped to resort to it in the first place

27. May 16   11:47 Posted by wheniwereyoung [report]

    Any more comment on Tullow, Paul?

28. May 16   11:45 Posted by Monkey [report]

    Bottom of side strikes and Oram is gone!

29. May 16   11:45 Posted by tears for tier 1 [report]

    pass the Gladiolas

30. May 16   11:45 Posted by Chrispy [report]

    Joe Lewis - As those that failed to anticipate the credit crisis call an end to the crunch, there’s another acronym to contemplate - HELOCs (home equity lines of credit). Thanks go to Bill Fleckenstein’s website for the heads up.

31. May 16   11:43 Posted by ds [report]

    we have a morrissey fan on the board

32. May 16   11:42 Posted by Justin [report]

    trinity definitely seems worth a friday flutter!

33. May 16   11:41 Posted by Greenback [report]

    hi.. why is oil / WTI barrel-ing up??? (up US$1.42 per b currently)

34. May 16   11:41 Posted by Lemmy [report]

    bsb: it’s a placing for RMV, not rights issue

35. May 16   11:40 Posted by VP [report]

    bsb, a diff co raising money daily atm, but RMV not one of them - is a placing from a shareholder I believe, cash not going to co.

36. May 16   11:40 Posted by Joe Lewis [report]

    Can I just put my hand up and say I’m roasted bear today? When will this madness end? After I’m cooked to crispy bear?

37. May 16   11:40 Posted by Monkey [report]

    Hector “I can’t explain what a CDO squared is to the Treasury Select Committee” Sants you say?

38. May 16   11:39 Posted by VP [report]

    Turned over the moment Sants came on.

39. May 16   11:39 Posted by bsb [report]

    RMV needing a rights issue seems to be telling us things are worse than it appears on the surface. RMV gets paid by estate agents on a per-office basis. EAs are currently closing branches or going bust up and down the country. Humberts shares being suspended today is just another indication of this. How much money is RMV losing out on due to all this? Why do they need to do a rights issue - are they having difficulty borrowing the money from their banks?

40. May 16   11:39 Posted by tears for tier 1 [report]

    Hector was the first of the gang with a gun in hand
    …etc
    such a silly boy

41. May 16   11:38 Posted by TheWord [report]

    @taxloss, yes - I would love to have been a fly on the wall when John Snow or Dennis Lillee heard that a fast bowler cried after being slapped! Honestly, what is the world coming to?

42. May 16   11:36 Posted by ss [report]

    WW said on the radio this morning he would be there for at least another 10 years

43. May 16   11:36 Posted by taxloss [report]

    @ theWord: And also blubbing on international tv

44. May 16   11:35 Posted by VP [report]

    Lol hope BAY don’t follow the banks & pay it in scrip!

45. May 16   11:34 Posted by TheWord [report]

    Paul, you didn’t slap anyone at Lords, did you? I hear that’s quite de rigueur at the cricket, these days!

46. May 16   11:34 Posted by Fitz [report]

    Any info RE: DEB? Stock up 5.8%

47. May 16   11:34 Posted by VP [report]

    Don’t BAY just whack on more fuel surcharge when oil goes up?

48. May 16   11:33 Posted by tears for tier 1 [report]

    The Fed did a much larger $50bn swap with the ECB and the Swiss 2 weeks ago today.
    The oil price has risen $12 since.
    Monopoly money indeed.
    To join the club you need something called a printing press.
    North Korea and Iran are rumoured to have one each.

49. May 16   11:30 Posted by TheWord [report]

    So, now Iceland can swap Monopoly money for Euros? That’s a great racket. How do you join?

50. May 16   11:30 Posted by andy [report]

    Enter your commentsdoes this stay streaming real time all day ?
    eno - if manitowic come in, they qwill be topped by itw who are much bigger. manitowec should get some paper in ie dawn raid

51. May 16   11:28 Posted by TheHoof [report]

    Cheers for the SB note chaps!

52. May 16   11:26 Posted by rahodeb [report]

    yep - they still do the same rubbish food they did yesterday

53. May 16   11:25 Posted by J Coupin [report]

    any view on Iceland today?

54. May 16   11:23 Posted by AM [report]

    Thanks for Enodis info

55. May 16   11:22 Posted by Harry Hindsight [report]

    sorry meant as poor pun for Monkey’s Chinese developers

    will go to Lords immed

56. May 16   11:22 Posted by tears for tier 1 [report]

    Lime technology will save the world from the terrrible CO2 monster that is cement.

57. May 16   11:22 Posted by Lemmy [report]

    I can barely keep up with the RAW. Great work Neil!

58. May 16   11:22 Posted by Pakora Mix [report]

    Re Trinity Mirror - Co has been buying back shares each day this week. Div Yield about 9 % so a purchaser could save £50M if buying with cash.

59. May 16   11:21 Posted by OJ@home [report]

    Harry Lime spotted on Alphaville!

60. May 16   11:20 Posted by TheWord [report]

    Harry, yes - the price of lime is on the rise tonight, whereas the price of bricklayers is falling,

61. May 16   11:19 Posted by Harry Hindsight [report]

    any concrete news??

62. May 16   11:18 Posted by Monkey [report]

    Seen chinese have vowed to use the death penalty on shoddy developers who they feel contributed to the large number of houses collapsing? I wonder what would happen if we granted the FSA similar powers ….

    Seriously though - if I were a Chinese developer I would be bricking it

63. May 16   11:17 Posted by Gen [report]

    Any news on Nettler if they recieved offer they must issue RNS today or answer speculation ?

64. May 16   11:14 Posted by AM [report]

    Enodis shares up, any news about counterbid?

65. May 16   11:14 Posted by bsb [report]

    can I ask about the connection between the separate news on the microcaps RMV and HUM today?

66. May 16   11:13 Posted by Harry Hindsight [report]

    recent FX moves v favourable

67. May 16   11:10 Posted by Monkey [report]

    OJ - they probably have the cricket on and are only posting between overs. Be a flurry of activity if there is a wicket whilst they wait for the new batsman to come in

68. May 16   11:09 Posted by TheWord [report]

    RAW Warning: Pass the tin foil & call out the UFO Emergency Response Team:-

    “STEALTH LAYOFFS” SWEEP ACROSS WALL STREET
    PEOPLE ON WALL STREET SEEM TO BE VANISHING OVERNIGHT…
    More here:- http://www.cnbc.com/id/24660877

    And here:- http://www.huntershack.org/nucleus/index.php?blogid=1&archive=2006-03

69. May 16   11:08 Posted by OJ@home [report]

    has the site hung - the suspense is killing

70. May 16   11:06 Posted by VP [report]

    BGY: more than one bidder, above 680.. Bet it’s not much above.

71. May 16   11:06 Posted by OJ@home [report]

    any views on Charlemagne Capital - down 11% today for no reason…or is there one?

72. May 16   11:05 Posted by rahodeb [report]

    When I saw Paul yesterday outside St John’s Wood station I can categorically say he wasn’t going to Lords in that red and gold stripey tie …..

73. May 16   11:04 Posted by Ian [report]

    You have to admit PM, a heck of a coincidence

74. May 16   11:03 Posted by Monkey [report]

    Things ran very smoothly yesterday under HT command!

75. May 16   11:02 Posted by VP [report]

    Miners just amazing.

76. May 16   11:02 Posted by Worzel [report]

    Tin Hats off ??!

77. May 16   11:02 Posted by Monkey [report]

    Feeling better today?