Markets live chat transcript for the chat ending at 12:29 on 15 Oct 2009. Participants in this chat were: Neil Hume, FT (NH) Miles Johnson, FT (MJ)
NH:
Hi there
NH:
good morning
NH:
welcome to Markets Live
NH:
FT Alphaville’s daily markets chat
NH:
Miles is here
MJ:
hello everyone
NH:
we are both wearing our Emobracelets
MJ:
what’s colour is your bowl then?
NH:
a soothing light blue at the moment
NH:
but then no one has mentioned Gulf Keystone – yet
NH:
anyway
NH:
it should be another action packed show
NH:
results from Goldman and Citigroup are due out shortly
MJ:
And Nokia has just come out
NH:
and we will stay on air and cover them all
NH:
in the meantime
NH:
here’s the latest whisper numbers we have
NH:
1100 BST – C: WHISPER = $(0.23)/SHARE vs ANALYST EST $(0.38)
1100 BST – NOK1V FH: WHISPER = $0.13/SHARE vs ANALYST EST $0.12
1230 BST – GS: WHISPER = $6.00/SHARE vs ANALYST EST $4.17
1100 BST – NOK1V FH: WHISPER = $0.13/SHARE vs ANALYST EST $0.12
1230 BST – GS: WHISPER = $6.00/SHARE vs ANALYST EST $4.17
(though have heard some chatter of it being as high as $9)
MJ:
thanks
MJ:
Tracy is on stand-by to flash the GS numbers
MJ:
and the add a bit of comment
NH:
she is
NH:
right lets get to the market
NH:
and a certain grocery chain
11:05AM
NH:
price is flying
MJ:
It is
MJ:
up 26.2p at 337p
MJ:
Almost 8.5 per cent up
MJ:
talk of a 425p a share bid coming from the Qataris
NH:
well that’s the story we have picked up
NH:
but I should stress
NH:
it is RAW
RAW is market chatter – information that has not been formally tested through traditional journalistic channels (PRs etc). The story might be complete rubbish, but if we believe there is some substance to it we will say so. Either way, Reader Beware.
NH:
actually there is a bit more meat to put on the bone
NH:
the talk is that the Qataris have teamed up either with ex-Barclays tax planner-in-chief Roger Jenkins
NH:
or the lovely Amanda Staveley to mop up what they don’t already own
MJ:
In case you have forgotten, they own 26 per cent
MJ:
and bid around 600p a share back in July 2007
MJ:
before the whole deal got crunched
NH:
yes
NH:
and the reason everyone is so excited this morning
NH:
is that the market believes Qatar + advisers
NH:
have started doing DD
11:07AM
NH:
So Miles
NH:
what do we make of this?
MJ:
well
MJ:
something has to be done with that stake
MJ:
and it would not be surprising if Qatar were considering options and taking advice on that
MJ:
but
MJ:
is there financing to do this?
MJ:
They are very rich
MJ:
but this is not 2007
MJ:
Even if the stock market is starting to act that way
MJ:
you can’t just find £5bn for a buyout under the sofa
NH:
and as Lemmy notes, the original SBRY deal
NH:
was an op/co-prop/co deal
NH:
which are now widely discredited
NH:
but obviously some people in the market believe it
NH:
and there is talk
NH:
that the SBRY family has agreed to the deal
NH:
which sounds flakey to me
NH:
in any case they don’t own that much anymore
MJ:
They only hold 5.98 per cent anyway, according to Bloomberg data
NH:
(AB, why does that not surprise me )
NH:
right
NH:
do we have anything more to say on SBRY?
NH:
or shall we move on
NH:
lots to get through
NH:
Nokia numbers just out
MJ:
Surely Sainsbury have to put out a statement with that sort of price action?
MJ:
Takeover panel will be on the blower
NH:
but who to?
NH:
Sainsbury
NH:
would they know anything
NH:
probably best to dial Qatar
NH:
anyone got the code
NH:
what i suspect will happen
NH:
is that “Source close to the company”
NH:
will shortly comment on the deal
NH:
via Reuters
NH:
and then we shall all know
MJ:
… what the PR advisors on both sides think of it
NH:
NH:
and while we wait for that
NH:
let’s have a look at the wider market
NH:
and Nokia
11:14AM
NH:
what’s the FTSE 100 doing?
MJ:
Not a great deal really
MJ:
pausing for breath after Wednesday’s run up
MJ:
Currently off 9 points at 5247
MJ:
Whats the reaction to Nokia been?
NH:
looks to be in line
NH:
shares not doing much
NH:
hang on
NH:
they are headed higher
NH:
up almost 3% now
NH:
RTRS-NOKIA Q3 NON-IFRS EPS 0.17 EUROS VS 0.14 EUROS AVG FCAST IN REUTERS POLL
11:00 15Oct09 RTRS-NOKIA PHONE UNIT Q3 NON-IFRS OP MARGIN 11.4 PCT VS 11 PCT AVG FCAST IN POLL
11:00 15Oct09 RTRS-NOKIA SAYS CELLPHONE MAKERS SHIPPED 288 MLN PHONES IN Q3 VS 280 MLN AVG FCAST IN POLL
11:00 15Oct09 RTRS-NOKIA Q3 NET SALES 9.8 BLN EUROS VS 9.95 BLN AVG FCAST IN REUTERS POLL
11:01 15Oct09 RTRS-NOKIA SAYS SHIPPED 108.5 MLN PHONES IN Q3 VS 107.2 MLN AVG ESTIMATE IN POLL
11:01 15Oct09 RTRS-NOKIA SAYS Q3 CELLPHONE AVG PRICE (ASP) 62 EUROS VS 62 EUROS AVG FCAST IN POLL
11:01 15Oct09 RTRS-NOKIA SHARES UP 3 PCT AFTER Q3 REPORT
11:02 15Oct09 RTRS-NOKIA WRITES DOWN GOODWILL OF 908 MLN EUROS IN NOKIA SIEMENS NETWORKS
11:03 15Oct09 RTRS-NOKIA SHARES TURN 3.9 PCT LOWER
11:05 15Oct09 RTRS-NOKIA SAYS SOLD 16.4 MLN SMARTPHONES IN Q3 VS 16.9 MLN IN Q2
11:00 15Oct09 RTRS-NOKIA
11:00 15Oct09 RTRS-NOKIA
11:00 15Oct09 RTRS-NOKIA
11:01 15Oct09 RTRS-NOKIA
11:01 15Oct09 RTRS-NOKIA
11:01 15Oct09 RTRS-NOKIA
11:02 15Oct09 RTRS-NOKIA
11:03 15Oct09 RTRS-NOKIA
11:05 15Oct09 RTRS-NOKIA
NH:
what was the whisper number
NH:
looks like we have delayed pricing on Nokia
NH:
again
MJ:
There was some stuff from local Finnish brokers earlier
NH:
yes
NH:
the reuters machine has just kicked in
NH:
showing off 1.75% now
MJ:
Local brokers said the numbers would come in below consensus
NH:
I thought our European stuff was live
NH:
obviously not
NH:
we are still showing off 1.75%
MJ:
talk is that everybody is long but nervous
MJ:
That sort of thing
NH:
shall we move
NH:
and talk about something
NH:
for which we have a live and accurate price?
NH:
what about Anglo
NH:
what are they doing after Xstrata ‘shut up’?
11:20AM
MJ:
Ah yes
MJ:
Off 84p to 2227p now
NH:
Not the least bit surprising they have walked
NH:
but the share price action is
NH:
would have thought it was in the price
MJ:
What is interesting about the statement is how Mick Davis expressed his “regret” that Anglo immediately rejected the approach
NH:
And how Anglo immediately leaked that approach to the Sunday papers.
MJ:
Cynthia appears to have hurt Mick’s feelings
MJ:
My letter to the Board of Anglo American was intended to commence confidential discussions to explore the potential to merge Xstrata and Anglo American and create a new mining super-major with the scale and diversity to compete in the evolving global mining sector.
MJ:
It is regrettable that the Board of Anglo American immediately rejected our approach, without engaging with Xstrata to investigate the potential to create more value than either company could alone.
MJ:
Mick pours his heart out to her
MJ:
And all he got in return was a leaked letter to the Sunday Times
NH:
How cruel. Some comment would be good
MJ:
Well ING says this
MJ:
What happens now? The open-ended nature of Xstrata’s statement suggests that the matter is not over, simply deferred for six months. Over this period we expect that Xstrata will push forward with its internal growth programme; the group’s statement notes that its growth pipeline could lift current production levels by around 50% by 2013, and two projects were announced today, ATCOM East and Lomas Bayas II.
MJ:
As of last night’s closing prices Xstrata was worth 52% of a combined EV and Anglo American only 48% not enough of a premium for Anglo shareholders. However, given its greater leverage to commodity prices, we expect Xstrata to outperform Anglo American over the next 6 months after which Xstrata may reconsider its options upon the expiration of the standstill agreement.
MJ:
New projects – Xstrata also announced today that it will proceed with its ATCOM East coal project in South Africa. The mine is expected to cost US$407m in capital expenditure and to produce 3.1mt of saleable thermal coal per annum. Xstrata will also spend US$293m on the Lomas Bayas II copper project in Chile, which will extend the mine life to 2020.
MJ:
Our view – We expect that the gap in EV between Anglo American and Xstrata will widen further over the next 6 months, which should at that time make a paper offer more attractive to Anglo American shareholders. Further a better commodity market should result in an Xstrata balance sheet that may even allow for a cash sweetener in a new merger proposal. We believe that Xstrata is prepared to play the long game. At this point in time we do not expect Xstrata to chase after Lonmin, in which it holds a 25% stake. This in effect blocks an offer from another party unless Xstrata agrees to sell to the third party. Lonmin is still very much a distant Plan B, in our view.
NH:
right
NH:
that was quite concise
NH:
here’s what Citigroup made of it
NH:
Waiting game — With momentum currently behind the Anglo value /
turnaround strategy XTA may be prepared to play a waiting game. XTA can
return in six months and has other options it can pursue including smaller
scale M&A and organic project growth. Anglo’s performance will be watched
closely over the next six months.
turnaround strategy XTA may be prepared to play a waiting game. XTA can
return in six months and has other options it can pursue including smaller
scale M&A and organic project growth. Anglo’s performance will be watched
closely over the next six months.
NH:
Conclusion — Overall we see this as a positive move. Although we see benefits
to XTA shareholders from a tie-up (synergies, cost cutting, project
optimisation) these must be weighed against the inherent merger / integration
risks and increased exposure to South Africa.
Maintain BUY — The three key elements (project growth, earnings momentum
and operational improvements) of our BUY case remain in place. We maintain
our BUY rating target price of £11/sh.
to XTA shareholders from a tie-up (synergies, cost cutting, project
optimisation) these must be weighed against the inherent merger / integration
risks and increased exposure to South Africa.
Maintain BUY — The three key elements (project growth, earnings momentum
and operational improvements) of our BUY case remain in place. We maintain
our BUY rating target price of £11/sh.
NH:
and finally
NH:
something from Merrill
NH:
Xstrata today announces that it has no intention of making an offer for Anglo
American. We believe that Xstrata was in a difficult position of not being able to
offer a premium to get Anglo to the negotiating table due to its similar market cap
and debt position to Anglo American. Under takeover panel rules Xstrata can bid
again in 6 months if they choose or sooner if it is an agreed bid.
American. We believe that Xstrata was in a difficult position of not being able to
offer a premium to get Anglo to the negotiating table due to its similar market cap
and debt position to Anglo American. Under takeover panel rules Xstrata can bid
again in 6 months if they choose or sooner if it is an agreed bid.
11:24AM
NH:
Okay
NH:
still keeping an eye on the SBRY share price
NH:
and it is holding the higher levels
NH:
still up 26.7 at 337.5p
MJ:
25m shares traded already
NH:
hmmm
NH:
I wonder whether there is a big bear position in SBRY
NH:
will have to check with Dataexplorers
NH:
obviously not the most liquid of FTSE 100 companies
NH:
with the Qatar stake
NH:
and family
NH:
anyway
NH:
we must move on
NH:
annd have a looking at the GBK
NH:
briefly
11:26AM
NH:
up, up and away
NH:
this morning anway
NH:
cable at $1.625
NH:
and a euro buys 0.918p
MJ:
Pound at a three week high against the dollar and yen
MJ:
Some putting it down to the Fisher interview in today’s FT
NH:
they are
NH:
Mr QE
NH:
and if you missed that
NH:
go here
NH:
The Bank of England has got its swagger back. After watching helpless as the economy dived into recession a year ago, Paul Fisher, the head of markets, insists the Bank’s extraordinary cuts in interest rates and its injection of money into the economy through its quantitative easing programme are now working.
“Personally I feel much more confident now that the asset purchase programme is having the scale and speed of impact that we would have hoped for when we started [in March]”, he says.
Paul Fisher: it is impossible to tell what would have happened without the Bank’s policy change so ‘you can never precisely calibrate’ its impact
The Bank’s ‘Mr QE’ adds: “Even two or three months ago it was still very difficult to find hard evidence which would justify that confidence, even though that is what we believed; now I think it’s much clearer.”
MJ:
Tracy has done a good post on this
NH:
she has
NH:
worth looking at
11:30AM
NH:
Ok
NH:
I have some short interest data in SBRY
NH:
4.4% of company out on loan
NH:
that’s 80m shares
NH:
apparently
11:31AM
11:31AM
NH:
what now
NH:
a trip to the pub?
MJ:
Why of course
MJ:
Which pub would that be?
NH:
our local
NH:
the Toxic Tavern
NH:
price hammered yesterday
NH:
and hit again today
Punch Taverns (PUB:LSE): Last: 90.40, down 6.25 (-6.47%), High: 100.00, Low: 83.00, Volume: 12.25m
NH:
and that’s down to Jamie Rollo at Morgan Stanley
NH:
very good leisure analyst
NH:
possibily the best in the sector
NH:
anyway
NH:
he has published a pretty damning note on Punch
NH:
to which he used to be broker
NH:
before Punch appointed Numis as its special broker alongside ML and Goldman
NH:
now I don’t know what a special brokers does
NH:
but I suggest they might want to think about responding to Rollo
NH:
who thinks Punch might need another cash call
NH:
if trading does not pick up
MJ:
You did a post on this earlier right?
MJ:
But worth sticking up again
NH:
it is
NH:
enjoy
NH:
We remain cautious on Punch and Enterprise. Current trading is dire, look at the shocking chart below from the note. The company is not really helping us understand what is happening here, or what is causing the rent decline to accelerate in H2, but I think it may be due to lessees/tenants leaving and rent dropping in these pubs to attract new entrants. This does not show up in the closed pubs or lessee support KPIs, so it is a bit of a grey area. If we are correct, this could have a knock on impact on other lease reviews and renewals as pub rents are set in-line with similar pubs, meaning we could be in for several more years of decline.
NH:
We now forecast an 8% L4L drop in Leased this year, giving just 15p of EPS, a 30% downgrade. Every 1% on group L4Ls is now 1p to EPS, or 7%, gulp.
I think the argument that selling pubs and buying back debt enhances NAV and EPS is very weak to say the least, there are some mathematical examples in the attached report as to why the effect is marginal. I guess this is why the company appears to be backing away from this strategy.
NH:
Finally, remember the real issue which is the step-up in debt service costs over the next 5 years. The company has just updated its website for the DS figures post its debt repurchases (see first chart in the attached), and they rise from £340m to about £400m, versus the original peak debt service costs of £425m. Even if we take another £400m debt reduction to take this down 10% to £360m, our EBITDA estimate for 2011 is £417m, implying a total DSCR of 1.15x, below the average covenant (A and B 1.25x, Spirit 1.3x). This is pretty back of the envelope stuff, but I think broadly in the right ballpark. Selling pubs for 12x ebitda and buying back debt at close to par as they are doing does not really move the dial enough.
If L4Ls continue to deteriorate, Punch may therefore need more equity. Needless to say, these points apply to Enterprise as well, I think.
MJ:
Jeepers
MJ:
Pretty scary stuff
NH:
it is
NH:
although
NH:
not really affected Enteprise Inns
NH:
they are pretty much flat at the moment
Enterprise Inns (ETI:LSE): Last: 118.30, down 0.6 (-0.50%), High: 122.50, Low: 117.40, Volume: 3.07m
MJ:
(@Lemmy: I would say a 9 per cent move is unusually large)
11:36AM
MJ:
For those looking for the Fisher transcript
MJ:
It is here: http://www.ft.com/cms/s/0/64f03818-b8fd-11de-98ee-00144feab49a.html
11:37AM
NH:
Right
NH:
what about paying an early visit to small cap corner
MJ:
Yes please
MJ:
What do you have for us today Neil?
NH:
well, at this point
NH:
we normally talk about oil in Kurdistan
NH:
but that is like so last week
NH:
what you need to look for now
NH:
is company’s working on a cure for Parkinson’s disease
NH:
test it on a few rats
NH:
and watch the share price go
NH:
yesterday we had Phytopharm
NH:
up 350% after testing on chimps
NH:
and today I bring you Oxford Biomedica
Oxford Biomedica (OXB:LSE): Last: 18.50, up 7.75 (+72.09%), High: 21.75, Low: 12.75, Volume: 34.44m
MJ:
Wow
MJ:
Not quite 350 per cent though
NH:
yeah, but it is not bad though
MJ:
I thought this lot were a cancer specialist anyway
NH:
so did I
NH:
by Parkinson’s is the new cool disease
MJ:
is this style drift we are seeing?
NH:
in market terms anyway
MJ:
have you got the statement?
NH:
here you go
NH:
Oxford, UK – 15 October 2009: Oxford BioMedica (LSE: OXB), a leading gene therapy company, announced today new data from the ongoing Phase I/II trial of ProSavin, its novel gene therapy for the treatment of Parkinson’s disease. All patients treated at the second dose level have completed their six-month assessments and have shown further improvement in motor function (UPDRS III ‘OFF’ score). The maximum improvement was 53% and the average was 34% relative to patients’ pre-treatment motor function. The Principal Investigator, Professor Stéphane Palfi of the Henri Mondor Hospital in Paris, will present interim results from the trial at the European Society of Gene & Cell Therapy Annual Congress, being held in Hannover, Germany, on 21-25 November 2009.
NH:
Also announced today is the publication of pivotal preclinical studies of ProSavin, which were conducted with collaborators from the CEA/Inserm Molecular Imaging Research Centre (MIRCen), the University of Paris XII and the Henri Mondor Hospital, a member of the Assistance Publique Hôpitaux de Paris (APHP), in France. The findings were published in the 14 October issue of the interdisciplinary journal, Science Translational Medicine (http://www.sciencemag.org/). The preclinical model used for these studies simulated severe Parkinson’s disease by inducing selective degeneration of dopamine-producing neurons, which decreased dopamine to 27% of normal concentrations. The results showed that:
MJ:
Not sure I understand all that. Have you got any broker commment that digests?
NH:
I have
NH:
Panmure have pubbed something
NH:
let me dig it out
NH:
The headline ProSavin data from a second cohort allows us to upgrade the
stock from Hold to Buy and reset our price target from 12p to 17p based on
including the project into our SOTP valuation on a 10% probability applied to
our NPV calculation of 50p for the project
stock from Hold to Buy and reset our price target from 12p to 17p based on
including the project into our SOTP valuation on a 10% probability applied to
our NPV calculation of 50p for the project
NH:
We continue to closely monitor the progress of ProSavin and are encouraged by
both the initial signs of efficacy and the safety profile to date. ProSavin has now
progressed to evaluate ProSavin at higher dose using a new administration method
in a third cohort. The change to administration and due to the fact that too few
patients have been dosed and that the data is without control to compare against, we
will only handicap the project as 10% probability in our SOTP. PD is notorious for
having patients that have spontaneous and non-treatment related bounce, which
may in fact have been caused by better standard of care having the patients looked
at in hospital by some of the world’s greatest neurologists.
both the initial signs of efficacy and the safety profile to date. ProSavin has now
progressed to evaluate ProSavin at higher dose using a new administration method
in a third cohort. The change to administration and due to the fact that too few
patients have been dosed and that the data is without control to compare against, we
will only handicap the project as 10% probability in our SOTP. PD is notorious for
having patients that have spontaneous and non-treatment related bounce, which
may in fact have been caused by better standard of care having the patients looked
at in hospital by some of the world’s greatest neurologists.
MJ:
They sound very cautious on this
NH:
they do
NH:
as are Astaire
NH:
Astaire view: This additional data demonstrates the potential of ProSavin to become a successful product, and makes it more unlikely that the benefits seen after ProSavin treatment are caused by the placebo effect. It is slightly disappointing that the improvement with 2X dosing is similar to that seen with 1x dosing but the numbers are very small (only 3 in each category) and there is a high variability in response. We maintain our BUY recommendation.
MJ:
Anything else from Small Cap Corner for today?
NH:
yes
11:44AM
NH:
oil
NH:
but in the Falklands
NH:
two companies Rockhopper and Desire trying to raise funds at the moment
NH:
to fund drilling
NH:
a rig is being drigged from the North Sea as we speak
NH:
and Desire
NH:
will no doubt be please to see this note come out of Oriel this morning
NH:
After several years of anticipation, Desire has finally secured a rig to undertake an
extended exploration campaign in the North Falklands basin which is expected to
commence in February. The plan is to drill a minimum of 4 wells, but the programme
is more likely to include 7-8 wells, possibly including 2 on Rockhopper’s acreage.
Desire is funded through its share of the first 4 wells from existing cash resources
and farm-outs but has announced it is looking to raise cash to help fund the
additional contingent wells. Rockhopper currently has only a small amount of cash
and has highlighted that it is looking at raising cash and/or securing farm-outs to
cover its share of drilling costs. Rockhopper does not currently have access to a rig,
but we expect it either to get access through Desire’s optional slots or through an
extension to the contract on the Ocean Guardian.
extended exploration campaign in the North Falklands basin which is expected to
commence in February. The plan is to drill a minimum of 4 wells, but the programme
is more likely to include 7-8 wells, possibly including 2 on Rockhopper’s acreage.
Desire is funded through its share of the first 4 wells from existing cash resources
and farm-outs but has announced it is looking to raise cash to help fund the
additional contingent wells. Rockhopper currently has only a small amount of cash
and has highlighted that it is looking at raising cash and/or securing farm-outs to
cover its share of drilling costs. Rockhopper does not currently have access to a rig,
but we expect it either to get access through Desire’s optional slots or through an
extension to the contract on the Ocean Guardian.
NH:
There are a large number of drill ready prospects in the North Falklands basin across
both Desire’s and Rockhopper’s acreage. Previous exploration in 1998 provided
evidence of a working hydrocarbon system but we still view the basin as frontier with
key risks associated with reservoir quality, trapping and, in certain parts of the basin,
source and migration. The majority of the targets are c100-250mmb which would be
commercial even at the lower end of the range, with chances of success varying
between 8-27% ahead of drilling. In total, we expect Desire to be exposed to
c1900mmb of net reserve upside and Rockhopper to c330mmb based on the P50
estimates of the prospect inventory likely to be drilled.
both Desire’s and Rockhopper’s acreage. Previous exploration in 1998 provided
evidence of a working hydrocarbon system but we still view the basin as frontier with
key risks associated with reservoir quality, trapping and, in certain parts of the basin,
source and migration. The majority of the targets are c100-250mmb which would be
commercial even at the lower end of the range, with chances of success varying
between 8-27% ahead of drilling. In total, we expect Desire to be exposed to
c1900mmb of net reserve upside and Rockhopper to c330mmb based on the P50
estimates of the prospect inventory likely to be drilled.
NH:
The Falkland companies offer investors exposure to frontier exploration, and in the
event of success could yield returns measured in multiples of current share prices.
However the upside potential needs to be balanced with the significant probability
that the proposed drilling campaigns will not yield any commercial discoveries, which
we estimate to be over 50%. Balancing the downside risks with the upside potential
we highlight Desire in the North and Falklands Oil & Gas* in the South as our
preferred plays.
History has shown that investor interest in the region will heighten into exploration
drilling and we expect the shares of both Rockhopper and Desire to be volatile before
and during the drilling programme. Whilst these shares have enjoyed a strong run
since the announcement of the rig contract in early September, we will be surprised if
they were not materially higher into the drilling campaign once funding issues have
been clarified
event of success could yield returns measured in multiples of current share prices.
However the upside potential needs to be balanced with the significant probability
that the proposed drilling campaigns will not yield any commercial discoveries, which
we estimate to be over 50%. Balancing the downside risks with the upside potential
we highlight Desire in the North and Falklands Oil & Gas* in the South as our
preferred plays.
History has shown that investor interest in the region will heighten into exploration
drilling and we expect the shares of both Rockhopper and Desire to be volatile before
and during the drilling programme. Whilst these shares have enjoyed a strong run
since the announcement of the rig contract in early September, we will be surprised if
they were not materially higher into the drilling campaign once funding issues have
been clarified
NH:
so
NH:
buy on the fund raising
NH:
because thes stocks are headed higher
MJ:
So the subtext to that note could be: retail invetsors will get very excited from all this drilling and will drive the shares up. Get on board
NH:
yep
NH:
that’s about it
11:47AM
MJ:
Sainsburys watch
MJ:
Shares still up 9 per cent
NH:
(DD – good management team at Rockhopper, no?)
MJ:
Jenkins theory is starting to gain momentum
NH:
it is
NH:
although
NH:
Source close to the situation is yet to make an appearance
NH:
where is he
NH:
this just filed by Reuters
NH:
Spokesmen for Sainsbury, Britain’s third-biggest supermarket group, the Qatari Investment Authority (QIA), which owns around 26 percent of Sainsbury, and the Sainsbury family, which own around 17 percent and rejected the QIA’s previous bid attempt, all declined to comment.
Traders reported rumours of a possible offer at 420 pence a share and that former Barclays banker Roger Jenkins was broking a deal.
A spokesman for Jenkins’ new corporate advisory finance firm declined to comment. Jenkins left Barclays in August to set up the new company, which has a specific focus on the Middle East.
Traders reported rumours of a possible offer at 420 pence a share and that former Barclays
A spokesman for Jenkins’ new corporate advisory finance firm declined to comment. Jenkins left Barclays in August to set up the new company, which has a specific focus on the Middle East.
NH:
A Qatari fund abandoned a 600-pence-a-share bid proposal, worth 10.6 billion pounds, in November 2007 as the credit crisis took hold.
The fund bought most of its stake, which was later transferred to the QIA, at around 575 pence a share.
Sainsbury shares, which have risen sharply on rumours of a bid from the QIA in the past, were up 8.8 percent at 338.6 pence, valuing the business at about 6.2 billion pounds
The fund bought most of its stake, which was later transferred to the QIA, at around 575 pence a share.
Sainsbury shares, which have risen sharply on rumours of a bid from the QIA in the past, were up 8.8 percent at 338.6 pence, valuing the business at about 6.2 billion pounds
NH:
SBRY
NH:
still rising
NH:
where is Mr Source Close to the Situation when you need him
NH:
we need to know if there is anything in this
11:50AM
MJ:
oh god. The GKP Liberation Front have joined us on the right. I would warn that Neil has an itch zapper finger
MJ:
(itchy)
NH:
you’re right they have. simon corkswill looks like he registered yesterday
NH:
Welcome Simon
NH:
you might be interested in talking to Debbie Downer
NH:
he is our resident expert on GKP
MJ:
11:51AM
MJ:
So, what else should we look at?
NH:
the insurers
NH:
Merrill pushing a couple of them today
NH:
in particular RSA
RSA Insurance Group (RSA:LSE): Last: 136.10, up 3.1 (+2.33%), High: 142.00, Low: 134.10, Volume: 8.25m
MJ:
(@Milky: We don not dispense “advice”.)
NH:
no just views
NH:
and opinion
NH:
not advice
NH:
and the most profitable trade
NH:
is to do the oppposite to our views
NH:
well Murph’s anyway
MJ:
Right, back to this RSA note, what does it say?
NH:
one moment
NH:
upgraded to buy
NH:
price target 145p
NH:
Merrill reckons
NH:
they are not planning any deal
NH:
and the gap between them and rivals should close
NH:
Attractive valuation relative to peers
Fears over a potential acquisition were overdone, in our view, and have led the
shares to significantly lag the wider sector, underperforming by about 25% yearto-
date. The stock now trades in line with the European non-life insurers, with
much of its historic premium to the sector eroded. In light of RSA’s highly cash
generative qualities, top-line growth prospects, as well as its well-respected
management team and its global diversification, the stock is inexpensive at 8.6x
2010e EPS and 1.2x 2009e book value.
Fears over a potential acquisition were overdone, in our view, and have led the
shares to significantly lag the wider sector, underperforming by about 25% yearto-
date. The stock now trades in line with the European non-life insurers, with
much of its historic premium to the sector eroded. In light of RSA’s highly cash
generative qualities, top-line growth prospects, as well as its well-respected
management team and its global diversification, the stock is inexpensive at 8.6x
2010e EPS and 1.2x 2009e book value.
MJ:
So, what ever happened to that cash call?
NH:
dunno
NH:
never happened
11:56AM
NH:
Silver Fox
NH:
they are in an auction
NH:
indicative price in SBRY
NH:
is 341p
NH:
at the moment
11:57AM
NH:
back to the insurers for a moment
NH:
Merrill is positive on Old Mut today
Old Mutual (OML:LSE): Last: 113.70, up 0.7 (+0.62%), High: 115.90, Low: 113.50, Volume: 6.21m
NH:
here’s why
NH:
Old Mutual – Blair Stewart.Upgrade neutral to buy, PT 137p, up from
> 97p.As part of a wider industry note on cashflow, and in a significant
> change of stance versus a few months ago, we are upgrading our opinion
> on Old Mutual from Neutral to Buy, setting a 12-month PO of 137p.
> Including the conclusions drawn from today’s industry piece, there are
> four specific reasons for our change of stance. These are bulleted
> below and set out in more detail overleaf and of course in the sector
> piece itself.The valuation gap that exists both on our sum of the
> parts and in the minds of the company’s management is confirmed by our
> cashflow work.
> 97p.As part of a wider industry note on cashflow, and in a significant
> change of stance versus a few months ago, we are upgrading our opinion
> on Old Mutual from Neutral to Buy, setting a 12-month PO of 137p.
> Including the conclusions drawn from today’s industry piece, there are
> four specific reasons for our change of stance. These are bulleted
> below and set out in more detail overleaf and of course in the sector
> piece itself.The valuation gap that exists both on our sum of the
> parts and in the minds of the company’s management is confirmed by our
> cashflow work.
MJ:
Hold on. Neil on the phone
NH:
Despite the recovery in both equity and credit markets which has
> significantly lifted the pressure off Old Mutual’s balance sheet,
> management has not lost sight of its restructuring agenda. We expect
> the pick up in the solvency surplus (we forecast an IGD surplus of
> £1.4bn) and holding company liquidity to lead to a resumption in the
> dividend to shareholders from FY 2010. We expect this to be announced
> with FY 09 results early next year.The valuation multiples are amongst
> the lowest in the sector at 6.9x 2011E IFRS EPS, 1x EV (our
> definition), and a 2010E FCF yield of more than 10%. Allianz – Brian
> Shea.Downgrade buy to neutral, PT Eur 92, up from Eur 85.Allianz’s
> main attraction in our view is its valuation. But investors are
> spoiled for choice amongst non-life oriented stocks in that regard. To
> buy a non-life stock at this stage we think requires a clearer
> valuation appeal and/or better confidence that company-specific
> actions are providing traction against a non-life market downturn.
> Three factors drive our downgrade:. Harder to argue the valuation
> case;2. Cutting estimates & 3. Newsflow should be less robust than
> expected
> significantly lifted the pressure off Old Mutual’s balance sheet,
> management has not lost sight of its restructuring agenda. We expect
> the pick up in the solvency surplus (we forecast an IGD surplus of
> £1.4bn) and holding company liquidity to lead to a resumption in the
> dividend to shareholders from FY 2010. We expect this to be announced
> with FY 09 results early next year.The valuation multiples are amongst
> the lowest in the sector at 6.9x 2011E IFRS EPS, 1x EV (our
> definition), and a 2010E FCF yield of more than 10%. Allianz – Brian
> Shea.Downgrade buy to neutral, PT Eur 92, up from Eur 85.Allianz’s
> main attraction in our view is its valuation. But investors are
> spoiled for choice amongst non-life oriented stocks in that regard. To
> buy a non-life stock at this stage we think requires a clearer
> valuation appeal and/or better confidence that company-specific
> actions are providing traction against a non-life market downturn.
> Three factors drive our downgrade:. Harder to argue the valuation
> case;2. Cutting estimates & 3. Newsflow should be less robust than
> expected
11:58AM
MJ:
What was all that about?
NH:
Sainsbury
NH:
what’s going on
NH:
there must be something going on
NH:
look at the volume and price action
NH:
right
NH:
I am going to call Andrea Felsted
NH:
our retail correspondent
NH:
she what’s she has heard
NH:
not there
NH:
which is a pitty
12:00PM
NH:
Okay
NH:
it looks as if we won’t be on the air after all for Goldman and Citi
NH:
they are due out at 12.30pm
NH:
and we have a lunch to get to
MJ:
And still no word out of Sainsburys or Qatar
Sainsbury (J) (SBRY:LSE): Last: 338.50, up 27.4 (+8.81%), High: 341.60, Low: 310.60, Volume: 28.99m
NH:
31m traded now
NH:
big, big volume
NH:
Miles is just checking the bloomie machine
NH:
to see what they have
NH:
while he does
NH:
Earthport
NH:
getting hit today
Earthport (EPO:LSE): Last: 35.00, down 4 (-10.26%), High: 39.25, Low: 35.00, Volume: 433.16k
NH:
results next week
12:04PM
NH:
Andrea is here
NH:
looking at the screen
MJ:
Nothing on Bloomberg
NH:
up 13% now
NH:
Andrea has heard nothing
NH:
SBRY saying no comment
NH:
apparently
NH:
all very interesting
MJ:
This is exhausting
NH:
14% now
NH:
14.5%
NH:
14.8%
NH:
15%
NH:
15.5%
MJ:
This is crazy
NH:
16.8%
NH:
365p now
NH:
17% now
NH:
Miles
NH:
call them
NH:
hang on
NH:
Paul knows Jenkins’ flack
NH:
I know Staveley’s
NH:
let’s put in some calls
NH:
beer with us readers
NH:
dialing
NH:
18%
NH:
18.6%
NH:
19.2%
NH:
jeez
NH:
right source close to Staveley
NH:
has put a call in
NH:
and not heard back yet
NH:
radio silence everywhere at the moment
NH:
Miles talking to SBRY now
NH:
they think nothing big is happening
NH:
he has just pointed out there share price is up 19%
NH:
apparently everyone in the press office is in a meeting
NH:
NH:
Miles?
MJ:
Well. Everyone is locked in a room
MJ:
Now. We can’t read too much into that
MJ:
@Lorkan. That was a AFX story
NH:
what are they now?
MJ:
up 17 per cent at 363p
NH:
more calls going in
NH:
Brokers saying a bit of selling coming in now
NH:
who is broker to SBRY
NH:
let’s call them
NH:
and in the meatime
NH:
Goldman is out
NH:
12:15 15Oct09 RTRS-GOLDMAN SACHS REPORTS THIRD QUARTER EARNINGS PER COMMON SHARE OF $5.25
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC Q3 SHR $5.25
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC Q3 REVENUE $12.37 BLN
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC SETS QUARTERLY DIVIDEND OF $0.35/SHR
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC QTRLY NET REVENUES IN INVESTMENT BANKING WERE $899 MILLION, 31% LOWER
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC SAYS FIRM’S TIER 1 CAPITAL RATIO UNDER BASEL I ((3))WAS 14.5% AS OF SEPTEMBER 25, 2009
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC QTRLY FICC GENERATED QUARTERLY NET REVENUES OF $5.99 BILLION
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC QTRLY NET REVENUES IN FINANCIAL ADVISORY WERE $325 MILLION, 47% LOWER
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC SAYS BOOK VALUE PER COMMON SHARE INCREASED 4% DURING THE QUARTER TO $110.75
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC QTRLY NET REVENUES IN TRADING AND PRINCIPAL INVESTMENTS WERE $10.03 BILLION
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC SAYS EQUITIES GENERATED QUARTERLY NET REVENUES OF $2.78 BILLION
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC QTRLY NET REVENUES IN FICC WERE $5.99 BILLION
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC QTRLY ASSET MANAGEMENT NET REVENUES WERE $974 MILLION
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC QTRLY NET REVENUES IN EQUITIES WERE $2.78 BILLION, 78% HIGHER
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC SAYS AS OF SEPTEMBER 25, 2009, TOTAL CAPITAL WAS $255.07 BILLION
12:15 15Oct09
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09 RTRS-GOLDMAN SACHS GROUP INC
12:15 15Oct09
NH:
A decent beat
NH:
but not a blow out JPM style beat
MJ:
Still strong
MJ:
But will have to be looked at in more detail
NH:
Right advisers to Sainsbury are
NH:
UBS and MOST brokers
NH:
and UBS financial advisers
12:18PM
NH:
back to Goldman
NH:
I have the statement
MJ:
This is chaotic
MJ:
What colour is your EmoBowl Neil?
MJ:
Looks like its glowing red
NH:
can’t copy paste from the GS statement
NH:
that is making the bowl glow even more
MJ:
GOLDMAN DOWN PRE-MARKET FROM 195 TO 188 USD AFTER FIGURES
NH:
why on earth do that
NH:
RTRS-EUROPE’S FTSEUROFIRST 300 <.FTEU3> PARES GAINS, UP 0.5 PCT AT 1,021.45 POINTS AFTER GOLDMAN RESULTS
12:19 15Oct09 RTRS-DEC BUND FUTURES PARE LOSSES AFTER GOLDMAN RESULTS
12:20 15Oct09 RTRS-EURO FALLS VS DOLLAR AFTER GOLDMAN, DOWN 0.1 PCT AT $1.4897
12:19 15Oct09 RTRS-DEC BUND FUTURES
12:20 15Oct09 RTRS-EURO FALLS VS DOLLAR AFTER GOLDMAN, DOWN 0.1 PCT AT $1.4897
MJ:
Sainsburys have just been on the phone
NH:
excellent
NH:
and
MJ:
They say they see this as “just a rumour in the market” and that, shock horror
MJ:
they will not be issuing any statement
NH:
well done, Miles.
NH:
that’s the best bit of reporting on this story so far today
NH:
no statement coming from SBRY
NH:
although
NH:
that does not rule out comment from Qatar
NH:
(Milky you are testing our patience)
NH:
in fact
NH:
yep
NH:
it’s a red
NH:
bye, bye Milky
MJ:
(very funny Simon)
MJ:
So now that there is no SBRY statement on its way we should call things to close
NH:
yes
NH:
we have a lunch
NH:
and Tracy needs to send the lunch rwap
MJ:
Neil, you seem to have upset some people by killing Milky
NH:
only banned him for an hour. he can come back tomorrow
NH:
no hard feelings
NH:
not sure about Corkswill
NH:
member of the GKP lunatic fringe
NH:
shall we card him?
MJ:
Maybe we should enter into peace negotiations with the GKP liberation front
NH:
Taxloss
NH:
he is natural diplomat
MJ:
Could be like the Good Friday Agreement
NH:
Taxloss
NH:
over to you
NH:
right Tracy says we must close the chat
NH:
in one minute
NH:
otherwise no lunch wrap
NH:
will be sent
NH:
so cya all tomorrow
Sainsbury (J) (SBRY:LSE): Last: 362.70, up 51.6 (+16.59%), High: 373.00, Low: 310.60, Volume: 35.59m
MJ:
No, no Taxloss. Its all love
MJ:
See you tomorrow
NH:
bye
MJ:
Thanks for all the comments
MJ:
we must go
MJ:
bye