Markets live chat transcript for the chat ending at 12:15 on 19 Nov 2009. Participants in this chat were: Neil Hume, FT (NH) Miles Johnson, FT (MJ)
NH:
good morning
NH:
and welcome to Markets Live
NH:
It’s 11.02
NH:
FT Alphaville’s daily whiz around the markets
MJ:
Morning
MJ:
Bit early today
NH:
we are
NH:
that’s novel
NH:
right
NH:
while we wait for everyone to log in
NH:
a couple of things that made me laugh this morning
NH:
Turn your glitter to litter
MJ:
Please share
NH:
puts a lot of this gold bug stuff into perspective
MJ:
Yeah – isn;t gold going to $6300?
NH:
according to Dylan Grice at Soc Gen it is
NH:
Central bank hoarding of gold in 1970 ushered in the famous gold bull market. With central
banks likely to be net gold purchasers in H2 2009 for the first time since 1988 the same
starting gun is ringing out today. The price at which the USD would be fully backed by gold (as
it was during the peak of the 70s mania) is $6,300. So there is a case for gold being “cheap.”
Moreover, the 70s bull market was facilitated by tight energy markets, overly accommodative
central banks and nervousness that policymakers had lost their way. Sound familiar?
banks likely to be net gold purchasers in H2 2009 for the first time since 1988 the same
starting gun is ringing out today. The price at which the USD would be fully backed by gold (as
it was during the peak of the 70s mania) is $6,300. So there is a case for gold being “cheap.”
Moreover, the 70s bull market was facilitated by tight energy markets, overly accommodative
central banks and nervousness that policymakers had lost their way. Sound familiar?
NH:
In 1965, concerned at the inflationary policies of the US and the attendant threat to their
dollar reserves, the French central bank started converting their dollars into gold. This set in
motion events which saw the central banks of Belgium, the Netherlands, Germany, and
eventually Britain doing the same in 1970. By 1971, the Bretton-Woods system, by which all
currencies were pegged to the dollar and the dollar effectively pegged to gold, had broken.
The French had fired the starting gun for the great 1970s bull market in gold and silver.
dollar reserves, the French central bank started converting their dollars into gold. This set in
motion events which saw the central banks of Belgium, the Netherlands, Germany, and
eventually Britain doing the same in 1970. By 1971, the Bretton-Woods system, by which all
currencies were pegged to the dollar and the dollar effectively pegged to gold, had broken.
The French had fired the starting gun for the great 1970s bull market in gold and silver.
NH:
Its worth pointing this out because central banks arent known for their investment
acumen. Some commentators have mockingly suggested that the Reserve Bank of Indias
recent decision to buy 200m tonnes of IMF gold signals the top of the market in the way
that heavy selling by the UK signalled the bottom in 1999.
acumen. Some commentators have mockingly suggested that the Reserve Bank of Indias
recent decision to buy 200m tonnes of IMF gold signals the top of the market in the way
that heavy selling by the UK signalled the bottom in 1999.
NH:
that’s from his latest Popular Delusions note
11:05AM
MJ:
Lots of chat about the Ireland game on the right
NH:
well we could all bang on about the Henry handball
NH:
but the facts are
NH:
the Irish blew it
NH:
they had chances to put the French away
NH:
but Keane messed up
NH:
and so did Duff
NH:
because he can only kick with one foot
MJ:
Neil – that is unlikely to endear you to the Irish ROTR contingent
NH:
no so much of an injustice after all
MJ:
One more thing
MJ:
in the Mail
MJ:
Neil did you see this?
MJ:
Dear Lucy, should I quit my City job after CEO stole my wife? Aviva love triangle is basis for FT agony aunt column
MJ:
Read more: http://www.dailymail.co.uk/news/article-1229104/Dear-Lucy-City-cuckold-Aviva-triangle-basis-FT-agony-aunts-column.html#ixzz0XImj0kKm
NH:
Oh no
NH:
missed that
NH:
I only read Geoff’s column
MJ:
here’s some more
MJ:
It did not take City gossips long to latch on to the juicy letter published in the Financial Times’s agony aunt column yesterday.
The letter, written by ‘director, male, 50′, related an astonishing story of corporate love and betrayal.
Under the headline ‘I’ve been cuckolded by my CEO’, he asked the FT’s Dear Lucy columnist if he should leave his job.
He detailed how his wife, who worked at the same company, had for months been conducting an illicit affair with their chief executive and had now resigned her job to move in with him.
Having read the letter, avid followers of scandal within the Square Mile quickly put two and two together and came up with. . . the Aviva triangle.
That little episode, which rocked the City last month, ended with insurance giant Aviva issuing an extraordinary statement to defend the reputation of its £2.2million-a-year boss, Andrew Moss, 51.
Read more: http://www.dailymail.co.uk/news/article-1229104/Dear-Lucy-City-cuckold-Aviva-triangle-basis-FT-agony-aunts-column.html#ixzz0XIp3ktQw
NH:
11:09AM
NH:
Right
NH:
let’s head to the market
NH:
but before we do
NH:
Monkey that’s yellow card for that terrible pun
NH:
one more
NH:
and you are off
NH:
zap
Warning to rude and abusive commenters – your ability to comment will be terminated immediately and permanently, without warning. Henceforth, FTAlphaville has instituted a One Strike and You Are Out policy. We’ve had enough. We are going to clean up these pixels once and for all.
MJ:
Firm but fair
MJ:
So, wider market?
NH:
yes
NH:
not doing that much
NH:
down 8 points at
NH:
5,334
MJ:
Whats moving?
NH:
hang on
NH:
that Daily Mail story
NH:
Taxloss just put up is very funny
NH:
Sharks off the British coast: Oil tankers refuse to unload until prices rise… keeping YOUR fuel costs soaring
Read more: http://www.dailymail.co.uk/news/article-1229070/Sharks-British-coast-Oil-tankers-refuse-unload-prices-rise–keeping-fuel-costs-soaring.html#ixzz0XIpYdwPY
NH:
These tankers have been parked off our shores for months, refusing to unload their oil until prices have risen even higher. The delay makes millions for speculators… and keeps your petrol costs soaring.
Laden with fuel, three oil tankers sit idly within sight of the British coastline, playing a waiting game that is driving up petrol prices for hard-pressed motorists.
They are part of a flotilla of ten vessels refusing to unload their cargo until market speculation has driven up its price to the level they want.
And as the value of that cargo is currently rising by over £1million a day, driven partly by profiteering traders and speculators, it is unlikely to see a petrol station any time soon.
NH:
With such tactics, it is not hard to see why prices at the pumps are forecast to have risen by 26 per cent in a year by this Christmas.
AA president Edmund King said: ‘Traders and speculators seem to be storing up oil until the price rises. Drivers can expect more hikes in the pipeline. Motorists are paying the price of this at the pumps.’
Residents near Brixham in Devon have watched with growing anger as the tankers have anchored in Lyme Bay for the past two months.
MJ:
ha
MJ:
Izy is rather shocked by that
MJ:
“Daily Mail have just discovered the contango”
NH:
anyway
NH:
what’s moving Miles?
11:12AM
MJ:
Well Reckitt is doing well
MJ:
off the back of this bid story
NH:
it is
NH:
up 106p at £32.11
NH:
a move of 3.4%
NH:
this of course is on the back of rumours
NH:
that Reckitt is set to merge with Colgate
MJ:
As you said in your post, there was some frantic options activity in Colgate last night in the US
NH:
and in the shares
NH:
volume of almost 140m
NH:
the recent average was nearer to 22m
MJ:
Wow
MJ:
So, what do think of this?
NH:
well
NH:
logically it makes sense
NH:
the two are around the same
NH:
size
NH:
there would be large synergies
NH:
etc
NH:
but
NH:
LYO – the DT piece is published in the evening. Have you heard of the internet?
MJ:
Yes, it was out yesterday evening
MJ:
Came out at around 7 UK time
MJ:
So was in market hours
NH:
a few merger arbs sent it to me
NH:
anyway
NH:
the reason people don’t think it will happen
NH:
at the moment
NH:
is that there has been some insider selling at Colgate
MJ:
Which couldn’t happen if they were in talks
NH:
hang on, I have a note on this from Credit Suisse
NH:
The Telegraph on line last night reported that Reckitt is close to
announcing ‘a multi-billion pound cross-boarder merger’ although
interestingly it doesn’t seem to make the paper this morning.
■
Last night’s report goes on to say that ‘well placed sources think the most
obvious candidate is US giant Colgate Palmolive.’ A potential link up
between Reckitt and Colgate has been talked about in the press in the past
given the similar cultures between the two companies, the potential for
cost synergies and the strategic possibilities of selling Reckitt products
through Colgate’s more developed Emerging Market infrastructure.
announcing ‘a multi-billion pound cross-boarder merger’ although
interestingly it doesn’t seem to make the paper this morning.
■
Last night’s report goes on to say that ‘well placed sources think the most
obvious candidate is US giant Colgate Palmolive.’ A potential link up
between Reckitt and Colgate has been talked about in the press in the past
given the similar cultures between the two companies, the potential for
cost synergies and the strategic possibilities of selling Reckitt products
through Colgate’s more developed Emerging Market infrastructure.
NH:
While we understand all this, we are not aware of any immediate catalyst
for this merger to take place now, we also note that on 3rd Novermber, a
Colgate insider was selling shares. Taken all together therefore we are
sceptical on the imminence of a deal between these two at least.
■
Longer term the logic still stands – the two companies have similar market
caps, similar net incomes and trade on similar P/E multiples. Therefore
any ‘take-over’ of one or the other would likely result in a significant transfer
of value between the companies respective shareholders. As a result we
believe that if such a deal were to happen it would most likely be a merger
of equals.
for this merger to take place now, we also note that on 3rd Novermber, a
Colgate insider was selling shares. Taken all together therefore we are
sceptical on the imminence of a deal between these two at least.
■
Longer term the logic still stands – the two companies have similar market
caps, similar net incomes and trade on similar P/E multiples. Therefore
any ‘take-over’ of one or the other would likely result in a significant transfer
of value between the companies respective shareholders. As a result we
believe that if such a deal were to happen it would most likely be a merger
of equals.
NH:
Given that both companies have such a strong cost containment culture, we
think that a merger could yield substantial savings. Assuming a merger of
equals and synergies representing 5% of combined sales (taxed at 30%)
there would be +10-15% accretion to Reckitt’s 09E EPS.
think that a merger could yield substantial savings. Assuming a merger of
equals and synergies representing 5% of combined sales (taxed at 30%)
there would be +10-15% accretion to Reckitt’s 09E EPS.
MJ:
Hmm
MJ:
Aren’t both companies appearing at the Morgan Stanley conference in NY today?
MJ:
Could get a little awkward
NH:
they are and as far as we know
NH:
no one has pulled out
NH:
yet
NH:
Colgate-Palmolive Webcasts Presentation At The Morgan Stanley Global Consumer & Retail Conference
New York, New York, November 6, 2009… Colgate-Palmolive (NYSE:CL) executives, Fabian Garcia, EVP, President, Colgate-Latin America & Global Sustainability and Franck Moison, President, Global Marketing, Supply Chain & Technology, will present on Thursday, November 19, 2009 at 7:30 a.m. ET at the Morgan Stanley Global Consumer & Retail Conference.
NH:
Investors may access a live webcast of this presentation on Colgate’s web site at http://www.colgate.com. For those unable to participate during the live webcast, a recorded version of the webcast will be made available through the ‘For Investors’ page of Colgate’s web site.
MJ:
Ah – might be worth tuning in to that
NH:
(LYO )
)MJ:
And what about SSL? Shares are up
NH:
yep
MJ:
Golden oldie
NH:
yep
NH:
old but gold
NH:
anywhere
NH:
here’s some more musing on the story
NH:
this is from UBS
NH:
IF A Reckitt-Colgate Deal Happened, Hard to See Colgate as the Target Yesterday afternoon, the Telegraph indicated Reckitt was nearing a
transaction with Colgate. Much of what we read today in the press had Colgate pegged as the “target”. Given Colgate’s $8 B market cap advantage
over Reckitt, we believe that the likeliest outcome (if a deal were to occur) would be a merger of equals scenario where Colgate was the “purchaser”.
transaction with Colgate. Much of what we read today in the press had Colgate pegged as the “target”. Given Colgate’s $8 B market cap advantage
over Reckitt, we believe that the likeliest outcome (if a deal were to occur) would be a merger of equals scenario where Colgate was the “purchaser”.
NH:
Why Reckitt Might/Might Not Want to Combine Combining with Colgate could give Reckitt valuable exposure to emerging markets, along with
higher scale and retail presence in existing markets. However, while Colgate has a best in class oral care franchise, Reckitt has had more of an OTC
focus in recent years. With that being said, a combination would increase scale in personal and household care (dish, fabric, surface) and give each
access to new categories (oral care/pet nutrition for Reckitt and air care/OTC for Colgate).
higher scale and retail presence in existing markets. However, while Colgate has a best in class oral care franchise, Reckitt has had more of an OTC
focus in recent years. With that being said, a combination would increase scale in personal and household care (dish, fabric, surface) and give each
access to new categories (oral care/pet nutrition for Reckitt and air care/OTC for Colgate).
NH:
.. Why Colgate Might/Might Not Want to Combine In Reckitt, Colgate could find another personal care partner with a “leading brands” business model.
However, Reckitt’s exposure to Western Europe (44% of sales) could be inconsistent with Colgate’s focus in emerging markets – despite Reckitt
offering greater scale in the region.
.. Valuation: $86 Price Target Derived via DCF Our price target implies 18x our CY 2010E EPS of $4.86. We note that over the past 15 years, the
average Global HPC transaction has been executed at 13.5-14x EV/ EBITDA
However, Reckitt’s exposure to Western Europe (44% of sales) could be inconsistent with Colgate’s focus in emerging markets – despite Reckitt
offering greater scale in the region.
.. Valuation: $86 Price Target Derived via DCF Our price target implies 18x our CY 2010E EPS of $4.86. We note that over the past 15 years, the
average Global HPC transaction has been executed at 13.5-14x EV/ EBITDA
MJ:
and haven’t Nomura done some good work on the synergy numbers?
NH:
they have. here’s their workings.
NH:
Reckitt-Colgate cost and revenue synergy valuation scenario – assuming a merger of equals:
NH:
· Market cap weighting would equate to 53% Colgate/ 47% Reckitt (GBP25.7bn/ 22.4bn)
· Estimate best case total cost synergies could amount to 5% of combines sales = GBP 840m
· Estimate revenue synergies could amount to 3% of combined sales at a 60% contribution margin
· Estimate restructuring costs of GBP 1.5bn (1.75x cost savings)
· NPV of total savings net restructuring charges = GBP 7.9bn
· Of which Reckitt’s share at GBP 3.7bn amounts to 510p per Reckitt share or 16% of the current Reckitt market cap.
MJ:
So, 510p a share?
NH:
yep
NH:
although not as punchy as its seems
NH:
when the stock is worth north of £30
MJ:
(Not sure that would cathc on Taxloss)
NH:
anyway
NH:
think that’s enough on this rumour
NH:
but we will be tuning
NH:
to this afternoon’s MOST conference
NH:
to see if anything is said
11:23AM
MJ:
SAB Miller also a big riser
NH:
it is
NH:
figures out
NH:
and the shares up 79p to £17.36
MJ:
And whats so impressive about them?
NH:
well
NH:
I have not looked in detail
NH:
but it looks to be relief
NH:
H1 results came hit expectations
NH:
and the outlook statement looks good
MJ:
Any comment?
NH:
one moment
NH:
here’s Merrill
NH:
SABMiller reported 1H09 EBITA of $2187m exactly inline with our estimate but
3% ahead of consensus expectations. This beat was despite sales being 4%
below expectations meaning that the EBITA margin of 16.4% was a good 100bps
ahead of market expectations. The clean EPS of USc80 was 10% ahead of
expectations due to lower than expected tax and interest.
3% ahead of consensus expectations. This beat was despite sales being 4%
below expectations meaning that the EBITA margin of 16.4% was a good 100bps
ahead of market expectations. The clean EPS of USc80 was 10% ahead of
expectations due to lower than expected tax and interest.
NH:
In the outlook statement the company highlighted that the margin trend delivered
in the 1H will not be delivered in the 2H, as price increases and cost efficiencies
achieved in the prior years are cycled. The company also indicated that input
costs relief will now only be achieved towards the end of the year. The company
also iindicated that FX will be favourable in the 2H (this is in our estimates).
in the 1H will not be delivered in the 2H, as price increases and cost efficiencies
achieved in the prior years are cycled. The company also indicated that input
costs relief will now only be achieved towards the end of the year. The company
also iindicated that FX will be favourable in the 2H (this is in our estimates).
NH:
We do not believe the market will upgrade EBITA materially for FY2010, but
earnings certainly have scope for upside depending on the guidance on full year
interest and tax guidance. We believe upgrades could be between 3-5%.
In line with the other brewers the top line missed but margins were ahead of
expectations, leading to likely upgrades.
On our estimates SABMiller remains the most expensive brewer trading 15.8x
cal10E PE and the lowest FCF yield at below 4%.
Based on our PO of 1750p we have a underperform rating on SABMiller
earnings certainly have scope for upside depending on the guidance on full year
interest and tax guidance. We believe upgrades could be between 3-5%.
In line with the other brewers the top line missed but margins were ahead of
expectations, leading to likely upgrades.
On our estimates SABMiller remains the most expensive brewer trading 15.8x
cal10E PE and the lowest FCF yield at below 4%.
Based on our PO of 1750p we have a underperform rating on SABMiller
MJ:
Thanks
NH:
and here’s something from Evo
NH:
EVO TAKE – Headline clean net profit at US$1,236m was 13% ahead of
our US$1,091m forecast on a strong margin beat. Outlook remains solid
but pricing and cost saving benefits will slow in 2H. We expect EPS
upgrades of c5%.
our US$1,091m forecast on a strong margin beat. Outlook remains solid
but pricing and cost saving benefits will slow in 2H. We expect EPS
upgrades of c5%.
NH:
DETAILS – SABMiller EBITA was U$2,187m vs. our US$2,026m (8%
ahead) on exceptionally strong performances in Latin America and South
Africa. Latin American organic profit was 33% ahead and margins up
400bps on higher pricing and cost savings; while South Africa organic
profit was +4% on firmer price increases. The group tax rate was 200bps
lower than forecast at 29% and this looks likely to persist for the full year.
Management also expect their global procurement programme to deliver
an incremental US$300m of savings by fiscal.
ahead) on exceptionally strong performances in Latin America and South
Africa. Latin American organic profit was 33% ahead and margins up
400bps on higher pricing and cost savings; while South Africa organic
profit was +4% on firmer price increases. The group tax rate was 200bps
lower than forecast at 29% and this looks likely to persist for the full year.
Management also expect their global procurement programme to deliver
an incremental US$300m of savings by fiscal.
NH:
VALUATION AND RECOMMENDATION – The shares are trading on 16x
CY10E PE. We expect today’s results to prompt FY10E earnings upgrades
of c5% principally on the higher H1 base, (we expect to make limited
changes to our 2H10E forecasts). We remain on the positive side of
Neutral.
CY10E PE. We expect today’s results to prompt FY10E earnings upgrades
of c5% principally on the higher H1 base, (we expect to make limited
changes to our 2H10E forecasts). We remain on the positive side of
Neutral.
11:27AM
MJ:
Held to ransom by the oily spivs
NH:
Miles, what’s that?
NH:
where’s that from?
MJ:
Just seen the Mail’s editorial on the tankers
MJ:
v. funny stuff
MJ:
The disturbing sight of a parade of oil tankers filled to capacity off the shores of the West Country is graphic testimony to a malfunctioning market.
The result is that British businesses and motorists are paying ever higher prices for fuel at a time when energy demand has slumped and world oil stockpiles are at record levels.
Indeed, the surging cost of fuel at the pumps is among the main factors behind a totally unexpected rise in consumer price inflation in October.
Behind the forecast of a 26 per cent rise in petrol price over this year is an oil market which has become dominated by financial players, including the global investment banks.
NH:
Oily spivs
NH:
NH:
love it
MJ:
Holding us to ransom eh?
NH:
what can we do
NH:
get some somalia pirates down to the south west double quick
MJ:
It would be like Christmas had come early
MJ:
Sitting ducks those tankers are
NH:
yep
NH:
like shooting fish in a barrel
NH:
forget the cost of east africa
NH:
rich pickings to be had in devon
NH:
actually
NH:
this reminds of the Mail’s moral outrage with short selling
MJ:
And we all know where that ended
11:30AM
NH:
Right
NH:
Cadbury watch time
NH:
what’s the latest Miles
NH:
the share price is doing nothing
NH:
down 2p at 795p
MJ:
Well, the inevitable barrage of comment in the press after yesterday
MJ:
Nothing much new, apart from we now have a better idea of who is doing what.
NH:
Like who is meant to be on the Hershey side.
MJ:
BoA and Cazenove research and sales both went restricted on Cadbury yesterday morning
MJ:
they are both in the advisory/financing mix for any Hershey bid
MJ:
But that had been reported already
MJ:
And, as the FT reports, Ferrero is being advised by Mediobanca and NM Rothschild
NH:
Also wasn’t there some more detail on the Ferrero banks out of Italy this morning.
MJ:
there was
MJ:
From Il Sole again
MJ:
Mediobanca and Intesa Sanpaolo are reported to be up for providing Ferrero with the cash
NH:
The Ferrero family owns a bit of Mediobanca don’t they?
MJ:
I think so
MJ:
Il Sole also floated the idea that KKR could get involved with a Ferrero and Hershey breakup bid
NH:
Have you managed to get a translation of the article?
MJ:
Sadly not. But here is a Bloomberg pick up
MJ:
Nov. 19 (Bloomberg) — Intesa Sanpaolo SpA, Italy’s second largest bank, may help finance a bid by Ferrero SpA for Cadbury Plc, daily Il Sole 24 Ore reported, without saying where it got the information.
Yesterday, Ferrero said it was in “preliminary stages of evaluating its options” on Cadbury, the U.K. maker of Dairy Milk, which has resisted a 10.3 billion-pound ($17 billion) approach from Kraft Foods Inc.
Yesterday, Ferrero said it was in “preliminary stages of evaluating its options” on Cadbury, the U.K. maker of Dairy Milk, which has resisted a 10.3 billion-pound ($17 billion) approach from Kraft Foods Inc.
MJ:
Private equity group KKR may join Ferrero and Hershey Co. in a bid for Cadbury, Sole reported.
NH:
Thanks for that. There don’t seem to be any fresh notes out on this.
MJ:
Almost every bank is now involved
MJ:
so there will be the compliance departments expunging anything interesting from all the research
MJ:
I imagine
NH:
So, while all this theatre makes things a bit more interesting, nothing has really changed that much.
NH:
The old problems of a Hershey-Cadbury deal remain.
NH:
Especially the Hershey family trust idea.
MJ:
And any break up with Ferrero would require such tortuous negotiations
MJ:
as to be nigh-on impossible
MJ:
Imagine sending a crew
MJ:
of shiny toothed proto-Bobby D’s to Italy
MJ:
to sit down with 80-something Mr Ferrero
MJ:
And spattering him with management jargon
NH:
could end in tears
NH:
I suppose they are hoping to do business with the sons.
11:36AM
MJ:
Moving on
NH:
Okay, the Candy Brothers’ mining plaything has returned from suspension
MJ:
And? Shareprice?
NH:
it is down 4.5p at 14.25p at the moment
NH:
but headting lower
NH:
as we speak
MJ:
This is metals exploration right?
NH:
it is
NH:
and there has been a rather sizeable
NH:
resource revaluation
MJ:
Suprise surprise
NH:
RUNRUNO RESOURCE UPDATE
Metals Exploration Plc (“Metals Ex” or the “Company”), the Pacific Rim natural resources exploration and development company, today announces a resource update for its Runruno gold-molybdenum project on the island of Luzon in the northern Philippines.
NH:
Total JORC-compliant Measured, Indicated and Inferred Mineral Resource is now estimated to contain 1.5Moz of gold and 25.4Mlb of molybdenum (previously 2.0Moz gold and 34.4Mlb molybdenum):
MJ:
oh dear
NH:
Resignation of Director
Gary Powell, Executive Director, has resigned from the Board and left the Company. The Company wishes him well in his future endeavours.
MJ:
So, do we know much about Mr Powell?
NH:
one moment
NH:
Gary Powell – Executive Director
Gary is a geologist (BAppSc-Geology) MAus.I.M.M., M.A.I.G. with over 25 years experience in mineral exploration, development & mining in Australia, Southeast Asia and Central Asia. He has an extensive background of mining operations in Australia, as well as corporate directorship experience in Australia, Philippines and UK. Gary is responsible for the technical aspects of the Company’s operations.
MJ:
So he was their geologist?
NH:
yes, it looks that way.
NH:
oh
NH:
there’s a comment from Christian Candy
NH:
following on the debacle, sorry news
NH:
Commenting on the revised resource Christian Candy, 44.1% beneficial shareholder of Metals Ex (through Solomon Capital) advised:
“It is important to realise that this detailed assessment provides a strong confirmation of the core of the resource and further support for a targeted gold step out programme.
“I remain fully supportive of the Company and Management who are now focused on finalising the reworked feasibility study and implementing the targeted programme of step out drilling.”
MJ:
he own 44 per cent?
MJ:
Mr Candy
MJ:
well.
NH:
yes
NH:
perhaps if it so cheap
NH:
he might bid for it
MJ:
NH:
(The Outlaw Josey Wales – the Soc gen note was published on Oct 13 and has been in the long room for a while. a lot of discussion on the note.)
MJ:
Maybe
MJ:
Good idea Lemmy
11:41AM
NH:
we will revist small cap corner
NH:
a bit later on
NH:
in the meantime
NH:
Cazenove
MJ:
ah yes
MJ:
the details of the deal are now out
MJ:
as well as the results
NH:
and the new executive line up
NH:
here’s are the highlights
NH:
J.P. Morgan Cazenove to become a wholly owned part of J.P. Morgan
NH:
• Cazenove shareholders to receive £5.35 per share
• Transaction values Cazenove at £1bn – implied value of joint venture of £2bn
• UK investment banking continues to operate as J.P. Morgan Cazenove
• J.P. Morgan will combine the joint venture’s Cash Equities and Research divisions with its existing operations covering Europe, the Middle East and Africa (EMEA). The enlarged business will be branded J.P. Morgan Cazenove
MJ:
hmmm
MJ:
sounds like there are going to be a few job losses
NH:
I would think so
NH:
In the Cash Equities business, the Cazenove platform has operated separately from J.P. Morgan. Upon completion of the transaction, J.P. Morgan will combine the joint venture’s Cash Equities and Research operations with its existing franchise in Europe, the Middle East and Africa and run the enlarged business under the J.P. Morgan Cazenove banner
MJ:
well that confirms it
MJ:
And what about the results?
MJ:
Very good year I would imagine
MJ:
havent looked myself yet
NH:
the results are impressive, yes
NH:
hang on
NH:
here’s the detail
NH:
(£m) 2008Full Year 20099 Months to September
Gross revenues 207.6 216.7
Operating expenses (excl. goodwill amortisation) 138.1 120.7
Profit after tax (before goodwill amortisation and exceptional items) 48.5
Gross revenues 207.6 216.7
Operating expenses (excl. goodwill amortisation) 138.1 120.7
Profit after tax (before goodwill amortisation and exceptional items) 48.5
NH:
sorry
NH:
that’s a bit of a mess
NH:
but gross rev in the 9 months to the end of Sept
NH:
were £216.7 vs 207.6m
NH:
for the whole of last year
NH:
and profits so far this year
NH:
of £48.5m
NH:
just trying to think if they have advised on any big deals
NH:
since the end of Sept
NH:
they must have
MJ:
Quite a few rights issues and the like
MJ:
including your favourite Yell
NH:
of course
NH:
£660m there
MJ:
had to divvy up the fees with the other banks of course
MJ:
but they have been doing exceptionally well on that front
MJ:
Adn what about the executive line up?
MJ:
Who is bagging the top jobs?
NH:
Mayhew remains top dog
NH:
and doesn’t appear to be going anywhere
NH:
and Ian Hannam
NH:
our favourite corp financier
NH:
remains in his job
NH:
here’s the full line up
NH:
J.P. Morgan Cazenove’s executives will continue in their key positions in the business as part of the wider J.P. Morgan Investment Bank:
• David Mayhew will remain Chairman of J.P. Morgan Cazenove
• Naguib Kheraj, Chief Executive Officer of J.P. Morgan Cazenove, will oversee the integration
• Ian Hannam continues as Chairman of Capital Markets
• Charles Harman will continue to be Head of UK Investment Banking
• Alan Carruthers will become Head of Cash Equities for Europe, the Middle East and Africa
• Laurence Hollingworth will be Head of UK Equity Capital Markets
• David Knox will be Head of UK Equity Research and Deputy Head of European Equity Research
MJ:
Hmm
MJ:
Naguib Kheraj
MJ:
“overseeing integration”
MJ:
presumably
MJ:
that means he is leaving
NH:
i reckon so
NH:
Naguib was the formed FD of Barclays
NH:
he hasn’t been at Caz, relatively speaking, that long
NH:
but he’s not giving much away
NH:
about his plans
NH:
LONDON, Nov 19 (Reuters) – JPMorgan Cazenove Chief Executive Naguib Kheraj says on a conference call: * JPMorgan Cazenove CEO kheraj says JPMorgan has discussed options for his role in future, nothing decided after integration role * JPMorgan Cazenove CEO kheraj says likely to be some redundancies from buy-out, most overlap in back office operations
11:49AM
NH:
(Lizzie can you stop commenting under other names pls – Top loss Co)
MJ:
Tuna asking for some 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:
not sure I have any
NH:
other than this odd Deutsche Postbank story
NH:
( Qld Mudcrab TL)
MJ:
Yup. Low grade sourcing on that one
MJ:
AGAIN rumour DBK to bid 27.25 for POSTBANK freefloat
MJ:
This has cropped up again and again. Don’t really know what to make of it to be honest
NH:
hmmm
NH:
sceptical myself
NH:
and I see that FGX International story was given another airing lsat night
MJ:
The dark glasses one?
MJ:
Was in the Telegraph again
MJ:
And Heritage?
MJ:
What are you hearing?
NH:
well
NH:
that they have found a buyer for their Ugandan assets
NH:
Lizzie you can’t use more than one. We don’t want sock puppets here
NH:
and the idea is
NH:
that when they sell the assets
NH:
100p a share will be returned to shareholders
NH:
now
NH:
Heritage owns one block outright
NH:
and the two other with Tullow
NH:
i believe
NH:
50% interest
NH:
and Tullow has opened a data room because it wants to sell half of its interest in these blocks
NH:
that’s as much as we have
MJ:
Thanks for that
MJ:
Arby looking for this Global Collapse note
NH:
(thanks Ikonvark you’re right)
MJ:
Not sure where it is actually
NH:
go here
11:55AM
NH:
Okay
NH:
almost midday
MJ:
(V. good Bluesky)
NH:
Miles
NH:
you going to this?
NH:
Masterclass: Cliche Bingo with Lucy Kellaway
MJ:
Of course I am
NH:
24th November 09 : Cliche Bingo.
Time: 01.00 – 2.30pm
Location: Editorial Conference Room
Time: 01.00 – 2.30pm
Location: Editorial Conference Room
MJ:
If I get a place
MJ:
They are limited
NH:
Lucy Kellaway is giving a masterclass on cliches taken from the FT and/or other papers in the editorial conference room at 13.00 – 14.30pm.
All participants must come armed with a list of clliches taken from the FT and/or other papers in the preceding few days. Lunch will be given with a game of Cliche Boggle in which all participants read out their lists and the person with the longest list stands to win a packet of Maltesers.
NH:
could be a session that
NH:
and we could with some help
NH:
although the Kinder Surprise headline was a goodone
NH:
actually
MJ:
I want those Maltesers
NH:
we should see if we could squeeze Monkey in
NH:
he needs help
NH:
and quick
MJ:
I would love to see that
MJ:
Put Monkey in a disguise
MJ:
and hide him in the corner
NH:
do you think that would work?
NH:
11:58AM
MJ:
I hope so
NH:
Right
NH:
back to small cap corner
NH:
before we finish
MJ:
yipppe
NH:
right, this situation has been bugging me for a while
MJ:
Oh no
MJ:
I can see where this is going…
MJ:
a small oil company perhaps?
NH:
actually it’s not
NH:
something called Raymarine, which as the names suggests makes electronic devices for boats
NH:
radar, GPS, tracking that sort of thing
MJ:
right
NH:
so, the company has been in talks with Garmin, a bigger US rival for a while
NH:
and Raymarine has warned time and time again that if an offer does materialise there would be nothing in it for shareholders
NH:
or very little
MJ:
because of debts?
NH:
indeed
NH:
yet the price has remained stubbornly around 10p
NH:
now, what part of this don’t retail shareholders get?
MJ:
beats me
NH:
anyway Raymarine have repeated the warning this morning in another dire trading statement
NH:
The Group has incurred during the second half of the year significant exceptional costs in relation to professional and bank fees considerably in excess of those envisaged at the half year stage. These have been caused by the continuing exploration of the long term refinancing options for the Group. At 30 October 2009 the Group’s net debt was £91.6m. The Group’s existing banking facilities mature on 31 March 2010. Raymarine is currently unable to comply with certain financial covenants within these facilities and, as such, is reliant on continuing covenant waivers from its banking syndicate. The current waivers expire on 4 December 2009
NH:
To meet the Group’s funding requirements in the coming months an additional facility has been agreed with the Group’s banking syndicate for £15m. This additional facility also matures on 31 March 2010 and its availability is similarly subject to the continued covenant waivers referred to above.
Long term refinancing options continue to be investigated, together with discussions with interested parties in relation to a potential sale of the business or equity fundraising. In light of these discussions the Board considers it increasingly likely that little, if any value for ordinary shareholders will be realised
Long term refinancing options continue to be investigated, together with discussions with interested parties in relation to a potential sale of the business or equity fundraising. In light of these discussions the Board considers it increasingly likely that little, if any value for ordinary shareholders will be realised
MJ:
And the share price?
NH:
well, it is down
NH:
off 31% at 7.85p
NH:
but they are still changing hands for 7.85p
NH:
and there can’t be that much value in the equity
NH:
there can’t be
MJ:
Why are they trading at that price? It is weird
MJ:
efficient markets eh
NH:
Right, looks like the Metal Exploration news is undergoing something of a revision
NH:
look at this from Dow Jones
NH:
DJ Metals Exploration Runruno Measured Gold Resource Doubles
LONDON (Dow Jones)–Metals Exploration PLC (MTL.LN), a Pacific Rim natural resources exploration and development company, said Wednesday measured resource at its Runruno gold-molybdenum project on the island of Luzon in the northern Philippines has more than doubled to contained 560,000 ounces of gold from 270,000 ounces previously.
MJ:
not bad news after all?
NH:
no
NH:
good news
NH:
the fact that the reserves have been revised
MJ:
erm
MJ:
nice bit of spin here?
NH:
yep
NH:
very nicely done
MJ:
They must have a very good PR
MJ:
NH:
actually there has been another small cap blow this morning
NH:
in a little drug company
MJ:
which one?
NH:
Immupharma
NH:
Shares in Lupus specialist ImmuPharma (IMM.L) sink nearly 20 percent after the company reports interim results for its lead drug Lupuzor.
The trial met its key target but failed to meet statistical significance on one measurement, after the company cut recruitment back when it changed the design of the trial.
“Although the outcomes were promising, statistical significance was not achieved in the primary end point, which necessitates us to change our forecasts with regards to the phasing of milestone payments,” Panmure Gordon says.
NH:
shares were down around 20% earlier
NH:
don’t know what they are doing now
NH:
my Reuters has crashed
MJ:
Ill have a quick look
MJ:
Down 20 per cent at 111p
NH:
apparently the CEO is telling everyone, the market has got it wrong and the trial news is not really that bad
NH:
after all
12:07PM
NH:
Okay
NH:
that’s it for today
NH:
my reuters has crashed
NH:
and I need to reboot
NH:
Miles
MJ:
Technology brings things to a close again
NH:
anything to add?
MJ:
Nothing more from me
MJ:
Thanks for the comments all
NH:
one thing
NH:
before I go
NH:
one thing we have been looking at in recent days
NH:
is volume
NH:
and how it is drying up
NH:
and a broker has just sent this over
NH:
Let’s start with a quote which aptly describes the current environment:
NH:
“When the music stops, in terms of liquidity, things will be complicated. But
as long as the music is playing, you’ve got to get up and dance….We’re
still dancing.” – Chuck Prince
as long as the music is playing, you’ve got to get up and dance….We’re
still dancing.” – Chuck Prince
NH:
NH:
The low volume melt-up we are seeing at the moment is reminiscent of 2007 all
over again.
over again.
NH:
I have been cautionary (and of course wrong) expressing concerns over
emerging short- and intermediate-term headwinds that threaten a self-
sustaining economic cycle, including the effect of the withdrawal of monetary
and fiscal stimulus.
emerging short- and intermediate-term headwinds that threaten a self-
sustaining economic cycle, including the effect of the withdrawal of monetary
and fiscal stimulus.
MJ:
Interesting
NH:
Countering those concerns has been one overriding factor – the Fed’s ZIRP
which has already produced its desired effect of causing investors to “look
over the valley” and to buy longer-dated assets (equities, bonds,
commodities).
which has already produced its desired effect of causing investors to “look
over the valley” and to buy longer-dated assets (equities, bonds,
commodities).
NH:
he Fed’s strategy, which was aimed at inflating the prices of three assets
(homes, stocks and bonds), is producing, along with higher stock prices, a
widening chasm between the market’s perception of value and that of economic
reality.
- So as we ground higher the market disconnected from fundamentals fueled by
performance-anxiety and the unwillingness to be left behind.
(homes, stocks and bonds), is producing, along with higher stock prices, a
widening chasm between the market’s perception of value and that of economic
reality.
- So as we ground higher the market disconnected from fundamentals fueled by
performance-anxiety and the unwillingness to be left behind.
NH:
The jury is still out as to whether Fed policy will be as effective as the
bulls expect because asset price inflation will not turn around the jobs
market or tempt consumers to spend nor will it produce an improvement in
personal consumption expenditures; consumers are already deleveraging on a
massive scale, still remain overlevered and lack confidence about their
future.
- But trying to justify bearish tendancies is not the issue here. Trying to
work out how we got here in the first place will put us in a good place to
understanding where we’ll be going.
- Hard to not point the blame at the quants again who chase price momentum (and
the self-fulfilling prophecy of the fund flows that follow the price momentum
induced by the quants). These momentum-based strategies are impervious to an
unsteady housing recovery, propsect of higher marginal taxes and how budget
deficits are going to be financed.
bulls expect because asset price inflation will not turn around the jobs
market or tempt consumers to spend nor will it produce an improvement in
personal consumption expenditures; consumers are already deleveraging on a
massive scale, still remain overlevered and lack confidence about their
future.
- But trying to justify bearish tendancies is not the issue here. Trying to
work out how we got here in the first place will put us in a good place to
understanding where we’ll be going.
- Hard to not point the blame at the quants again who chase price momentum (and
the self-fulfilling prophecy of the fund flows that follow the price momentum
induced by the quants). These momentum-based strategies are impervious to an
unsteady housing recovery, propsect of higher marginal taxes and how budget
deficits are going to be financed.
NH:
So shorting the dollar, buying long-dated bonds and pump commodities like
gold has synthetically inflated equity prices. As investors become
overinfluenced by prices (not fundamentals) that dominate the markets it has
the potential to lead us back to where we were in 2007 and early ‘08 and
supports a favouring on my part for defensive positioning into the new year.
- So as Chuck Prince’s music is still playing you have to get up and dance –
just don’t do any breakdancing – but if you need to, wear a helmet, elbow and
knee pads.
gold has synthetically inflated equity prices. As investors become
overinfluenced by prices (not fundamentals) that dominate the markets it has
the potential to lead us back to where we were in 2007 and early ‘08 and
supports a favouring on my part for defensive positioning into the new year.
- So as Chuck Prince’s music is still playing you have to get up and dance –
just don’t do any breakdancing – but if you need to, wear a helmet, elbow and
knee pads.
MJ:
(@ Vintage we can take it to Lucy’s seminar)
MJ:
thanks for that
MJ:
provactive stuff
NH:
Cheers Ptolemy
NH:
and Promtheus
NH:
I don’t know how you are commenting
NH:
but you have a life ban from the site
NH:
and the LR
NH:
hence the zappings
MJ:
Prometheus is like Agent Smith
NH:
yes
MJ:
Neil and him will have to duel in cyberspace or somthing
MJ:
But another day
MJ:
for that
NH:
banned him again
MJ:
got him
NH:
went into the back end
NH:
and got him
NH:
zap
MJ:
Can a sinner not repent on ML?
NH:
well
NH:
no
NH:
not sure
NH:
he will have to come up with a good case
MJ:
Very old testiment from Neil
NH:
right
NH:
we are done
MJ:
bye
NH:
Tuna, various and we dont have enough time to mention them
NH:
OK
NH:
thanks for logging in everyone
NH:
until tomorrow
NH:
farewell