GG now spends rainy days trading equities and currencies. He likes to use a combination of technical analysis and news flow to make trading decisions.
Independent News & Media and Enterprise Inns
Results are due on Thursday from media group Independent News & Media. However these are a sideshow in a developing story that has more plots and sub-plots than poor old Julius Caesar had to put up with.
‘Billionaires battle it out’ - Dennis O’ Brien in the role of Brutus and Tony O’Reilly as Caesar might appear a tad unlikely, but there is no question that with O’Brien raising his stake (currently 22.15%) in the company things could become more ‘interesting’.
A 25% holding could block some types of resolutions being put to shareholders, whilst enabling emergency meetings to be called. There are rumours that some loose stock may have come onto the market this week following INM’s demotion from one of the many Dow Jones Indices. Funds which ‘track’ the Dow Jones STOXX Global Select Dividend 100 Index are likely sellers; it looks like O’ Brien was quickest to his wallet!
As for the results, the market is expecting EBITDA (for anyone interested, more here) of about €390m, giving earnings of about 19 cents. The main focus will be on the 2008 outlook statement, with investors concerned that slowing advertising revenue in Ireland and unfavourable currency impacts from the group’s South African operations might lead to further downgrades.
INM has announced a restructuring programme aimed at saving €45m-which may go some way to mitigating any slowdown. Much more radical action is proposed by ‘dissident shareholder’ O’ Brien, including the sale of the loss-making London titles, restructuring the board and divesting the South African and Australian assets.
Bit late for Mr. O’Reilly to be ‘Beware the Ides of March’ but I’m sure he will be keeping a keen eye on the shareholder register as the company’s AGM approaches!
On Friday keep an eye out for the trading statement from pub company Enterprise Inns. Against a backdrop of the introduction of the smoking ban and a consumer slowdown it seems unlikely that there will be much to raise a glass to. Add on the recent rise in duty in the Budget and a downbeat trading statement from competitor JD Wetherspoon and it wouldn’t be surprising to see investors ‘crying in their beer’.
One glimmer of hope-some of the pub companies including Enterprise have been talking to the taxman about converting into REIT’s (wazza REIT then?). Basically a fancy way of sticking the property assets (pubs) into one company and the operating company into another whilst obtaining significant tax benefits for the company and its shareholders.
A recent broker note suggested that the tax savings from converting into a REIT could be worth 100-160p per share; resulting in a ‘fair value’ of well over 700p per Enterprise share. Although we all know that broker notes tend to portray an optimistic view, that leaves plenty of scope for a re-rating IF the stock gets REIT status.
Not unsurprisingly, the taxman told Enterprise in November to go away and think again after their initial proposal. However any positive news on this front would be very well received by the market.
March 27th, 2008 at 3:46 pm
Interesting developments at INM, the board naming O’Brien as dissident shareholder, not acting in interests of all stakeholders, and indicating that motives are probably personal and questionable-although these were refuted by O’brien.
Always amuses me that the owner of a telecom company ‘cannot be reached for comment’.
Results much in line with forecasted numbers; earnings of 18.8c, comments about the outlook for 2008 appear a little more upbeat than some were expecting, dividend up 10%;
as a result the shares have rallied 9%
March 28th, 2008 at 2:43 pm
Raise a glass to Enterprise!
Although it has to sheleve a refinancing because of turbulent debt markets, the company reassured on trading, and suggested to investors that becoming a REIT was still on the cards.
Remodelled pubs helped to bring EBITDA ‘broadly in line’ with a year ago, which given the smoking ban, slipping consumer confidence and the recent hike in duty was perceeived by the marketr to be a half-decent effort.
The ‘real deal’ on this stock is whether it can get REIT status;significantly higher valuations are ascribed to the shares if it can.
As it is, the ongoing glimmer of hope on REIT status and a decent trading statement has seen the share zip up about 40p or 11%