Diversified Gas and Oil - quick thoughts
First few days of dealing
Friday 3rd February was the first day of dealing for Diversified Gas and Oil, a conventional onshore US producer with assets in the Appalachian basin (in Ohio, Pennsylvania and West Virginia). The company raised c. US$50m (c.£40m) pre-expenses through a placing of 61m shares at 65p/share (indicating a market value of £69m or $86m). This blog is a summary of parts of the admission document and our reflections on it based on initial and basic analysis.
Read more...Market Commentary - Housing, Infrastructure, Construction and Services 6th February 2017
Housing will be the issue this week and not just with Redrow reporting its half year on Wednesday. Firstly, the long awaited Housing White paper may be due also this week but some of what it is expected to say, especially about increased availability of affordable housing is happening already
Read more...
Implicit forward guidance on asset prices?
Outside Japan, global inflation measures have over the last 8 months been rising as fast as at any time in the previous 25 years on a headline basis. The US Fed has kept real interest rates much lower for much longer than in previous cycles and the orthodoxy in central bank circles still appears to be that interest rates should stay accommodative in order to avoid the risk of deflation with rates still close to zero. Keeping rates low as inflation and growth accelerates may feel pleasant for now but also runs the risk of Fed Chair Yellen’s “nasty surprise”.
Read more...Snap Inc – pain, not gain
$20bn – $25bn is at least 32% too much to pay for investors who will also have no say whatsoever in how the company is run despite having significant skin in the game.
Read more...Market Commentary - Housing, Infrastructure, Construction and Services 3rd February 2017
Homeserve and Smart Metering Systems (SMS) have news this morning; the former has acquired stakes in two online platforms for tradespeople for a combined total of £37m and the latter has issued a positive trading update. Compass was the largest riser yesterday, up 3% after its update. The losers yesterday were all in the category of ones that have some balance sheet concerns.
Read more...Facebook Q4 16 – In focus
In the next 3 years, the priority is clearly video and we can see Facebook evolving to become more like YouTube or Netflix.
Facebook reported good results and highlighted that while 2017 would be much slower, video is the current priority to drive the next leg of growth.
Read more...Market Commentary - Housing, Infrastructure, Construction and Services 2nd February 2017
Compass and Carillion have news this morning, the former an AGM update and the latter has extended the duration of its contract with Openreach. Compass has its AGM today and a conference call at 8am. Interserve was the main mover yesterday, it rose 3.1% to 334p. It remains on a low valuation with a p/e of 5.4x 2016 expected earnings and has a yield of 7.3%. Carillion’s new FD has wasted little time in ensuring the operations have the funding needed and getting the Openreach contract agreed.
Read more...Apple FQ1 16 – A one-way street – iPhone benefits where Google could not
These were good results but they do not herald the return to growth that the shares badly need if they are to see any real upward momentum.
Read more...
Shell/Chrysaor deal… raising the private equity stakes
PE continues to build its influence in the UK North Sea
While details on the Chrysaor/Shell deal are pretty thin on the ground, it clearly represents another material transaction for private-equity investors in the North Sea. Previous press reports were that Chrysaor was in competition with Ineos and fellow PE-backed Siccar Point to acquire the portfolio of assets that were put up for sale in late September 2016 as part of Shell’s $30bn divestment programme following the BG acquisition. As recently as October 2016, the for sale package was reported in the press to be valued at around $2.2bn so the $3.0bn that Chrysaor is paying (that could increase to $3.8bn) reflects a bullish view of the sector, albeit the asset package may have changed during negotiations and oil is $7-8bbl than at that time. In terms of materiality, the Chrysaor deal easily trumps Siccar Point’s acquisition of OMV UK announced in November 2016 for up to $1bn, further increasing the exposure of PE to the UK North Sea.
Read more...