I am sooo busy at the moment, reading Farwell’s book "Buffett and Beyond", which looks at clean surplus accounting. So much to do, so little time. Like Greenblatt’s Little Book That Beats The Market, the author uses too many words to explain simple concepts. I intend to incorporate a synopsis of the book in my "Hackers Guide to Investing" pamphlet. All of the concepts, none of the calories. I think a lot of Geoff Gannon’s writings would be useful to include in the pamphlet. Geoff is writing some truly great stuff at GuruFocus at the moment. I’m sure that by inwardly assimulating his writings I will become a better investor.
Time for a market roundup, which has some interesting things going on. The market is going gangbusters at the moment, making my assertion a few days ago that we’re in a bear market and things are going to get worse look foolish so far. You twit. I’m still sticking to the dead cat bounce theory, though. That theory is looking increasingly untenable in light of the graph over on csinvesting. It shows strategists recommended weightings in the S&P500. The recommended weighting is 52% – just slightly above the level that they suggested in Q1 2009 – and shows a slight lag with where the bottom of the market was attained. It’s funny how analysts and prognosticators always seem to lag markets, like meteorologists who predict yesterday’s weather. But I digress. Such current uber-pessimism could well be a contra-indication of the market’s future direction.
ASX is up 1.18% today so far. Let’s look at some shares that are reporting.
ICP – Intermediate Capital – up 14.5% on good finals. Third party AUM is down a little. Profit after tax is well up from £186m to £188m, with divvies up 5.6%. Current yield is 8.4%. In its outlook, it says "longer term trends are favourable to specialised lenders". On a quick skim, everything seems to be playing out exactly as I expected, and Mr. Market seems to have been slow on the uptake in assimilating publically-available data.
HSV – Homeserve – the emergency boiler and repair services company that takes lots of customer money and delivers little – is down 26.7% today. Ouch. The prelims shoud revenues up 15%, EPS up 48%, and divvies up 10%. It’s on a PER of 8.4, so the casual onlooker would no doubt be puzzled as the what on earth Mr Market is thinking marking the company down. The problem is with the FSA:
The UK management team has a constructive relationship with the Financial Services Authority (FSA), with regard to the business improvement initiatives being undertaken. The FSA has informed us that they intend to investigate certain historic issues. The FSA’s investigation will take a number of months to complete.
The dive is somewhat puzzling, giving that the FSA investigation is such a well-known problem. Its share price fell heavily in October 2011 on the announcement of the FSA investigation.
VOD – Vodafone – needs no introduction – up 3.33% on its announcement of final results for y/e 31-Mar-2012. Group revenue is up 1.2%, which hardly gets the blood racing of course. VOD’s yield is very high, and shareholders have benefited from a special dividend thanks to Verizon Wireless. On 23-Apr-2012, VOD made an offer for CWW (Cable & Wireless Worldwide) at 38p – a figure that most considered a total bargain. The deal isn’t complete, so I guess there could be many a slip twixt cup and lip, and is expected to be completed on 27-Jul-2012. VOD is on a PER of 10.9, and is at the top of my list of "safe" Footsie yielders. A comparatively boring company, but I doubt investors will go far wrong on this one.
Mr. Market doesn’t seem to be particularly clear-headed today, seeming to react violently to information that has been known for quite awhile.
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