BBI - Babcock & Brown Infrastructure

[investorpaul]

gargh bbi back up near 9 cents again, i sold too early lol
wonder if this will hold up, but at least we know the support is around 8 cents

The whole market is up today, BBI and BEPPA have dropped like a stone over the last couple of days so a relatively small bounce today is nothing to get excited about.

Still alot of selling pressure on both BBI and BEPPA IMO

 

[mark_au]

The whole market is up today, BBI and BEPPA have dropped like a stone over the last couple of days so a relatively small bounce today is nothing to get excited about.

Still alot of selling pressure on both BBI and BEPPA IMO

Not enough though LOL.. its getting hard to get beppa under 10 c today.
i havent had much luck in that yet... looks like 10c is holding quite well

 

[nathanblack]

Hi BB

is this a typo?

lowest price for BEPPA ever was 4c

cant figure out how you could have that average buy price

he means by converting BBI to BEPPA as BBI rises and parity is achieved, he has managed to convert into BEPPA at an average of 3cents("net result")

cheer

 

[banska bystrica]

Hi BB

is this a typo?

lowest price for BEPPA ever was 4c

cant figure out how you could have that average buy price

I originally bought BBI at average 7.5c.
Arbitraged BBI/BEPPA in 2009.
Never paid more than 12.5c for BEPPA and subsequently sold the remaining BBI securities from 17c down to 11.5c. These sales have netted cash which I am sitting on.
Total outlay on BBI/BEPPA investments is now at a level which equates to 3c per BEPPA.
Only holding BEPPA.

 

[fureien]

The whole market is up today, BBI and BEPPA have dropped like a stone over the last couple of days so a relatively small bounce today is nothing to get excited about.

Still alot of selling pressure on both BBI and BEPPA IMO

ah right, i hadnt looked at the volume yet. yeh there are indeed still more sellers than buyers. but i will keep an eye on it nevertheless. i need that 40% of my portfolio back lol

or do you reccommend that if i put my money into antyhing it wud probably be beppa over bbi? this is kinda what ive inferred from reading all these pages

 

[investorpaul]

ah right, i hadnt looked at the volume yet. yeh there are indeed still more sellers than buyers. but i will keep an eye on it nevertheless. i need that 40% of my portfolio back lol

or do you reccommend that if i put my money into antyhing it wud probably be beppa over bbi? this is kinda what ive inferred from reading all these pages

We cant give advice on the forum but most people prefer BEPPA because it is owed past interest payments and ranks higher in the event of a wind up of the company.

BEPPA is tied to BBI and requires BBI to survive to see the gains most on here are aiming for.

 

[awg]

I originally bought BBI at average 7.5c.
Arbitraged BBI/BEPPA in 2009.
Never paid more than 12.5c for BEPPA and subsequently sold the remaining BBI securities from 17c down to 11.5c. These sales have netted cash which I am sitting on.
Total outlay on BBI/BEPPA investments is now at a level which equates to 3c per BEPPA.
Only holding BEPPA.

Thanks,

I should have understood that from the post.

I have done a similar thing, except my prices are not nearly as sweet as yours.

I only hold BEPPA now too.

ah right, i hadnt looked at the volume yet. yeh there are indeed still more sellers than buyers. but i will keep an eye on it nevertheless. i need that 40% of my portfolio back lol

or do you reccommend that if i put my money into antyhing it wud probably be beppa over bbi? this is kinda what ive inferred from reading all these pages

Hi Fury,

no one can recommend, as against ASF policy.

If you read even some recent posts, they explain that BEPPA has less risk than BBI, and IMO a better likely return.

nevertheless, this is a risky investment, as reflected in the SP discount to NAV, things could turn very sour with just one announcement

 

[fureien]

We cant give advice on the forum but most people prefer BEPPA because it is owed past interest payments and ranks higher in the event of a wind up of the company.

BEPPA is tied to BBI and requires BBI to survive to see the gains most on here are aiming for.

Thanks,

Hi Fury,

no one can recommend, as against ASF policy.

If you read even some recent posts, they explain that BEPPA has less risk than BBI, and IMO a better likely return.

nevertheless, this is a risky investment, as reflected in the SP discount to NAV, things could turn very sour with just one announcement

hi sorry, i think i shud have rephrased my question better. i know its against rules for advice.

i was after the risk levels of the two stocks. which u guys have pretty much summed up for me =) thanks
but yes, from what i understand, as traderpaul said, beppa ranks higher than bbi in the event of a windup. thats what i was looking for.

i held both beppa and bbi, but got rid of bbi, for the risk reasons and because it moves way too much. i still hold beppa, but my average price is high. so i kinda wanted to know if its worth loading up more beppa to lower my average price, or just sit and hold with what i got.


actually i have another question. why does beppa move past 10 cents in strange increments? as i understand you have to increment by 0.005 once ur stock price hits 10 cents. but beppa moves in 0.001 or 0.002 increments

 

[random]

fureien

Don't take this as gospel but if you trade with commsec as your broker you can not bid or sell in .001 increments past 10c. You have to move in .005 increments.
If you are with other brokers i guess you can.
I have tried with commsec but it won't register.

Just from my own experience.

 

[nathanblack]

fureien

Don't take this as gospel but if you trade with commsec as your broker you can not bid or sell in .001 increments past 10c. You have to move in .005 increments.
If you are with other brokers i guess you can.
I have tried with commsec but it won't register.

Just from my own experience.

i mentioned this a couple weeks ago when i tried to buy beppa at 10.4c through commsec(the last traded price) but was forced to bid 10.5c

at those levels, when it hits you at buying and selling time it can affect your margin a bit. if sp is 10.3c you need to either bid 10.0c and not get the buy or up your bid to 10.5c and lose 0.2c margin. same at sale time.

not sure if its just a commsec thing or others too, or maybe if its only restricted to the non-prefered $29.95 account. perhaps over the phone or through prefered account at $19.95 other increments are possible.

anyway i sold the 10.5c batch for 16 and 17c and since bought back under 10c, so all worked out. hoping for a good dow this week.

beppa and bbi holding up well. no real news only waiting to see impact of sparcs sellers. so far they either arent selling or just waiting. volumes steady.

 

[ricee007]

Don't take this as gospel... but.

*MOST* shares, once they hit 10c, you have to trade in .5c increments.

However, you can trade BEPPA in .1c increments.

However, Commsec have a blanket webrule which prevents *ANY* share from trading at < .5c increments once it hits 10c. Seemingly their system is not capable to handle allowing only some shares to trade at .1c. I've emailed them about it, and it's been 'passed on', but...

You can, however, ring up and do a phone order at a .1c increment. If you whinge that you can't do a web order at .1c, it is likely that they will just charge you online brokerage instead of phone brokerage.

 

[bunyip]

If you adopt a strategy of selecting stocks on the basis that they are performing strongly now and hence I would assume this performance is reflected in the price (which would be toward the stocks highs) arent you making the mistake of buying high on the assumption that current performance is reflective of future high performance?

A stock trading near its highs is not necessarily a strong performer. It could be as flat as a lizard drinking, with little or no gain for months or even years on end....a non-performing stock.
Buying such a stock would certainly be a case of buying high...it's not something I'd do.
There are better ways to judge performance.
When stocks make the transition from prolonged downtrend to strong new uptrend, they offer the opportunity of buying strong performance while the price is still relatively low.

To my mind this exposes you to significant downside risk as you are buying at a high on the above noted performance assumption.

I agree with you.


Whereas by buying a stock which your research indicates has been oversold by the market then the downside is minimal and upside significant.

I agree that the upside potential is significant.
I disagree that the downside potential is minimal.
Renee Rivkin's newsletter recommended stocks that he considered were oversold and had limited downside and considerable upside potential. I can tell you that many of those stocks kept heading south in a big way.

I reckon both you and I could name many stocks that fell much lower after being bought by investors whose research indicated that they had been oversold by the market.


You have to also consider each stock on its merits eg BBI regulated income stream, quality assets, significant NTA etc as against GTP where investment was driven by tax considerations, high front end fees, no real title to assets etc.

Yes, I'm sure you'd consider all those criteria if you invest on fundamentals.
But if the company is drowning in debt then perhaps this over-rules those other fundamental considerations you've mentioned.

 

[mcahn1]

Hi guys,
FYI BBI in Street Talk section of FR today.

I am seeing couple of members here i.e. BB and Hardyakka suggesting DBCT would likely sell for 2.4bn - 2.8bn - could you kindly advise on the basis of this valuation? Looks bit optimistic to me.

Would I be wrong in saying that - at this moment BBI is under considerable pressure to sell DBCT and there is an high possibility that DBCT would more likely go for around 220 (FY10 EBITDA forecast) x 9.5 multiple = 2bn? Kindly correct me if my calculation is flawed or absurd.

I've always been concerned about PD Ports and WestNet Rail. I've got a feeling bulk and container throughput in UK would be slowly improving now and also iron ore demand out of WA would too be improving. Anyone know if this is true?


Thanks guys.

 

[Tysonboss1]

i mentioned this a couple weeks ago when i tried to buy beppa at 10.4c through commsec(the last traded price) but was forced to bid 10.5c

at those levels, when it hits you at buying and selling time it can affect your margin a bit. if sp is 10.3c you need to either bid 10.0c and not get the buy or up your bid to 10.5c and lose 0.2c margin. same at sale time.

.

your Half right,

yes you are limited to placing bids in incriments of 0.005 but that doesn't mean it can't go through at a lower price.

For example I placed a bid at 0.10 but when i checked after it had gone through i noticed my buy price was actually 0.097,

 

[banska bystrica]

9.5X EBITDA??? On which planet does one of the largest coal terminals with protected regulated income sell at 9.5X?
EBITDA 2009/10 $224M
Multiple = 12X
Enterprise Value: $2.7Bn.

 

[bellenuit]

your Half right,

yes you are limited to placing bids in incriments of 0.005 but that doesn't mean it can't go through at a lower price.

For example I placed a bid at 0.10 but when i checked after it had gone through i noticed my buy price was actually 0.097,

Yes, that happened to me using CommSec when beppa was on its way up a few weeks ago. The two lowest offers were 50K at .133 and 100K at .134. I placed a buy order for 200K at .135 and my order executed as 50K @ .133, 100K @ .134 and 50K @.135.

 

[Amor_Fati]

I just bought a bunch of these securities, hard to see anything but a total bargain at the current prices, with distribution guidance at 15 cents per security (tax deferred).

I have to disagree with Nicks, I don't see any short term financial mismanagement. Their reports and distribution guidance are consistent and the company line has barely changed. Their debt/equity ratio is 70:30 and that what the regulators allow for I'm sure.
...
I'm not claiming I understand their business model completely but it is not a traditional company with everything hingeing on profit & loss. Would be good to find a guide comparing traditional P&L business with an infrastructure fund. Sure, returns will never be spectacular but you will always get one I reckon.

From the first page. Do people think we have seen that infrastructure funds are not exempt from the same requirements as "traditional" businesses? Or is this financial crisis/recession just a special case where the normal laws don't apply?

Actually I'm going to remove the poster's name because he had nothing but good intentions and I feel badly for him (or her). And it's completely irrelevant, just an example of the sort of thinking that becomes popular in a lengthy boom. I'm definitely not having a go at them, just trying to learn from experience.

 

[ricee007]

Hi guys,
FYI BBI in Street Talk section of FR today.

Does anyone have a link or scan of the BBI AFR Street Talk article that they could PM me or post to this thread...?

It would be much appreciated.

I am seeing couple of members here i.e. BB and Hardyakka suggesting DBCT would likely sell for 2.4bn - 2.8bn - could you kindly advise on the basis of this valuation? Looks bit optimistic to me.

2009-2010 Forecast Earnings 224M.
2010-2011 Forecast Earnings 240M.

VERY VERY conservative multiple of 10X = 2.24Bn
Very conservative of 11X = 2.4Bn
Conservative but plausible multiple of 12X = 2.69Bn
More realistic, 12.5X = 2.8Bn
Slightly optimsitic but very plausible of 13 X = 2.91Bn
Quite optimsitc of 14 X = 3.14Bn
Very optimistic, but certainly not impossible, multiple of 15 X = 3.36Bn. This is higher than pretty much anyone would dare mumble...but this is only a P/Earnings multiple of 14 using the 2010-2011 EBITA estimation...which is merely 'quite optimistic'.

There's no reason at all that 12.5 X Fy2010-2011 = $3Bn can't be done.

You are saying $2Bn...after one year the Price/Earnings ratio would be (forecasted) 8.33. This is ridiculously low.

Having said that, I am a bit more hopeful on the sale price of DBCT than BB and Hardyakka... the seem to think $2.4B-$2.8Bn, I see more $2.6Bn-$3Bn being most likely.

Remember this asset is in the books for $1.9Bn, and has $1.7Bn of debt attached to it.

VERY optmistically, but definitly possible would be 15X 240M = $3.6Bn. Again, this is just *VERY* optimistically... but much more surprisng things have happened.

In my mind, I would be surprised if DBCT got 100% sold and the price was OUTSIDE of $2.46Bn - $3.14Bn. Again, I believe a bit higher than BB/Hardyakka seem to think, so take my thoughts with a grain of salt.

Would I be wrong in saying that - at this moment BBI is under considerable pressure to sell DBCT

Realistically, a 49% sale would be sufficient. IMHO, not ideal. But certainly sufficient.

Tysonboss1;437010]your Half right,

yes you are limited to placing bids in incriments of 0.005 but that doesn't mean it can't go through at a lower price.

For example I placed a bid at 0.10 but when i checked after it had gone through i noticed my buy price was actually 0.097,

See my post a couple up explaining this ^^.

BankSA... I know you are going to hate to do this, but I'm sure it would be entirly appreciated by the forum. As such, I'll be rude enough to ask.

Can you please explain what the deal with SPARCS reseting / converting are? When and how many of the remaining 120M SPARCS can convert to BBI in the future? At whose option is this? Is it a case of SPARCS holders have to elect by September 2009 to convert, and then they (and only they) will be converted in May 2010?

Thanks all.

 

[ricee007]

Furthermore, If anyone can get a copy for me of Page 45 of todays AFR about BBI... I would much appreciate it...

 

[banska bystrica]

Can you please explain what the deal with SPARCS reseting / converting are? When and how many of the remaining 120M SPARCS can convert to BBI in the future? At whose option is this? Is it a case of SPARCS holders have to elect by September 2009 to convert, and then they (and only they) will be converted in May 2010?

25.8M SPARCS can elect to convert in Nov 2009. Conversion price will be determined by the "20 day average price prior to conversion date" as it was on Monday.

The remaining 120M SPARCS have to wait until May 2010 where the process will be identical to what happened this May. They can elect to convert or reset for another 12 months.