AFG - Allco Finance Group

[Pager]

I normally only buy for long term holdings during corrections in the overall market, but after doing more research on AFG bought half the parcel im looking for yesterday at $7-80.

My

Think they may well be overdone, reports say they may have paid too much for Rubicon which may account for the current weakness but its not a done deal and subject to an independent report/valuation by Grant Samuel, The 3 Rubicon property trusts are all trading on or near there lows and have Yields between 9 and 12%.

They have plans for retail infrastructure/property funds similar to Macquarie and B&B and there management have a history of doing well, David Clarke the MD was responsible for turning BT around when Westpac bought it a few years ago.

Directors have also been buying, 4 of them in fact including the MD it was disclosed yesterday, they have a yield of 5.5% and P/E of 11, not so long ago they were over $13, maybe not going to get back there in a hurry but very surprised if in the not so distant future they are not at or above that level.

 

[greenfs]

I have cashed but am now very tempted to follow Pager and 3 Views of A Secret into this stock as it now looks irresistible. I don't think I will wait any longer as to try and pick the very bottom might result in a miss altogether as recently happened with Select Harvest about a week ago.

A 3 month graph is attached and whilst the MACD & DMI indicators are terrible, you can see once it bottoms out it is not hard to accept that given a change in buyer & seller sentiment it will probably once again bounce back to $9 very quickly.

 

[Julia]

I have cashed but am now very tempted to follow Pager and 3 Views of A Secret into this stock as it now looks irresistible. I don't think I will wait any longer as to try and pick the very bottom might result in a miss altogether as recently happened with Select Harvest about a week ago.

A 3 month graph is attached and whilst the MACD & DMI indicators are terrible, you can see once it bottoms out it is not hard to accept that given a change in buyer & seller sentiment it will probably once again bounce back to $9 very quickly.

View attachment 14505

So are you saying that you will buy this before the buyer/seller sentiment you mention above has in fact turned around?
It looks pretty woeful at present.

 

[Pager]

I m not a big follower of Technicals but do look at price movement in its simplest form and since it made its multiyear lows in August and bounced to $9-50, fell again to around $7-30 or a higher low, bounced again to about $9-75 or a higher high, if Fridays lows of $7-70 hold then I reckon it could very much be in an up trend particularly if it gets past $9-75.

Combined with my previous post, it was worth jumping the gun and buying 50% of the stake I want know as it may well push back and consolidate over $9 in the next few weeks, if im wrong and it falls further to were I was happy to buy for my long term buy and hold then yes ive got in a bit higher than I wanted when averaged out.

Basically ive had a bit each way in public, either way it’s a long term buy for me, if I don’t get my other 50% in the near future im sure at some point I will pick them up, hopefully when there pulling back from $13 or $14 rather than in the next few weeks and lower than now

Some noteable brokers have a buy on it also with price targets around $10 to $11.

Wish me luck

 

[Pager]

Bought my second parcel today at $7-20 for a long term holding, Citibank amongst others have a $12-70 target on the stock but they do note it may take a while for investors to re-visit the stock partly due to cynicism over the Rubicon deal.

Thought when i said on a previous post i was jumping the gun on half my stake it would be a sure thing it would go to my entry price and it has !, Murphys law in action again !

Out of intrest and curiosity, anyone got a technical view for the longer time frame ?.

Cheers

Pager

 

[Ken]

Chartwise I think AFG is in a lot of trouble.

It has broken long term uptrend. However you will also notice that around $5.00 AFG has two blue bars which inidacted downside, it also broke the longterm uptrend here. The recovery saw the stock rise from $5 to $10.

Not saying this is the case here. Chartwise, the shorts are probly going to book some profits, as technically this was a short when the stock broke the long term up trend then failed to go past the long term uptrend after the August 10 meltdown. We could see $5.00 but the yield on the stock would probly prevent that from happening.

$7.15 a share. 45 cent dividend. Looking at over 6% for an investment bank. Whether that says there is risk, or whether that says it is oversold, you be the judge.

Its obvious AFG is the most hardly hit stock out of the investment banks.

MBL is lucky to be in a trading halt cause I am sure that would be back below $80 if it was trading.


Uncertain times.

Be greedy when others are fearful, be fearfull when others are greedy.

The market has still has a number of stocks fully priced, is AFG one of those stocks??? Probly not, but the trend is south untill something changes that.

 

[Pager]

Thanks Ken

I will hold for the long term, timing it just right would be great but at its current levels (will maybe lower tomorrow, next week/month etc) i think its a good entry level.

Some times you get a bargain sometimes you should wait another week or 2 or even another 6 months or more, $7-20 was my entry, i jumped the gun a few days ago so my average cost is $7-50.

time will twll but im on a 5.5% yeild thats 70% franked.

 

[Ken]

Are the dividends sustainable???

Thats the question.

If they are buyers at current levels are guaranteed winners over the long term....

 

[drum]

I also think now is the time to buy. AFG seems oversold in an unloved sector. The recent rubicon purchase has seen the price fall even further.

to me under 7.50 is a steal.

Macquarie Research Equities have it as 'outperform':


http://www.egoli.com.au/egoli/egoli...9B42-41DC-9144-1E91AF95F518}&Section=Warrants

 

[Ken]

We have seen what has happened to Citigroup over in the states.

If AFG has similar issues the share price most likely will tank further.

The last time i researched AFG it was about get deals done in the equity markets.

"If"

Deals slow, or deals are not done than AFG suffers....

I think you will get a chance to buy at these levels for some time.


If your a short term player looking for upside I think your better off sticking with a trend.

Be cautious of broker reports they have a funny habbit of telling you when to buy, and then telling you to sell after a share price has lost 30-40%.

 

[blaze87]

personally i think brokers are dodgy..
it's true that they haf similar valuation system like discounted cash flows and such.. but i reckon the market probaby would have discounted it into current pricing. i think if u are a long-term investor, ie 1.5-forever, u would do fine

 

[michael_selway]

Are the dividends sustainable???

Thats the question.

If they are buyers at current levels are guaranteed winners over the long term....

Well it depends what their future earnings are, but it does look like they want to keep it at 50% payout ratio

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 63.9 78.6 95.1 107.2
DPS 44.0 44.0 49.0 53.5

thx

MS

 

[greenfs]

I have determined that the time is now right to make a first time entry into this stock as I think that we are very close to the bottom. At least two financial planner groups that I work with are now recommending it as a buy on the strength that the downward movement in the sp has been very much overdone. They are both saying that their respective broking houses reckon it should return back towards $10 once a reversal starts.

Apart from some mistakes made by management, the value fundamentals look good at the current price.

A current graph is provided and I am the first to admit that it tends to indicate that we may not be at the bottom yet. However, given that brokers are now prepared to recommend it as a buy, I think that we should see an upwards movement on the strength of that alone. Time will tell

 

[Pager]

Ive already bought but thought its performance today was very encouraging, with the market taking a beating it recovered pretty quickly from an early sell to be about the only financial stock to go up today even if it was only a cent .

 

[greenfs]

I finally bought a significant parcel at $7.10 last week.

I note that the stock pick section of the financial pages of the Melbourne Sunday Sun has 2 of 3 brokers recommending AFG as one of only two preferred buy stocks nominated.

 

[Ken]

The concern for AFG shareholders is the amount of debt that they carry.

This is what I was told by a broker.

However if they meet forecast then the yield is attractive and the EPS growth also says its good value.

Whether or not this credit crunch effects there operations is yet to be seen.

Macquarie bank would appear the preferred choice of investment banks along with BNB.


It is undervalued by sentiment in the sector is the issue.

 

[greenfs]

It is highly probable that this stock will shortly be successful at receiving another order for some planes under an operating lease from Qantas

 

[EZZA]

i'm in at 7.19, bargain imo at a pe of 10.

seems to be holding the 7.00 mark. sold off my bnb for afg hope i made the right call

 

[golfmos123]

I'm with you Ezza,

Have also topped up today at low 7's. Unfortunately I first bought in when the stock was in the 11's!! But I still believe in the stock and now is the right time to average down for me. I guess I still can't believe I didn't bail earlier but time will tell. This isn't a short term holding for me and it seems one of the few around with some true value there.

 

[michael_selway]

Bought my second parcel today at $7-20 for a long term holding, Citibank amongst others have a $12-70 target on the stock but they do note it may take a while for investors to re-visit the stock partly due to cynicism over the Rubicon deal.

Thought when i said on a previous post i was jumping the gun on half my stake it would be a sure thing it would go to my entry price and it has !, Murphys law in action again !

Out of intrest and curiosity, anyone got a technical view for the longer time frame ?.

Cheers

Pager

Its a a good entry in the low 7's one would think

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 63.9 78.6 95.1 107.2
DPS 44.0 44.0 49.0 53.5

Date: 13/11/2007
Author: Paddy Manning
Source: The Australian Financial Review --- Page: 53
Allco Finance Group has defended related party transactions with Rubicon AssetManagement. Rubicon was formed in 2001, mainly funded by loans from RecordInvestments, which is managed by Allco. Record Investments managed Record RealtyTrust, which merged with Allco in 2006. Gordon Fell, of Rubicon, is on theboards of Allco and Record Investments. The buy-out of Rubicon has beencriticised because executives will gain more benefit than shareholders