FGE - Forge Group

[Valued]

I am out at 0.805. I hung around a little to see if it could recover again. When I saw the high of 0.86 I was hoping we could get to 0.90. It was quite close but then a lot of sellers seemed to come through, likely the ones who bought at 0.70 this morning.

I didn't make back the money I lost before the trading halt. I lost about 20% overall. That's a lot better than losing 80% though and the short term trade by itself was hugely profitable.

 

[McLovin]

Sure but someone's got to be accountable somewhere along the line... I guess that explains a lot about why big instos struggle to outperform.

Big instos outperform when the market is falling by going to cash. It's too hard trying to consistently outperform in a rising market.

I don't know what sort of methodology they use to select stocks, but I would have thought with something like FGE it would be part of a macro theme rather than a company specific idea. So, for instance, playing mining capex, you can buy WOR or MND or you can buy a basket of small mining services stocks on lower pe's. I have no idea if this is how the operate.

I do think that retail investors have a tendency to fixate on what instos are doing. I seem to recall a similar discussion in the TGA thread when Perpetual was sellling down.

 

[skc]

Big instos outperform when the market is falling by going to cash. It's too hard trying to consistently outperform in a rising market.

I don't know what sort of methodology they use to select stocks, but I would have thought with something like FGE it would be part of a macro theme rather than a company specific idea. So, for instance, playing mining capex, you can buy WOR or MND or you can buy a basket of small mining services stocks on lower pe's. I have no idea if this is how the operate.

I do think that retail investors have a tendency to fixate on what instos are doing. I seem to recall a similar discussion in the TGA thread when Perpetual was sellling down.

A fund manager friend once told me that they rebalance based on beta to try to outperform. I.e. overweight high beta stocks in a rising market to get those extra performance. But it probably depends a lot on the mandate / strategy of the fund.

I think retail investors should pay heaps of attention to what instos are doing. Not because instos are always right/wrong, but because they affect substantially your entry/exit points. TGA may have been a buy at $2, but if Perpeutal is selling and has 10m shares to go - why stand in its way?

There are only 2 broker reports on FGE that I've seen today... Bells and MQG. Bell has a target price of 58c (and downgraded to sell) while previous target was $5.15. MQG downgraded it to underperform with target price 43c, based on 50% of NTA. It's Thanksgiving in the US so probably a few other analysts away - so may be there'd be more reports come Monday, or perhaps the company is just too small to receive coverage anymore.

 

[McLovin]

I think retail investors should pay heaps of attention to what instos are doing. Not because instos are always right/wrong, but because they affect substantially your entry/exit points. TGA may have been a buy at $2, but if Perpeutal is selling and has 10m shares to go - why stand in its way?

Sorry, I should have been clearer, I meant investors fixate on whether the company is "good" or "bad" based on what instos are doing. The TGA thread is too long to go and find examples but to paraphrase many of the comments were along the lines of "If Perpetual is selling why would you think you know more than they do".

There are only 2 broker reports on FGE that I've seen today... Bells and MQG. Bell has a target price of 58c (and downgraded to sell) while previous target was $5.15. MQG downgraded it to underperform with target price 43c, based on 50% of NTA. It's Thanksgiving in the US so probably a few other analysts away - so may be there'd be more reports come Monday, or perhaps the company is just too small to receive coverage anymore. QG downgraded it to underperform with target price 43c, based on 50% of NTA.

Yeah, I read the Mac report. At least this time we know FGE can't be accused of selective briefings.

 

[skyQuake]

Sure but someone's got to be accountable somewhere along the line... I guess that explains a lot about why big instos struggle to outperform.

They'd probably just give a call to an IB to dump shares. Price not important, volume important!

If it beats vwap then well done. If its not oh well. Just like GNC this morning

 

[Valued]

How big was the fund?



Sorry, I should have been clearer, I meant investors fixate on whether the company is "good" or "bad" based on what instos are doing. The TGA thread is too long to go and find examples but to paraphrase many of the comments were along the lines of "If Perpetual is selling why would you think you know more than they do".

I think in some cases retail investors can have more industry knowledge or better knowledge about a specific company than a fund too. If you work in a specific industry you might be able to piece together things outsiders can't. An example I think is the ASX listed law firms. Most of the investors arn't lawyers and don't understand the first thing about how the firm makes money other than it wins cases and gets paid. A lot of focus is put on their acquisition strategy without even understanding the basic principles behind what generates their revenue.

If you work in an industry you also have contacts in the companies you may consider investing in. Big funds can talk to senior management but sometimes there is more value in knowing middle management. One big ASX listed company that is popular with mum and dad investors and institutions alike looks great from the eyes of senior management but there are huge problems underneath at the middle and lower management level. If you miss that, you overvalue the company. The problem is you can't know that unless you work in the industry.

 

[Intrinsic Value]

The basic problem with all these mining services companies is the high level of risk assosciated with their projects.

First off the mining service companies often dont have the quality resources to manage big projects and set themselves up for failure in the intial acceptance of the contract terms which are typically run on very tight margins. You typically have customers like BHP, Rio, Woodside etc who have far greater resources and far greater financial acumen than the staff at mining services companies so you are behind the eight ball to start with.

I worked for two big mining services companies specifically setting up their project WBS structures for their projects and doing their month end and monitoring their costs for their cost plus jobs.

The staff they employed werent really up to the job of managing these projects. Costs were often missed and became unrecoverable and many projects lost money as a result. Basically there are a lot of cowboys in the mining services industry who dont really have the expertise, experience or staff to run a big project.

One of the companies I work for no longer does projects because it lost over 50 million on one project alone.

So it is always buyer beware when it comes to these sort of businesses.

 

[skc]

How big was the fund?

Not sure the exact size but it was a big insto (can't remember rthe name!).

Sorry, I should have been clearer, I meant investors fixate on whether the company is "good" or "bad" based on what instos are doing. The TGA thread is too long to go and find examples but to paraphrase many of the comments were along the lines of "If Perpetual is selling why would you think you know more than they do".

Yes I agree. Just like those who are fixated on the presence of bots in any particular stock...

 

[So_Cynical]

If you didn't know it was in a halt, I hope you don't own FGE since you just lost the large majority of your investment.

Lucky for me that in general i avoid stocks that don't own anything, the "value" trap...i dont and have never held FGE.

 

[Valued]

Lucky for me that in general i avoid stocks that don't own anything, the "value" trap...i dont and have never held FGE.

I suppose service companies can seem risky but imo a service company like FGE isn't that much different to say a supermarket like Woolworths (ignoring Woolworths' other very large interests). They employ a relatively low amount of capital in order to generate very high profits due to high revenue with low operating margins.

 

[VSntchr]

I suppose service companies can seem risky but imo a service company like FGE isn't that much different to say a supermarket like Woolworths (ignoring Woolworths' other very large interests). They employ a relatively low amount of capital in order to generate very high profits due to high revenue with low operating margins.

Look at the customer base. WOW has millions of repeat transactions...any of which can drop off and WOW will not even notice. They can make a pricing blunder and still it wont affect them badly...

now look at FGE, handful of transactions..any of which drop off and you'v got a serious problem...a pricing blunder on just two contracts has nearly wiped them out and at best has tarnished their name for the foreseeable future...

 

[ROE]

I suppose service companies can seem risky but imo a service company like FGE isn't that much different to say a supermarket like Woolworths (ignoring Woolworths' other very large interests). They employ a relatively low amount of capital in order to generate very high profits due to high revenue with low operating margins.

you soon learn, business that has million of repeat transaction in small number is far superior to any other business on the market...and the same business that are ticket clippers and get customer to pre-paid is even better

Business that has large contract are inherently more risky as one contract could make or break you.

 

[Valued]

you soon learn, business that has million of repeat transaction in small number is far superior to any other business on the market...and the same business that are ticket clippers and get customer to pre-paid is even better

Business that has large contract are inherently more risky as one contract could make or break you.

Fair enough. This makes sense. Im convinced lol. Btw above I said low operating margin. I meant high revenue low profit margin. WOWs operating margins in their supermarkets are very high, as with forge which is why one contract can bust them

 

[Baker1494]

A fund manager friend once told me that they rebalance based on beta to try to outperform. I.e. overweight high beta stocks in a rising market to get those extra performance. But it probably depends a lot on the mandate / strategy of the fund.

I think retail investors should pay heaps of attention to what instos are doing. Not because instos are always right/wrong, but because they affect substantially your entry/exit points. TGA may have been a buy at $2, but if Perpeutal is selling and has 10m shares to go - why stand in its way?

There are only 2 broker reports on FGE that I've seen today... Bells and MQG. Bell has a target price of 58c (and downgraded to sell) while previous target was $5.15. MQG downgraded it to underperform with target price 43c, based on 50% of NTA. It's Thanksgiving in the US so probably a few other analysts away - so may be there'd be more reports come Monday, or perhaps the company is just too small to receive coverage anymore.

Hey SKC,
Where have you been getting these reports? I have been searching for a couple of years for a good collection of them.

 

[skc]

Hey SKC,
Where have you been getting these reports? I have been searching for a couple of years for a good collection of them.

You have to pay for them or a client of the research house.

This site offers a summary of daily broker calls. I don't know about its accuracy, currency or comprehensiveness.

http://finance.ninemsn.com.au/newsc...108/fn-arena-broker-call-headlines-3-dec-2013

Back on FGE... still plenty of movements. Looking at the movement of MMS after its shock (completely different event and potential outcomes), the price action may turn out to be quite similar.

 

[ROE]

I hate to say it but downgrade usually don't come with one off
It usually follow by more down grade .... I ain't suggesting FGE going to do it but stats wise

It has a bigger chance of more down grade down the track.

With big miners spear head and accelerating capex saving in the next 2 years the odds stack against mining services companies.

RIO announce today they going to save 8bn capex by 2015

 

[Baker1494]

You have to pay for them or a client of the research house.

This site offers a summary of daily broker calls. I don't know about its accuracy, currency or comprehensiveness.

http://finance.ninemsn.com.au/newsc...108/fn-arena-broker-call-headlines-3-dec-2013

Back on FGE... still plenty of movements. Looking at the movement of MMS after its shock (completely different event and potential outcomes), the price action may turn out to be quite similar.

That website is brilliant. Thank you very much for that. Any opinions on research houses?

I got out of FGE today more for a short term short, planning on buying back in if it falls by 50%. Def looking like the potential for more falls over the next couple of days/weeks.

 

[skc]

That website is brilliant. Thank you very much for that. Any opinions on research houses?

Do a search on the forum and ask the questions in the right thread so we can keep this thread on FGE.

 

[Floater]

Hi to all,

Have just joined Aussie Stocks,
Not new at share trading but no wizard either,
My question is I have just purchased a sizeable parcel of FGE shares today at $0.505c and jumped the gun by about an hour as they went down even lower to 48.5c.
Did I make the right decision, looking at the value of the company regardless of the issues at hand the original values are still there even though they made some not so diligent purchases.
I believe still that I have made a good purchase and that the shares will rise in the not to distant future.
What are the thoughts, is in your learned eyes FGE still a good company to own shares in.

Regards
Floater

 

[infamous]

Hi to all,

Have just joined Aussie Stocks,
Not new at share trading but no wizard either,
My question is I have just purchased a sizeable parcel of FGE shares today at $0.505c and jumped the gun by about an hour as they went down even lower to 48.5c.
Did I make the right decision, looking at the value of the company regardless of the issues at hand the original values are still there even though they made some not so diligent purchases.
I believe still that I have made a good purchase and that the shares will rise in the not to distant future.
What are the thoughts, is in your learned eyes FGE still a good company to own shares in.

Regards
Floater

Feeling better about that decision now? (hopefully you stuck to your guns)
Currently $0.67, so +33% on the back of a being awarded a 40 mill contract in the US market.