OBL - Omni Bridgeway

herzy · 26 August 2012

Re: IMF - IMF (Australia)

Without getting too personal (and keeping in mind the topic of the thread), would you consider outlining your LEACA strategy using IMF as an example? E.g. selling 1/3 of your holdings above 1.50, buying 1/3 back in at 1.40...

Your LEACA strategy sounds interesting, and like something that I've been looking into - yet to do it successfully though (still waiting for some of my holdings to drop in sp - there are worse problems I suppose).

Tannin · 28 August 2012

Re: IMF - IMF (Australia)

The price dropped briefly when they went ex-dividend (to 1.44 as I recall) but rapidly went up again before I had a chance to increase my stake.

The price dropped again today, for no apparent reason, closing at $1.43 and mostly trading around $1.44 to $1.46. This puts IMF on a trailing p/e of 4.8 and a fully franked trailing yield of 7%, grossing up to 10% with franking. I took the opportunity to buy some more. I see IMF as a core holding. I might (or might not) sell off a half or a third if they put on 20 or 30c over the coming months, but my present intention is simply to hold until further notice.

McLovin · 28 August 2012

Re: IMF - IMF (Australia)

pwnitat0r said:
I bought the notes (back in May when you posted this) for more exposure on the chance the shares spike after they release guidance for full year net profit, or release their full year net profit which I expect to be $40 million+.

I don't see any downside risk, but I do see the potential of an upside spike when full year profit is released. Who knows how the market will value ~$40 million profit with the shares a PE ratio of 5. $2 isn't too far fetched IMO.

Not sure about buying the notes now though, there is only 2 payments remaining and currently trading for ~$1.74, so you'll be losing money assuming they repay the full value of $1.65 back in December (which they plan to do) without a spike in the share price above $1.65.

Just to update on the notes. In the presentation they have stated that they haven't made a decision on whether or not to redeem the notes in December. It sounded like they were leaning more toward not redeeming early.

JTLP · 28 August 2012

Re: IMF - IMF (Australia)

Can somebody help me out with the IMFG notes?

I've read somewhere that they most likely will need the money and won't be bought out in Dec - does anyone know how many payments are left on them and what they are paying?

Thanks!

McLovin · 29 August 2012

Re: IMF - IMF (Australia)

JTLP said:
Can somebody help me out with the IMFG notes?

I've read somewhere that they most likely will need the money and won't be bought out in Dec - does anyone know how many payments are left on them and what they are paying?

Thanks!

Face value is $1.65 coupon is 10%, early redemption is by Dec 31 this year. You'd have to listen to the presentation to form your own opinion of whether or not you think they are redeeming or not. If they go for early redemption then they have two payments left, plus the face value + the penalty payment (2%/year remaining compounding quarterly) otherwise they must be redemed (these are debt securities not hybrids) by 31 Dec 2014.

galumay · 31 December 2012

Re: IMF - IMF (Australia)

Has anyone done an IV calc on this stock, I have rechecked my numbers a couple of times and for some reason I am getting an IV of around $5.50!! Clearly not right and I cant see where I have gone wrong, I have fiddled around with the convertible notes and dividend accounting but whatever I try makes the numbers bigger rather than smaller! Either its the bargain of the century - or I have made a fundamental error. (almost certain!)

herzy · 2 January 2013

Re: IMF - IMF (Australia)

galumay said:
Has anyone done an IV calc on this stock, I have rechecked my numbers a couple of times and for some reason I am getting an IV of around $5.50!! Clearly not right and I cant see where I have gone wrong, I have fiddled around with the convertible notes and dividend accounting but whatever I try makes the numbers bigger rather than smaller! Either its the bargain of the century - or I have made a fundamental error. (almost certain!)

Can't help specifically but I am also of the view that it is majorly undervalued if that helps. Very low p/e, lumpy but consistent earnings (which IMO will increase), potential for US expansion, high dividend... Happily holding.

McLovin · 2 January 2013

Re: IMF - IMF (Australia)

galumay said:
Has anyone done an IV calc on this stock, I have rechecked my numbers a couple of times and for some reason I am getting an IV of around $5.50!! Clearly not right and I cant see where I have gone wrong, I have fiddled around with the convertible notes and dividend accounting but whatever I try makes the numbers bigger rather than smaller! Either its the bargain of the century - or I have made a fundamental error. (almost certain!)

How are you valuing it? When I bought it early last year I got a value around $2, with margin of safety. I mainly used the value of their existing portfolio and made some guesstimations as to how much cash would flow from them + the cash on the balance sheet. I didn't include anything from their US expansion because, well, it hasn't done anything yet.

systematic · 2 January 2013

Re: IMF - IMF (Australia)

No IV, but I have it rated well on value (top 15%).
Showing some near term momentum, too.

herzy · 3 January 2013

Re: IMF - IMF (Australia)

What's going on today?? Up between 4 and 7%. At one point there were 4 sellers left! Should be an interesting ride (up)!

galumay · 3 January 2013

Re: IMF - IMF (Australia)

McLovin said:
How are you valuing it? When I bought it early last year I got a value around $2, with margin of safety. I mainly used the value of their existing portfolio and made some guesstimations as to how much cash would flow from them + the cash on the balance sheet. I didn't include anything from their US expansion because, well, it hasn't done anything yet.

I basically use the Montgomery formula and tables for calculating IV, I didnt include anything from the US stuff either, really based on current data rather than projected.

McLovin · 3 January 2013

Re: IMF - IMF (Australia)

galumay said:
I basically use the Montgomery formula and tables for calculating IV, I didnt include anything from the US stuff either, really based on current data rather than projected.

So what numbers did you plug in? Montgomery's formula is pretty flawed but I would imagine it's almost impossible with a lumpy earner like IMF to calculate IV based on his forumla.

IMF do provide quarterly case updates with expected case wins by year and by value, which makes it a pretty good candidate for a bit of DCF.

Country Lad · 4 January 2013

Re: IMF - IMF (Australia)

You will be hard pressed to come up with a valuation of this one which relates to the share price. Mind you, I am of the same view with all shares but that is a different story.

IMF is valued by the market at any time by the cases they are funding and the probability of a successful outcome. That can cause quite a fluctuation. Currently the market likes the chances of the initiative in the Netherlands against ABN AMRO Bank N.V, now The Royal Bank of Scotland N.V.

The price has been rising nicely since that announcement and the recent increase was to some extent predictable.

Cheers
Country Lad

galumay · 4 January 2013

Re: IMF - IMF (Australia)

McLovin said:
So what numbers did you plug in? Montgomery's formula is pretty flawed but I would imagine it's almost impossible with a lumpy earner like IMF to calculate IV based on his forumla.

IMF do provide quarterly case updates with expected case wins by year and by value, which makes it a pretty good candidate for a bit of DCF.

I plug in NPAT, Dividends, # of Shares and Equity for the 11/12 year, I have a RR of 12% by default. My workbook refers to Montgomery's tables for the calculation.

While I accept there are issues with his formula, that is true for any calculation of IV and at least it gives me a reference point for value. Its pretty hard to find stocks in the current market that give results using this method that indicate prices below value - so when one flags up with such a difference it piques my interest!

I am only in the research phase of my investment journey and I have settled on a FA approach as opposed to a TA approach hence the work I have done in creating a workbook to allow me to calculate and save IV numbers.

I am not looking for absolute numbers, I see it as more providing an initial guide for stocks to investigate further for potential investment when I am confident enough to start serious investing.

Thanks for the feedback!

McLovin · 4 January 2013

Re: IMF - IMF (Australia)

galumay said:
I plug in NPAT, Dividends, # of Shares and Equity for the 11/12 year, I have a RR of 12% by default. My workbook refers to Montgomery's tables for the calculation.

While I accept there are issues with his formula, that is true for any calculation of IV and at least it gives me a reference point for value. Its pretty hard to find stocks in the current market that give results using this method that indicate prices below value - so when one flags up with such a difference it piques my interest!

His forumla makes assumption about compounding retained earnings which may or may not be true. The rub with IMF and where you will fall down everytime using that forumla is that their earnings are lumpy and so are their dividends (their franking account is empty until tax is paid, which happens after they receive their fee). What happens if you use prior year NPAT instead? As you've seen, the reference point for value is way off. Unfortunately, if you use his method you may end up with more GIGO errors than real undervalued companies.

Plenty of people don't like IMF because of the earnings lumpiness, so don't worry, it's not an easy one to value!

JTLP · 26 February 2013

Re: IMF - IMF (Australia)

Mixed feelings about the HY report today.

Not too concerned about falling NPAT etc - tis a lumpy earnings business and should be treated as such. However no dividend was a bit disappointing - they have quite a bit of cash so not sure why they didn't part with some?

Must be holding for the Wivenhoe dam case + others?

DNH but looking to in the future

McLovin · 26 February 2013

Re: IMF - IMF (Australia)

JTLP said:
However no dividend was a bit disappointing - they have quite a bit of cash so not sure why they didn't part with some?

No franking credits available.

JTLP · 27 February 2013

Re: IMF - IMF (Australia)

McLovin said:
No franking credits available.

Thanks for that - is it noted in their report? I didn't see!

Was pretty heavily traded down today to finish at $1.50. Still on the sidelines and waiting...

McLovin · 28 February 2013

Re: IMF - IMF (Australia)

JTLP said:
Thanks for that - is it noted in their report? I didn't see!

Was pretty heavily traded down today to finish at $1.50. Still on the sidelines and waiting...

Not disclosed (at least I didn't see it in there).

They don't generally have franking credits until the pay tax, which doesn't occur until FY year end. There is some commentary about in last year's report.

Also note, they generally like to have between $55-$70m in cash on their balance sheet.

JTLP · 28 February 2013

Re: IMF - IMF (Australia)

McLovin said:
Not disclosed (at least I didn't see it in there).

They don't generally have franking credits until the pay tax, which doesn't occur until FY year end. There is some commentary about in last year's report.

Also note, they generally like to have between $55-$70m in cash on their balance sheet.

Makes sense.

In other news shot straight back up today...you snooze you lose!

OBL - Omni Bridgeway

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McLovin

JTLP

McLovin

galumay

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systematic

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