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Recent Posts
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Well decision made for me, management have sold out to PE. Over an 80% return in 4 years so I guess I cant complain, especially as management appeared to have lost their way.
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Shares / Re: Companies I didnt buy
« Last post by galumay on October 25, 2022, 08:19:08 PM »Chris had previously talked to me about ATP, Atlas Pearls and I had dismissed them as unprofitable with significant debt. He mentioned they had now turned a profit and also just paid out the rest of the debt. So I thought I would run the ruler over it again, no question its cheap by any metric, a P/E of about 4x, a range of value based on FCF of 10c compared to a current price of 4c.
The problem for me is the risks inherent in a agri(aqua)culture/commodity play, they spend pages in the annual report detailing the complexity of the risks and their potential impacts on bottom line - oyster value/life/disease risk, FX risx, size of pearls, production rates, price of pearl, margins, etc. . Also a question mark over capital allocation now debt gone, divvies? buybacks? consolidation? Also all of the operations are based in Indonesia so there is also sovereign risk to consider.
I think its a potential position for someone with a higher appetite for risk than me, there is quite a lot of upside if they continue to execute and it re-rates to reflect the turnaround in the business. I just found the downside risks too hard to quantify and qualify, so I assume its somewhat symmetric. Probabilistically i think maybe 30% chance it stays around the current price in the medium term, 30% some of that risk comes home to roost and earnings revert such that price drops back to the 1c range, and a 40% chance it continues to grow, no problems with the oysters and pearls, and it rerates to round 10c - so price expectancy of 1.2c+0.3c +4c = 5.5c which is not enough upside for me.
Lets see where it is in 3 years!
The problem for me is the risks inherent in a agri(aqua)culture/commodity play, they spend pages in the annual report detailing the complexity of the risks and their potential impacts on bottom line - oyster value/life/disease risk, FX risx, size of pearls, production rates, price of pearl, margins, etc. . Also a question mark over capital allocation now debt gone, divvies? buybacks? consolidation? Also all of the operations are based in Indonesia so there is also sovereign risk to consider.
I think its a potential position for someone with a higher appetite for risk than me, there is quite a lot of upside if they continue to execute and it re-rates to reflect the turnaround in the business. I just found the downside risks too hard to quantify and qualify, so I assume its somewhat symmetric. Probabilistically i think maybe 30% chance it stays around the current price in the medium term, 30% some of that risk comes home to roost and earnings revert such that price drops back to the 1c range, and a 40% chance it continues to grow, no problems with the oysters and pearls, and it rerates to round 10c - so price expectancy of 1.2c+0.3c +4c = 5.5c which is not enough upside for me.
Lets see where it is in 3 years!
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Thoughts and Ideas / You weren't supposed to see that.
« Last post by galumay on October 09, 2022, 08:57:33 PM »65
Thoughts and Ideas / you are not entitled to your opinion
« Last post by galumay on October 09, 2022, 08:56:47 PM »66
Thoughts and Ideas / interview with @thelazybeavers
« Last post by galumay on October 09, 2022, 08:55:45 PM »67
Added to SMSF at $5.68 and also added more to personal PF at same price, 26/09/22
see decision journal here
see decision journal here
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Shares / Re: Investment Wisdom from Others
« Last post by galumay on September 05, 2022, 07:51:32 AM »How to think about owning micro caps.
https://focusedcompounding.com/how-warren-buffett-thinks-about-micro-cap-stocks/
https://focusedcompounding.com/how-warren-buffett-thinks-about-micro-cap-stocks/
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As we knew, very strong result for FY2022, only annoyance is the announcement of results posting bull**** earnings and no mention of actual earnings (which were up 10%.)
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An outstanding year for $JYC, somehow they seem to have fared better than many other businesses this year in terms of margins.
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