129 replies to this topic

[flexbender]

On a fair PE of around 10, there is still more value on offer here. About 20-30% more.

 

After the quick profit takers and gamblers take their money and go, it'll settle around the R16-R17 level over the next few months. Lot's depends on the results next week. It will be slightly lower but the question is by how much. Depending on that I'll decide if it's time to sell.

 

For now, loving this...

 

[LiveInExcess]

Did not just miss the boat on this, the boat is already back from it's world tour...........

[vlam]

New SENS out 20 minutes back:

 

 

 

CONCLUSION OF THE INVESTIGATION REGARDING CHARGES OF ALLEGED ATTEMPTED BRIBERY
AGAINST AN EXECUTIVE DIRECTOR

Shareholders are referred to the previous SENS announcements dated 25 and 26 March 2014, as
well as 24 April 2014, 2 July 2014 and 20 August 2014, regarding the charges of alleged attempted
bribery brought against an executive director, Mr Takalani Tshivhase.

Mr Tshivhase has today received written notification from the Specialised Commercial Crime Unit of
the National Prosecuting Authority of South Africa (SCCU), that after careful consideration of the
evidence at their disposal and consultation with, and evaluation of the reliability of all the state
witnesses, the SCCU has come to the conclusion that the evidence presented is insufficient to
provide a reasonable prospect of a successful prosecution. The charges against Mr Tshivhase will
accordingly be withdrawn.

The Company welcomes the decision. The conclusion and decision of the SCCU corroborates the
Company’s own investigation into the matter and confirms the Company’s initial statement that
from the evidence available to the Company, the Company was satisfied that there was no reason to
doubt the veracity of Mr Tshivhase’s denial of the allegations.

After what has been a most trying time for the Company, as well as Mr Tshivhase and his family, the
Board re-assures all of its stakeholders that the Company continues to practice the highest standards
of corporate governance and transparency. Mr Tshivhase, who was on leave of absence from the
Company pending the outcome of the case, will now resume his duties.

The Board thanks the many stakeholders that have shown faith and support in Pinnacle during this
difficult period and now refocuses its energy on executing on its strategy.

 

[zoner]

Share just jumped up to 35% in the last 10 min... not guilty!

1330c

[M e r l i n]

Maybe Gamma, to illustrate my view consider prices of Ellies and Pinnacle about a year ago, these stocks are presently a pittance compared to their over rated prices then, PNC year high was 2724 ELI was 762 so how can there be such variances in value without the influence of market sentiment.

 

Merlin, Market sentiment is nothing more than the aggregated sentiment of future value. We are saying the same thing.

[gamma]

Guys, you are both forgetting the most important thing - Market Sentiment, there are shares worth 2 Rand that the market loves and pays 10 Rand, plus the shares worth 10 Rand but the market pays no more than 2 Rand, so with the greatest respect for financial analysis which I am incapable nor inclined to, the market is the arbiter of value. 

Sure I study PE and EPS but the intuitive nous is more important, I saw the high div on ABL and was immediately attracted but then saw more worms than woodwork and knew that this is not sustainable, so never held a single share ever.

 

Thanks for the analysis Soletrader.

 

 

Merlin, Market sentiment is nothing more than the aggregated sentiment of future value. We are saying the same thing.

[M e r l i n]

Guys, you are both forgetting the most important thing - Market Sentiment, there are shares worth 2 Rand that the market loves and pays 10 Rand, plus the shares worth 10 Rand but the market pays no more than 2 Rand, so with the greatest respect for financial analysis which I am incapable nor inclined to, the market is the arbiter of value. 

Sure I study PE and EPS but the intuitive nous is more important, I saw the high div on ABL and was immediately attracted but then saw more worms than woodwork and knew that this is not sustainable, so never held a single share ever.

 

Thanks for the analysis Soletrader.

Generally agree with you however it's not that simple. One needs to factor in risk. Current EPS means nothing. Better to look at fwd EPS, which is an estimate that must include risk. If you're a long term investor then 3 year fwds are more important. And that brings us to PNC. Since the evaluation of risk is subjective the evaluation of value will be too.

[gamma]

@Merlin - I try to focus on value and not on price. If I can buy a R10 asset for R7.50, of course I will. Even if it means as the share is falling. So the ratio to look at is the so-called price to fair value ratio. Below 1 stock offers value. Above 1 stock is expensive. Looking at shares like Shop rite the stock will offer value at ca. R100. So although the price is lower than a couple of weeks ago, it is most probably still a short since the price to fair value ratio is above 1.The direction of the price is immaterial, as investors we need to focus on what the value of the counter is. Look at books by Benjamin Graham on formulae for estimating value. For PNC my estimate is a PE of 6-7 times and EPS of 160 - 170c giving a value of R10 to R12. Kind regards ST

 

Generally agree with you however it's not that simple. One needs to factor in risk. Current EPS means nothing. Better to look at fwd EPS, which is an estimate that must include risk. If you're a long term investor then 3 year fwds are more important. And that brings us to PNC. Since the evaluation of risk is subjective the evaluation of value will be too.

[SoleTrader]

@Merlin - I try to focus on value and not on price. If I can buy a R10 asset for R7.50, of course I will. Even if it means as the share is falling. So the ratio to look at is the so-called price to fair value ratio. Below 1 stock offers value. Above 1 stock is expensive. Looking at shares like Shop rite the stock will offer value at ca. R100. So although the price is lower than a couple of weeks ago, it is most probably still a short since the price to fair value ratio is above 1.The direction of the price is immaterial, as investors we need to focus on what the value of the counter is. Look at books by Benjamin Graham on formulae for estimating value. For PNC my estimate is a PE of 6-7 times and EPS of 160 - 170c giving a value of R10 to R12. Kind regards ST

[M e r l i n]

Soletrader, forgive me for labouring the point but it is worthy of consideration, I shall paint two scenarios with one buying a falling share and the other a rising share and selling at the end:

 

Falling price in downward movement buying one share each day and selling the day after last trade

12- day 1

10- day 2

8-  day 3

6-  day 4

4-  day 5

sell @ 2-/share = 10- day 6

Because the trend is down on day 6 you sell at 2- because suddenly you need the money, so you sell 40- worth of stock for 10- (huge loss)

 

Kelvin's Law of buying rising stock, the same scenario in reverse with totally different results:

4-  day 1

6-  day 2

8-  day 3

10- day 4

12- day 5

sell @ 14-/share = 70- day 6

Because the trend is up on day 6 you sell at 14- because suddenly you need the money, so you sell 40- worth of stock for 70- (huge profit)

 

Do you see the difference? that is why I do not buy a falling share.

 

@Merlin. The difference between a trader and an investor is that the former focusses on momentum. I focus on value. Different strokes for different folks I guess !

[Procrastinator]

Yes that is indeed what he meant.
And I believe PNC has been punished too hard. The market sentiment is very negative yes, and it's massively been compounded by people having fears of seeing another ABL picture unfold. But there's no case for that happening to be made at all!
 
There is still value here. The market has overreacted. And when the executive issue is dealt with and sorted out I think that those who were willing to be greedy when others we're fearful will be rewarded.

Fair enough, I take it that you have applied other buffet criteria to your assessment of this counter such as:

Strength of Pinnacle economic franchise?
Protection offered by an economic "moat" ?
Great Managers?

Sorry, I just don't see the above in this counter, but we can agree to disagree,
Honestly, good luck, I hope it pans out for you.

[flexbender]

Try telling that one to the Abil punters, just saying!
Think Buffet was referring to purchase of stocks below market value based on general market sentiment, not piling into a stock of a company that has fundamental operational flaws or morally questionable management.

All lessons in life are learnt with our hearts or our wallets, good trading.

 

Yes that is indeed what he meant.

And I believe PNC has been punished too hard. The market sentiment is very negative yes, and it's massively been compounded by people having fears of seeing another ABL picture unfold. But there's no case for that happening to be made at all!

 

There is still value here. The market has overreacted. And when the executive issue is dealt with and sorted out I think that those who were willing to be greedy when others we're fearful will be rewarded.

[Procrastinator]

"BGWOAF"
 
- W Buffett

Try telling that one to the Abil punters, just saying!
Think Buffet was referring to purchase of stocks below market value based on general market sentiment, not piling into a stock of a company that has fundamental operational flaws or morally questionable management.

All lessons in life are learnt with our hearts or our wallets, good trading.

[flexbender]

"BGWOAF"

 

- W Buffett

 

[M e r l i n]

Agreed, for those with cast iron stomachs and similar dangling appendages - the price now is where it was in February 2012 to put it in context, my view is this is merely a temporary correction in a downward channel.

 

need a strong stomach to trade this. there will be further ups and downs come the court case. definitely not for the long term portfolio at this point.

 

this latest move is probably a short stampede for the exits. I expect the smart money to push it back down over the next couple days..

[gamma]

missed this, kudo's to those who took risk trade off the bottom..bit envious 22%!!

 

need a strong stomach to trade this. there will be further ups and downs come the court case. definitely not for the long term portfolio at this point.

 

this latest move is probably a short stampede for the exits. I expect the smart money to push it back down over the next couple days..

[yusufm]

Closed out now, will reassess entry and TP for tomorrow's trading...

[vlam]

So from the SENS, revenue up 7%...okay, so they didn't really grow in real terms and the "increased" revenue didn't trickle down to earnings.  But I guess it does show that they aren't being blacklisted by corporate SA as SoleTrader speculated earlier.

 

I was still busy getting my head around the company, but from what I've read it seemed that the retail sector is a big customer of theirs.  And the retail consumer is currently under pressure, and from what we've seen the last couple of days retail businesses are (therefore also) under pressure (Shoprite, Massmart)...  And this will most likely just increase as interest rates go up...

 

Let's see what happens in the next couple of days.  I didn't enter a position, just didn't seem very attractive from what I've processed thus far :/

 

Congrats to the guys with a different risk appetite who have entered a position

Edited by vlam-hobbyist, 20 August 2014 - 05:01 PM.

[delta66]

missed this, kudo's to those who took risk trade off the bottom..bit envious 22%!!

[yusufm]

Make that 15% in the last 30min! It's going like a runaway train man... all aboard.

Awesome! What's the TP? 1200 or more? May easily see 1000 by end of day

Edited by yusufm1, 20 August 2014 - 03:40 PM.