Penrice Soda Showing Strength on a Down Day
With the Australian market down over 3%, XJO currently down 3.1%, Penrice Soda (PSH) is showing strength up 2.6% or 1 cent to 40 cents. A non-executive director, Andrew Fletcher, bought 50,000 shares last week at $0.395, increasing his holding by 73%. I take recent strength and insider buying as two signs that a bottom is forming in Penrice.
The latest presentation by the MD, Guy Roberts, as two weeks ago at the Goldman Sachs JB Were Micro Cap Conference. Mr Roberts outlined the business drivers and outlook, including this breakdown of the business.
- Low cost producer in Soda Ash.
- Sodium Bicarb returns exceed their hurdle rate.
- Outlook – NPAT $5-6M and negative cash flow of $7-9M.
- Negotiating with banks to defer 2011 debt amortisation.
Reduction in Water Usage. 20 May
Excellent discussion on PSH at Hot Copper. (registration may be required). In that thread one of the key points of concern in the difference in projected net profit after tax and cash flow for 2010. Similar results can be found in 2008 and 2009 with NPAT considerably higher than CFFO in both those years.
The following graph is a breakdown in the difference between NPAT and CFFO for 2009.
Disclosure: Small long PSH
P.S. For anyone interested in my exams.
This morning I sat Derivative Securities and while I believe I did well, I fell short of my expectations. I made at least one stupid arithmetic error which will have cost me dearly and was not entirely sure about my solution for another question.
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Hi Dean, don’t worry too much about exams. Success is not forever and neither is non sucess. I have no idea why you would want to work for platinum or a fund manager. A person from my year worked for platinum as a health stock analyst and it sounded as boring as BS. Once you have worked for yourself, you might find working in an large organisation a bit of a drag.
PSH: chart is still ugly. Could go to zero. Not convinced of their business model. Too much risk of capital for my liking.
ELD: looking more interesting at 80c. At current prices, I still prefer NUF over ELD as a soft commodity play though.
Just my thoughts. Still cashed up and waiting. Could be until september or forever. Good luck with the other exams!
I keep watching Elders and despite Roger M. dissing the concept of falling knives I find that concept incredibly useful at keeping me out of situations like Elders. I value Elders at over $1, so ti is now looking attractive.
I’m not worried about my exams, my expectations were simply too high. It was the first time I’d ever had a reasonable expectation at getting 100%. As my 9 year old said if I had lower expectations I’d be really happy with my result. At any rate, as I said it was learning the material which was more important and I know I accomplished that.
Gotta go, talk more soon.
Exams are important when you are doing a course. 100% is perhaps too high an expectation. I’m sure you will do well in the exams.
Keep your eye on the prize, which is where you want to work after all this. If a prospective employer doesn’t see the value in employing you, with your previous experience and current skills, then maybe it’s not where you want to work anyway. There are a zillion people with MAF’s, CFA’s, MBA’s and other type qualifications. There are few people with the ability to turn around a business or manage money well. Instead of thinking “who will employ me”, I’d balance that with “where do I want to work”. You have a lot of skills and value so it’s important to back yourself there.
A 90% average Vs an 80% average may not be that distinguishing, so I don’t think it is a big deal in the long term. It might be imporatnt for someone who has just done an undergrad degree with little other experience looking for an entry level position, but that may not be you. More important may be your personal contacts and other skill sets. Maybe you need the entry level option there as a backup but I would be swinging for something else.
Good luck in the rest of the exams!
Once again thanks for your thoughts Sean, much appreciated. 100% was too high an expectation, particularly when it was my first exam in 17 years. I really like this line of yours “If a prospective employer doesn’t see the value in employing you, with your previous experience and current skills, then maybe it’s not where you want to work anyway”. It reminded me of when I finished my Applied Science degree and was getting lots of rejections. A friend said it was simply that they were not the right jobs for me and when the right job came along I’d get it. Despite thinking that was a tad hippy trippy it made me realise a couple things. One, I didn’t really want any of the jobs I had been applying for and two I needed to think more about where I would add value.
I soon ended up getting offered two jobs, the one I chose was a consulting position with SAP, which was then a smallish German software company. It was a fantastic job. Everyday I woke up excited to go to work. I now wonder where I could add real value and what job would make me jump out of bed in the morning. Working with smart people in a challenging varied environment solving big picture problems sounds good to me. Breaking that list down may be interesting. Both working and smart people cuts out any government job (friends in that sector please take that as a joke, I hope the rest of you are laughing with me.) Heck I better stop there before I alienate even more people. If anyone has thoughts about a job that would suit an A Type, ENTP, with an in-depth understanding of business gained from consulting to over 30 companies in Australia, New Zealand and the UK, who has a passion for investing spanning over twenty years and hands on portfolio management for the last five years then please let me know.
Hi Dean, I have no expertise in this area, but my general experience is that competition reduces potential returns. I think everyone wants to work for a large organisation and has a fantasy of a fast track to the top. If you are very competitive then an investment banking environment might be for you. Personally I think I would hate it, I am just not that competitive and pitted against super competitive and super greedy people, I think I would come out close to last and well done over. I really don’t want to do people over or get done over and that’s the way I am.
Private equity is another popular area. But it could be a lean few years or decades for with GFC and debt issues. And like other popular areas, everyone seems to want to do that too. PE managers are also from the very few I’ve met not very good business managers, but they can stich together deals and sell that with the gift of the gab.
As a thought experiment what about inverting your desires? “Working with smart people in a challenging varied environment solving big picture problems” becomes “working by myself making a good margin, doing the same thing everyday and taking care of the endlessly boring everyday issues with running a business”. Of course another way of looking at it might be “working with a very smart person (you), getting a team of smart people who complement you (who you employ) in the biggest challenge there is which is to make a good business prosper, maintain fat margins against never ending competition over time and being well rewarded for that.”
I think this is where the entrepreneur thing comes in. You can work as a CFO for a startup. But no one will be holding your hand. You can run your owwn business or set up your own fund. No one will be holding your hand there much either. If you need the hand holding, work for a small fund or for lots of hand holding, a larger fund manager. But as with other areas of life, balance the popular wisdom about a sector, which is often true to an extent, with the other truth of life which is that if you look where others don’t, there’s less competition and a better chance of finding a gem. You might also be adding more value where others are competing elsewhere.
That is all pretty vague. Don’t let it be a cause for procrastinating about exam preparation. That has to be done. Leave the long term thoughts in the back of your mind where it can churn over and perhaps yield some perspective that gives you an edge when you need it.
Back yourself and take a step into the unknown. Try to do that without risking too much capital.
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