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Tumbleroll

3,495 Posts.

27/11/16

23:42

Post #: 20922155
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Good post Mike. Reasonable and measured. Debate around here is more polarised than ever but you've always played a very straight bat imo.

Originally posted by mike8654 ↑

I didn't run out of patience bergo - I re-assessed the risk involved in holding and decided I'd be out for the time being (happy to buy back in later at increased price if numbers stack up).

I'm happy to hold anything that looks like a recovery stock - for any length of time so long as the numbers are stacking up.

The main reason for my re-assessing risk are:
- Trump - looks like interest rates will rise a bit quicker than everyone thought, and currently SGH falls into the very highly geared category
- Citi deciding to dump their debt.

Citi are/were a secured debt holder - and are selling for 38c in the dollar.  So their assessment is the shares are worth nothing, and on an administration the present value of the secured debt recovery is 38%.

If Citi were making their decision on the basis of the same information you and me and other shareholders have, then I wouldn't see it as a problem.  But Citi get weekly and monthly trading figures and cash flow from SGH - they know more about what's going on in SGH than anyone here including me, and probably anyone except Slater's CFO.

I'm not saying that SGH will fail - or that it can't trade out of where it is at the moment.  Just my own opinion - back in April when I bought,  I thought SGH had a 70% chance of surviving in its current form, but I think that is down now more like 50% to 60% depending on who is buying the Citi debt.

If SGH have a good 2017 FY result (like EBIT of more than $120M - or EBITDAW of more than $140M) then that changes things.

Lenders will want to roll the debt over because they'll see that as maximising their return.   If this happens then SP will be over $1 - and the longs who stay long will be vindicated.

If you're reading Dr.Who's post - there's a distinction between justified optimism about a stock and self-delusion.

Dr.Who's post is - like many of his posts in the past - mainly (but not all) about either self-delusion or an inability to look objectively at a stock that he's currently long in and has invested a lot money and time in following.
That's not the way to make money on share investments.

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SGH Price at posting: 33.0¢ Sentiment: None Disclosure: Not Held
1 Upvote

0 Great analysis

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