It's early morning here so anything I say can be excused on the basis I'm still half asleep.
I'll also throw in that I rarely, if ever, trade shares short term, so short term price is of academic interest only to me. I'm interested mainly in news that changes the fundamentals, mainly for others - I'm often at odds with the markets, which latterly (past two or three years) has cost me a lot, on paper at least. I'm hoping SGH will be the start of a longer term change in trend - 'patience rewarded' kind of thinking. Chance would be a fine thing.
The game here is whether the shorters, who were all over SGH like a rash - no, that doesn't do it justice; let's be more accurate and say "like a widespread outbreak of bubonic plague" - were right. Or whether they got every media outfit and his dog to join in with them in predicting doom and despair, when the real situation was nowhere near as bad as the one that was painted (cash is always king - how much of the $1bn was lost on trading - revisit the 29 Feb announcements and check - I think the number was about $70m?). The complete silence the company has treated everyone to ever since seems likely to me to be Houghton's & Grech's (and their advisers') recognition of the futility of saying ANYTHING at all until it could be proved beyond doubt - because whatever was said, positive or not, would be presented by the usual suspects as being Armageddon.
Houghton might have actually been smart to have the mammoth clearance of the decks that was reported in Feb (if you're going to have one, make it a good one) because SGH DID have a reputation for having been - how shall I put it - a touch 'sporting' in the view it took each time of WIP build-up and how much should be reported as 'profit' each time. Tax and accounting rules gave it ample room to report in this fashion. Maybe the accumulation of so many different law firms in such a short timescale had let to the build up of a few cupboard skeletons. WDIK?
I'll precis the book I could write here about theories and practices of accounting and presentation of numbers - and the new way it's possible to view what would in the past automatically have been regarded as: "over-gearing", IF (and I say IF) one takes the view low interest rates are here to stay, by simply saying the only really important thing we're looking for in these half year numbers is significant cash turnaround since the last reporting date. If the path to debt reduction is clearly laid out and a maintainable start has been made, then it will look to most people as if SGH has 'made it through the night' and the future is bright.
I haven't been following the 'shorts book' closely recently - is there any noticeable build up? If there is, expect whatever is announced to be presented by these types as if it's the end of the world, regardless of what the numbers actually say to anyone looking at them rationally. Scurrilous rumours work wonders for shorters; the media invariably jumps aboard because bad news sells, whereas good news is boring and you know the rest. Financial journalists today are mostly 'ESN' (educationally sub-normal) - they care little what they write about and understand even less.
That's about it, except to say I'll be pleasantly surprised, from an aesthetic perspective only, if the MMs decide they want the shares to close today above 50c. It'll at least keep you more clear-headed than you might otherwise have been, Dougie and 'er indoors will probably be happy.........
GLAL - have a great weekend - 11 days and counting..........
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