Today's acquisition of SummitReheis looks good according to the financial expectations released by Elementis and makes the company even less reliant on the oil industry. My only concern would be if there is a trend towards more natural deodorants which do not contain aluminium or zirconium but I am sure natural deodorants currently account for only a tiny percentage of sales and that Elementis would have done due diligence on this. There is also plenty of other diversification offered by the acquisition including a move into the dental sector which I guess must have good margins. I hope Elementis does not see a need to maintain any special dividend as it would be better to pay down debt arising from the acquisition rather than give money away. Have held for many years and still believe this company has good long term prospects.
Elementis seems to specialise in announcing the blindingly obvious and then seeing the market take it entirely amiss. The speciality chemicals producer serves a range of industries. Yesterdays trading statement makes it clear that all is progressing well enough across most of the group, Asia Pacific is returning to growth and even some stability is returning to its oilfield activities after the inevitable downturn in the wake of the crude price collapse.
Its chromium division sells in areas such as automotive production and leather tanning and, particularly in eastern Europe, the strong dollar has been a problem, making prices less competitive against local competition. The Russian and Kazakh currencies have been especially affected. The company has warned about this twice this year already, but the shares still fell 17¾p to 208¾p.
Elementis hands out half its year-end cash balances to investors. The rate of cash build-up and so the potential for this years special dividend are unchanged and this means the shares offer a 5.4 per cent yield. This is attractive but I would worry about further share price falls.
MY ADVICE Avoid
WHY Potential for further surprises is there"
I was tempted to pick more up in the recent low 200's, but held off.
I'm not rushing in at the moment and I am waiting on 190's/180's.
Its probably an over reaction, but hey, those are what create opportunities for private investors.
I'm not selling, but if you are worried about a short term loss, then it's a weak SELL or if you bought on the recent Investors Chronicle BUY tip expecting a quick up move, I'd consider taking a small loss and looking for other quick trades.
I think that the disappointing trading statement from Elementis needs to be seen in context. Remember that the financial performance for the year to 31 December 2014 was strong, with basic eps up over 60% so this might explain why the rating of the company was higher than you might expect for a typical cyclical company (although I would argue that Elementis is not a typical cyclical). I would suggest that there has been no fundamental change in the business so I will continue to hold, but I would suggest that there will need to be a recovery in demand for Elementis' oil industry products before the share price recovers.
"Should you fret or yawn over Greece? Negotiations appear to have foundered after the leftist Greek government tried to shift revenue-raising onto business taxation, but the Troika wanted a more serious cut in state spending. Ideologically they ..."
"Easter Freebie - our FUTURES below are all readable! Hopefully they are as accurate again!ELEMENTIS (LSE:ELM) Â We're NOT share tipsters and only comment against numeric potentials. But every now and then, we come across something which presents ..."
Please could I suggest to the person in charge of Investor Relations that they improve the information on the corporate web site. When I searched on "Dividend History" nothing was found. When I finally found the dividend history on the web site the last dividend shown was the final dividend in 2010. When I tried to contact Investors Relations about this using the online system, it did not work. I get the impression that there is room for improvement here.
There is no doubt in my mind that this is a solid company with good products but selling inevitably into an international market and into a sector as one of its customers that is currently in a bear market. Therefore two factors are affecting the share price:
a) the severe drop in the price of oil per barrel is making the explorers reduce or slow down their activities, which in turn affects the 'picks and shovels' companies (see Petrofac); in turn those companies require less supplies
b) the $ exchange rate. There is a view that the $ is on a bull run; if it is, then the earnings of many companies are going to be affected.
I repeat - a good company but can one deploy the capital tied up to any better advantage?
Bookmark the links if you wish to 'pass the LINK/s on'.... or read later?
BE A PART OF IT
# The big problem with shorting is that THEY (the shorters) WOULD most likely lose most of their money IF they just 'bet' on the price going down without trying to 'help' it down?
So, there is the 'catch 22' scenario. No one would know of an RNS to be released that will contain BAD NEWS, if they did and then 'shorted' the stock, then they are guilty of 'insider trading'.
The only sure way to short a stock and WIN is to spread dis-information to defame the company with help from other posters that are in concert with them. To ENSURE that they don't lose the biggest part of their 'short', ironically, then, they must deramp with (seemingly) believable posts.
When the pro's do it, they simply get the media or well known 'crooked' tipsters, analysts or brokers to do it for them. (say no more). .They're all in cahoots with each other!
The campaign against shorting is for the benefit of the 'cheated' investors that cannot control their investments due to the dirty tricks played out by co-ordinated deramping in order to tank the sp to abnormally low levels.
When the campaign is complete, the results will be reviewed by Govt legislators re- further action! The branch of the FSA ie FCA will be asked by Davide Serra to conduct an investigation into short selling practices, with the view to either:- an outright ban on short selling, or at the very least to be better and more vigorously regulated !
The HMGovt epetition is a regulated and monitored site with legal authority that will NOT under any circumstances allow any auspicious individuals to prevent 'others' from casting their free votes. Discussions of which are freely entered into with individual viewpoints.
It is estimated that over 90% of AIM stocks are INFECTED by short-sellers !
Many highly popular stocks are going down even on GOOD NEWS !
# IF you were a short-seller, BLUFFING, (basically manipulating a shares' price) about a company's overvalued share price, you might not want to *draw attention to yourself since you could get accused of stock manipulation. So you would hope (OR PLAN FOR) others to get involved and to present SEEMINGLY GOOD REASONS to short the stock.
You would want to put AS MUCH FEAR INTO 'LONGS' as possible and would use high volume short trading as well as buying to drive the share price down as low as you can and as long as you can. You really want the longs to fold and to get out of the game. If you are consistently seeing sellers overwhelming buyers driving a share price down as a stock seems to be going up, I can assure you it's probably shorts' selling, since longs are totally motivated to sell their shares at the highest possible selling price. #
IT is easier to tank a share price, rather than make it go UP, by short-selling.
RUINOUS to genuine investors.
They may be able to buy in cheap BUT what's the good, if the stock never really recovers?
AND when they have got you all hooked on the 'lovely' new all-time LOW.....They'll SHORT IT AGAIN !
# ChalieHarper - posted on iii - TRP
IF a fund owns a large share holding in a firm and is long.... whilst waiting for its end game to materialise, it loans out any number of its shares to a shorter...the shorter then manipulate the share price down making £X amount when short ended.... the shorter then gives the loaned shares back and splits the proceeds 50/50.
They both make cash, probably during a time when not much is happening with the sp. IT's a WIN-WIN for them but BAD news for the pi's who as usual may have sold at a loss because the cash has to come from somewhere. #
# Topalov asks on iii Ariana Res-AAU
(to give balance to this debate, i have included his response and Q.s with my reply)
Axo posted on iii...(thanks Axo, sound explanation )
These are the kind of people that Winnifreth & Co like to associate with. They aren't helping anyone, and they're a part of a growing awful trend where large short positions open a number of weeks before a 'damning' piece of 'evidence' is revealed that completely tanks an SP well before the piece could even be reasonably digested.
I would posit that Gotham City research hold even less credibility than Edelman, and yet their research note was apparently convincing enough to knock 50% off the QPP SP in under one hour. No-one of any note would have stumbled across their 74 page smear. Why would they? It was Gotham's 6th piece of research (term used very loosely) and absolutely no-one I have spoken to had ever heard of them. As such, they held zero credibility and had no natural exposure. It was disseminated beforehand with exacting purpose.
Elementis produces additives that have an effect on the way liquids behave, such how well they flow, whether they spatter or whether they form a level surface. These have a huge range of applications, paint being the most obvious.
The group also owns a hectorite mine, in California. Hectorite is a white clay that is used in many of these specialty products.
I believe hectorite is also used in unconventional mining/drilling including fracking.
"The Specialty Products business provides an ideal growth platform with its balanced geographical exposure across mature and emerging economies, strong technology base and strategic market diversification. The business has a significant technical service and application support presence in all its markets, which has been built on long-term relationships of trust, collaboration and technical expertise. The businesss differentiated technology innovation is supported by best in class process technology and tightly held manufacturing know how.
We own and operate a hectorite mine that is the worlds only known source of hectorite clay, which owing to its properties makes it a premium raw material used in some of our products."
Group earnings per share increased by 6 per cent to 23.0 cents per share.
Strong growth in Specialty Products
Sales and operating profit* up 10 per cent.
Double digit sales growth in Personal Care and Oilfield drilling.
Another year of excellent cash generation:
Net cash position increased to $54.1 million.
Total dividends for the year increased by 11 per cent to 13.93 cents per share:
Special dividend increased by 22 per cent.
"Based on our strategic position, focus on innovation, strong product portfolio and healthy new product pipeline, we remain confident in our ability to deliver profitable growth across a broad range of economic scenarios."
Bought this at the lows on Friday, read the news about the appointment of a new chairman this morning and am both delighted and surprised to see the sp rally so strongly today - or perhaps there's some other reason for the rally. Certainly the new chairman's credentials are impressive and it does boost confidence in the stock. Any other views?
"In July 2012 the Elementis Board announced that in addition to its current progressive dividend policy, a special dividend programme would be instituted to provide an additional return to
shareholders of up to 50 per cent of year end net cash on the balance sheet. This programme reflects the Boards high level of confidence in the Companys financial strength and its ability to deliver continued strong cash flows"
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