"In the City they say "let the trend be your friend", and sometimes you just have to go with the flow. It's what traders have been doing since the FTSE 100 began its miraculous post-referendum rally a fortnight ago. Central bankers and politicians ..."
"Societe Generale downgraded IMI to 'hold' from 'buy' and slashed the price target to 975p from 1,350p after the company said on Thursday that earnings for the year would be at the low end of market views.
"We remain upbeat on the longer-term benefits of the strategic turnaround programme but with global industrial demand taking another leg-down we see little scope for upside surprise over the next 12 months."
It said the third-quarter statement confirmed a highly challenging operating environment with sales down 5% LFL year-on-year.
With a further fall in 2016 sales and management highlighting rising competitive pressure, margins in the critical engineering division look set to be capped next year at a lower level. IMI also ruled out M&A in the short - term given the macro, removing another potential earnings catalyst, the bank said."
A difficult year for IMI and 2015 is likely to be flat in constant currency; add in the headwind that is likely to more than offset any gain from the US$ strength then earnings will probably be lower this year.
The upside is management's commitment to double operating profits by 2019.
"The FTSE had a mega Tuesday. When we'd written yesterday that the market needed only trade above 6357 this week to allow growth, we truly did not plan for the next day providing 150 points of elevation. The market closed at 6372 and FTSE ..."
Reasons sound solid to me...in fact overall I think you could be onto the better bet. A quick analysis with my spreadsheets...based on EPS, DPS, SP and BV suggests that I should sell IMI and buy Weir (better value) with the funds. More work required. Thanks for your response. The counter argument is that IMI eps is projected to grow rather more quickly over 2014 and into 2015. Difficult...this investing business.
I prefer Weir because their involvement in the fracking biz strikes me as similar to that of the folk who sold shovels to gold miners in 1849. Also I just like the pump business! Not very scientific, I know, but Weir has done very well for me.
I also admire the way the CEO of Weir came out and said that a Yes vote for Scottish independence would be barking mad.
I read an article suggesting that as WEIR failed in its bid for Finnish rival Metso it might bid for IMI. I think unlikely as IMI is too big at about £3.8 billion market cap compared with WEIR's £5.5 billion.
IMI share price has fallen 22% this year from all time high in January. In part by return of capital to shareholders. I do not think it can be blamed just on strength of pound as WEIR, in same sector, was at all time high at the end of July. Looking like a buy to me at current price irrespective of bid rumours.
Decided time to take profits. Sold all my IMI shares at 1470p this morning when my limit order reached. I note that price I got was within 1p of highest today, however it took me a while to get that price. CG of 45.7% with dividends on top of that in under 18 months, so very happy with return. IMO returns will fall in the future, but I could easily be wrong.
Traded Action Notifier Price Amount Value
12-Mar-14 Sell Roy Twite 1,434.00p 88,830 £1,273,822.21
12-Mar-14 Sell Roy Twite 1,434.00p 79,110 £1,134,437.41
12-Mar-14 Transfer From Roy Twite 0.000p 56,536 £0.00
After reading link you posted and the fact that SP has fallen through my 15% moving stop loss (i.e. -18% at Fri close on 15 Jan high of £17.91) I have changed my view on IMI. I do not make it a strong sell because I think their margins might improve more than article suggests now they have divested themselves of retail arm. Time for me to take profits which in my case are nearly 57% CG in less than 18 months since first purchase. That does not include dividends.
Curses should have taken profits like I had half a mind to, see my previous post.
Had a quick look at results and they seemed quite good. Market must have been expecting better judging by near 6% fall in SP. I believe because organic growth only modest and market expected strong growth, I hope fall is knee jerk reaction and SP recovers.
IMO now represents a buying opportunity particularly for investors who have yet to buy as thought price too high.
I am not sure I agree with BNP and market does not seem overly concerned judging by SP. It has made me wonder though if it is time to take profits by selling some IMI. On the other hand IMI have done this with capital return. I think I may sell a few to get back to a round number of shares. IMI is my 2nd best performing share of all those shares I bought in the last 2 years (about 12 different companies). 1st is NXT.
Kantos, "As to whether the SP should have gone up or down - it should have done neither"
I agree with you it should have opened flat Monday compared with uncorrected SP at Friday's close. Some date sources correct historic prices and some do not. IMI web site does not. If however you want a share price chart that reflects value of a company i.e. market capitalisation then historic prices should be corrected. For the purpose of Capital Gains Tax it is important to apply correction.
In this case the editor posted a confusing incorrect statement on this board (I believeborrowed from Motley's Fool): http://www.iii.co.uk/articles/147996/why-shares-imi-plc-jumped in it was:
"What: Shares in IMI (LSE:IMI), the global engineering group headquartered in Birmingham, jumped by 17% to 1,535p in early trading this morning, after the company announced a share consolidation relating to its return of cash to shareholders."
The table I linked to from FT was correctly done to reflect company value. When there is a share consolidation the historic share prices should be corrected for this reason:
The market capitalisation (MC) is equal to number of shares x SP. Now there are fewer shares but the MC in the past has not changed so historic SP have to be corrected (made bigger i.e. x 8/7).
Sometimes companies consolidate shares without making cash distribution perhaps because SP has become too low so may do a 1 for 10 consolidation. In that case historic prices are corrected by multiplying by 10 and on date of consolidation in a flat market corrected chart of SP would stay flat. In the case of a cash return to shareholders the post consolidation SP should fall from the corrected pre-consolidation SP in proportion to the amount of cash being returned/pre-consolidation MC.
MC at Fri close before consolidation = 326,900,000 x 15.07 = £4,926 million
MC at Mon close after consolidation = 286,000,000 x 15.30 = £4,376 million
A fall in MC of 11.2%
Cash to be returned =2 x 326.,900,000 = £654 million (to nearest million)
As a percentage of pre-consolidation MC this is 13.3%.
We should have expected SP to have fallen by this amount from corrected Fri close on Monday morning so in fact SP performance on Monday was about 2% up on theoretical.
I hold IMI shares outside a an ISA so need to get this right when working out capital with a view to avoid paying CGT.
"Fractional entitlements resulting from the Consolidation will be aggregated and sold in the market and the proceeds distributed pro rata to entitled holders, save for amounts of less than GBP5.00 which will be retained for the benefit of the Company"
My fractional bit is worth less than £5 so the company will benefit from about 30% of share holders and as you are a shareholder you will therefore benefit twice :-)
If you have elected to take as capital you should get £1,000 + around £7 depending on SP at sale time on or shortly after 10 March 2014.
As to whether the SP should have gone up or down - it should have done neither. The point of the share consolidation was to reflect the reduced size of the company following the 200p return to shareholders. The equivalent reduction in number of shares means that the value per share is unaffected and the SP should remain unchanged, other than daily fluctuations. Incidentally, the same applies to the dividend per share which is unaffected as a result of the consolidation. Had there been no consolidation, the div per share would need to be reduced.
MRO conducted an identical exercise on 7 Feb (47p returned to shareholders, 11 for 13 share consolidation) and the SP barely twitched.
In this case, it seems publications took their eye of the ball, including the FT.
I am sure Interactive Investor has messed up correcting for share consolidation. Other sources show that corrected share prices resulted in a fall in SP yesterday of 11.2%. This is correctly done by multiplying all share prices from Friday back by 8/7 approx 1.142857. Fri closing price before correction was 1507 after correction becomes 1722.286. Monday's close was 1530 a fall on Fri corrected price of 11.16%. Not a 17% rise as shown on this web site and in charts on this web site.
See following FT link which supports above: http://markets.ft.com/research/Tearsheets/PriceHistoryPopup?symbol=IMI:LSE
Sorry folks. ShareScope has corrected prices for consolidation. Actual closing price on Fri was 1507p not 1722p. SP apparently rose 15% today but after correction for consolidation fell 11.1% which allows for £2 cash back. Shareholders are 11.1% worse off today so market not keen on sell off. I suppose this is because the cash return was factored in once shares went ex-cash return.
If the £2 cash back added to 1530p close that makes £1730 which is not +17% on Fri close of 1722p. Do not understand. Bloomberg and ShareScope show fall today of 11.1% (i.e. 1722p down to 1530p). £2 a share value removed from company by cash return but that compensated for by share consolidation so share holders now have fewer shares. All things being equal SP should not have fallen today. The fall today then would appear to be a real one of over 11%.
Although we donât believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.
What: Shares in IMI (LSE:IMI), the global ..."
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.