Hidden value #investments
This week the offer for Premier Foods by McCormick was withdrawn but the offer of 65p a share did show the hidden value in the company. It seems Nissin is still increasing its holding in the company and their joint venture seems a good deal for both parties. Premier’s share price still plummeted down to 42.5. This is still better than it was before the offer.
Packaging and marketing
A lot of home brands are now on the shelves of supermarkets that basically copy packaging designs. Cake packaging made to look like Mr Kipling packaging is on display in both the leading supermarkets and the discounters. It would seem it’s time for an exceedingly good marketing campaign based on new, but traditional, packaging.
Solo Oil has a lot of hidden value and I increased my stake based on their oil assets in the UK and gas coming on stream in Tanzania. Good news from the company always sends the share price north and then it drifts back down. I think we could be looking at a series of positive announcements soon and they could not only make the share price soar but it could sustain a big rise too. My educated guess would be for a big rise sometime in June. With the share price down at .27, there would appear to be a lot of hidden value there. The 52 week high was .63 and we have seen the price go over a 1p based on very weak news. We have a number of positives we could see in June. The referendum will be out of the way, the oil price is set to recover and there should be news from Tanzania on gas sales. If there is also news from the Horse Hill oil discovery that will just be the icing on the cake for Solo.
Debenhams and the AA
We do have to look at who the customers are when it comes to retail companies. Debenhams and AA both seems to have hidden value but their customers are the middle classes. Their customers are the doctors, nurses, teachers, dentists, administrators and so on who are reliant on the government for increases in income. Government cuts might explain why some company share prices are stagnant. We also have to look at what the traditional working classes spend their money on and factor that into investment decisions. With cuts in most people’s discretionary income, people are shopping around and going down market for many goods. Competition is fierce in some sectors impacting on company revenue. While competition is healthy, if it gets too fierce we see companies going into administration.
I own shares in two AIM pharmaceuticals as well as the GlaxoSmithKline. Immupharma and Verona Pharma both have new drugs that are in the testing and development phases. Verona seems to be favoured more by the market but both have hidden value in assets that are hard to quantify. While larger companies grow steadily, these AIM companies have unstable share prices that surge based on good news and positive sentiment.
Beating the trend
While I have been writing this, the All Share Index has dropped .28%, while a few of the companies I have mentioned are up. Premier Foods, Solo Oil, Tesco and Verona Pharma have made significant gains while Immupharma dropped significantly for no apparent reason. Some of the hidden value is being recognised in those companies and by being diverse I’m benefiting while the market in a downward trend.
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