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I like spin-offs as they are much more likely to be incorrectly priced than an average share will be. Sometimes this is because a newly spun-off business has a liberated management team who can really drive shareholder value and sensibly evolved strategic positioning. And sometimes it is because the remaining 'stub' business is underappreciated, as all eyes focus on the excitable new spin-off. This morning we effectively had spin-off related announcements from two corporate names I have individually written about before: Vodafone (VOD) and Mothercare (MTC)…
I quite like working on a Sunday as it gives me a chance to feel fully prepped when markets start moving about come Monday morning. However I am sure there was some spluttering over the cornflakes and coffee for anyone associated with Vodafone (VOD), BT Group (BT/A) and FirstGroup (FGP) given the various mentions all three corporate names garnered in the deadwood press. Looking at it dispassionately though from the perspective of shareholders, I think we can characterise the news out there as the equivalent of the good, the bad and the ugly.
I was really worried I had made a grave error is buying into Vodafone (VOD) for my mini Dividend Munchers’ portfolio. Of course, on the basis of having paid over 190p and the shares subsequently collapsing to well under 150p I clearly had – but fortunately had only piled up half of what I had wanted so by good fortune I escaped the worst. The question was then whether to pile in for more – so the market was wrong – or to accept I had made a mistake. This morning Vodafone offered up its interims.
Vodafone (VOD) has had a very weak year so far and the share price has been dropping steadily, but I believe that it can still turn things around longer term.
Not too much in today's larger cap corporate earnings to get excited about. Suffice to say comments from the housebuilder Berkeley Group (BKG) were suitably patchy, with chat from the company that profits would be down a third next year. I stick with my recent cautious views towards the sector. My thoughts therefore turn towards other areas of the market.
A little over three months ago, I noted about telecoms behemoth Vodafone (VOD):
Hello Share Totters. Every time I type Vodafone (VOD) my computer turns it into Voodo, which seems a bit unfair. Vodafone is not cursed and, in fact, is doing a bit better than the market expected.
Near the top of the FTSE-100 leaderboard today is the telecoms behemoth Vodafone (VOD), which proudly said earlier today that it had enjoyed a ‘good year, gaining share’. Of course the headline profit numbers were full of the negative impact of a non-cash impairment of €5 billion relating to its Indian business. But don’t worry about this! ‘Organic adjusted EBITDA growth of 4%-8%’ is expected and, with €5 billion of free cash flow and a 2% hike in the dividend, the yield munchers will be bought off. Right here, right now though, I would sell Vodafone shares.
Hello Share Spaders. Recently, I opined on this superlative website that BT had been over-sold in the last 12 months and was possibly cruising for a new target of 500p a throw, rather than the present sad sub-400p share price. But I’m not so confident over its rival Vodafone (VOD).
Hello Share Shapers. A few years ago, I sold all my Vodafone (VOD) shares for a goodly profit. Rather a good job as it paid for 10 years of phone bills which used to be high in those days. The shares went into a damp patch after that, but over the last few years the share price has perked up, while its rival BT’s (BT.) share price is currently, to say the least, stodgy.
Hello Share Togglers. I’ve long sung the praises of BT (BT.A) on this splendiferous website. But I’m going off it just a bit. I’ll continue to hold the shares, as they have been a big success for me in the last three years. But they seem to be taking a bit of a rest in the upward march. As are most shares, to be fair. So now let’s switch a bit of my allegiance to a rival - and that’s Vodafone (VOD).
Getting back to Vodafone,, the over riding impression is that of a stock which has been struggling to maintain positive momentum.
Allegedly the best things come in small packages…well not today if you are a Vodafone (VOD) shareholder. Below – in its entirety – is a regulatory news service update from the company that hit the wires at just after 7am today:
I read on the internet that ‘the Vodafone logo was designed in 1997 by Saatchi & Saatchi. The colour is red (Pantone 485)’. Well then yesterday there are Pantone 485 coloured faces amongst certain professional investors, as the FTSE-100 giant Vodafone (VOD) said in a regulatory statement today that it was ‘not in discussions with Liberty Global concerning a combination of the two companies’. At the time of writing this knocked a couple of percentage off Vodafone’s share price which now sits over five percent off its multi-year high of a week or two ago.
From the charting perspective that the recent history of Vodafone began with the sharp bear trap reversal from 180p that we saw in October. Since then we have seen this reversal underpinned by an unfilled gap to the upside through the 200 day moving average currently running at 218p.
Vodafone’s (VOD) half year’s results to 30th September 2014, just published, are a satisfactory outcome in relation to my analysis last June, which pointed to the expectation of top line revenue growth, heavy capital spending and reduced profits meantime; obscuring the longer term rewards of that investment in terms of sales revenue and then eventually, probable earnings per share.
Hello Share Smackers: You don't often get merger and take-over talk at this time of year. The big cheeses of companies are too busy taking their annual hols. It takes a lot to work to sort these things out. And before you make the big announcements, you have to have some complicated the press relations campaigns sorted out.
The Vodafone (VOD) share price has been heading south in recent times; like a lemming heading for a cliff edge. Looking at the chart there seems little to stop it plunging further. Is it telling us something above and beyond what the market seems to expect? Probably not! The Markit short selling market activity coverage has it on a “low” rating. But it is a veritable “falling knife” that investors - according to timeless market tradition - should never grasp. To quote the great Horace Rumpole, Heaven forefend that one should disobey that timeless rule! But nevertheless, there are good rational reasons saying that one should.
In part 1 of these articles I talked about the need to avoid index funds and the importance of stock picking focusing on growth or ‘proper returns to shareholders’. Now, in part 2, I focus on the second of these two investment themes.
Now that the talk of a takeover of Vodafone (VOD) has retreated, I have caste an eye over the company which, at 220p (last seen) is 13% down from its February peak of 253p. The shares clearly represent above average value in terms of annual dividend yield of 5%, though it is not hugely well covered by earnings on a ratio (historic) of 1.5 times. Moreover, according to market consensus estimates and expectations little dividend growth is estimated.
The Vodafone (VOD)/Verizon (VCZ) deal proves that the world has become too clever by half. The cyber-world is awash with frustrated and demented private investors who either do not understand this arrangement or, if they think they do, do not know how to take action.
Vodafone (VOD) is at the cutting edge of the application of digital information technology which it supplies to a world of clamouring, fastidious consumer demand. The mobile phone is taking and increasing share of Internet communications business including data transmission, the latest commercial opportunity and phone company objective, from PC’s laptops and tablets. It is transformational; exciting stuff socially and economically.
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