Video market round up for the week ending Friday, 26th July 2013

A week ending round up of the markets from Steve Briggs YouTube channel.

Included in this video is a look at the FTSE350 index, Oil and Gas producers, Shell, the banking sector and RBS.

Links:

Steve's YouTube site http://www.youtube.com/user/sjb5555.

Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/

Silverdell buys a bit of itself to save itself.

Silverdell made a further announcement today following on from its statement of why its shares were suspended on AIM a few weeks ago.

Silverdell announces that on 23 July 2013 its subsidiary, Euro Dismantling Services Ltd ("EDS") acquired the business and certain assets of Kitsons Environmental Europe Limited (In Administration) (the "Kitsons Business"), thereby keeping the Kitsons Business within the Group. The Kitsons Business will operate as a separate division of EDS, with the objective of maximising cost efficiencies between the existing EDS division and the Kitsons Business and to facilitate a seamless transfer of ongoing customer contracts and relationships to EDS.

The consideration for the acquisition is payable in cash on a deferred basis and is capped at £8 million (subject to downward adjustment (if applicable) following the completion of a valuation of the Kitsons Business by an independent valuer). The deferred consideration is intended to be satisfied from the Group's banking facilities at that time.

http://www.digitallook.com/news/rns/21047864-188986/SID-Acquisition_html?ac=,&username=,

Looks like what has turned out to be a fairly costly mistake has been made somewhere along the line. The company is getting support from its bankers, but it could end up looking to raise more cash at some stage. Shareholders might be wondering what the share price will look like when the suspension is finally lifted, but I suppose they can be thankful that they will still have something rather than nothing which many might have feared a couple of weeks ago.

IQE, trading update in

IQE reported today and perhaps the good news, at least for now, was in the price rise of the last couple of weeks as the shares finished down on the day having been up almost 10% at one stage.

The Board expects first-half performance to be ahead of market expectations, with first-half revenues approaching £63 million, EBITDA in excess of £10 million and net debt below £39m. This represents revenue growth of over 80%, and EBITDA growth of over 150% compared with the first half of 2012.

http://www.digitallook.com/news/rns/21046928-24795/IQE-IQE_plc_H1_trading_update_html?ac=,&username=,

Pretty good release, expected to be ahead of expectations for the first half, but then they end with the belief that the group is on track to meet market expectations for the full year. Qualcomm fears remain and given the effect on the share price since February of what the US giant might be planning, chances are that volatility in IQE's share price won't go away just yet.

IQE, still rising ahead of results

IQE report eagerly awaited results tomorrow that will have both bulls and bears of the stock on the edge of their seats. As reported here, IQE had been until recently under a constant short attack, the share price having fallen from a high of over 37p back in February to a low of around 18p in early July on the back of competition fears from US giant Qualcomm. According to shorttracker.co.uk, BlackRock still holds a 2.7% short position. That's fairly hefty considering the recent pre-result bounce in the share price to 27p today.

A good result tomorrow could easily send the shares higher, but I was slightly mystified by the BlackRock short position given the recent rise unless they are just trading this as a hedge? A check of the major IQE shareholders shows the following.

Blackrock Investment Management 37,076,124 5.74%.

http://www.iqep.com/investors-shareholderdata/

So, BlackRock have over 5% of the shares and are both long and short the stock. BlackRock Investment Management are down as holding 0.90% of that 2.70% short, the rest being held by other parts of the BlackRock empire. Perhaps it is just a hedge on Qualcomm fears?

Truth is no one knows what the company will announce tomorrow as so little has been said in the run up. Expectations are high that results will be in line or exceed expectations, so there is a risk after the recent bounce that there could be a sell off on the news if they disappoint. The results could still be fairly good and yet fall if there is profit taking on the news (trade the rumour, sell the news). Alternatively, it could break out further tomorrow, especially if expectations are exceeded. The IQE daily and weekly charts are looking more positive though, so, everything to play for.

Many brokers are still rating this as a 40-50p plus share, but it won't necessarily get there straight away, and we are still waiting for further details of what Qualcomm intends to do that started off the recent fall in IQE's share price. There could be further volatility ahead once Qualcomm makes up its mind.

http://www.guardian.co.uk/business/marketforceslive/2013/feb/22/iqe-semiconductors-competition-qualcomm

AIM shares in ISA's from 5th August

The date has finally been confirmed when AIM shares can be bought in UK tax free ISA's.

The government has confirmed that risky smaller shares will be allowed in stocks and shares ISAs from 5 August.

From August investors will be able to invest in shares listed on non-traditional stock exchanges, including the Alternative Investment Market (AIM) and lesser-known ICAP Securities and Derivatives Exchange (ISDX).

Investors will also be able to hold shares listed on alternative European stock exchanges.

http://www.citywire.co.uk/money/aim-shares-to-be-allowed-in-isas-from-5-august/a692123

Perhaps the key word here is "risky".  This has both its good and bad side (AIM shares in ISA'S, the dark side and buyer beware) so it's important to understand the level of risk, especially with AIM regulation being so weak.

Silverdell, finally a statement

It's been a couple of weeks since Silverdell announced their suspension of dealings on AIM, finally this morning a company statement has been issued.

The Group announced on 2 July 2013 that it had requested a suspension of trading in Silverdell's shares pending clarification of the Group's financial position. This followed the appointment of administrators to Kitsons Environmental Europe Limited ("Kitsons"), one of the Group's principal trading subsidiaries.

The Board is pleased to confirm that discussions with the Group's bankers, HSBC, have reached a satisfactory outcome. HSBC has confirmed that it remains supportive of the business and will be providing additional short term facilities to the Group.

The Board also confirms that Kitsons is the only Group company which is in administration, and that all other Group companies continue to trade as normal. The Board is extremely grateful to the Group's employees, customers and suppliers for their patience and forbearance.

Further announcements will be issued in due course.

http://www.investegate.co.uk/silverdell-plc--sid-/rns/further-re-suspension-of-dealings/201307160700073973J/

This basically confirms the main rumour that the problem was with with a winding up order against Kitsons and it has clearly taken some time to negotiate with their bankers to continue to support the group. The group says that it is "extremely grateful to the Group's employees, customers and suppliers for their patience and forbearance", which is all very well, but perhaps they should have mentioned shareholders of the company as well who have been kept in the dark for a couple of weeks.

Next will be the lifting of the suspension and the market reaction to events. If there has to be a fund raising, a dilution of the shares, then expect the share price to be lower, perhaps significantly lower.

http://sevenpillarstrading.blogspot.co.uk/2013/07/silverdell-whats-going-on.html

Video market round up for the week ending Friday, 12th July 2013

A week ending round up of the markets from Steve Briggs YouTube channel.

Included in this video is a look at Pearson, Fresnillo, Royal Dutch Shell, Weir group, Salamander Energy and RPS group.

Links:

Steve's YouTube site http://www.youtube.com/user/sjb5555.

Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/

IQE, are the shorts closing? Watch for their results later this month

One share that I've been following for quite a while is IQE, a technology company on AIM that calls itself a global leader in advanced semi conductor wafers.

From the company website;

IQE's products are found in many leading-edge consumer, communication, computing and industrial applications, including a complete range of wafer products for the wireless industry, such as mobile handsets and wireless infrastructure, Wi-Fi, WiMAX, base stations, GPS, and satellite communications; optical communications, optical storage (CD, DVD), laser optical mouse, laser printers & photocopiers, thermal imagers, leading-edge medical products, barcode, high efficiency LEDs and a variety of advanced silicon based systems.

The manufacturers of these chips are increasingly seeking to outsource wafer production to specialist foundries such as IQE in order to reduce overall wafer costs and accelerate time to market.

http://www.iqep.com/about/

The share price can be quite volatile, both up and down. It is a blue sky opportunity that has great potential, most of the brokers covering the company have placed a much higher price target for it than its current low of around 18p. Many see 50-65p as the target range.

Silverdell, the silence is deafening.

It's been over a week since the suspension of shares at AIM tiddler Silverdell, yet there has still been no statement from the company.

At the very least this is a poor show as investors in the company have been left in the dark as to what is going on. This has only served to add to rumour of what may or may not have happened.

The worst case scenario here is that the reason for the silence is because whatever the problem was that resulted in suspension is not that easy to clear up. Perhaps it is bigger than first thought? Who knows, but unfortunately the company silence doesn't help in the matter.

Barratt Development, more good news for UK house builders

Barratt Developments share price may be down slightly today, but that is probably more due to the general market being down and the fact that in recent days it went up on the back of other good trading updates from listed UK construction companies, than any bad sentiment towards the company. The share has had an amazingly good run the last 18 months or so, like others in the sector defying bear calls that it is overvalued. 

That run looks set to continue as Barratt follows others by confirming that the Government's Help to Buy scheme is playing its part.

Mark Clare, Group Chief Executive commented,

"As more house buyers return to the market, supported by improved mortgage availability and the Help to Buy scheme, we are in a strong position to continue to grow the value of the business. We are increasing our investment in land whilst reducing debt and have delivered a performance ahead of expectations. Momentum is continuing to build and with forward sales up substantially, we are confident we can improve our performance still further in the year ahead."

http://www.digitallook.com/news/rns/21017935-10120/BDEV-Trading_Statement_html?ac=,&username=,

While valuations of UK house builders are already stretched and there is a lot of good news already baked into their share price cake, don't be surprised if we seeing the still early stages of a bubble in prices for these companies.

More posts on house prices and house builders below:

Help to Buy, the new housing benefit

Bovis Homes update

Taylor Wimpey benefits from Help to Buy

Persimmon reports

Telford Homes update

UK house prices, case of too big to fail.

Help to Buy, the new housing benefit?

Bovis Homes reported today, following on from a number of trading statements towards the end of last week from other house builders and as expected the news was good.

David Ritchie, the Chief Executive of Bovis Homes Group PLC said:

"The Group has performed well in the first half of 2013 with a significant further improvement in housing profit, delivered from the ongoing successful execution of the Group's growth strategy. Trading in the first half of 2013 has been strong and the Group has achieved a 40% increase in private reservations compared to the same period in 2012. Continuing its success in the land market, the Group has added 2,767 new consented plots to the land bank. With the positive progress in executing its growth strategy, the Group is well positioned to deliver higher shareholder returns."

It goes on.

Market conditions

Even though the general economic background remains challenging, the housing market has shown signs of strong improvement. Consumers are increasingly able to access mortgage finance and the launch of the Help to Buy shared equity scheme, replacing FirstBuy, has had a positive effect on customers' confidence to buy a home and their ability to transact. These positive effects are expected to support greater activity in the new homes market, which in turn will provide an impetus to the number of new homes built. The Group continues to view positively the Government's initiatives to support the housebuilding sector.

http://www.digitallook.com/news/rns/21012367-11178/BVS-Trading_update_html

Of course it does.  How can any company not be thankful that the Government is potentially poring billions of pounds in taxpayer money its way? Supposedly this is to kick start a market that hadn't really seen a big fall after the financial crisis set in, but in reality was effectively dying a death from inactivity because of what happened before the financial crash.

FTSE100 Update - Central Bankers to the rescue

With the US closed yesterday, EU and UK Central Bankers took center stage and basically gave the markets what they wanted to hear.  Low IR's, perhaps even lower for some time to come, QE still on tap if needed, the UK market lapped it up almost hitting 200 points for the day. Unlike Bernanke in the US, the ECB's  Draghi effectively said that any exit from this dovish stance is very distant.

Market is up again so far today, but will await the US job numbers. Again we could be in for an interesting day because if the numbers come in weak then markets might actually jump higher on it because the US Fed will have less reason to taper QE. A good jobs number could ironically bring back the old doubt and fear that the easy money policies might be about to end and markets could go the other way on this "good" news.

The jump yesterday effectively took out the lower high possibility that I posted a few days ago. Still not a full bullish turn and we may now be entering into a period of consolidation.

FTSE100 - Daily

AIM shares in ISA'S, the dark side and buyer beware

It was perhaps ironic that after the announcement over the weekend that AIM shares would be allowed in tax free share ISA's from later this year, the market opened up Monday with a couple of its constituents under suspension.

Silverdell and Pursuit Dynamics had their listing suspended, the former has yet to release a statement as to why, while the latter did so yesterday. In the absence of any information there has been much speculation about what has happened to Silverdell. Time will tell, but while there may be celebration that AIM shares can finally be included in ISA's, it is important to understand that many of these companies are high risk and regulation is very light touch.

AIM is a market that has its critics, Tom Winnifrith being one of the most vocal. Here's what he has to say about the decision to allow AIM companies into ISA's.

The crap at the bottom of AIM which is loss making now and always will be cannot attract institutional funding for a good reason. The bottom 450 companies on AIM are just not investment grade material.

Most are resource stocks or investment companies or just plain joke companies. They create no real jobs in the UK and in most cases merely seem to exist to support the same band of directors (who rarely have big stakes in the firms) and to pay fat City advisors fees. They simply DO NOT create very many jobs in the UK. The firms that create most jobs are small private companies. Claims that AIM creates real jobs outside the boardroom and the Square Mile on a meaningful scale are simply false and were part of the spin that financial services companies & City financiers served up to push for this ISA change.

This change will create very few if any real new jobs. Whether it will assist Middle England is saving in a more prudent, careful and measured manner is also something about which I have grave doubts. But the jury is out on that for now.

Will a flood of ISA money revive the Cesspit? Of course not. There will not be a flood of money for the small cap end of the market. For it to recover AIM regulation needs to kick out the miscreants who lie to investors, restore trust in the market and finally to attract a few real companies that make things rather than just more and more cash shells, investment companies and third rate resource exploration plays. Will that happen? I see no signs of it.

http://www.shareprophets.com/views/892/aim-shares-in-isas-misguided-folly-driven-by-city-misinformation
(Registration to site needed to access articles)

Not all AIM companies are bad and things can go wrong at any of them, but anyone buying them needs to be aware that even after you have done your due diligence you might just get a bad one and sometimes you won't know it until it happens.

ShareSoc also exists to look after the interests of UK investors, associate membership is free.

http://www.sharesoc.org/membership.html

FTSE100 Update - A stripped down look at lower highs being formed

So, after a few days of summer relief fear is back on the agenda today, the word Portugal being used a lot to describe the sell off. As we should know by now, when the market needs a reason for a sell off or profit taking it can usually find something. That's not to say that the wider macro issues are not important, but anyone following this blog will know by now that quite often the market turns a blind eye to news, good or bad, just as often as it will take it into account. Usually the news will serve its purpose, whatever the market sentiment is at the time. Often it is just plain old noise.

However, the charts are suggesting a sentiment change. The first of the two FTSE100 charts below is a stripped down version that shows that we seem to be in a wave down pattern. I'm not that proficient at Elliot waves or wave theory and whether they offer us a "scientific" approach to technical analysis, but anyone who looks at charts for any length of time cannot fail to see that markets and individual shares often move in waves, up and down. These waves will often have higher highs in an upward move and lower highs when falling.

The charts below are suggesting lower highs, the market unable or unwilling to sustain any bounce. A wave formation is also emerging that could see more downside as so far it looks like this is only the beginning of a third wave down. MACD also suggests that the daily chart is weakening to further downside. FTSE100 does have support levels below 6000. If the latest fall today continues watch out for what happens on the next bounce, as 6300 is the approximate lower high just achieved. Any bounce that does not clear that and sets another lower high suggests weakness and more downside.

The weekly and Monthly charts, not included here, also suggest weakness, although the latter still offers hope to bulls that the longer term upward trend is still in place.

It's also Summer, and markets can drift on low volume numbers.

For charts click below:

Silverdell, what's going on?

Being a self regulated market AIM can throw up potential nightmare stories for investors from time to time. At face value things can look good with a company, results look impressive, news flow from the company itself positive, but the share price is declining, an investor may wonder why or question whether there is something not quite right going on?

Other than market drift which can often hit smaller company shares in a big way, it's difficult to know sometimes why a share price of a company that may be on reasonable fundamentals is falling. It might be technical, sometimes there's a rumour which often the company will deny. Investors will often blame the market makers, the short sellers, bears of the company, but with AIM companies a bolt out of the blue can happen at any time it would seem. Shareholders are often the last to know.

One company I've been following for a while is Silverdell, in part because although the share price was falling, and other than a rumour that a cash call to aid further growth might be needed - denied by the company, it seemed to have a lot going for it. Then suddenly today its shareholders were presented with this.

Suspension of Dealings

Silverdell has requested a suspension of its shares from trading pending clarification of the Group's financial position.  Further announcements will be made as and when appropriate.

http://www.investegate.co.uk/silverdell-plc--sid-/rns/suspension-of-dealings/201307020730033712I/

Silverdell investors will have woken up to this, I suspect largely unexpected news and wondered to themselves what is going on? After all, the company itself was very bullish if it's own recent statements are anything to go by.

This is what Silverdel's CEO Sean Nutley said in April.

‘We are targeting 15% year-on-year revenue growth over the next three years. The market only has us at 8%,’ he states. ‘At the 8% forecast growth rate, we can support that growth without going out for further funding from a bank or elsewhere. If we want to go to 15% growth, we will need additional financial support.’

http://www.sharesmagazine.co.uk/articles/silverdell-mulls-the-price-of-growth

Then in June.

Today Nutley tells me that Silverdell no longer needs additional working capital to hit the 15% target. ‘We’ve been able to get the right mix of business and right payment profile to meet our strategic targets,’ he states. Additional money is only needed if the group finds a way to ‘supercharge’ growth beyond the 15% rate, adds the CEO.

http://www.sharesmagazine.co.uk/news/silverdells-communication-challenge

So, have they suspended because they want more funding to "supercharge" at 15%+?  Most unlikely. Shares tend to be suspended for far more serious reasons, although you would be forgiven for wondering where the serious reason is in this case, but there just might be one.

AIM shares become ISA eligible from this autumn

News today confirmed that UK listed companies on AIM can be bought for tax free share ISA's from this autumn.

"Over 1,000 companies listed on the Alternative Investment Market (Aim) will now be eligible for direct Isa investment," the Treasury said. "The changes will provide savers with a tax-efficient way to hold shares traded on SME [small and medium-sized companies] markets."

http://www.telegraph.co.uk/finance/personalfinance/investing/isas/10153431/Birth-of-the-IHT-free-Isa-as-ban-on-Aim-shares-is-lifted.html