AIM shares lifted by ISA buying

Well, it has been a few weeks since UK investors could put AIM shares in their tax free ISA's and it looks like this has provided a lift for AIM companies.

Aug 9 (Reuters) - London's beleaguered junior stock market is on track for its best weekly volumes in two months, fuelled by rule changes that prompted investors to snap up stocks, particularly in the beaten-down basic resources sector.

The lurch higher in volumes on AIM, a sub-market of the London Stock Exchange, followed implementation on Monday of a government plan to let people invest in small firms while avoiding tax to help drive economic recovery.

http://uk.reuters.com/article/2013/08/09/europe-stocks-aim-idUKL6N0G92IP20130809

That's a few weeks ago, but anyone following AIM shares cannot help but have noticed that the price on many seems to be up while in general the main market has been going through a will it, won't it, finally correct this summer mood.

In the last month the FTSE AIM all share is up over 4%, compared to -2.7% for the FTSE100 and  + 0.36% for the FTSE250.  Certainly some of the shares that I follow, which tend to be the more liquid AIM companies, do seem to have found a flurry of buying that has resulted in higher prices. This shouldn't be a one way ticket though as these shares still offer more volatility and can surprise big time if they announce something the market doesn't like.

Nasdaq, down and out, for a while at least.

Nasdaq was down for a while today, in the sense of not working at all.

The sudden shutdown of Nasdaq — without any warning or explanation of what was happening — caught everyone by surprise, but it was over or nearly over by the time a lot of investors and money managers became aware of it. It freaked out systems — no bids and offers had options traders wondering if they were rich or broke until they realized what was happening — and traders, but it didn’t have the impact of a Flash Crash or even a rate hint tossed out by the Federal Reserve.

A black squirrel event?

In 1987 and 1994, the Nasdaq was shut down on two occasions when squirrels got a little too adventurous on power lines, forcing a fast flameout on trading until the power grid could be restarted.

It’s going to take the Securities & Exchange Commission days to figure out what happened and months to tell us about it, but don’t bet on the squirrels.

Instead, look at this kind of sudden “black squirrel event” — which would have created a full-blown media frenzy had it happened in panicky October instead of sleepy August — and consider what your reaction to it says about you as an investor.

http://www.marketwatch.com/story/nasdaq-outage-a-black-squirrel-event-2013-08-22

A glitch?  For those with money in the market it might make you wonder what safeguards there are when there's a total blackout, and what if it went on for weeks not hours? Make sure you have good records as a backup.

Silverdell updates the market, remains suspended

The latest Silverdell update to the market may sound like better news for shareholders with confirmation of banking facilities, but the shares remain suspended.

When the suspension is lifted it is most likely to include a fundraising at some point and at least one knowledgeable smaller company analyst has guessed that the share price upon lifting of the suspension could well be in the 4p-6p range, around 50-60% lower than the suspended price.

http://www.stockopedia.co.uk/content/small-cap-value-report-14-aug-sid-qpp-mur-pgb-you-eck-76200/

4p-6p is a lot better than nothing, but it does mean a hefty dilution of the share price for share holders. Despite all this there has been no mention from the company as to who is going to accept blame for what looks like a costly mistake that put part of the company into administration. You might expect that heads would roll. I mean, it is not unreasonable to ask whether the management really is good enough if no one wants to take responsibility for what happened. Who would want to invest in such a company?

A short history of (official) UK inflation

A short history of (official) UK inflation

1900 - 2012: 104.17 per cent / 0.6 per cent per year

1914 – 1918 (WWI): 103.06 per cent / 17.8 per cent per year
1939 – 1945 (WWII): 51.30 per cent / 6.9 per cent per year
1997 – 2012 (Since the Bank of England released from political control): 54.21 per cent / 2.9 per cent per year.
2008 – 2012 (Since the financial crisis): 12.99 per cent / 3.1 per cent per year

Government since 1979.

1979 – 90 (Thatcher government): 122.93 per cent / 1.9 per cent per year
1990 – 1997 (Major government): 24.85 per cent / 3.2 per cent per year
1997 – 2007 (Blair government): 31.23 per cent / 2.7 per cent per year
2007 – 2010 (Brown government): 8.23 per cent / 2.67 per cent per year
2010 – 2012 (Current government): 8.57 per cent / 4.11 per cent per year

Bank of England.

1993 – 2003 (George heading Bank): 28.85 per cent / 2.5 per cent per year
2003 – 2012 (King heading Bank): 33.92 per cent / 3.2 per cent per year

http://www.cityam.com/blog/1376059623/thatcher-only-prime-minister-last-30-years-under-whom-inflation-rose-less-20-cent

Money inflation comparison 1999 and 2009.

Average salary £18,396 - £20,900

House prices £73,302 - £163,969

Weekly State pension £66.75 - £95.25

UK consumer debt £656.4 billion - £1457.4 billion

http://www.thisismoney.co.uk/money/bills/article-1633409/Historic-inflation-calculator-value-money-changed-1900.html

And since 1960 that humble meal of fish and chips has risen in price from 6 old pence to around £4.50 today, a rise of 7,400%.

The old saying, if something looks too good to be true....

A couple of weeks ago I noticed a new follower on my Twitter account going by the name of Little Miss DayTrader. I usually don't follow day traders as its not my interest, but having looked at her blog and some of her tweets I decided, more out of curiosity than anything to follow back. I'm not a big Twitter user, don't always follow back if only because the number of tweets can get too much in that you struggle to sort the wheat from the chaff, but something stood out about this new follower that suggested one way or another there was a story here.

First, here was a young woman who supposedly had been an analyst for RBS, who had traded for many years on her own account and who seemed to have a decent enough knowledge about the market. I even re-tweeted one of her early blog articles on trend trading which seemed well written and worth reading.

However, something didn't quite sit right about Miss DayTrader (MDT). From the start she claimed not to really be a day trader, but interested in the bigger market moves. Her "system" seemed to be based around moving averages over different time frames, how price would bounce off these or fail under them. She talked of chop zones and had a thing about how stops of the retail traders would be deliberately taken out before price would then bounce. Fib numbers were also introduced, some charts had indicators on while others didn't and you needed to be able to interpret candles as well. Her system seemed to be a mishmash and not as simple as first suggested. It suggested that anyone trying to copy it might just need some help to get it right. Early on there was no suggestion that the help would come at a price.

As time went on however, most of her trades seemed to be of the day trade, very short term (i.e. a day or less) variety, although she would often have a go at the scalpers and the "let's make 10 points quickly" type trader, even though she seemed to be doing a lot of this herself. Her trades supposedly time stamped, although as she seemed to send out lots of tweets, only her hard core followers that read every one might believe that she was on to something. I didn't read them all, mainly because they were relentless, about a thousand tweets in a few days, I couldn't be bothered. The question was, what was all this leading to, what was the pay off?

After a few days the first cracks began to appear, firstly due to the fact that Twitter suspended her account, apparently for over following or over Tweeting. MDT promptly set up another account and tweeted and followed just as much.

But now we get to what MDT was probably all about. On her blog a post appeared which suggested that she had received many requests to set up an online trading room, where real time trades could be had. She proposed to do this, but could only do so at around £75 a month, but with a full refund for any months when there was a loss. Oh she seemed to suggest that a couple of hundred points a week was easy to make, so losing months weren't likely. However, the original trading room idea was quickly dropped as she said it wouldn't fit in with her life at this time. It would be back to just blogging and Tweeting apparently.

What happened next was the sting in the tail and some well respected people seem to have fallen for it. MDT began contributing a daily market analysis to Spreadbet Magazine's blog on their website. Not only that, she appears to have got an invite to be part of the opening of Zak Mir's new trading cafe which goes live on 14th August. Zak Mir is also the new editor of Spreadbet Magazine and one assumes that he must have been impressed by all the technical analysis that MDT was posting on both Twitter and her blog to have made such an offer. The truth was that MDT wasn't all that she seemed.

Video market round up for the week ending Friday, 2nd August 2013

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

Included in this video is a look at the banking and oil and gas sectors. Companies covered include Lloyds Banking Group, Barclays, BP and Royal Dutch Shell.

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/

William Hill delivers results with a surprise

I mentioned William Hill yesterday and the possibility that at the first sign of something bad their share price might take a hit after being a very good momentum play for some time. Well, today appears to be that day.

Shares in William Hill sank sharply on Friday morning as investors gave a cool reaction to the High Street bookie's first-half results.

Even Canaccord Genuity, which labelled the figures as "strong", kept its 'hold' recommendation and 438p target price for the shares, highlighting headwinds for the company in 2015.

The increase in profits in the first half was better than expected, the broker said, though earnings growth was "flattered by a particularly low tax charge".

Retail was boosted by a strong Grand National and a general good run of results, helping to offset a higher Machines tax. Meanwhile, Online delivered strong growth, but this was outweighed by a weaker contribution from Sportingbet.

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=14283&ac=,&username=,&action=news&story_id=21069911

Shares are down around 7% so far on this news.  It would seem that the major hit came from the UK Government's new machine games tax, first mentioned as a possible drag on the sector here. It's interesting that the market largely overlooked the potential for a negative reaction from the imposition of new taxes, as long as momentum was with William Hill for most of this year, until now that is. The tax itself is not a surprise, but it would appear that William Hill while delivering a decent enough performance was not able to make up in other areas of its business to offset the negative tax in a way that would mean the market would overlook it.

Does this mean the end of the bull run for the company? Possibly, but a look at how the charts develop over the next few weeks will be needed to see whether the upward trend holds. For now, a little froth on the share price has been taken off.

William Hill, Ladbrokes and 32Red, where next?

It's been a while since I looked at the UK gambling sector (for anyone interested in previous posts click on the labels below) and it seems to be a sector that continues to recover, although some companies appear to be hotter and more in favour than others. I came across this analysis today that is worth a read and it does save me the time of going into the fundamentals.

http://bulmerinvestments.com/betting-on-gamblers/

It covers William Hill, Ladbrokes and AIM tiddler 32Red, which was flagged up here some time ago as one of the few potential smaller company takeover targets left in the sector. Naked Trader Robbie Burns seems to have bought it with a view to holding it in the hope of a takeover at some stage.

These three can actually be compared to a three horse race, William Hill being the class of the field, Ladbrokes, the underachiever who promised so much but has failed to deliver and 32Red a complete outsider with bags of potential. Bookies would probably have William Hill as the odds on favorite, with Ladbrokes and 32Red vying for some long shot money.

William Hill's recovery in the last couple of years seems to go on and on. The share price is now heading towards 500p and there is a lot of good news and expectation in that price going forward. They are no longer cheap and it would be easy to imagine a bad set of results hitting the share price hard, but so far the company has delivered.

Ladbrokes is the opposite.  They have everything to prove and will hope that their deal with Playtech leads to an improved bottom line from their online offering. If they are finally putting things right then compared to William Hill they are cheap. The article above makes a case for the upside if Ladbrokes has finally got its act together.

32Red has the attraction of perhaps being an eventual takeover bid from one of the bigger players. In the meantime it is a decent company in its own right and from next Monday as an AIM share it can be put in an ISA. It's more of a gamble than the other two, but if it attracts the interest of a bigger player it won't be sold for its current forward P/E of around 10.

Lloyds PLC pleases market, UK Government finally in profit.

Lloyds Banking Group gave the market and banking sector something to cheer about today as it came in with some decent numbers, but the one stat that stands out today is 73.6p. That is the average price that the UK Government paid for 39% of Lloyds back in the dark days of the credit crunch. The UK Government is now in profit on its "investment", or rather the UK taxpayer is.

Had the Government not intervened back than the chances are that Lloyds would have gone under. Certainly Halifax/HBOS which Lloyds took over after pressure from the last Labour Government in 2009 would have gone under. HBOS was effectively bust, having been one of the major players in handing out questionable mortgages to people they really shouldn't have given money to.

Looking at their charts today, it is difficult to get too enthusiastic about Lloyds hitting 74p as pre-financial crisis it was heading for 600p.  And let's not forget that Halifax/HBOS was also a FTSE100 company back then and in 2007 it hit a high of 1150p. Long term buy and hold investors who hung on have been wiped out, but at least 74p is better than the 20p or so of a few years ago.

Still, the Government may now be thinking that sooner rather than later they may want to cash in their gain? The only problem is how do you sell 39% of a company the size of Lloyds into the market without seeing a big fall in the share price? 39% is a lot of shares to unload and I would have thought that any major buyer may want a discount.  The one thing that isn't likely to happen is a generous sell off to the taxpayers that saved the company.