Tom Winnifrith BearCast - Doing the maths on Sefton & why its 80%+ overvalued

Comments

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   DUCK AND DIVE

   25 April 2015, 06:36

   [Yawn] And how many junior oilers have a larger market cap than Sefton without producing a single barrel of oil? Your calculations are based on a hypothetical scenario which assumes that Sefton will acquire a producing asset without any upside. What do you know about the undeveloped prospects in the deal? I don’t know that there will be any; but you don’t know that there won’t. Your thumbnail sketch has been drawn so that it supports your mantra. Anyone can do that. Equally, anyone can draw a different sketch that blows your hypothesis out of the water. Suppose they have found a buyer prepared to pay £10m for their Kansas assets? Do you know that they haven’t?

   The time to pass judgement is when you know what you’re talking about. Meanwhile, Seftonites will dream about better scenarios and some will back that hunch in the hope that they may finally get out of Ellerton’s jail.

   Stranger things happen at sea. Didn’t your chum, Big Dave, sell an asset for £1m only to see it immediately re-sold for £10m? Haven’t you seen instances of cash shells’ MC being transformed by a good deal? Didn’t newly-enriched Dan Levi turn up at some investor show today to talk with other shareholders?

   And I don’t understand your apparent reasoning for not buying in to Sefton at 0.05p. It’s surely sufficient to say that you didn’t fancy it? The notion that you wouldn’t be able to write about it objectively must also apply to the other stocks that you have taken a personal/RMPC position in.

   This was your fourth Sefton rant/warning inside 48 hours. One was enough, imho. Report them to the regulators by all means but save the obsessive repetitions for the companies you have exposed as scams and frauds. New Sefton is neither – yet.

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   DUCK AND DIVE

   25 April 2015, 13:17

   Here’s another shocker. Twenty-time champion National Hunt jockey, AP McCoy had his last ever race ride in the 4.25pm race at Sandown today – in a difficult-to-judge 18-runner handicap hurdle contest wherein the official handicapper allots extra weight to each horse if they have shown good form so that, theoretically, all the runners should finish the race close together.

   And, in truth, McCoy’s mount, Box Office, should have started at odds of around 10/1 based on its form (finished 7th in both recent races), its preference for better ground (today’s was good to soft) and its likely lack of energy reserves (a hard race two weeks ago at Aintree and another in March at Cheltenham).

   But the betting public ignored all that and decided that the race had been set up for McCoy to retire on a high. The horse was trained by fellow Irishman, Jonjo O’Neill and owned by McCoy’s long-time patron, Irish millionaire, JP McManus – who had plenty of horses to choose from if he wanted to give McCoy a fairy tale send-off.

   So the money poured in for Box Office and the nervous bookies sent it off the hot favourite at the ridiculous price of 5/2 – with the next best horse in a supposedly competitive race priced at a remote 9/1.

   Colourful tipster, Prince Winnifrith of Monolulu, resplendent in tribal robes, was floating around the packed Silver Ring selling his tip for the race at £5 an envelope. “Roll up you happy people,” he shouted. “I know the winner of this race. It’s a fundamental certainty.”

   “So tell me something we don’t all know,” said a beaming punter, dropping a fiver into the Prince’s goatskin shoulder bag. “You’re a wise man and soon a wealthy one,” said the Prince, handing over the envelope.

   The tip was for a horse called Brother Tedd. “Enjoy my fiver,” said the punter, “but you’re way off the mark – Box Office wins this, everyone here wants him to win and McCoy goes out on a high.”

   The Prince retorted loudly: “I will tell you, sir, that Brother Tedd is weighted to win, likes this ground, is a fresh horse and both its trainer and jockey are in top form. I may be £5 richer as a consequence of meeting you but you can be hundreds of pounds richer as a consequence of meeting me.”

   The punter walked off to join a long line of racegoers queueing to put their money on McCoy and the ridiculously short-priced favourite.

   Five minutes later, Box Office finished third to 9/1 winner, Brother Tedd.

   The punters who had lined up like lemmings to back the sentimental favourite lost their money. The Prince got it right but he didn’t earn much that day because everyone had wanted McCoy to win and placed their bets accordingly.

   Had anyone been conned? Was there some mischief to report to the British Horseracing Authority? No – pure sentiment drove the price of McCoy’s horse down to an fundamentally unjustified price because millions of people wanted it to win and thousands assumed it had been laid out to win.

   Sefton is no different. Thousands want it to succeed and hundreds assume that it will. The SP reflects that sentiment — and will probably continue to do so until the punters’ hopes are realised or dashed. There doesn’t appear to be any sign of an orchestrated pump & dump, nor of any sinister malpractice by Sefton’s officers.

   Sometimes, sentiment is more important than fundamentals to a share price. And some companies survive on sentiment alone.

   Vive la révolution!