Bitcoin plummets as Bill Gates wades into the debate

Liam Roche
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Bitcoin plummets as Bill Gates wades into the debate

Bitcoin falls by 20% in five days

Bitcoin is down by 9.53% in 24 hours following the cryptocurrency’s recent surge to record highs.

The price of of the cryptocurrency is now valued at just above $46,000, down from $51,600 a day before.

The cryptocurrency reached an all-time high of $58,000 on Sunday as a series of institutional investors put their weight behind the controversial blockchain technology.

Friday’s fall represents a 20% drop in value within the space of a week.

Michael Saylor, co-founder of Microstrategy, the software company, restated his view that the cryptocurrency was here to stay following his company’s announcement that it had taken its holdings to 90,531 bitcoins, valued at $4.5bn.

“The company now holds over 90,000 bitcoins, reaffirming our belief that bitcoin, as the world’s most widely-adopted cryptocurrency, can serve as a dependable store of value,” he said.

“We will continue to pursue our strategy of acquiring bitcoin with excess cash and we may from time to time, subject to market conditions, issue debt or equity securities… with the objective of using the proceeds to purchase additional bitcoin.”

Microsoft founder Bill Gates also waded into the debate recently, warning retail investors against investing in bitcoin. The billionaire cited Tesla CEO Elon Musk as someone who could afford to take risks by holding the cryptocurrency.

“Elon has tons of money and he’s very sophisticated, so I don’t worry that his bitcoin will sort of randomly go up or down,” Gates said.

“I do think people get bought into these manias who may not have as much money to spare. My general thought would be that if you have less money than Elon, you should probably watch out.”

The news means more of the same for bitcoin’s rising yet volatile price. At the beginning of 2020 one bitcoin was valued at under $10,000.

Investment bank JP Morgan recently revealed a long-term price target of $146,000.

FTSE 100 slides as anxiety grows over rising bond yields

Liam Roche
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FTSE 100 slides as anxiety grows over rising bond yields

The FTSE 100 is down by 96 points, or 1.4%, at 6,555.85 on Monday afternoon. Having gained momentum on Wednesday and Thursday, the index is now lower than where it began the week.

The dip is in line with significant falls in Europe and Asia as rising bond yields raised eyebrows over the prospect of higher interest rates.

Craig Erlam, senior market analyst at OANDA Europe, commented on a dramatic end to the week for the FTSE 100.

“The rapid rise in yields this week has come despite a perfectly competent performance from Fed Chair Jerome Powell in front of the Senate Banking and House Financial Services Committees. He gave his best assurances and it’s seemingly fallen on deaf ears,” said Erlam

“I expect we’ll see a lot more of this from central banks in the coming weeks if stock go into freefall. Despite a couple of days of losses, we’re very much not in that territory yet – this is not a taper tantrum – and policy makers may be perfectly comfortable with what’s happening.”

FTSE 100 Top Movers

Out of the few companies that did make gains on Friday, International Consolidated Airlines (3.96%), Reckitt Benckiser (1.48%) and Rentokil Initial (0.83%) led the way at the top of the index.

At the bottom end of the FTSE 100, British Land Co (-5.37%), Rightmove (-5.32%) and Anglo American (-5.09%), were the day’s biggest fallers.

Pets At Home

Pets At Home (LON:PETS) has upgraded its profit guidance again as raised demand for pets during lockdowns is showing no signs of slowing down. 

The FTSE 100 company announced on Friday that it is forecasting its underlying pre-tax profits to reach £85m, up £12m from its previous forecast of £77m. 

Hikma Pharmaceuticals

Hikma Pharmaceuticals (LON:HIK) announced on Friday that it expects its yearly operating profit to rise during 2021 having been tasked with supplying emergency treatments for Covid-19 patients.

The FTSE 100 company confirmed its core operating profit rose by 11% to $566m during 2020, up from $508m the year before. Hikma said its profit was driven by strong growth in sales of Generics and Injectables.

Hikma Pharmaceuticals predicts profit rise as demand for Covid drug treatment ramps up

Liam Roche
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0
Hikma Pharmaceuticals predicts profit rise as demand for Covid drug treatment ramps up

Hikma Pharmaceuticals has supplied drug treatment across the world

Hikma Pharmaceuticals (LON:HIK) announced on Friday that it expects its yearly operating profit to rise during 2021 having been tasked with supplying emergency treatments for Covid-19 patients.

The FTSE 100 company confirmed its core operating profit rose by 11% to $566m during 2020, up from $508m the year before. Hikma said its profit was driven by strong growth in sales of Generics and Injectables.

The London-based company’s core revenue rose by 6% to $2.3bn.

Despite the upturn in profit and revenue, Hikma Pharmaceuticals’ share price levelled at around 2,341p per share post-lunchtime on Friday following a morning of peaks and troughs.

The drugs company has been called upon to supply its emergency drug treatment to nations across the world as demand soared during the pandemic.

The company confirmed it used its “strong foundation to meet increased demand for essential medicines used in the treatment of Covid-19,” while remaning focused on other apsets of its business. 

Siggi Olafsson, Chief Executive Officer of Hikma, commented on the company’s performance during the pandemic.

“Thanks to our strong foundation, flexible and high-quality manufacturing capabilities, robust supply chain and the unwavering dedication of our people to our purpose, Hikma was able to play a critical role in the pandemic. We responded rapidly to the changing needs of healthcare providers, supplying essential medicines used to treat COVID-19 patients, while continuing to provide the critical medicines our patients need every day,” Olafsson said.

“Our response to the pandemic demonstrates the resilience of our business, which enabled us to deliver a strong financial performance and continued progress against our longer-term strategic objectives. We achieved good revenue growth in all our businesses and an improvement in core profitability.”

Aquis Exchange to make maiden profit

Liam Roche
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Aquis Exchange to make maiden profit

Aquis Exchange share price soars on early morning trading

Aquis Exchange announced on Friday that it expected to make a profit in 2020, the company’s first time doing so, as revenue is forecast to grow above expectations.

The trading exchange expects revenue to be at least £11m, which would be nearly a 60% increase from £6.9m in 2019. 

Revenue growth has been driven in part by continued high levels of trading on Aquis Exchange alongside strong technology sales, with a number of clients having renewed licensing contracts at the end of the year. 

Therefore, Aquis Exchange expects to record its first ever profit, compared to a loss of £1.1m for 2019.

The company’s share price shot up on Friday’s morning trade by 8.65% to a value of 565p per share. It is a continuation of the share’s bright start to the year which began with a valuation of 470p per share. 

Alasdair Haynes, chief executive of Aquis Exchange, outlined the company’s preparedness for Brexit and the coronavirus pandemic.

“We have long been well-prepared for Brexit-related changes and are pleased to report the successful and seamless continuation of our operations in the UK and the transfer of our European trading business to the Paris office.”

“Despite the continued pandemic-related restrictions seen across our markets, we continue to achieve substantial operational progress and have beaten market expectations. Looking forward to 2021, we remain confident in our ability to execute against our growth strategy.”

Aquis Exchange was admitted to the AIM in 2012 and has since become one of the largest trading companies in Europe.

Aquis Exchange PLC is an exchange services group, which operates pan-European cash equities trading businesses, growth and regulated primary markets and develops/licenses exchange software to third parties.

Pets At Home raises profit forecast as demand surges

Liam Roche
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Pets At Home raises profit forecast as demand surges

Pets At Home performance ‘ahead of expectations’

Pets At Home (LON:PETS) has upgraded its profit guidance again as raised demand for pets during lockdowns is showing no signs of slowing down.

The company announced on Friday that it is forecasting its underlying pre-tax profits to reach £85m, up £12m from its previous forecast of £77m. 

Pets At Home changed its guidance upon learning that its trading during Q4 of its financial year was stronger than anticipated. 

The company said: “In our trading update on 8 January 2021, our guidance for full-year profit out-turn reflected a number of ongoing uncertainties over the near-term outlook, including renewed challenges from higher Covid infection rates and restrictions on a national level, as well as potential supply disruption relating to the UK’s exit from the European Union.”

“Notwithstanding this challenging external environment, our performance over the last eight weeks has been ahead of expectations, with continued strong and broad-based growth across all channels and categories.”

Before lunchtime on Friday the Pets At Home share price was up by over 6% as investors reacted to the FTSE 250 company’s announcement. 

“The rapid improvement is evidence of just how strong recent trading has been, and the effect rolling lockdowns are having — both on pet ownership and our willingness to splash out on our furry friends,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.

Pets At Home has been a beneficiary of lockdowns, revealing an “exceptional level of demand” in November, as the company’s revenue shot up.

In January, Pets At Home revealed that its retail sales climbed up by 17.5% between October and December.

Pets At Home is the UK’s leading pet care business with over 451 stores, many of which also have vet practices and grooming salons.

Tesla share price: analysts remain bullish despite high valuation

Liam Roche
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0
Tesla share price: analysts remain bullish despite high valuation

Elon Musk saw his net worth tumble by over $15bn as shares in Tesla fell by 8.6% on Monday. While 2020 was an outstanding year for the electric vehicle manufacturer, its performance over the past week has brought its future prospects back into focus. 

Tesla share price

Despite recent losses, the Tesla share price is up 465% over the past 12 months to $742 per share. During 2020, in the midst of the pandemic, the electric car maker saw a 743% rise in the value of its shares. Stretching back further to October 2019, Tesla stock is up by around 1300%.

Analysts have given mixed views for Tesla over the coming year. Colin Rusch, analyst at Oppenheimer, has set his price target at $1,036. While Dan Ives of Wedbush, set a price target of $950, more than $200 above where Tesla is currently trading.

Sales

Tesla delivered nearly 500,000 electric vehicles in 2020, up 36% from the year before. Over a “multi-year horizon”, the company expects to achieve 50% average annual growth in sales. The electric vehicle manufacturer is on track to begin deliveries of its Model Y capacity from its Gigafactory Berlin and Gigafactory Texas in 2021. 

Morgan Stanley believes Tesla “can leverage its cost leadership in EVs to aggressively expand its user base, over time generating a higher percentage of revenue from recurring and high-margin services revenue.”

Risks

Tesla’s price to earnings ratio is in excess of 200. Put simply, the car maker’s profits will have to grow substantially in the coming years to justify this value.

This could become a problem for Tesla as competition from other manufacturers is intensifying. Volkswagen ended 2020 with over 400,000 new electric vehicle sales. While Nio, XPeng and Li Auto, Chinese electric car makers listed on the New York Stock Exchange, are worth a combined $166bn.

FTSE 100 up despite expectations of tax hike

Liam Roche
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0
FTSE 100 up despite expectations of tax hike

After lunchtime on Thursday the FTSE 100 was up by 0.35% despite news emerging of an oncoming tax rise. The index stands at 6,821.21 points as investors’ faith in the vaccine holds steady.

In an effort to restore the country’s finances, UK Chancellor, Rishi Sunak has hinted at an oncoming tax hike akin to the policies of Joe Biden. “It’s right that once our economy begins to recover, we should look to return the public finances to a more sustainable footing and I’ll always be honest with the British people about how we will do this,” the Chancellor said.

FTSE 100 Top Movers

DS Smith (6.68%), Evraz (5.33%) and Anglo American (4.43%) all made significant gains as the top three risers on the FTSE 100. 

At the bottom end, Standard Chartered (-5.96%), Hikma Pharmaceuticals (-5.25%) and Polymetal International (-2.21%) are the day’s biggest fallers on early afternoon trading.

Standard Chartered

Standard Chartered will reinstate its dividend this year despite seeing a significant fall in its pre-tax profit. The bank also unveiled plans to significantly reduce its office space over 2021.

BAE Systems

BAE Systems, the FTSE 100 aerospace company, posted “strong” results on Thursday morning, announcing a 4% increase in sales over 2020, up to £21bn.

The company’s revenue rose to £19.3bn from £18.3bn, while operating profit climbed to £1.9bn. The underlying earnings per share is now at 46.8p.

Seeking out deep value with Miton Global Opportunities

Liam Roche
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0
Seeking out deep value with Miton Global Opportunities

Miton Global Opportunities

Founded in 2004, Miton Global Opportunities (LON:MIGO) has evolved to become a deep value and special situations fund. The fund’s aim is to buy discounted investment trusts that have a “catalyst for change”. Miton Global offers a diversified fund with a range of geographical locations and a variety of assets, including equities (37.7%), private equities (22.7%), property (17.8%) and mining (13.9%). The company sets itself apart by avoiding mainstream markets, instead seeking to buy esoteric, overlooked assets.

Buying trusts at a discount

Miton Global Opportunities aims to buy companies where the NAV (net asset value) both exceeds the share price and is growing over time. This can be achieved in a number of ways. For example, an asset class coming back into favour, or a company employing a new leadership team. One of Miton Global’s key strategies is to target the acquisition of assets worth £1 for as little as 70p.

In 2017, Miton Global Opportunities purchased Ecofin Global Utilities & Infrastructure Trust when its NAV exceeded its share price by over 10%. Due to poor performance levels by the management team, a discount had been created. A new management team was then appointed and became a “catalyst for change”, turning around the company’s prospects. New investors were found, narrowing the NAV discount, while the NAV rose by 23%. In January 2020 Miton Global sold and reaped the benefits.

Miton Global Opportunities Top 12 Holdings

Top 12 stocks Weight (%)Discount (%)
Baker Steel Resources Trust7.6-14.0
River & Mercantile UK Micro Investment5.6-9.4
Epe Special Opportunities5.2-39.1
Alpha Real Trust5.0-25.6
Dunedin Enterprise4.8-23.3
Vinacapital Vietnam Opportunity Fund4.8-8.5
Phoenix Spree Deutschland4.2-32.0
Atlantis Japan Growth Fund4.0-6.2
Third Point Offshore Investment3.7-22.0
Henderson Opport Trust3.4-8.5
Oakley Capital Investments3.3-27.5
New Star Investment Trust3.2-29.8
31/1/21

Performance

Over the past 12 months Miton Global Opportunities Trust’s share price has risen by 9.6% despite the pandemic, around the same level as its NAV. Over a five year period, the trust has seen a 95.9% increase in the value of its share price.

Baker Steel, the specialist fund manager, which is Miton Global’s top holding at 7.9%, was the trust’s best performer in January, announcing a 29% increase in NAV. This capped off a promising start to the year for Miton Global which saw a 3.69% rise in the company’s share price in the last month. 

Year-to-date, the top performers on the Miton Global fund are Artemis Alpha Trust, VinaCapital Vietnam Opportunity and River and Mercantile UK Micro. While the losers so far have been Real Estate Investors, Duke Royalty and Macau Property Opportunities. 

The trust has a total of £86.6m worth of assets under management. 

Triple Point Social Housing REIT: high yield with a high social impact

Liam Roche
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Triple Point Social Housing REIT: high yield with a high social impact

Triple Point Social Housing REIT (LON:SOHO) was one of three organisations that presented investment opportunities at February’s UK Investor Magazine Virtual Investor Conference. 

High impact investment strategy

The trust’s aim is to allow investors to get a solid long-term return while having a positive impact on society. Their mission is geared towards addressing the ongoing housing crisis by investing in the UK social housing sector. The REIT supplies homes adapted to the needs of vulnerable adults who require long-term care and support. Triple Point Social Housing generates a long-term investment stream for investors from tenants whose rent is ultimately paid by the government. 

The Department for Work and Pensions funds housing benefits for individuals in specialised housing. The relevant local authority will pay both the core rent, along with the service and management fee, to an approved provider. The approved provider keeps the service and maintenance charge while passing the rent onto Triple Point Social Housing. 

“Often when it comes to investing, money sloshes about and has no real impact but here the money we raise and invest is having a tangible impact on society,” said investment director at Triple Point Social Housing, Freddie Cowper-Coles.

Secure income stream

The nature of government subsidised housing means Triple Point’s annualised income of £28m is on a secure foundation. 100% of rent payments were collected by the trust over the first half of 2020, proving to be unaffected by the pandemic. In addition, inflationary increases in housing benefit have been achieved. 

Value

Triple Point Social Housing is trading at a 2.55% market premium which reflects a positive sentiment around the portfolio’s underlying assets. 

The company’s current IFRS valuation at £510.3m means Triple Point Social Housing has earned a 7.25% uplift against investment of £476.1m. In addition, its portfolio premium valuation, the amount the company would achieve if it sold off all of its assets, is at £548.5m. SOHO is therefore significantly undervalued by its IFRS valuation.

Properties

The trust has funded 404 properties, housing 2,872 people. Triple Point Social Housing has a geographically diversified portfolio with properties in every region of the UK. 

Since its initial public offering SOHO has funded 22 construction projects, committing £56.2m.

Triple Point Social Housing dividend

Triple Point Social Housing’s target dividend is at 5.8p per share for the company’s upcoming financial report, which is around the same level as the previous two years. In 2018 and 2019 the company’s dividend yield was 5% and 5.7% respectively. 

Debt

The REIT used debt to leverage its portfolio, which is secured against properties Trust Point bought. The company’s debt stands at £185.1m. However, it appears to be at a manageable level with a gearing of 33.1% LTV.

BAE Systems poised for growth in 2021 with sales up to £19.3bn

Liam Roche
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0
BAE Systems poised for growth in 2021 with sales up to £19.3bn

BAE Systems confirms dividend payout for year at 23.7p

BAE Systems, the aerospace company, posted “strong” results on Thursday morning, announcing a 4% increase in sales over 2020, up to £21bn.

The company’s revenue rose to £19.3bn from £18.3bn, while operating profit climbed to £1.9bn. The underlying earnings per share is now at 46.8p.

BAE Systems announced a final dividend of 14.3p per share, bringing the total payout for the year up to 23.7p per share. This is down from a total dividend payout of 37.5p per share for 2019.

Despite a slight dip due to the pandemic, demand for defence has proved resilient, according to Neil Shah, director of research at Edison Group.

“Whilst the company reported a small drop in its recent orders compared to 2019, BAE Systems has indicated that its order backlog is already 80% full. And, boosted by 2020’s £1.7-billion acquisition of Ratheon’s Airborne Tactical Radios and Military GPS, the company expects that sales in its higher-margin air and electronic systems will continue to offset the disruption in its commercial aircraft business and provide sales and underlying profit growth of 3-5% and 6-8% respectively,” said Shah.

Shah’s outlook beyond Covid-19 is positive for BAE Systems, specifically as a proposition for investors. 

“Consequently, BAE systems appears to be poised for appreciable growth as the global economy returns to some sense of normality post-Covid, and, after a bleak year for traditional UK equity income strategies, the stock should be an especially attractive proposition for investors looking for secure dividend pay-outs.”

BAE Systems’ share price is up by 0.93% to 500.6p since Thursday’s open. Year-to-date the company’s share value is up marginally from 493.9p per share. 

Charles Woodburn, chief executive at BAE Systems, commented on the groups results:

“Thanks to the outstanding efforts of our employees and close cooperation with our customers, suppliers and trades unions, we have delivered a strong set of results against a challenging backdrop of the global pandemic. Throughout 2020, we focused on keeping our people safe and supporting our communities, whilst continuing to deliver for our customers,” Woodburn said. 

“In 2021, we will continue to drive operational performance, progress our sustainability agenda and invest in high-end discriminating technologies to meet our customers’ priorities, which will ensure we are well positioned to grow the business and contribute to the economic prosperity of the countries in which we operate.”

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