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Regal Partners Ltd V.RPL


Primary Symbol: VGIPF

Regal Partners Limited is an Australia-based company, which operates as specialist alternatives investment manager. The principal activity of the Company is the provision of investment management services, specializing in alternative investments. It is engaged in managing a diverse range of investment strategies covering hedge funds, private markets, real and natural assets, and capital solutions on behalf of institutions, family offices, charitable groups and private investors. The Company has seven alternative investment management businesses: Regal Funds Management, PM Capital, VGI Partners, Taurus Funds Management, Attunga Capital, Kilter Rural, and Merricks Capital. The Company operates offices across Australia, Asia, United Kingdom/Europe, and North America.


OTCPK:VGIPF - Post by User

Post by InvestorSuperfanon Jun 21, 2013 4:42pm
285 Views
Post# 21559184

Bottom Line Re. Nuttall's Comments

Bottom Line Re. Nuttall's Comments

I think the two major questions for anyone who currently owns shares in RPL are: 1) What is RPL's share price likely to be going forward (next week, next month, next year, etc.)? 2) Will RPL be paying a dividend in the future (either as a stand-alone company or as a post-takout combined entity with another company)? While predicting the future price of this stock is obviously very speculative, I think Eric's G&M online discussion posted a few days ago provided a pretty clear answer as to what he expects:  ".......I'm not talking a 100% premium or anything but the value of this company in my opinion exeeds the current share price by a fair margin". (witek's post dated June 18, 2013 @ 3:18pm). Even if one was to err on the optimistic side and interpret his "fair margin" comment to mean around a 50% upside from the $1.12 share price at the time, it appears Eric may believe the best case scenario for a takeout price is in the neighbourhood of $1.68. With regard to the second question: I think Eric is being a little too defensive about the safety of the dividend. An "all in" dividend payout ratio means the dividend plus capex (at least from where I stand). Notice what is not included in this calculation. That's right: debt (along with accumulated interest on said debt). Sure, bigger names may have higher all-in payout ratios, but they also likely have a higher current ratio, lower D/E ratio, etc.  The debt can't just be ignored when saying the dividend is likely safe. Now, perhaps $23M savings per year (50% cut in the dividend) or $47M savings per year (dividend elimination) may not be enough to stabilize the company - perhaps Eric believes that selling the Viking assets will bring in a one-time cash infusion that will bring the debt down to satisfactory levels and allow RPL to proceed alone (no takeover or merger), milk their high quality SE Sask assets on their own, and maintain the dividend....?  I see that as a pretty interesting scenario to consider. Alternatively, if the company that purchases RPL in a takeout is cash rich and can afford to continue paying a dividend, this may remain a dividend-paying investment, Finally,  I'd like to give some credit to Eric Nuttall. Unlike Bruce Campbell, Eric has not only stuck with RPL for his clients, he indicated he owns it personally as well (though I'd like to know the average cost per share of his own money he has in the name). He appears to be deeply underwater in this stock, yet still holds on and stated he even bought more at around $1.20 (witek's first G&M post on this board dated June 18 @ 3:13pm). So he at least eats his own cooking and didn't bail on this stock to date.  Kudos to him, even though he obviously got it wrong at the point when RPL decided to buy the Penn West assets for $405M near the end of last year. With the proverbial 20/20 hindsight, it would have been prudent to sell RPL shares at that point given this large purchase given the size of RPL combined with the further cash drain of a new dividend, and wait for the Dec 31 2012 numbers to be released (March)so one could examine the impact of this purchase on the balance sheet before deciding whether to re-enter the name. He did not, That is on him. But I respect the guts he has shown to come on shows like BNN or participate in online forums such as the G&M event, take questions on RPL, express his current views on the company, and acknowledge that he is down significantly in the name but is sticking it out.
 

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