Liams Last Post: Bettermarket , sticking neck out and saying CRH is a buy , Bond auction success.

Good Afternoon ,

 

A brighter day in Ireland , the NTMA successfully got away the bond auction today though I hear that International institutions may have been advised to short the Irish 10 year last week ahead of the auction so they effectively were able to over it back at a better price today… either way the optics were positive and the auction was a success.  This helped underpin a rally in the Irish financials who had been subject of constant pressure for the past week on decent volume.  Bank of Ireland was +5.8% as was AIB and Irish Life continued to struggle but ended marginally higher.

 

I sent out my thoughts on CRH . I do think the stock is on balance a buy here ahead of their interims on Tuesday.  The stock looks oversold , I don't think that we will see much good news rather that the bad news is priced in and I would be shocked if there is further downgrades after the downgrades we have already got in early July.   This would be the effective deathknell to management credibility which is at a low at this point.

 

The cyclicals rallied so Smurfit also joined in and rallied +3.5% . I am not changing my mind here that it is a big macro call and that I think that the risk reward here is to be out of it and into the likes of CRH.

 

Ryanair was on the up and up helped by the announcement of a new internal Spanish route.  Aer Lingus took off (Ha !) as the news about the strike being cancelled in Heathrow was well received.

 

I watched Greencore CEO Patrick Coveney having his dinner in a burger joint in Dublin last night but I could not make any judgement on the body language or the earnestness of the conversation. The stock price though is telling you that the market is at best bored to tears with this story especially the disappointment of the USA strategy. However the valuation is low and the yield is high so it is likely to just hang around here for a while. The stock has not convincingly broken up to new levels since the placing of the Liam Carroll stake by my former colleagues at ABN (RBS) in December. It does look oversold too so probably not a good time to lose patience with it.

 

The wheat price rally also looks like this was a storm in a tea cup although the amount of wheat which is going to be harvested relative to initial forecasts is down sharply.The Wheat ETF was down -3.5% today  to the 2.42 level which is a support level and levels which were trading in October and November 2009.

 

Origin enterprises has begun to perform , it is cheap and was sort of overlooked for a long time , the stock was up +5% today , I do like this one but it is tightly held. The level of gearing at Aryzta probably brings the timing of a disposal by Aryzta of their stake that much closer… this is not the view of my colleague Sam who has been adamant that the high Return on Capital employed characteristics of Origin and the role this metric plays in the Compensation formula for Aryzta executives meant it would never be sold. The stake is being diluted overtime though as Aryzta grows bigger so I think this is a factor in the market having a closer look at origin.

 

Have a good evening

 

Liam  

 

 

 

 

 

___________________________________________

Liam Boggan

　

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