Liams Last Post : Another Day when the bears were squeezed ...

Good Afternoon ,

 

Another day where the bears have been squeezed …

 

The day started off with bad news of a watery hole for Tullow. The stock reacted negatively , it was a potentially high impact drilling but Sebastian had risked the potential result to have had to only take our  NAV down by 12p , the upside however was estimated to be 68p so not great news. The next news from Tullow will be the results from the Mercury well off shore Sierra Leone where Tullow have a 10% stake. Anadarko are the operator here. News is expected by end of November and then we look to further news from the Ghana and Uganda drilling over the next few quarters It will be busy newsflow wise so the market will have plenty to anticipate.

 

Paddy Power peer William Hill released a strong IMS statement for Q3  in which Group net revenue and Group EBIT increased by 22% and 64%, respectively on a yoy basis. Group net debt stood at £501.3m at the end of September.  William Hill online continues to perform well driven by increases in revenue and a gross win margin (8.9%) from Sportsbook. In the company's retail channel,  William Hill's OTC gross win margin came in at 18.2%; above the company's indicated range of 17-18%. On outlook, the company notes that since the end of September, there has been a continuation of Q3 trends and the company now expects to deliver an operating profit "around the top of the current range of forecasts" for the full year. The bookmaker is cautious looking in to 2011 given the recent public expenditure cuts in the UK and also the planned VAT increase, in what is considered a "challenging economic environment".

 

ICON rose this afternoon after a set of numbers which were disappointing but where the disappointment had been largely built into the price which has been on the slide for the last month. Clearly ICON have a management challenge to turn around the performance of the Central Lab business which is loss making at an operational level as well as incurring re-structuring charges. It would seem that the order book wins are pleasing but it was acknowledged by ICON that it is taking longer to convert orders to Revenue. I personally remain somewhat cautious of the company as it explains that it is investing ahead of its clients transitioning to new business models. This seems a tad woolly. I am however a believer in ICON longer term it has just been a frustrating experience to invest knowing that the business parameters are still moving around and there is little certainty yet. The volume in the stock today is very large which suggests that there is decent size interest on the buy side as well as a number of frustrated shareholders choosing to exit.

 

Then Anglo Irish Bank announced that it is inviting all holders of the Sub Debt to exchange any or all of their Existing Notes for new euro-denominated Floating Rate Notes due 2011. Just under €1.6 billion in sub debt (and $200MM in other sub debt) will be converted into around €300 million of new debt paying 3 Month Euribor (which has recently been surging)+ 3.75%. Bondholders, or opt for a cash alternative, have until November 19 to make a decision. If they will agree to booking an 80% loss…

 

Think that's probably enough news for tonight…

 

Have a good evening ,

 

Liam

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

www.merrion-capital.com

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