Liams Last Post : DCC Investor Day adds little new news , US data triggers sell off (-2.2%) in USA

Good Afternoon,

 

I have unfortunately no feedback as yet from the Paddy Power investor day in London. There was feedback from Gerard re the DCC investor day. It seemed to me to achieve little except to establish yet again that DCC is now a company run by a bunch of sincere guys who move slowly , who are driven by returns and a reticence to do anything to disturb the returns pattern. The presentations gave lots of divisional details and was attended by Dublini brokers ,DCC staff and a lot of existing DCC shareholders. They have an appetite for deals  but no seeming urgency to do bigger or more aggressive ones. Even they see the contrast between the more aggressive deal style of Rubis and its valuation and their conservative style and their rating.  It was left for attendees to draw their own conclusions about the possibilities for corporate re-structuring in the form of disposals of the smaller businesses. DCC would appear to not be feeling the pressure from investors that a modicum of excitement might be nice. Don’t get me wrong. This is a great company , it is hard to sell  it an idea all the time though as there is little newsflow and it tends to range trade with unexpected moves driven by deal flow.  It is a pension stock , good returns a buy , Hold and Put away kind of stock and it is not that easy also for analysts to get a hold of the numbers and do proper innovative added value analysis so guidance from the company plays a big part in shaping forecasts with the spread of their businesses.

 

The ADP employment data followed by a weak ISM number in the USA helped create a lot of angst in the afternoon.

 

The dollar weakened and the DOW Jones fell -2%  to break thus far a predictable pattern of First day of the month positive returns. The market will worry now that the recent strength of the market has been purely technically driven and has had no impact on generating sustainable recovery in the USA which is a real concern.

 

Ryanair continues to benefit from the positive momentum of the management post results road show and closed +3% today. CRH gave up the ghost this afternoon after it was helped this morning by a Merrill Lynch (BOFA) positive recommendation.

 

Smurfit  too gave up -2.5%. I have been a bear of this one and have been right recently but I am a tad more circumspect now that I see that Input prices for waste recycled boxes OCC have fallen and Testliner prices have continued to rise. I would think this may provide a catalyst for a rally. Gotta do a bit more work on this one but it looks interesting.

 

Have a good evening

 

Liam

---

Disclaimer: www.merrion-capital.com/disclaimer

Merrion Stockbrokers Limited (registration no. 307878)
is a limited liability company whose registered office is at
Block C, The Sweepstakes Centre, Ballsbridge, Dublin 4, Ireland.