The hunt hit a 16-year low this month, thanks to its reliance on the U.S. oil and gas industry on land, to which it sells parts and services. This has been the hardest hit part of the sector given the higher production and storage restrictions in the region. The valuation is now well below the June 30th working capital balance of $ 429 million (£ 331 million) at £ 229 million.
Investor pessimism comes from the Oil price stay low and depress the balance sheets of US onshore producers. Last year was a tough year for producers, so the fall in prices was particularly hard in March. In response, Hunting mothballed one facility and permanently closed another, releasing over 600 workers to cut costs in the first half of the year. That is a considerable number for a company with around 2,200 employees.
Despite the challenges and massive depreciation, the dividend has returned, increasing the yield to nearly 3 percent, while Hunting held onto a net cash position of $ 5.5 million as of June 30. This affected inventory levels of $ 33 million.
With that in mind, managing director Jim Johnson and finance director Bruce Ferguson may have bought 50,000 and 14,000 shares, respectively, in the first week of October. Mr Johnson paid 122 pence per share and made his new share worth £ 61,000 while Mr Ferguson paid 122.6 pence.
The state of the hunt becomes clearer after a trade update was released on October 27th. Barclays analyst Mick Pickup pointed to potential inventory discounts as another problem, although he said the share price was “covered” to a 50 percent decline. In the half year results, the company hurt its inventory value by $ 33 million due to the weaker market. The company has performed better in its subsea business, although those contracts have also decreased.
Consulting firm Rystad Energy forecast global offshore spending commitments of $ 34 billion in 2020, up from $ 101 billion in 2019. Onshore is in even worse shape, falling from $ 89 billion to $ 19 billion, despite Rystad in 2022 saw a strong rebound to over $ 100 billion. Conditions in the US do not suggest a rapid recovery in the onshore industry that would affect Hunting’s main titanium division. At 140p, the hunt could be a bargain and the bosses might have found why. However, there could easily be more pain if the circumstances are out of the company’s hands.
Investors in TP ICAP have another tough year. After a resilient first half, the interdealer broker surprised the market in August when he warned The activity had slowed considerably. The reaction to this sudden malaise – the Acquisition trading company Liquidnet for up to $ 700 million (£ 538 million) – requires a rights issue of $ 425 million. In less than three months, the share price has fallen by more than a third.
With confidence dwindling, chairman Richard Berliand and chairman Nicolas Breteau entered the battle this week, buying shares valued at £ 57,330 and £ 23,000, respectively.
Should investors feel reassured now? First, neither volume is particularly large for the world of the FTSE 250 c-Suites. For example, the purchase of Mr Breteau equates to 3.5 percent of his 2019 fixed compensation, excluding an additional £ 1.5m in deferred and short-term variable compensation.
The timing of the trades is also puzzling as all directors have already agreed to participate in the upcoming rights issue. The purchase of new shares by both men is likely to be imminent. However, it turned out that prior to these purchases, Mr Berliand and Mr Breteau only owned 50,000 and 15,000 shares directly, although the latter can point to his interest in 548,042 shares under a long-term incentive plan and the 237,193 shares not transferred to which he was entitled at the end of 2019.
So how much of their own money can we expect the couple to get involved in the rights issue? The terms have yet to be released, although a two-for-seven offer at the current price could cover them. With 100,000 shares held, the directors would only have to spit out around £ 63,000 to meet their equity commitment.
Mr. Breteau has high hopes for a company whose enterprise value is valued at up to 11 times adjusted Ebitda, more than double the current valuation of TP ICAP. With so much at stake, he might have brought more skin into play.