Posts Tagged flotation
No false start for Betfair float
Posted by Peter Webb in Bet Angel on October 27th, 2010
Betfair shares got off to a good start last Friday on the London stock exchange. I am sure there will be plenty of excitement and speculation around the shares for some time. Betfair is a ‘new’ business, has good competitive aspects and is one that has seen rapid growth. Surely a ‘hot’ stock.
As you may be aware, I have been brought up on a diet of long term investing on the stock market and not speculation. My focus has always been on value and not price. So there is the reason why I’ve been generally been luke warm on Betfiar’s flotation. This is not because Betfair isn’t a great company, but it’s just the price I would have to pay to own part of it.
If you want to rationalise how I see stocks, imagine you are betting on a football team to win a match. You are searching for situatons that are stacked in your favour and where doubt has been minimised, you know there will be goals. The sort of value I am looking for when buying shares, would be the equivalent of the team I was betting on being a goal up already or been able to back them knowing they are definately about to score. Of course that never really happens in the sports market, but these type of situations can occur in the stock market.
If you buy a growth stock it’s like betting that a football team will win by a set number of goals. The high valution of growth stocks represents the future, the trouble is, that hasn’t happened yet! Any hint of a failure to fulfill the expected future can be crushing to a companies valuation. When buying growth stocks you are betting on there being many goals rather than exploiting value.
All that said, I will almost certainly become a Betfair shareholder at some point, why? The lure of being a owner and a customer is tough to resist. While shareholder rights are generally poorly understood, you do have them and this makes it worth holding a few shares at least.
And there're off!
Betfair 1/3 for float failure
Posted by Peter Webb in Bet Angel on September 27th, 2010
Credit to the forum poster who found this on the Internet but it’s either a wonderful peice of PR or people are actually betting against the float being a success. An interesting read anyhow. Until I see the price and / or the offer document it’s difficult to make a true judgement as to whether it’s too expensive or not.
A lot of hot air or will a good float?
Betfair flotation WILL go ahead
Posted by Peter Webb in Bet Angel on September 21st, 2010
Read full details here: -
http://corporate.betfair.com/investors.asp
As an active private investor I’ve been valuing companies for years. When a company IPO’s to fund expansion this is usually seen as a good sign, raising low cost captial to expand. When a company IPO’s to acquire, there is some risk but the rationale can be justified. The final type of IPO is an exit strategy, a chance for shareholders to cash in at the highest price and to sell some of their shares and pass risk on to new investors. Betfair don’t need any new funds, so this IPO appears to fall into the last catefory.
Until the offer document is out I can’t really comment on valuation but I already suspect this will be at the very top end of expectations given the nature of the IPO and justified on future growth prospects. The trouble will very highly valued shares is that it doesn’t take much to send them crashing to earth. But lets wait till the offer document is published and see what comes out of that. One thing that will change is, if you are a shareholder, you will have the right to turn up at the AGM and ask questions. Betfair will also have to publish more detail and be more open about their business. I’ve met many a director of a public company that dislikes the scrutiny that occurs at that level but it’s all part of being a public company.
Having been an investor for such a long time and also one of Betfair’s longest serving customers this is going to be a fastinating period.
There is a thread on the forum, where we shall be discussing matters for sure.