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Sefton (LSE:SER) groupies are terribly excited that Mohammed El Fayed has picked up 15 million shares (just over 3%) of their company. Er up to a point. And it makes no difference. The stock is worthless. My target remains 0.1p and it is a stonking short. Here is why.
The shares have actually been picked up by an upstream fund run by the phony pharaoh’s nephew ( Fayed E&P Acquisitions). It is based in Switzerland. As far as I can see the last time it took a 3% stake in an AIM listed oil minnow was Sound Oil (LSE:SOU) a couple of weeks ago. Like Sefton its share price spiked as Al Fayed built up a 3% stake via market purchases. It has fallen back since.
I am sure that Jim Ellerton presented very well to Al Fayed. He has been doing so to UK investors for years. They have lost up to 98% of their cash as a result of being suckered in. I wonder if Al Fayed has heard the bear case yet. He will.
Ultimately it does not matter which fund or private investor buys or sells what. Not, for that matter does it matter what I or others write. The share price of all companies is driven by its ability ( or otherwise) to generate cash.
And the bald fact with Sefton is that its assets are so piss poor that $18 million of capex since the start of 2007 has yielded just $5 million of operating profit and now sees monthly production running at its lowest rate ever.
That is why the shares in this heavily indebted enterprise are virtually worthless – my target remains 0.1p and you can see why by clicking HERE
This remains an outstanding short. Sorry Mo.
Libertarian investment writer Tom Winnifrith writes extensively for a number of US and UK financial websites. All of that material appears on his own blog, which also carries his extensive original non financial material, at TomWinnifrith.com – for alerts on all Tom’s writings follow him on twitter at @tomwinnifrith
SER reminds me abit of the Savile saga. Critics seems so wise after the main event which saw the shares slump best part of 95%. Shame they weren’t so clever long before and maybe saved a lot of heartache for long term shareholders. Glory boys ahoy!
Tom, Please check your email (tomat49@gmail.com). Thanks
Trevor
Apologies for not spotting this earlier. For as long as it has been on my radar screen i have raised questions not asked in a public way before.
Fidel, I have and have replied.
Others please note that a courteous email normally gets a rapid response. Impolite emails may not be answered so promptly, if at all
Tom