Wednesday 15 May 2013

Portfolio Buy: Centaur Media (LSE:CAU)


In my pre-DIY Income Investor days, before I found my own way through the investment maze, I used to buy on recommendations from investing magazines.  'DYOR' (Do Your Own Research) needs to be burnt into your investing psyche.

Ah...impulse buys - don't you love them!

Now I Do My Own Research - but I still have the occasional impulse buy, of which this is one: so do not look on this purchase as a recommendation.

Centaur Media is a FTSE 250 publisher and event organiser that I have discussed in a previous post. I bought it, not using my current purchase rules (based on yield, etc.), but on the basis of a 'recommendation' of the Investor's Chronicle: - to which, probably needless to say, I no longer subscribe.

So, Centaur Media is one of my 'legacy' share holdings that I would rather keep quiet about, as it has under-performed consistently since I first bought it in November 2007. But I have been watching it recently with a view to possibly adding to it or dumping it completely.

However, today's shock 33% fall on opening made the decision for me. After looking quickly at the announcement that prompted the price fall, I decided that there didn't seem to be much more bad news than was known before - except that the CEO was now stepping down. So - in my innocent view - the sell-off was overdone.

Although it has fared poorly since purchase, paradoxically, this means that Centaur Media has moved into DIY Income Investor territory - now with a forecast yield of over 5% with dividend cover over 2 (although these forecasts may change following today's announcement).

The group is organised in 3 operating divisions reflecting the core capabilities of the business.
  • Business Publishing: the provision of content-based marketing solutions and market intelligence to its niche markets. Its portfolio currently comprises a dozen market leading brands and includes Marketing Week, Creative Review, Money Marketing, The Lawyer, Employee Benefits and The Engineer. The primary focus of Business Publishing is on digital media.
  • Business Information: the delivery of 'high value content and workflow solutions to support business-critical decision making'. Its portfolio currently comprises 10 leading brands, including Econsultancy, Perfect Information, Profile Group and VBR.
  • Exhibition: the organisation of information-rich events which connect buyers and sellers. Its portfolio comprises 10 leading brands. They include Homebuilding & Renovating, Marketing Week Live, Business Travel Show, The Meetings Show, Employee Benefits Show and Subcon. 
Today's Interim Management Statement notes that: "the Board now expects to deliver modest profit growth for the current financial year to 30 June 2013, relative to the adjusted profit before tax of £8m reported last year. This is below market expectations." The bad news seems to relate to print advertising, recruitment fees and overseas training; but this is offset to some extent by good performance in other parts of the business.
Now, this is not exactly end-of-the-world stuff - certainly not enough (to my mind) to warrant a reduction of a third in the value of the company, but there may be more bad news that a new CEO will bring out.
So I gave way to my impulse...and bought a chunk.
[Initial purchase price: £1.00 (!), re-purchase price £0.329]

I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.

1 comment:

  1. Up 11% today to £0.575. This was a good call by you.
    I note that there is an RNS out about a former CEO considering an offer ??