Resolute to sell Ravenswood, page-96

Just to inject some data into this discussion.  The AFR's Chanticleer published a article yesterday titled "how much is your company undervalued"  https://www.copyright link/brand/chanticleer/check-how-much-your-stock-is-undervalued-20190107-h19til

Key points:

    RSG came in at 79th position,undervalued by 18%.   Therefore, RSG has a price valuation of ~$1.40. 

    The list is correlated with stocks that are significantly shorted.  (RSG short position 3rd Jan 19 = 5.58%, Top 20 shareholders own 67% )

    You could interrupt this as:

          First, the short sellers have got it right by identifying red flags and positioning themselves to profit from the imminent declines

          Second, the short sellers have got it wrong and are about to be burned by share price rises triggered by strong earnings and forecasts

    Not on the list is SBM, NST, EVN, OGC, RRL

    Powerful quantitative hedge funds have trading strategies tied to target prices.

    The list more broadly is useful as it helps identify opportunities.  

    

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"Investorslooking for stockmarket bargains could well start with Chanticleer's analysisof the top 100 companies ranked by the percentage discount to the consensusshare price targets of the country's leading broking analysts.  Theanalysis reveals that many quality companies with good prospects in sectors ofthe economy that should do well in the year ahead are trading at huge discountsto the consensus earnings estimates of brokers. 

The dataprepared for Chanticleer by S&P Capital IQ suggests that the Australiansharemarket has been oversold in many sectors. Share prices, in many cases,bear no resemblance to the earnings prospects of leading companies.  The datapublished here shows the percentage discount to the mean target price of allanalysts which supply data to S&P Capital IQ. The mean target price waschosen rather than the median to remove the potential distortion from analystswho are significant outliers.

Shareprice targets were chosen as a key barometer of value because more often thannot they are the same as the valuation of a company based on discounted cashflows (DCF). Analysts often calibrate their DCF valuations against a sum of theparts valuation which applies market price earnings multiples.