Evil Knievil: Oil is well

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Evil Knievil: Oil is well
Master Investor Magazine

Master Investor Magazine 53

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About three years ago I got fairly excited about REA (LON:RE.) and got it into my head that a bid at, say, 600p was on the way. I paid c. 350p. There had been a bid for MP Evans (LON:MPE), a similar business and now around 650p.

Since then the palm oil price has collapsed and RE. has passed the cumulative preference share dividend. (Notionally the yield is 9p per 100p nominal. The prefs (RE.B) now stand at 70p.)

However, the price of palm oil has been creeping up off the bottom which was $470 a tonne and is now $530. The effect upon RE.’s prospects is dramatic. So, although RE. is highly geared, I surmise RE. is coming back with a vengeance. Earlier this week I paid 130p for RE. and expect to double my money with ease. Warning: this is a thin market and it is quite possible that there will be a rights issue to shore up the balance sheet.

Be it noted that MPE has not collapsed and, therefore, punters should decide: is MPE too high or RE. too low?

*****

I reckon Orosur (LON:OMI) is again too low at 5p. I have paid 6p earlier this week. The potential drilling results in Colombia are sensational.

Comments (1)

  • Surinder D-B says:

    Hi Simon,
    Good to see you back on form and firing on all cylinders!

    Should we should continue to feel excited about Clear Leisure?
    Any update on what is going on behind the stage curtain would be much appreciated!

    Always a pleasure reading your commentary.

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