cobolt

I own shares in Aga which i bought at the bottom of the market and sold half my holding when it reached the 1.90 mark. Im now trying to decide if I should keep the remaining shares or off load them. I also had a look into the pension issue and it does seem that the extra 50m shortfall comes from the actuarial accountant reducing the discount rate from 4.5% to 3.5%. If you consider that low inflation and a rising market are both good for pension funds generally with regards to funding gaps then this 1% change in the discount rate makes a huge difference. I have noticed that this situation is cropping up with lots of companies not just Aga. One of the reasons Mr Green sold BHS for 1 pound was due to the funding gap in their pension scheme. I think it is possible that the funding gap might take care of itself when (or perhaps if) interest rates go back to normal. That said it does not change the fact that Aga is due to make 94m in pension contributions over the next 7 years as part of its deficit recovery plan. This is totally unrealistic and I think you're right that it might be reviewed. I bought Aga as a value play and I have been trying to work out whether it really qualifies as one. In terms of tangible assets per share diluted I think you're getting about 2.13 per share book value. The EV per share diluted is 3.01 So if you bought the entire company sold all the parts you would be left with 0.88p effectively not far from the share price as it stands today. When you add in pension headaches, no dividend possibly for the next 8 years, gross margins of 3.67% and a ROCE of 1.2% it just looks like a value trap. If they had kept all of their 9.2m profit this year the P/E would 7.3 and the ROCE around 5%. Really Aga would need to make around 20m to be a healthy company. My other bug bear is with the management. Aga a manufacturing company with high fixed cost is now solely reliant on retail consumers for its revenue stream. From what I can make out they sold a pipe making business in 2001 and the industrial catering division that accounted for 80% of sales in 2008. The CEO seems to be pinning his hopes that they can have a Land Rover moment in China. Just seems like a shame, Aga makes really nice things but in struggling to justify holding these shares any longer.