Diving into chilly waters off South Australia

Diving into chilly waters off South Australia

Agribusiness
Clean Seas Seafood says it has all the cash it needs for the planned expansion, which would see it having an overall positive cash flow and paying dividends by 2025.

Clean Seas Seafood says it has all the cash it needs for the planned expansion, which would see it having an overall positive cash flow and paying dividends by 2025.

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Diving into this market is a bit like bungy jumping without the rope. Not recommended.

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Diving into this market is a bit like bungy jumping without the rope. Not recommended.

On March 6, following another horror session on Wall Street, the Australian all ordinaries index tripped and fell 7.5 per cent, crashing through the 5000 mark in the first 10 minutes.

The Punter has already jumped too soon, putting in a bid for more shares in the macadamia and ginger group Buderim (ASX code BUG) a couple of weeks ago. He had offered to pay 18c or 20pc less than the market price. Not only was his order filled last week, but the shares have since fallen to 16c. Oops.

He ordered the extra shares following the strong half-yearly results. It seemed like a good idea at the time.

Past performance, of course, is an unreliable guide to the future. A recession, like a falling tide, lowers all boats, and a worldwide recession does seem an increasingly likely possibility.

Nevertheless, the Punter is diving into the chilly waters of SA's Spencer Gulf, increasing his investment in Clean Seas Seafood (CSS). The company maintains it is on track to fulfil its 2025 vision and has all the cash it needs for the planned expansion.

The half-year to the end of December saw statutory net profits of almost $4.6m compared with a loss of $4.4m in the corresponding period the previous year. Net tangible assets per share were estimated at 89c, substantially more than the current share price of 50c.

He already has $2000 invested in their convertible loan stock (CSSG), which can be converted at any time into ordinary shares at an 8pc discount, in the meantime yielding nearly 8pc in interest. He has decided to go for the relative safety of stock supported by that 8pc yield and has paid $1000 for another 1000 units and placed an order to buy 2500 ordinary shares if the price falls to 39c, half the price before the big slide.

  • The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
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