Sunday share tips: Genel, Barclays, Crystalox

12th Aug 2012 16:01

Genel, the oil investment vehicle headed by Tony Hayward, the former chief executive of BP, has been unloved by the stock market. Genel had 1.8bn dollars (1.15bn pounds) of cash when it gave its last trading update. Last week it spent 240m dollars buying an additional 21 per cent interest in a Kurdish oilfield called Bina Bawi to bring its stake to 44 per cent. This means that about 78 per cent of its current market capitalisation is backed by cash in the bank. Indeed, part of the reason for the underperformance has been the "cash drag". Money sitting in a bank earns little return at the moment and the market has been waiting for a big acquisition. However, Genel is the largest oil producer in the semi-autonomous region of Iraq. No agreement on an oil law with the Iraq central government has been reached, but there are signs that progress is being made on exporting more oil to Turkey. Reports suggest discussions with the Kurdish and Turkish governments may result in the construction of a pipeline. The Telegraph´s Questor team recommended the shares as a speculative play in February when they were at 828p, but they have continued to fall. However, a canny M&A deal will be just the catalyst the share price needs. Genel is a speculative buy, Questor says.Company directors cannot buy or sell shares based on insider knowledge, but their dealings can provide investors with useful clues. Midas regularly analyses directors' trades and in the past four months a number of deals stand out, and one of these is Barclays. Many financial companies have been hit hard in recent years, but in the past few weeks Barclays must top the league. Nevertheless, non-executive director Reuben Jeffery spent £1.1m on Barclays shares last month. Jeffery bought on July 30 at 169p. The shares are at 183 1/2p today. Five years ago, Barclays stock was more than 500p but the financial crisis and the recent inter-bank lending rate scandal have taken their toll. Now, many brokers believe the shares are pretty good value and Jeffery clearly agrees. A former Goldman Sachs banker, Jeffery runs Rockefeller Financial, which manages money for extremely wealthy families, including America's legendary Rockefellers. Something of a financial expert, Jeffery's purchase proves that Barclays still attracts support from experienced investors. Individuals would have to be brave to follow his lead, but Barclays appointed Sir David Walker as its new chairman last week and the bank may come good in the long-term. A stock for the patient punter, says the Financial Mail on Sunday´s Midas column. Once upon a time Crystalox Solar was a big company. At its height in 2008 the maker of components for solar panels was tickling the £1bn mark. As of Friday, it was worth just £33m. Its main plant in Germany sits idle as management wait, quite possibly in vain, for panel prices to recover. The company is a cautionary tale of what happens when European manufacturers go head to head with the Chinese juggernaut. The company announced in May it had reached a €90m settlement with a customer that had pulled out of a contract. Analysts have pencilled in a big loss for the first half of the year. After that deficit is taken into account, plus tax on the settlement, the company should still be left with a cash pile of at least €50m. That would be equivalent to about 10p a share, more than the 8p at which the stock closed on Friday. Investors want some of that cash. As well, sooner or later Iain Dorrity, the chief executive, will have to decide whether PV Crystalox has any future at all. In a recent note, Peel Hunt said: "Investors are soon going to need to choose whether to push for maximising short-term cash returns (dividends, buybacks) or maintaining an industrial base in case of a solar market recovery." Belief in the latter is not unrealistic, The Sunday Times writes, citing how Bloomberg New Energy Finance says prices are "below manufacturing cost, and consequently unsustainable". Yet even if prices do stage a comeback, PV Crystalox's glory days are surely behind it, the newspaper believes.ABPlease note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.