CPP – Now 12-13.75p if you have not closed do so now

PUBLISHED: Dec 03 2012 @ 05:12 | Comments (0) | More info about Tom Winnifrith

As you may remember, I advised shorting this AIM listed financial services group at 26.75p on 21^st November on the basis that the chances of a bid for CPP (LSE:CPP) happening were zilch. That was because I had taken the trouble to find out that the putative US bidder (Affinion) had no cash. A week later the bid talks were called off which should have paid for Christmas for anyone who took my advice.

You can read up my original and highly prescient sell call with a detailed CPP balance sheet analysis in full here

On the 28^th I wrote HERE: What will the stock open at tomorrow morning? There was unusually heavy trade in the shares today and they closed off 5p at 20p. Hey but the announcement was posted after the market closed. Er, well nothing suspicious there at all is there. My guess is that 15p is first stop tomorrow. What is the company actually worth? Hell only knows as earnings visibility is nil and the balance sheet is a big issue. My initial target for when the bid (ho, ho. ho) approach went away was 13p. I reckon if you can close out at 15p or lower this should pay for Christmas or your annual subscription to my Nifty Fifty website with its weekly Short Letter full of other ideas like this. The next Short Letter is out on Friday. Or maybe tomorrow.

The shares did indeed open at 15p. They are now 12p – 13.75p and if you have not closed out you should do so now.

I am not sure, given the balance sheet issues, that CPP is worth anything like 12.875p a share. But there is always the chance that its largest shareholder might just take it private as a face saver. So being a prudent fellow I would ensure that all cash is off the table and winnings banked.

Libertarian investment writer Tom Winnifrith writes extensively for a number of US and UK financial websites. All of that material appears on his own blog, which also carries his extensive original non financial material, at TomWinnifrith.com – for alerts on all Tom’s follow him on twitter at @tomwinnifrith

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