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  Watching for Value and Growth Stocks

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 2 July 2013

Following on from a recent theme as highlighted by the case of Sphere, a falling share price often tells a story. However, in the case of Asbestos removal and Environmental services operator Silverdell, this mornings news of the shares being suspended at 12.75p pending clarification of its financial position, is something of a shock to holders.

It is some time since I have taken a look at this company, after the shares enjoyed a good run up to circa 20p earlier this year.

But, despite in its pre-close trading statement released in April stating that expectations remained unchanged, the shares had already begun to trek southwards. Other wording such as a strong order book and a solid pipeline of business along with £66m of work falling into the second half, briefly perked the shares up, but the retraction continued ahead of its interim results released in June.

Focused on utilities, Education Establishments along with other Public and Private businesses, Silverdell has grown into a pretty big operation, having made a couple of acquisitions, including EDF Holdings.

In that interim announcement there doesn’t appear to be much of a clue to what has today emerged, as it talked of eyeing growth overseas and turnover rising significantly. Non Exec Director John Mathews even picked up 165k shares at 14.75p, which may have suggested confidence. Only last year, the company announced that it had restructured its borrowings with its bank, part of which saw it putting in place a revolving credit facility of £5.4m along with announcing a maiden dividend.

Shareholders now have an anxious wait and it serves as another warning to keep a close eye on the price and take nothing for granted, not only on AIM but the main market too.

I do wonder whether there were ongoing talks already in place concerning a fundraising, and the recent price weakness had put that in jeopardy. After all, Institutions in many cases want to see a hefty discount as appears to be the case with Sphere and it is a route that seems to be driven in order to give the support. Of course, there could be something else unforeseen that has emerged, but one would hope that is not the case. You certainly have to feel for the holders here, there may have been an  amber light from the share price weakness, but that was largely glossed over by the board’s bullish tone.       


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