The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
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I've been thinking about this share a lot as it's one of my bigger positions. As per some of the other posters down thread I am equally baffled. Barring any left field skeletons in the cupboard, which I find highly unlikely given the controlling family's massive skin in the game and solid reputation, I can only conclude that it's a bet on significant behaviour change as a result of the streaming wars, and, most recently, Disney and its massive content catalogue, joining the fray. I assume the logic is that as the most levered operator Cineworld will be worst placed to respond and most likely to have to cut divi, etc. To be clear I don't believe the shorts are questioning survival (a la Carillion, Thomson) but just predicting ST financial pressure, which will in turn further depress the SP.
Clearly only one side can be right and as a long my vote is with the family / management / brokers, etc rather than the shorts. There is comfort from the fact that H2 has been strong for the industry, as per competitors' results. And I don't believe that consumer behaviour will change as much as the shorts fear. In the interim Cineworld's strong cash generation means that leverage will steadily decline bringing a virtuous circle of diminished finance charges and BS strength. We will have a better sense of where we stand on the 3rd.
As a final thought I find the super conservative attitude to leverage in public markets interesting and creating a serious disadvantage for competent management teams that want to take advantage of cheap capital to dream big and achieve outsized LT returns for their shareholders. The message from markets / shareholders seems to be - don't. Leave that to the Private Equity guys to do off market, where much higher leverage multiples are routine, and not just tolerated but encouraged. And then the press / people are surprised that we are living in an ever more unequal society when those outsized returns accrue to an ever smaller pool of the most sophisticated / richest investors. But of course it does when there seems to be a net negative to staying / being listed. Rant over :)
Yes I agree, long term it will be fine. Always going to have good and bad years depending on film slate in this business.
I dont think they will know something as an "inside" job of really bad news but expect the following at play they expect lower sales growth (following on from the poor interim results) based on very poor film releases, higher costs of refurbishments for Regal sites and a massive debt. It could create a 'perfect storm' that drops the SP further this could be the thinking but who knows. The bull case looks to be how much the new subscriptions will off-set the poor film releases, am sure long term this will be fine but could see shorter term pain.
Cant blame you. Its been a bloodbath.
Noticed Goldman buy recommendation today. And shorts slowly now 10.7%.
Something just aint quite right here
I sold my shares this morning. I feel that we have been abused by market speculators. If they know something that other shareholders don't, it should have been made public. Otherwise they are just scumbags trying to make a quick buck at other peoples expense.