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gfclappah - be very careful with using debt to invest. At the very least spread it over 5 different, good shares at the very least. That being said, morses seems pretty stable for the sector its in.
mhgh45 you forgot about thungela res when it got spun out of a conglomerate for being dirty coal. Was in the 100's now in the 400's. No-one wants a cold home no matter how environmentally friendly they are.
I've decided to go with a truck and a Hercules to load up.
Just remortgaged on your advice everyone thanks for the tips. The house is now on the line!
Good shout cane, also dabbled in Amigo in decent size last year and got out with a smile on my face. Even before the tribulations of the reg situation I’d figured out they needed more equity to support the likely covenants of the RCF in Amigo 2. This funding position is critical and as discussed in a previous post, is clearly very different for Morses.
Sub 60! Fill yer boots. If yer boots are full, back up the truck. I have, unfortunately my truck now full too! Space for more in the boot if it keeps falling for no reason. If the banks keep rising, I’ll have more powder.
This last 18 months has presented some amazing opportunities. I’m a financial geek, have been for 25 yrs. So VM at 60p, Lloyds at 25p, NatWest at 90p. Happy days. It’s been a great pandemic in that sense. I could go on.
At 1x geared I’m betting morses survives and prospers. Still got some banks , but none offer the same upside as this little company. Timing is just different. Yes reg risk. But the regulator needs good operating business like Morses.
Reg still remains the Achilles heal, but if adapted (which I think they have) this company is going to prosper cyclically, secularly and is probably one of the best earnings recovery stories in the market. Certainly the financial space that I analyse.
I'm holding my first target is £1.30.
Will buy more anything sub 60p.
Agreed on the world tour v frustrating ++. Reason I didn’t sell was I felt it was worth 150p+. Still do. Lots of sensible analysts think 10p+ earnings next financial year. More the year after. I think totally reasonable if the claims management companies doesn’t stop it then the math gets you there. At this stage comfort on claims is key as the rest is mechanical - again the funding message here is key, I think. Management very confident on the longer term. I agree given macro, micro and everything else. Reg is key. With 98% satisfaction they seem well covered here.
I don't see mcl being like amigo in that traditionally mcl has been more face-to-face lending and hopefully more ethical.
I'm still not sure whether short-term loans are a good thing but there obviously is a market for them that credit unions don't cater for.
Good post MHGH.
Isn't just mcl that price has went lower in the short term. I should have sold all my shares 3 months ago, went on a world cruise then bought shares back with cash to spare.
Good time to invest atm just sucks to see long-term invests currently down. Hopefully come summer will be better.
If it’s Andy Thomson then he did have 2.5% of the stock at last annual report and retired due to ill health at the end of December. Would make a lot of sense coz I’ve been testing the offer in decent size and been surprised how liquid the stock has been consistently, interesting. There’s sure been a lot of stock sold recently.
Re the Amigo and Provident complaints read - this is clearly the Achilles heal in the sector. I gained comfort from a few things;
1) maternity lower complaints in the teeth of the CMC heat
2) decent customer reviews and management attitude to customer satisfaction/relend/developments in reg- it’s been a growing theme for a long time they appear to have been on top of
3) CMCs have been killed in Amigo and Provident, which reminds them that the high cost credit gig is not PPI (ie the sector, unlike banks, can’t afford it.
All of these make me more comfortable on claims, but I agree an update on this at results or pre-close (if provided) is very important given current sentiment.
The other absolutely key attribute though is leverage. Morses as BAU is currently funding its loan book pretty much 1:1 with equity (which is unheard of in the financial sector and reinforces the resilience of the firm) and the growth provided by the £37m RCF has only just been extended - this is important as the lenders get inside information that we clearly do not. If claims were an issue of material nature I’m guessing they wouldn’t be rolling funding well in advance of when the facility is due. Very, very different to AMGO, Prov and NSF. Stick with it.
Who do you believe left?
I think this one is getting dragged down by the sentiment towards the sector, and let’s face it Amigo has burned investors big time. I’m invested, but know the downside is claims of mis-selling in this sector, which can be a game-changer. That said, I have some CFD’s on other shares, which I am expecting to generate some profit, which I’d be happy to top up here at this price. Let’s see what tomorrow’s brings.
Let’s hope whoever it is has now cleared out over the last two days selling. Morses closed at the bottom of a very big trend line that would be v unhealthy if it breaks. If you park amigo, there has been no fundamental shift in the story (feels like someone burned in AMGO ditching their high cost credit sector exposure regardless and unfortunately they seem to own Morses and with NSF down 10% too that one as well-Both too small to short) so I’m riding this one out, though fingers are now cut to shreds trying to catch this one on the way down.
I saw the 10% drop and topped up with another 2250
AMGO is interesting. It looks like the market has gone full circle on that one. 9-12 months ago, Amigo, Provident and NSF’s demise was good for better quality operators like Morses – now it’s seen as bad. While I can see that Amigo’s problems are clearly not good for sentiment, the same woes have not exactly just popped up out of the blue, given the company has been technically insolvent for a while (the Directors have been telling you that). I stick with the view that with a strong capital, funding and operating model the strong recovery in Morse’s profits will become evident in the new financial year as digital moves through break-even, HCC remains resilient, and credit issued continues to recover. Demand for consumer credit fell sharply across the UK/world during the pandemic and it is now only just recovering at a UK economy level, albeit pockets of demand are returning more strongly, faster in the areas of the economy most impacted by the pandemic (hence the read from HAT was interesting). For companies that can navigate the higher regulatory bar now set to service this part of the market the growth outlook is very strong. Earnings and dividends will follow quickly once the tipping point on the IFRS9 drag has been reached. The good thing about accounting is that it is predictable once you understand how it works.
Morses current div yield is 5.62%, 2% more than HAT.
H&T, the high cost credit pawn broker, has released a trading statement this morning highlighting a stronger than expected recovery in lending during November and December, with December at record levels. While IFRS9 means profit expectations remain in the range of expectations, the set up for next year looks strong. Sound familiar?
Continues to lend support that the Morses investment case remains intact and the set up as we move into the new financial year is very strong.