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I agree that you can value a company based on fundamentals but you have to make a number of assumptions before you arrive at a valuation.
The market value is the real value because that is what you can buy or sell at.
I agree that trends can change, indeed momentum hasn't worked so well over the last few months.
I just use momentum for my investing and I have made returns on average of 20% for many years. The main bonus is that it involves very little effort / research, I simply pick my top share at the end of each month and then hold for 12 months.
That’s true Owls, but if you look at the dot com crash, shortly after there was a switch from growth to value stocks. I believe value stocks will see their day soon enough.
“In the short-run, the stock market is a voting machine. Yet, in the long-run, it is a weighing machine.” - Warren Buffett
"If something is undervalued buy it. If its over valued sell it. Whats not to like."
That assumes you know the value. It is an opinion not a fact. The only true value is the current maket value.
Over many years "value" investing has fared badly, momentum investing has performed much better.
Sorry texting while waking…that’s what I meant. Anyway we’ll all be one share soon so £3-£4 easily possible whether your Sgc or Nex holders
Oh dear don’t some people talk rubbish on here scaremongering. 65p lol what with nearly £1bn in liquidity and forecast earnings of nearly £200m and possible £35m in savings from takeover. £3-£4 by March when worst of covid is over is where we are heading dyor
Sure Owls, I do appreciate what you're saying. If I'd of invested with Tesla, Amazon or Bitcoin, could of made higher returns.
I took the Warren Buffet value approach and invested in ITV, NEX and SAGA (as I believed they were cheap last summer / autumn). They were on the downtrend (similar to now), it was frustrating but i kept buying as they dropped.
I sold ITV with 90% profit, and made 70% profit on saga earlier this year. It was much slower than seeing growth everyday, however ultimately I believed my money was safer in stocks that were undervalued rather than other options that were hitting all time highs.
"Personally I'd rather being holding shares in a company that's undervalued and dropping, than overvalued and rising.2
You are better off investing in shares that are rising rather than shares that are falling.
*happen soon. Are there other shares out there that will give a better return over the next 3/6/9/12 months than NEX? Of course there are. Are there any that I feel I can identify with the same level of confidence that I feel about NEX, with the same trade-off of minimal risk of the company going bust, and potential upside if things just get back to normal (let alone go exceedingly well)? Not that I have come across in a while.
So please everyone, sit tight, stop freaking out about the daily movements (even though they are grim to see), and just keep an eye on the bigger picture.
(amazingly I had to do a RECAPTCHA to post this and the puzzle was to click on busses - it's a sign!)
What's happening with NEX is a great illustration of the pros and cons of value investing.
We - or at least most of us - believe that we have identified a stock that is undervalued relative to its performance and potential. This seems to be mainly because of market sentiment - I agree that there is nothing in the fundamentals that explains the current price.
(as an aside, if you go to Yahoo Finance and plot NEX vs EZJ and IAG over the last 6 months the charts are strikingly similar. As many have said, it seems NEX has been lumped in with the UK passenger transport sector, which is lazy/inaccurate because it's a relatively small part of NEX's business).
These undervaluations due to irrational market sentiment are exactly why value investing works, and are exactly why the little guys - like us on this BB - have a chance against the people who do this for a living.
BUT there are two big downsides to the value approach:
- value traps - where the "undervaluation" was in fact accurate; likely because the wider market knew something you didn't. This is a particular risk for us "little guys" since we tend to have less access to information than the pros (legitimately or otherwise). I have certainly fallen into a few value traps in my time (including some very recently), but NEX really doesn't feel like one - it's such a solid, well run company. There are a few question marks - will the driver shortage be a big problem long term? Will COVID keep popping up? Will the general shift away from coach towards rail that has been happening over the last decade or so continue? But I don't think any of these bring enough doubt to make NEX a true "value trap", although they may limit upside.
- we have NO IDEA when the market will "come to its senses" and appreciate that they have undervalued a particular share. We hope it will happen after a positive update - there is typically some catalyst - but the market can be stubborn and irrational, too distracted by the shiny new toy, or too worried about some far-off cloud, to pay attention when we think it should. This is just a fact of this kind of investing, something that we have to accept and plan around. Sometimes we will identify a brilliant "value" share, but for unknowable reasons it will never come good. Sometimes in the intervening years things will go wrong and that true "value" share will turn into a value trap, and that's just bad luck. And sometimes you wait patiently for months or even years and end up with a multi-bagger.
The key things are 1) patience and 2) continual re-evaluation. Coming on this BB every day and complaining about the short-term fluctuations is never helpful. Thinking critically about whether your original thesis is still valid is essential.
For me, the recent TU has helped me keep my confidence. NEX is a good company with good opportunities. A return to profitability and the reinstatement of the dividend are both realistic catalysts for a re-rating which should ha
Other stocks do not do this
Are you guys just happy to sit on this regardless of loss? How can they manipulate the price ready for the take over ? Now where is the logic in that when another investment firm could easily step in and take their position? This is mind boggling it really is
I personally sold my shares because my investments were at the following stages -
£500 at 267
£500 at 260
£1000 at 223
£340 at 240p
So basically with the share value all at different prices I cashed out and then put £2k in at 220p which will account 100% of the rise from 220p onwards so therefor my gains will be more ?
Personally I'd rather being holding shares in a company that's undervalued and dropping, than overvalued and rising.
Sentiment can't last forever, when something is fundamentally undervalued eventually the market wakes up. Hold in there.
Also as a side note, its worth having a read into the dot com crash.
Hopefully will bounce tomorrow to 225p , then I will sell again, and then wait until Xmas where I will buy in at about 150p lol. Got no confidence with this what so ever.
Just to add further to that, on 6th November the sp was 165, then I think the first vaccine was announced on Monday 9th November and it jumped to 206 before a sustained rise on vaccine sentiment all the way Xmas lockdown until March when the Delta variant became a concern.
So the current sp is on par with those days.
I sold my holdings earlier and then re entered at 220p. And yep , down it went even further. Laughable.
All I can say right now is that I'm fed up with watching my hard earned money decline. I could take the dips earlier pre H3 report and capital markets day , but this continued down turn defies all logic given the numbers we have seen. I thought dealing with stocks was logical but looking at this, the ship is sinking big time (eventhough revenue is up , government funding is up , secured contracts are up) . Does not make sense ! It can't be the covid fear given deaths are so low. All I can see is a manipulated stock which is somehow corrupt.
Don't understand this sustained fall either, capital markets day was positive, trading update no issues identified, debt not an issue, plenty of liquidity, fuel costs hedged until 2023, even IAG, easyjet, CINE , firstgroup all up today, I just don't get it.
The only observation I would make is that at the end of trading the day the merger was announced, stagecoach was 86 and NEX was 240, and stagecoach has dropped by more than NEX since then.
Culco,
Saga could be worth a punt
Hmmmm may dip my toe
Will have a look
Just picked up 1546 shares
Gla
I believe it's worth 500-600
https://markets.ft.com/data/equities/tearsheet/forecasts?s=SAGA:LSE
Take a look, be good to hear what you think.
Is saga worth a look? Is the pre covid price achievable?
350 is good with me. Worth remembering public transport is a priority for governments, and for the future.
Also worth noting Dan, Nex has been buying up companies too and securing new contracts. Signs of a strong growing company.
Best of luck with those you've shared, I'd be temped but I'm all in with Nex and Saga.