Member Info for alex1621

RiaanS ... you are not alone in being underwater, but you have to really do your own analysis and come to your own conclusions. I'm not a seller because I don't think the situation at Boo Hoo is terminal, even though I acknowledge the next 18 months at least will be tough trading. Bear in mind the shares are being heavily shorted, but those shares will have to be returned at some point. I'm not offering advice, I'm just explaining my intentions. I'm not putting more money in, but I will reevaluate that after seeing the next update. And even then I won't do so until I believe that the worst has passed.

Kachrafilter ... you got out a few days ago, and have been on here daily since then congratulating yourself on your trading smarts. My bet ... and this comes from experience ... is that when the SP turns you'll go missing in action? Let's see whether I am right.

All retailers will suffer in a downturn, the question is who survives the next couple of years? With financing in place I believe Boo will be among them. Unless we have a nuclear Apocalypse, in which case nothing is safe and we will all have better things to concern ourselves with.

I’m also thinking we are getting closer to the point where fear drives everyone to throw in the towel, the capitulation point.

We know one fact. Boo Hoo is not a company that is saddled with enormous debt, like say, CINE. We know that it is able to access bank funding. The point being is that it has the resources to see itself through a tough trading period. And even if the pre-tax profit goes negative it has the cash to get through this period. And when it does it also has tax losses to offset against future profits.

In the May 2022 finals the following: “New £325m RCF agreed in March 2022 … “

The point being made is that they have the means to access credit, sufficient to see them through difficult trading conditions.

Thomas Cook ... they weren't buying stakes in other companies (like Boo) for the very simple reason they were labouring under enormous debt. Boo Hoo has an unused revolving credit facility, so even in the toughest times it can still get through it.

28th

I'm holding for the long term also, because my base thesis is that Boo Hoo will come through this period (as will ASOS and THG) and grow sales and profitability. However, trading will be difficult over the next couple of years, so I'm not as bullish about the strength of Boo Hoo as they will suffer like the rest. During these times best forget about M&A (unless it is small size) and concentrate on the basics. Retailers that come through this period will emerge fitter than before it started.

There is no great reason for a sudden surge, as all retail industry stocks are being hit. The special shocks we are seeing is particularly bad for online retailers. However, there does come a point where even slightly better than expected updates or big macro developments could spoil the shorting party. The end of the war, for example. Or inflationary pressure easing. Revolution Beauty doesn't strike me as the underlying reason for the large falls in recent weeks, and building a stake takes a few phone calls to a broker, so hardly a drain on management time, as a full takeover would be.

A focus on declared short interest is, in my view, fairly meaningless unless it is falling like a stone. Much more can be going on under the radar, as not all shorts are above the level that they have to declare. The one's increasing may also be long-term shorters who operated below the radar. They hunt in packs.

Volt-air - there is great deal of fear in markets, and let's be honest most retail investors views on a company are based on where it's SP is and has been going lately. If the SP is going down and shorts are increasing there must be something wrong? Tends to be true for heavily indebted companies or one's who are complete frauds. It is unlikely that results will be stellar as we are in difficult trading conditions.

That's a perfect scenario if you are shorting and it makes sense to capitalise on that fear to push it down further. I don't criticise the company for being silent. When Matthew Moulding of THG opened his mouth it actually made things worse, not better. He correctly pointed out that his company was being subjected to a shorting attack and what happened? He was ridiculed in the press. The same press that never investigate short selling activity, but instead actively promote it. I mean, if you are a financial journalist these are the guys that supply you with scoops. They attack Moulding because he's a flashy show off, rather than bite the hand that feeds. So you are better off being professional and updating the market on scheduled dates.

If you owned shares in Boo Hoo as a private company you'd just focus on updates. Most private companies get on with it without thinking about the company sale price because they are not sellers in a tough market.

I wouldn’t trust any information that’s published on short interest because the rules on disclosure require you to go public if your short position goes above a certain %. Like an iceberg, a lot could be going on below that level. The other point that I’ve been banging on about (apologies) is the possibility of naked shorting, using phantom shares. It’s going on in the US, and their regulators are better resourced than the UK. So in my personal view no one really knows the extent of shorting.

But essentially shorting is a mechanism that drives down the SP. In doing so it reduces a company’s ability to raise additional finance, so going out of business can be the end result. This tends to happen to the heavily indebted, like CINE or Carillion. So if you own a share that’s being done over the question is can it sustain itself through difficult economic times? My person al view is that Boo can, others on here might think or wish otherwise. We are on AIM, the so-called Wild West of the UK market. The danger of course is that expectations become so dire that even poor RNS updates are ahead of expectations. And of course any geopolitical event, like the end of war, will cause battered stocks to soar. So it’s not a one way street.

Go onto You tube and type in "market crash prediction in ..." and then add any year you can think of. You'll find the same people pop up regularly to tell you about the great crash, which in most years doesn't happen. But one year it does ... and you'll see them on CNBC and Bloomberg labelled "the man who predicted the great crash". Peter Schiff comes up a lot, but there are many of them.

Retail is a cyclical industry, as consumer belts tighten retail suffers. That's true today, as it has been true in the past. If you look at a share like Next (and even ASOS) you will see ups and downs. But every recession or downturn is different. This one is particularly unusual as it is the result of post pandemic shocks made worse by an unexpected war. Add to the fact that shorting is a thing on listed markets and it is a perfect storm. So online gets hit harder than bricks and mortar, during the pandemic the opposite was the case. During the pandemic bricks and mortar was "finished", taken over by crafty online retailers. Now it is online retailing that is "finished", being outmanoeuvred by willy bricks and mortar retailers. Neither of these narratives was correct, but if your SP is falling you need a story that explains it. And there are plenty self-interested people happy to oblige.

Online will struggle through harder times, but the main shocks from the pandemic are unlikely to be permanent. So as long as a company can keep going through this period it will have better times ahead. And then you'll be being told a new narrative. Retail slumps inevitably make way to retail growth, and then retail booms. And that is when it is time to sell.

HappyInvestor100 ... I have also been here before, I can't say its a great feeling but I'm a bit more detached this time round. What I've invested I don't need anytime soon, so I continue to hold and await a turn in economic conditions. There is nothing anyone can do about this situation other than keep a cool head. If a holder believes that Boo will never recover that's a reason to sell, otherwise do nothing.

The one thing I might do is forget about the market, bulletin boards, etc because they don't really help in such times. So check out the RNS, take a look at the SP now and again, and otherwise get on with your life. My brother worked with a guy who had invested in a minnow miner (EUA). He bought a ton of stock for pennies and it did nothing for years, so he pretty much forgot about it until it sparked into life several years later. At one point his stake was over £6m. It has since fallen.

Well we can at least agree on that ... capitulation point is where the hedge funds do a reverse ferret.

EconAnalytica ... so there's not a lot of hedge funds shorting Boo Hoo? The constant press reports about shorting activity is just made up?

The FCA are useless, as the mini bond scandal revealed. What I object to is that no authority monitors the activities of short sellers. The Game Stop saga revealed that naked shorting (an illegal activity) was going on with Game Stop, and on a grand scale. How can 140% of the shares be short? In the documentary “Gaming Wall St” a former Morgan Stanley employee acknowledged that this process was wide spread. Given how bad our regulators are I wondered whether that was going on in the UK. I would be amazed if it weren’t.

So welcome to AIM and the UK where you can game the system every day of the week. Journalists get scoops from short sellers, and politicians get funded by major hedge funds. You can be sure there will never be a short selling ban and there will never be an investigation into their activities. The last time it happened was the Banks, to avoid a systematic catastrophe.

As I stated before Wibble, Sports Direct was 87% down a few months after it’s flotation. Anyone buying at that level, suffering from chronic “confirmation bias”, made more than 25 times their investment in the space of 7 years. Even those that bought at the previous all time high would have made more than 3 times their money. I could give many more examples, but will leave that one hanging.

The online fashion business and retail business in particular is cyclical. It has never been a steady state industry. The business model has been hit by post pandemic shocks, exacerbated by a war and the shocks that culminate from that. So retailers won’t be doing well for a while, but these issues will recede over time, businesses will stabilise, and growth in sales and profits will return. The SP is falling so the dominant narrative is overly pessimistic … we can all look clever stating that narrative because “look at the SP”. A couple of years ago the narrative was that online was taking over … Next was having a “Kodak moment” according to one analyst. Broken business model going out of business. After the dot com crash Amazon was also a broken business model … until it wasn’t.

If you hold Boo and think that it can’t survive the next couple of years then exit. My own take is that it will get through this period because it has the resources to cope, even though the results won’t be stellar for a while. There are lots of possibilities … war ending, inflation falling, supply chains stabilising … anyone who thinks that this is impossible would best be advised to get a tent, tins of beans, and live in the woods waiting for the Apocalypse. Beware of narratives.

Kachrafilter ... I suspect the reason that short interest is not reducing is because we are unlikely to see much positive in any updates for a while, so there is no reason to bail. The narrative that they pedal dominates and investors are fearful of buying in case things worsen. But that doesn't mean there aren't any dangers for them. A positive development in the war, any signs that supply chains are getting back to normal, any update that is even slightly better than expected, any unexpected deceleration in inflation, and any rumours of private equity interest. A SP under such intense short interest is like an elastic band stretched to its limit. Anything that scares the horses (shorters) could send it rocketing.

I recall looking at my 888 stake many years ago, and lamenting how far it had fallen, and how long it might take for a recovery. Then there was a positive RNS about US gambling laws, and a few other positives. The one thing I remember from that time is that when it changed direction it was violent and quick ... large % moves in a short space of time.

Wibble - The problem is that in cyclical industries profit performance can wane and soar, it's not unusual in fact it is something to be expected. And the underlying reasons can differ with each slump. So we've had a pandemic, supply chain shocks and inflationary conditions that have been exacerbated by the war in Ukraine and the impact on energy prices. This is not normal, it is in fact abnormal and not a new paradigm. Over the next couple of years we are likely to see these challenges recede, and conditions improve. If the war in Ukraine came to an end you would see a bigger bounce in the markets than when the Covid vaccine was announced. You'll see similar moves when markets can see inflationary pressures receding. The companies that will do well as we come out of this period are those that survive. As hard as it is to believe today, the retail market will boom again. There have always been slumps, but none of them have been permanent.