Member Info for alex1621

Arcadia is another great example. During a recession it's SP slumped, as sales growth was hard to come by. This happens as retail is a cyclical industry. Philip Green bought it cheaply using debt and a few years later made a fortune. The only problem for poor Philip is that he failed to see the rise of on-line retail, and he lost quite a bit of it several years later.

Mike Ashley and Sports Direct are a great example of some of the points I'm making. When Sports Direct floated it went up to around 275p in March 2007. By November 2008 it was 35p, a fall of 87%.

At this point it was being slated for results below expectations. WibbleWobble would have labelled it a broken business model, no doubt? You can say this because the SP slump follows that narrative. The bulletin boards would have been like this one.

So what happened to the poor suckers who held a 87% loss? By March 2014 the SP was 866p, a 25 bagger from the low, and a 3 bagger from the previous high after flotation. Making 3 times your money over 7 years is pretty impressive. If you did not buy at the high your multi-bagger would have been much higher.

Mike Ashley has been were Kamani is today, and bounced back.

So what happens when supply chains adjust from the pandemic, we are already seeing steady reductions in freight rates? And when inflation starts to turn, which it will eventually? And the war ends? And the US DC is established? And consumer confidence returns? And returns rates stabilise? You're "broken model" argument suggests that none of the above can happen. I beg to differ.

It could go anywhere, but director buying will only happen I suspect when the management numbers start to look brighter ... and given what's going on in the world I don't think that is 2022. 2023 is another matter. The inflation prediction seemed quite extreme, as if it were designed to make headlines. Things can change very rapidly, oil went negative not so long ago, now it's gone in the opposite direction.

I find it hard to believe that you actually own shares in Boo, and if you are playing the same role in other boards that would tend to reinforce that view.

The ADVFN board is completely trashed by people who post every 10 minutes. They are either paid to do that or they have a mental problem. You can't do that on LSE, as it is moderated and monitored. To be effective on here you would need to be a great deal more subtle?

Fira ... for someone who claims to be a shareholder you seem very happy to see the SP plunge?

Unhooked … agree that internal and external factors have contributed to the SP slide, the culmination of supply chain issues, inflation, war, etc have hit the retail sector hard, and online in particular. But it would be a mistake to ignore the coordinated shorting that Boo, ASOS and THG (to name a few) are being subjected to. A steady flow of press stories regurgitating shorting talking points followed by massive borrowing/selling. Designed to encourage holders to sell whilst discouraging anyone from buying … but it seems to have gone far more extreme than is justified by the numbers. In the GameStop saga one of the revelations was the extent of naked shorting … phantom shares being sold to push the SP down further. A former Morgan Stanley employee admitted this activity was widespread on Wall St and he participated in it every day. If that is happening across markets then it’s illegal, and shows organised shorting in a very bad light. It’s not a benign activity.

So when people call out the market for being rigged they may well be correct.

The Kamani's hold a large stake, an individual family member might sell for all sorts of reasons. If we see any large scale buying that might indicate a turn in the business and/or a stake build for taking private. Given the retail climate I don't think we are there yet. Definitely worth watching.

There is always a bear case and bull case for any company listed on a stock exchange. I don’t mind posting my views, or countering the views of others who might have a different perspective. Sometimes both parties can be “right”, over different time horizons. Clearly the economic forces in the world today and the specific position of the company today are not conducive to high growth and profitability … this is a time for battening down the hatches, concentrating on the basics, and trading through a difficult period. In private retail companies this is done by management/owners without any thought for what the buying price of the company today might be … as they are not selling. In listed companies the situation is different, so market SP’s can get crushed, and bulletin boards are full of gloating hoards ridiculing and belittling holders. The biggest challenge for any retail investor is the psychological one. As someone who worked in private retail I can tell you that no one gave any thought to that, as they were too busy getting on with running the business. Retailers go through downturns, and the Kamani family will have experienced several during the period they ran private companies.

Another prominent bulletin board site is awash with trolls, who appear and trash a board. It seems to always happen to those shares that are being heavily shorted. I’ve read accusations that people are paid to participate in this … if someone has a £1,000 spread bet I can’t imagine that they would be posting every 10 minutes during a trading day. What type of human being would do that? Who are these people? And if they are genuinely mental health cases, why should anyone listen to them?

Fira … can you pledge that you’ll stick around for a few years? That you won’t disappear off the board if the numbers start to pick up?

I ask because I’ve been here before, holding a stock that’s been hammered, reading bulletin boards full of gloating commentators about the falling share price. The one thing that I noticed is that they quickly disappear when the trend reverses, never to be heard of again. It happened recently on the ITV board (another website). A guy constantly trolling and ridiculing people predicting doom and gloom. As it doubled he was no where to be seen … as soon as it started to move upwards he disappeared. Now ITV have been hit by the war/post pandemic shocks he made a reappearance. Seems that those that like to dish it out aren’t so keen in taking it. Don’t be that guy.

I’m not a huge fan of technical analysis … but Boo has strong momentum on the downside, like most listed retailers, but especially so given the weight of shorting that the share is subject to. Meanwhile Pretty Little Thing announce that Love Island’s Gemma Owen becomes a new brand ambassador. Business and trading is tough in these economic conditions, but the business continues to trade. Cyclical stocks get hammered during downturns, the survivors come out of these periods and grow. Next have upped their stake in Reiss and Joules, investing in brands during a downturn to reap the rewards when the economy turns. Note that freight rates for containers continue to fall … a small but not significant positive.

Not a great time to be holding retail stocks, particularly heavily shorted ones, but also not a time for panic. This too shall pass.

I share your positivity, but over a much longer time period as the company and the retail sector will be under pressure well into 2023 … and SP predictions make little sense to me, no one can say with any certainty. We own a fractional share of a business, not a selling price. In extremis (high and low) the SP doesn’t represent the business value. And anyone who doesn’t believe that would need to explain why a bid rumour on Monday wouldn’t have any impact on the SP? We all know it would soar.

Shorting is a mechanical process, and if enough of them work in concert they can push a share price wherever they like. They target frauds, heavily indebted and those that are simply facing a range of market challenges. Boo Hoo and ASOS are in the latter category. The question is whether this is a permanent change or simply a tough patch? Shorts want everyone to believe it’s permanent but I’ve shown below many examples of companies in similar situations that have bounced back as conditions changed … another I can think of was Ocado at 250p, shooting up to 2500p in the space of a couple of years. A great example of extreme pessimism to extreme optimism. Being right today doesn’t make you right forever. JD Sports was another one. It’s share price was flatlining, then it goes north rapidly. When all of these companies were suffering their boards where full of pessimistic narratives.

Benjamin Graham quoted Horace: “many shall be restored that now are fallen and many shall fall that are now in honour”.

No one said conditions were great? They’re clearly not. Things weren’t great after the dot com crash in 2000, where you’d have been ridiculed for sticking with Amazon, or in 2008 were you’d have been insane to invest in retail property companies like Barrett or Taylor Wimpey. Or in Apple after Steve Jobs left. Or in Coca Cola during the “new” Coke debacle. You’d have been nuts to buy Glencore at 85p when it was struggling with debt. Or 888 at 28p when online gaming shares where under pressure.

But the funny thing is that if you had bothered to just buy and hold any of these you’d have done incredibly well. The power of narratives.

I don’t think anyone thought it would fall this low, as at 100p the supply chain issues and lockdown issues whilst there, the expectation was that over time they would correct themselves. But no one reckoned with the post pandemic inflation and the war that began in a Ukraine in Feb 22. That makes the economic environment much worse and pushes out the timeline for green shoots. Reminds me a lot of 2008, but with different factors at play. When times are good the dominant narrative is that it will be good and get better forever, and when times are bad the dominant narrative is that they will stay bad and get worse. Both narratives are false. The only interesting aspect of holding a share that is heavily shorted is the prospect of positive surprises. Supply chains will right themselves, inflation will adjust, and wars will come to an end. And the dominant narrative will change.

As for the SP, with a share controlled by professional shorters with deep pockets, it can go anywhere. It is a mechanical process. If I take £25m, borrow shares, and then dump them in the market, the SP will fall steeply. Even if nothing happened in the day to day business of Boo to affect its value. So 40p is meaningless in many respects, because if an RNS was issued the next day saying that Boo Hoo was in play, it wouldn’t stay there very long.

Revolution Beauty have certainly messed up the accounts, and it might require a great deal more audit hours to untangle the mess. The suspension could be a harbinger of doom but it also could be purely technical, in the sense that there is no way the auditors will meet the deadline so suspension is the only option available. The question is of course whether the mess has been balanced by the fall in the SP. In other words, it’s still a commercially viable company and will eventually rejoin the market after suspension is lifted (and accounts are published). The Boo Hoo board don’t strike me as the types who would throw money at something without checking it out thoroughly. If RBG was terminal then better to wait until the Administration and buy off the insolvency practitioner. It will be interesting to see how this plays out.

I don’t think it’s too controversial to say that the next 18 months won’t be great for the economy and we can’t expect the financial results to be outstanding over this period. In that respect the heavy shorting operation is not going away anytime soon. I’m not bothered about the short tracker because fractional moves up or down are pretty meaningless. But one thing about markets is that they tend to move in anticipation of recovery, so you can sometimes find markets climbing whilst the economic environment is still poor. I have no fear of Boo going out of business but I am slightly concerned that the family might buy it out cheaply when things begin to turn. Bear in mind they have access to better information than anyone. Something to look out for.

When you see a news article at the weekend spouting shorter talking points you know that there will be downward selling pressure the following week. The short interest tracker only shows shorting that crosses a threshold, but there can be a great deal more below that water mark. Who do you think has been lobbying the MCA to open up a "greenwashing" enquiry? It's the same organisations that are feeding journalists with copy ... all coordinated, this is not the work of independent actors. And who sold today? I doubt very much it was retail holders. The same organisations working together.

The investment in REVB strikes me as a sign of confidence. When this economic environment passes (and we are nowhere near that point) the surviving companies will be well placed to recover. I think Boo will be amongst them.

Muscles12 - most investors on Game Stop were using the Robinhood app, where you can buy the stock cheaply. The reason that their model worked is because they were selling order flow to Citadel Securities, owned by Ken Griffen. The biggest victim of the meme short squeeze was Melvin Capital. Both Ken Griffen of Citadel and Steven Cohen injected $3bn into Melvin Capital to prop it up. At the same time Robinhood banned any user from buying Game Stop, only allowing them to sell. It's okay for hedge funds to game the system, but not the small investor?

The most amusing short squeeze was Volkswagen in Germany, who were being shorted heavily by hedge funds. At the same time Porsche had built up an undeclared stake, secretly hoovering up the float. When the news became public there was no stock available to buy back, and the bid price shot up so high that for a short period of time Volkswagen became the most valuable company in the world by market cap. At the time the declaration rules were very different in Germany. Hedge funds got crushed.