Member Info for alex1621

I think it’s incredibly difficult to make an assessment of ASOS during these times, as we are in such unique circumstances. No one is going out or going on Summer vacation. Of course Christmas trading was poor … but what did anyone expect? Restaurants, bars and clubs are severely restricted by a pandemic. For shorters it’s a gift. You can spin the most negative of narratives around poor trading numbers, as has been going on here for months. But what happens when the pandemic is over and supply chain issues disappear? It’s a lot more difficult to keep the negative story going. Any positive news will change that narrative. And medium to long term investors need to think beyond the covid fog.

Tough times haven’t started? Looks to me that the pandemic is in the late stages and the supply chain issues that it’s triggered will be gone soon after. Young people are desperate to go out and get away this Summer and that may well trigger an upsurge in clothes buying. Inflation wasn’t transitory, but it’s coming to a peak, and will start to level off. No doubt we’ll have a recession at some point in the future but I suspect we’ll see a post pandemic boom before that.

The results were in line with expectations, which is okay given the Omicron upsurge and the continued supply chain constraints worldwide. Listing on the Main Market is a positive. No idea how the market reacts, but as the pandemic recedes and supply chains normalise it’s not too much a stretch to imagine improved results over the next 12-24 months.

But rarely in January … it’s not complicated.

They issued a January trading statement in 2017 and 2021, so it doesn’t appear to be a regular event. Next scheduled update is March 2022, from the company website.

Okay, so the Jan 2021 update was a one-off? So nothing expected until March 2022. Disturbing price movement.

Is there a trading update in the offing? Very strange price movement off the back of no news?

They are increasing shorts slightly as they don’t believe that in the near term the supply chain and related cost issues will resolve themselves. So any update is unlikely to be overwhelmingly positive, mixed at best. As these factors recede I’d expect to see a retreat. So I’m guessing two steps forward, one step back.

Bear in mind we still have to navigate Omicron, that may impact numbers more than expected. Requires easing of supply chain pressures and opening up of venues like restaurants, pubs, and clubs that young people frequent. Needs positive news.

Comparisons between BOO and CINE are interesting, and a good illustration of how investors think about a stock. What they have in common is disappointing news related to the impact of the pandemic (CINE ducking out of the acquisition deal was connected) and a rapidly falling share price. But are they valid comparisons? CINE is overloaded with debt and could potentially go under, whilst BOO is lowly geared and has sufficient resources to see them out of the pandemic. Given the Omicron scare I’m expecting BOO to flatline or fall further, but bounce back strongly as supply chain and pandemic issues recede. I’m not as confident about CINE. If you look at the companies that got hit by the first lockdown, like Carnival, Greggs, etc, they bounced back strongly on positive news. I personally believe that Boo will continue to grow after this and return to all time highs, but not in 2022. So batten down the hatches and ride out the storm.

I’m in the same position as all holders, underwater having bought at what I thought was a good price. Today’s update was disappointing but on reflection not a great surprise. It appears that market moving information was out there, and that gave the hedges the confidence to lay large bets. I surprisingly took the news in my stride, as I’ve been here before with 888 about a decade ago. It was painful at the time but worked out well in the end, within a couple of years to be precise. And when it started to move it did so rapidly. The positives are that these issues look on the face of it to be pandemic related, with knock on impact on the supply chain. It is unlikely to recover until these issues are resolved, so I’m expecting a period of flatlining or indeed further falls from here. But on the whole I would expect to see Boo Hoo come through this period on a stronger footing. Those that can hold on should be rewarded, and that is my plan going forward.

Whilst I’d like to see the SP move upwards I don’t think the organisations shorting BooHoo will care a jot about the Fed. They see an opportunity to drive down the SP by working together and gaming the market. They appear to hold fire in the morning, let the SP rise, then engage in high volume selling late in the afternoon … creates a bit of fear and scares holders into selling or having their predetermined stops hit. Market manipulation at its finest. With everything that’s going on in the wider economy they believe they are on very safe ground. It is unlikely that the next update will not reference continuing supply chain issues. The danger for them is that online sales have been boosted by Omicron, and we see a strong reversal like 2020. Personally, I’d wait until the update in early January.

Boo Hoo is the subject of a coordinated shorting operation by a number of hedge funds and friends. There has been no RNS indicating institutional selling. Indeed, Norges Bank has bought 3%. The bet is that supply chain issues will continue to hamper operations resulting in updates that show signs of worsening rather than improvement.

This has nothing to do with the Federal Reserve, and a positive market reaction to Fed policy won’t make any difference to BooHoo. This slide will reverse on good updates, better than expected performance, or general news that supply chain issues are receding.

There might be some holders selling but I’d bet the vast majority are those that are borrowing, then selling. I’ve not seen any RNS that suggests institutional selling? So it’s a concert party of hedge funds capitalising on negative sentiment, and creating more negative sentiment in the process. Will only reverse on positive news.

I think you might be missing the use of leverage (trading on margin) to boost the sales volume and the fact that it is a continuous process of shorting, buying back lower, utilising proceeds to invoke a larger second short, rinse and repeat. But it’s a very risky strategy, because when a SP reverses on positive news it moves very quickly. If BooHoo surprises the market in January there will be a rush to close shorts, and margin calls for those that don’t move swiftly enough. It’s easy money, until it isn’t.

Boo Hoo have slipped up on governance, and like every other retailer are grappling with supply chain challenges, and the higher costs of dealing with them. That’s enough to change the narrative from positive to negative. And if that is backed up with substantial selling pressure from organised groups with deep pockets you get a substantial slump in the SP. They are on safe ground as near term supply chain issues will persist. It becomes a riskier bet once supply chain issues ease. If the January update is better than expected fingers will get burned. If worse it will continue to slide. And that creates an even better buying opportunity for the patient investor. BooHoo is not Carillion, it will recover and re establish growth. This too shall pass.

My observations of these things is that on the whole it’s wise to hold on to both. That’s would be my instinct on GSK, as I believe the Consumer business will be either rumoured to be or actually be a takeover target. I’m guessing of course, but I think that might be why GSK retained the 20% stake post split? I qualify that statement with the phrase “everything else being equal” because I f the macro economy causes worries markets in general will fall, impacting both stocks.

I don’t think so. But your ISA broker would contact you if a decision had to be made on anything.

The other thing I meant to say is that you don’t have to do these calculations, as you will see them in your brokerage account on the day of the split. When you look at your account you will see how many shares you have in each company and what the cost price is. So no need to worry.

No, they are not free from tax. But that is actually a good question. I’d guess you go from one pool of GSK shares to two pools, one for new Pharma, and one for Consumer.

The difficulty for Capital Gains Tax purposes is what “cost of shares” do you use if you are selling either company shares. If you bought 10 shares of Glaxo at an average £14, you will end up with 10 shares of New Pharma and 10 shares of Consumer, presuming its a one for one split. The allocation of £14 between each share will depend on how the company value both divisions. So if 60% New Pharma and 40% Consumer your cost price will be £8.40 for the former and £5.60 for the latter. And that is the cost price you use when calculating the capital gain. This information will no doubt be published closer to the split.