Member Info for alwayswrong

Yes liquidity is very low and I think it was Stuart who made that point earlier. It won't help that the stock is now out of the FTSE 250...so I think you will have to wait for a good news update to sell into a rising uptrend..

Oogle..... I didn't come across where Richmond announced they were selling all their holdings...if they had I fear the share price would have fallen to 20p...I only read they were considering selling some of their holdings but keeping the majority of their holdings...

I have a large chunk of my money invested here because I am a conviction buyer ..but I am bemused by the ongoing low price of the share which makes me concerned that there are threats that I have not picked up on in my analysis ...contributions to this thread are therefore welcomed and sought...
The threats as I see it are as follows...

1. Regulation ....bound to have a negative effect given that the regulators come into this arena with negative intent and Amigo has 80% of the market so the regulators must have Amigo's business model in their sites...and 49.9% APR does sound high when the loan is guaranteed ...although how effective the guarantor part is when defaults are running at 30% must be open to question..

2. Competition ...If you check out the top 10 guarantor loan companies you can see that most charge the same APR as Amigo who always feature at the top of these comparison websites probably due to their market share... The ones who charge less are :
(a). UK Credit..who have a headline rate of 39.9% but when you read the fine print it points out that this is dependent on circumstances and the maximum APR is in fact 68 % ...in other words you have to prove you don't need it in order to qualify for the lower interest..
(b) TFS loans...copy UK Credit's 39.9% headline APR model
(c). Guarantor my Loan has a headline rate of 29.9% APR but this is only where both borrower and guarantor are homeowners and they too have a much higher typical rate of 49%

There are a couple more lenders who copy Amigo and these are Trust Two and Buddy Guarantor ...so Amigo are not uncompetitively priced and hold the go to provider slot for these types of loan...
3...State of the Economy...yes Brexit is a threat but actually would Brexit increase demand for loans...?
4...New entrants. ...to me this is a real threat...Banks and other prime lenders could re-enter this market but only cream off the top 10 -20% of borrowers with the best credit ratings within the this segment of borrowers offering much cheaper rates which would seriously impact Amigos prospects ...not on the horizon yet though..

4...Amigo's source of funding dries up, or their interest charges for providing the funding, increases significantly...both of these are possible but not likely at the moment..

Can anyone else think of any threats that I haven't covered...? Of course there are opportunities too, to take their business model to other markets and the Republic of Ireland is an example of this...

All factors considered the margin between the rate Amigo charge of 49.9% and the cost of their funding of around 6% gives a huge profit margin even allowing for the increasing amounts of impairments and operating costs.. All of these factors lead me to believe that the current share price of Amigo is massively undervalued and what encourages me in particular is that the balance sheet continues to show the company growing in prosperity despite the collapse in share price, or

BigBangs...didn't think about super Friday...that is the most probable cause and thanks for drawing attention to it .
Stuart ..your views coincide with mine long term...I have forensically examined their Balance Sheet which shows net equity actually rising and their statement that dividends will be maintained (and they can afford to ) even at the reduced levels of expectation which gives a 13% yield at current prices..
Yes this is a company whose outlook isn't as positive as it was a year ago...but not bad enough to warrant the fall in share price from £2.97 down to 70p...it's fundamental value is probably somewhere in the middle based on the last update...but yes still destined for growth beyond this once profitability fully restored... I am holding ...especially now I have a probable explanation for the sudden drop late this afternoon..

Forget this wtf just happened and why ? What news don't we know or has somebody just taken out a short ?

I agree with you totally Stuart, once a share price more than halves as Amigo's did there is an initial bounce then a retreat back testing the previous lows and if they aren't broken as in Amigo's case then a longering low is met by a creep upwards to come back to the share's fundamental value..until of course the next news anouncemnt or macro shift in the stock market as a whole..
I am watching this space and "holding". Like you I am reassured by the vulture's retreat from the scene..

Agreed zcccax77.. broker forecasts are as my name suggests always wrong...the zero shorts is the result of Toloman Capital settling their 0.71% short, probably when the price shot up rapidly to 84p last Friday...not bad considering they shorted the stock back in April when the price was around £2.50... what this should mean now however is that we now have a level playing field for trading so interesting to see where the price goes from here but my guess is northwards..

First of all, hello to those regular contributor friends..
Yes I am back again, tempted by the greater than 50% fall in share price in one day.. I got in at an average price of 75.8 pence so a reasonable 24 hour return .
It is worth making some candid reflections on the investment though starting with those which act against making the investment, and there are several ...
1...massive relative uplift in impairment rates which now stand above 30%....All of this comes off the bottom line ..hardly bodes well for assessing potential guarantors...do they carry out ANY checks..?
2..another large increase in admin cost ratio, underpinned by substantive increases in early arrears rates...discouraged by their explanation of "operational difficulties" in the collections department..
3...They charge very high interest rates for what are supposedly guarantor loans.....zcccax77 makes several very relevant comments about their business model . They are the highest of the competitive lenders where the guarantor is a homeowner. The others charge 39% for these or 29% if they are both homeowners .
4...The regulatory environment will ultimately bring an end to theirs and others premium lending rates which in all honesty are excessive...
5..At some point the prime lenders will relax their lending criteria and when that happens Amigo and other sub prime lenders will see their customer base diminish..
6..Finally (and personally) I wouldn't lend money from anyone who made me call them "Amigo"
Ok so why am I of the opinion they are a strong buy ? 1...Well, my opinion is a short term one to get in now and make a short term (less than 6 to 9 months ) profit which I think could exceed 50% above the low price of 68p. So I aim to exit around £1.10 hopefully before Christmas..providing no further bad news emerges..
2. This stock had minimal shorts (even before the bad news) so the hedge funds are not circling them which is a very positive sign .
3...Even factoring in no growth and maintaining the high ongoing levels of impairment and admin costs will still provide an EPS of around 16 pence...or PE ratio of about 5 on an 80 pence share price....the dividend of 9.32 pence can and should be maintained which gives a yield in excess of 10% ..
4..Ireland might prove a blue print for further expansion elsewhere supporting future growth..
On balance then I think that 80 pence is very cheap and a purely entiment based over reaction which will no doubt correct at some point....I am forseeing a rise to between £1.00 and £1.20 share price before Christmas assuming no further bad news emerges...
Good luck all and as ever dyor...

Thanks John...think I may have determined the reason why they have extended the offer timetable even though they have already received over 100 % acceptances...reading the offer document it states that there are two conditions that need to be met..
At least...
(a). 100% acceptances of the full 3% of the shares plus
(b) approval from 50% of the shareholders
Presumably they don't have that yet..

That can't be true Does as 30% are already owned by their consortium so even if all remaining 70% subscribe then will need to allocate 3% X 100/70..

I have today received a corporate action in my Sipp account relating to my holdings in AML shares.

There is a statement by Strategic European Investment GRP, offering to BUY my shares for £10.00 per share.. I have immediately opted for acceptance but given that the share price move today was downwards I am now completely baffled as to the status of that offer...

Has anyone on here received the same or can advise on what all this is about because the offer is for more than twice the current share price..

Wack wack .JD will be given a period of grace to turn things around .I think tactically then he should do what all freshly
Incumbent CEO’s do and say publicly that things are far worse than he thought they were and although he would still be able to turn things around, it will take longer than he first thought and patience would be required or something like that ..in other underpromise to the city and then over deliver , and release a first positive update in a few months time which gives a positive surprise to them ..
Of course patience might still be required ...I am sceptical about whether any good news is around because if there had been then ES would have released it in the run up to the EM which might have just been enough for him to have retained control ..

PC...Yes I agree , I am a fundamental investor using annual reports , interim statements company releases etc whereas the city traders are technical traders using technical trading patterns and signals and making instant trades from these .. I think you are a little muddled by not using fundamental value with you only being interested short term like city traders but then reviewing the accounts etc which is of fundamental nature. City traders wouldn’t know a Balance Sheet if they were hit over the head with one.
Regarding job cuts of course you don’t indiscriminately remove overheads for the sake of it , much planning and consultation is required and altering plans when required and you certainly don’t boast about this to the city .you do it quietly and discreetly. I have been an FD for 20 years and empires do build ..I do like the fact that JD is a builder but that can be done without ignoring costs Is what I am saying ..
You are totally right about cost cuts when publicised giving entirely the wrong signals to the city ...When ES publicly stated that this was the main content of his transformation problem, the signal was given that he had run out of ideas and the brand and company was in the decline phase.
Regarding your point about Income is for vanity but profit is for sanity ,,a well known saying but you missed out the most important final one ...”but cash flow is the reality” At the moment Superdry has cash in the bank and remains cash positive ...remaining like this will in my view enable it to prosper and thrive ..

Lignum - when he first went public with his disapproval of what was happening late last year JD said that it wasn't too late to turn the prospects of the company around and he felt that he could achieve this within 12 months with the reversal of the current strategy.. I hope he is right because I have a lot invested here.

Pokerchips, the things you say are mirrored out time and again on the employee reviews on indeed. Co website.. Employees refer to toxic workplace , bullying culture, favouritism and one employee says its no fairytale, fair to point out others were more favourable.. Lots of reviews saying the management strategy changed on a daily basis and lots of promotions and discounts all the time at a store level.. I do agree that JD capable of turning this around and after 18 months away from the place he will be reinvigorated and determined not to fail.. What do you think a fair value for the share price to be?

I agree that is the question re brand life cycle but only time will tell.. Incidentally as much as I respect JD and what he has done and the fact that he is putting his own money where his mouth is in terms of share ownership which secures the motivation, I did pause a little when he said he might halt the job cuts that ES had proposed.. these cuts were head office delivering bottom line improvements in profit. Couple that with something I read about him when he was at Superdry that he hates and doesn't understand finance caused me a sharp intake of breath.. Could ES and JD have learned to work together for the greater good?.. Keep ES out of strategy and design but JD out of finance.. Reassured that your view is for SP to double from here as that would be nice..

I would be interested in other people's opinion of the fundamental value of one of Superdry Shares.
Based on information in the public domain we know that forecast net profit this year should be around £40 million which equates to about 50p per share..
Next factor in future growth and I am taking a neutral stance of zero future growth so I am still assuming 50p per share but in reality this could go up or down. It was 80p per share last year for example..
Next calculate the PE ratio which was as high as 18 during its growth phase but I think 10 to 12 would be reasonable given where we are but that JD is now back at the helm so this would imply a current fundamental share price of between £5 and £6..
The market is currently only forecasting a PE of 9 hence its current share price .
As I say during the growth years it was up to 18 or 19 but if JD doesn't turn it around and the brand ends it decline then both EPS and the deemed PE ratio could both go into decline and the share price could fall to around £2.50.
The question is where is YOUR money... Views appreciated

n1s.. wouldn't be so sure about that.. As my name suggests with reference to share prices, they are always wrong in comparison to their fundamental value and are either over priced or under priced, I agree they are now heavily underpriced against their fundamental value but just because they are doesn't mean to say that they can't get more so and external investor sentiment which wouldnt havent been helped by the resignation of two of their brokers is now very negative.. All the same I hope that you are right as I got in again late last night..

Thought I would set up this new thread to capture what people think is likely to happen in the the future as far as they can foresee..
I think that after the ICC waded in this morning with their uninvited judgement, the institutional sharehders are likely to opt for the status quo to guard against any future criticism of their handling of the situation with clients funds.. Their mantra is to extract the maximum amount of management fees from the least amount of risk taking.. Thereafter I see the resulting gradual demise of the brand and the business.. If the current executive led by ES decide to take drastic steps involving introducing debt on the balance sheet then the demise will be more rapid..
What I would like to happen is for Superdry to return to its design led roots selling coats and hoodies but being more financially aware.. Check out the history.. Massive increase in revenue not reflected in the scale of profit increase and JD said in an interview once that he hated finance, well someone in a prominent position on the board has to... Would it be too radical to fire ES but then ask him back as a financial consultant?

Yes, that is significant. It does appear to have gone through though. It appears on second thoughts it might be an agreed purchase and sale which will go through properly on Monday...