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I hope you are right. The current market cap is very low for a very good reason. There are too many risks right now and this is really now for the very brave.
I suppose to a degree one can take comfort in the fact that Julian Dunkerton has a very large holding here - however he doesn't have all his eggs in one basket and if this went bust he would still be a very wealthy man albeit with a tarnished reputation. He will probably do everything in his power to prevent this company from going bust. However, he is only human and not infallible. I don't like the fact that the company had to turn to Hilco (even if they had no other choice) for additional liquidity - this is such a poisonous deal as it almost feels like Hilco are betting on this company going into administration. Look at their history.
I suppose the biggest risk here is the possibility of a huge equity restructuring. This would save the company from going bust yet existing shareholders would get massively diluted. I've experienced this before and it is painful. The creditors will be ok, but shareholders will get royally taken to the cleaners. The current liquidity (including the Bantry and Hilco lending facilities) I fear is not enough.
I've known this for some time now, but what is glaring whenever I look at the income statements for SDRY is just how high Selling, General and Administrative (SGA) expenses are - they eclipse the company's gross profit.
As of 29th April 2022, SDRY had a gross profit for the year of £341.4m with SGA expenses at £360.3m.
In the latest statements, as of 29th April 2023, SDRY had a gross profit for the year of £328.4m with SGA expenses at a whopping £419.1m.
I've read the ES article. It is well worth a read. Here is the link...
https://www.standard.co.uk/insider/julian-dunkerton-superdry-clothing-company-brand-b1105610.html
My biggest concern right now, more than whether or not the brand is currently 'cool', is the financials and the financials are dire. Superdry is in an incredibly precarious situation financially. The loan facilities from Bantry and Hilco are not substantial and also come with a high rate of interest. Any company that gets involved with Hilco is an immediate danger sign in my view. The company's current liabilities well dwarf all the available liquidity it has. And this is my biggest fear.
Julian Dunkerton does have a considerable amount of skin in the game. He has been hovering up shares all the way down to 76p and now owns over 27 million shares (27-28% of the total market cap).
However, why has he not been buying even more shares now that the share price is just 43p? Why has he stopped buying more shares?
"The Hilco model is effective. It offers retailers a helping hand by lending money when normal banks won’t – at a price – but it is also potentially benefits when companies fail, collecting fees from advising on and handling the sale of assets for administrators or taking control of a company and selling off the assets directly."
https://www.theguardian.com/business/2023/sep/04/hilco-wilko-high-street-retailers
As of 29th April 2023;
Total current liabilities: £275.7m
Total non current liabilities: £139.0m
Total liabilities are thus £414.7m
So sadly the company’s debt is not in 'the teens’.
Liquid cash only at £58.2m
Forest34,
It is cheap for a very good reason. If you look at the latest financial statements, SDRY now has negative working capital. It's current liabilities exceed it's current assets. That's not a good sign. The total combined amount of the lending facilities provided by both Bantry and Hilco is not a huge amount and both come with a high rate of interest on them. I don't like the track record of Hilco - look at their history - they are vultures.
It is extremely risky to purchase shares now. Of course, there is that small chance that this will turn around substantially and uber brave shareholders will be handsomely rewarded. By that same token, this could also become totally worthless. Something to bear in mind.
"i wish if they just could copy uniqlo they will do well."
not a good comparison. they are two different brands with different visions and histories. if i had to make comparisons i would place superdry more in the same league as brands such as diesel or g-star.
for me, i still place the blame on many of the problems that superdry currently faces on the former ceo euan suntherland. dunkerton made a terrible decision to allow him to take control of the company - that was the biggest mistake he ever made. suntherland is the *****essential zero skin-in-the-game corporate manager with no real vision - he should never have been allowed to take control of a fashion brand.
i've been saying this for some time now, but in order for superdry to thrive and rise again it has to focus purely on it's brand. it has far far too many shops around the world. it doesn't need so many shops. these shops are also a huge drain on the company's gross profit margin.
the deal with hilco capital is also, as i have already mentioned, a terrible omen for this company. hilco deep down knows that this company has liquidity issues and is betting on the company going into administration. look at hilco's track record.
its a genuine concern mountainous. hilco capital is the *****essential vulture fund. not a good omen.
Tesla is quite simply an obscenely overvalued zeitgeist stock with a history of fraud. It's bloated valuation is mostly supported by inexperienced dumb as rocks investors who have never experienced a genuine financial crisis. This is the type of stock that Warren Buffet would not touch with a barge pole.
As of this month, Tesla is party to over 1750 lawsuits. This is simply staggering...
https://en.wikipedia.org/wiki/List_of_lawsuits_involving_Tesla,_Inc.
"We'll also see deflation in 2024..."
How do you know?
"...they're not going to be some anodyne old fart on a yacht, they're going to be a feather ruffler. "
Yes, on one hand this is quite correct. However, on the other hand one needs to tread carefully before backing such individuals. Adam Neumann was a feather ruffler and very unorthodox and attracted a ton of VC capital for his company WeWork. Massive fortunes were lost. Softbank especially lost a packet investing in WeWork. SMT dodged a bullet not investing in WeWork.
"Did Enron have any redeeming features? Tesla have arguably made sustainable energy and transport fashionable, which is a biggie if you ask me."
It doesn't matter. Both companies have a history of fraud. In the case of Tesla (and Elon's other companies), all the info is in the Plainsite PDF link I provided. Remember, Enron was also a darling stock and very fashionable.
Enron also grew from nothing to a market cap of $70bn doing some 'dodgy stuff to get there'.
*businesses not business
"Mars rockets and electric cars are still cooler, sorry 😛"
It's precisely this type of mindset (that so many people have) that is the reason why he is able to get away with so much (plus the fact that he has over 140 million followers on his own platform). Any other entrepreneur would be in prison by now doing a long sentence. He currently has the halo effect like no other entrepreneur.
I know that I am not making myself popular here by saying this (and you can shoot me down in flames - that's fine), but I don't think many people have ever considered the possibility that his business could one day become bankrupt and he may even end up doing a lengthy prison sentence. If this ever happened this would not only be a seismic blow to the entire tech/startup world, but also to the hopes and dreams that many people have of him. There will be a lot of, 'What was I thinking?", "Man, I got so duped" etc
I take your point on Gates, but he is nowhere near in the same league as Musk when it comes to committing fraud.
I am enclosing a 107 page PDF document by the legal website Plainsite called "Reality Check" on Tesla. It's from January 2020, but it's an important and revealing document containing information on the company that many people are not privy to...
https://www.plainsite.org/realitycheck/tsla.pdf
"Bill Gates is someone who contributed negatively overall imo..."
One can say whatever they like about Bill Gates and there is no shortage of conspiracy theories attached to him ;)
However, unlike Elon Musk, Gates doesn't have a record of committing fraud and breaking the law. I am all for innovation and backing breakthrough technologies, but I give a wide berth to those who don't respect the law.
*QCM (not Darktrace) promptly responded to...
PG - You can say what you want about QCM, but I am on their side regarding Darktrace. I think it's a bit too premature to write them off. They have a good track record of being proven right on the companies they target - even if it takes a long time.
I don't think many here have read their full report from earlier this year. To think that QCM are just some short seller spivs looking to make a quick buck is unwise. They have constantly challenged Darktrace asking legitimate questions. Why would QCM go to such great lengths? Darktrace promptly responded to Darktrace's EY Review RNS on the same day with a statement, which I've included in an earlier post. In this statement, Gabriel Grego, quite rightly asks;
"We call upon Darktrace to fully unveil the details of the EY review and facilitate an open dialogue on its findings. Given the severity of our allegations, we believe this situation warrants a significantly higher level of transparency, which Darktrace has yet to provide."
I think this is perfectly reasonable.