Member Info for AquarianAge

"I personally don't feel sorry for anyone that got burnt, its a valuable learning momment - you were warned enough by a few on here."

Indeed. It's a huge lesson. Those shareholders got burnt and the CEO of this company continues to laugh all the way to the bank.

"...if this goal is missed then Steiner would be set to receive up to 600% of his base salary, or almost £5m."

And this is the problem. Steiner will still be handsomely rewarded even if the share price is just 50p by that time.

I am surprised most shareholders approved this. However, I do know that in the event that Ocado goes bust and shareholders lose everything, they will really turn against Steiner. He will be the prime scapegoat and I wouldn't be surprised if legal action is taken against him over his gigantic pay packages over the years. Even if, at the time, shareholders had no objections to all this.

One thing that is clear as day is that Ocado has to finally make a positive net profit. My rough estimate is that Ocado currently has around £600m of cash remaining, which will probably be enough to keep the company going for another 18 months if it still fails to make a positive net income profit within that time frame.

The company also has over £1.4bn of debt with maturity dates between 2025-27.

Probably the thing that really is a strong red flag for me is that over the years Tim Steiner has made out like an absolute bandit - he's raked in tens of millions of pounds and still the company has failed to make a net profit and the share price has collapsed from an all time high of almost £30 to sub £3. I am sure that those who bought close to the ath must be absolutely thrilled. You see the share price could continue to collapse to £1 or the company could even go bankrupt. The shareholders would be screwed yet Tim Steiner would remain an incredibly wealthy man. This I do not like.

Stumpy - the report published by Quitessential Capital Managament on Darktrace earlier last year is well worth a read. Here is the link....

https://www.qcmfunds.com/the-dark-side-of-darktrace/

I think they did a very thorough and excellent job exposing all the corruption, fraud and irregularities at Darktrace. Of course, there will be those who will rubbish the report on the basis that since it was published the share price has almost trippled in value, but that means nothing. QCM have an impressive track record of targeting companies early on that have a chequered history and engage in fraud. I think they will be vindicated in due course.

The Gamestop saga simply reinforces my view that there is still too much dumb money in the markets. This is a company that should have gone bust a long time ago.

Considering the rate at which Ocado burns through cash, the sooner it can raise more cash the better. If it doesn't raise any more money by the end of this year I predict that it's cash pile will dwindle down to around £400m by the end of this year. If it fails to make a positive net profit (after operating costs, finance costs and taxes) by that time, I fear that the company will be in trouble.

Ocado already has almost £1.5bn of borrowings - at least half of these are in the form of convertible bonds with quite close maturity dates from 2025-27. So it's not ideal for the company to take on more debt.

The only hope, and there is absolutely no guarentee that this will happen, would be for the share price to near double from current levels to around £6-7 a share at some point in the coming months. If this happens then the company should jump at the chance to do another placing and raise an extra £1bn of cash. It could do this be issueing another 150m of shares and the total number of shares in circulation would still be below one billion.

Ocado eats through a lot of cash.

Just going over the lastest annual report again for the year ending 3rd Dec 2023, the following points are of note from the cash flow statement...

Net cash flow used in investing activities was £500.1m for the year ending 3rd December 2023.

This figure was even higher at £717.4m for the year ending 27 november 2022.

Now of course I fully understand that Ocado is investing in it's business to grow it and this is fine. However, almost all it's cash has come from borrowings and share placings. This is the problem. Hence my concerns about liquidity.

"If anyone can make the SP £29 I’ll be very happy - I would be delighted to give them the bonus"

Share price performance is one thing. However, I think such a bonus should only be rewarded when the company is making big net income profits and generating lots of cash in excess of it's operating costs. As I have mentioned in previous posts, I fear that if Ocado fails to finally make a profit within the next two years it will run out of money.

It's all there...

https://www.qcmfunds.com/the-dark-side-of-darktrace/

Luke Bidco will regret it's takeover of Darktrace in the same way that HP regretted it's takeover of Autonomy. Mark my words.

I wish I could share this optimism. However, as per an earlier post of mine here I am worried that Ocado could face a liquidity crisis in the next two years if it continues to fail to make a net profit. This is very important to remember.

The company burns through a lot of cash and even though it has over £800m of cash on its balance sheet (as of 3rd Dec 2023), it will likely experience liquidity problems by the end of 2025 if it fails to generate a positive net profit by that time.

The company also has £1,459.5m of borrowings as of 3rd Dec 2023 with the majority of these in the form of convertible bonds with maturity dates from 2025-27.

I fear that at some point in the not too distant future, the company will either have to increase it's borrowings on unfavourable terms or raise more money via a placing at potentially a lower share price than the current one, which could be pretty dilutive.

I am also unhappy by the grotesquely excessive amount of money Tim Steiner has been paid over the years. This is absolutely insulting for a company that has still failed to make a positive net profit. I am not against big pay packages. Tim Cook at Apple gets paid a lot but he is worth it since Apple is quite simply a cash machine generating beast of a company. Ocado isn't.

If it wasn't for these risks then I would agree that the current share price is a bargain.

I wish I could share this optimism. However, as per an earlier post of mine here I am worried that Ocado could face a liquidity crisis in the next two years if it continues to fail to make a net profit. This is very important to remember.

The company burns through a lot of cash and even though it has over £800m of cash on its balance sheet (as of 3rd Dec 2023), it will likely experience liquidity problems by the end of 2025 if it fails to generate a positive net profit by that time.

The company also has £1,459.5m of borrowings as of 3rd Dec 2023 with the majority of these in the form of convertible bonds with maturity dates from 2025-27.

I fear that at some point in the not too distant future, the company will either have to increase it's borrowings on unfavourable terms or raise more money via a placing at potentially a lower share price than the current one, which could be pretty dilutive.

I am also unhappy by the grotesquely excessive amount of money Tim Steiner has been paid over the years. This is absolutely insulting for a company that has still failed to make a positive net profit. I am not against big pay packages. Tim Cook at Apple gets paid a lot but he is worth it since Apple is quite simply a cash machine generating beast of a company. Ocado isn't.

If it wasn't for these risks then I would agree that the current share price is a bargain.

Thank you Valueplay for sharing this.

This is of course not the first time that Tim Steiner has been obscenely over remunerated.

A few years ago he was paid £59m despite Ocado making a record loss...

https://www.thetimes.co.uk/article/ocado-chief-tim-steiner-paid-59m-despite-record-loss-8206r03cx

Why Ocado shareholders on this board are not more outraged about this I find rather puzzling. Instead they decide to vent their anger towards those 'pesky shorters'.

Even if Ocado were to go bust, Tim Steiner would still walk away a very wealthy man.

Why should it be made illegal to short shares?

I would argue that it is far riskier to go short than it is to go long. It's not easy and for the very brave. If it were easy everyone would be doing it.

Some short sellers are real mavericks like Jim Chanos (go check him out). He's a black belt at spotting companies that are not only incredibly overvalued, but also at detecting companies early with serious issues long before everyone else (including the financial authorities) have cottoned on.

*CORRECTION: "from a cash position of £1,328m as of 27th November 2022"

I am going over again the company’s annual report for the 53 weeks ending on 3rd December 2023. 

At that date, Ocado’s cash position was £884.8m. 

That may sound like a lot, but consider that during that 53 week period the company went through £443.2m of it’s cash (from a cash position of £1,328bn as of 27th November 2022). 

That is some serious cash burn. If the company continues to burn through cash at this rate then with the current amount of cash remaining it has only two more years remaining before it faces liquidity issues. 

The problem with Ocado is that it is still failing to make a net profit. 

I am aware that total revenue was £2,825m as of 3rd Dec 2023 (and up over 10% from 27th Nov 2022), but what does this mean when operating costs dwarfed total revenue at £3,337.7m. 

When will this company finally make a positive net profit?

Because, if it fails to make a net profit in the coming years it will simply have to keep eating into its finite cash pile. 

It is a shame that the company didn’t have an equity raising when the price was in the £8 - £10 range last year. In fact I remember a poster suggesting a placing of around 100m additional shares in that price range and getting shot down in flames. The company could have raised an additional £800m - £1bn in cash. 

The company already has £1,459.5m of borrowings as of 3rd Dec 2023 and I’d rather the company doesn’t increase it’s borrowings. Much of these borrowings are in the form of convertible bonds with maturity dates from 2025-27; not that far off. 

"Superdry confirms that it is in discussions with Hilco over an increase to its lending facilities by approximately £10 million to provide the Company with necessary additional liquidity headroom to help facilitate the implementation of its ongoing turnaround plan and cost reduction programme, along with an additional £10 million to assist with seasonal working capital peaks to the extent required, and an extension to the maturity date of its facilities with Hilco by six months to 7 February 2025. There is no certainty that such changes will be agreed."

I have said many times in previous posts here how uncomfortable I feel about Superdry turning to Hilco Capital for additional liquidity. This has always been a major red flag for me since Hilco is a vulture firm - just look at their history. Now that the company are discussions with Hilco again to increase its lending facility is a really bad sign and just simply reinforces how deeply in trouble SDRY is.

 

On the surface, the latest results for NVDA are impressive - revenue for the year ending on January 28th 2024 was $60.922bn - more than double the revenue figure of $26.974bn for the previous year ending on January 29th 2023. Much of this revenue growth was fuelled by a massive jump in revenues from it's Data Centre business, which increased from $15.005bn (for the year ending on Jan 29th 23) to $47.525bn (for the year ending on Jan 28th 24) - a whopping 200%+ increase in just one year.

But lets not get too carried away here. With a current market cap of $1.94tn against $60.992bn of revenue, NVDA now trades on a valuation of over 32 times revenues! And this is no small cap AIM growth stock here. This is a company with a near $2tn market cap!

I hope that the managers here will take some profit on their holding, because if they don't they will only have themselves to blame once this obscene bubble bursts - which it will. I have seen this all before I am afraid.

My own calculations put the current NAV figure (as of 2nd Dec 23) at 62p. And that's taking into account the latest cash position of £128.1m, which was a lot higher before the Nigerian Naira devalutation.

I don't think PZC should completely exit from Nigeria. Even though there is a lot of corruption in this country, it also has a lot of future growth potential and it would be a pity if PZC missed out on that. The Nigerian Niara is however a very unstable currency and the company should not have so much of this currency in cash. Most of the cash generated from its Nigeria operations should be converted into US dollars and that way the company's overall cash position is protected from further devaluations in the Niara.