The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
I mentioned this some days ago, please check the ROI of this analyst of his last 270 verdicts. I watch the ratings for one purpose only, once more start rerating you know your are in business. It is a good predictor of the psyche of the crowds under peer pressure. Sell ratings are down now to 5 from 8 since nov22.
Roberto , let me give your current valuation. 3 B with 3 % FCF a share is about 75 pence, if you get that in 2025 and onwards modest growth 4 % you are with 10 % wacc and a PER of 15-17 at 9-11 pounds easily. I rate this probability at 50 %, 30 % that we do better and 20 % we go down. Below 4 pounds this is a asymmetric bet hence why i think the elephants add shares and prepare for what is coming. I am leaving all the intangibles value out of the equation. My preferred thesis is running the turnaround but the 20 % is always in my mind.
Dear All, these fora are to share info, views on a business and as investing is a personal thing we must welcome different views to sharpen our own convictions and perhaps even adjust. There are daytraders here and LTH like me convinced that the turn will be made. One of the most important things in investing is to stay calm, even when you are at a loss. I would really much appreciate that all of you here respond to others how you would like to be talked to. Perhaps you might learn something. Thank you.
Goldman Sachs reaffirmed the sell rating today, this analyst had a -9,2 % return per rating last years on his 269 ratings.....
Darien, details will be shared later. This is a standard trading update, if you wait for all details you have zero edge in these risky turnarounds and expectations are embedded in the SP. It is in this case about implicit conviction about the turnaround, do you think they can do it or not in the coming 2 years. GLA
The press needs to attract readers to sell advertisements and will focus at the -18 % sales drop. I am pleased with the trading update, ASOS did 3,2 B in 2020. The sales drop is just a Covid e commerce correction getting back in shape and coming back to earth where interest rates are normalised. So you kick out the losing customers who are non loyal discount shoppers who cause most work in the company and bring zero profits. I am looking forward to H2. Intending to keep my shares and block them for being available for shorts via my broker.
So you own 14 % and add 2 % of Asos in the week before the period data 3-3-24 closes, you have a ton of experience in retail and are a board member and have insights in actual data. I know only one reason why BOD buy, because they think the business is undervalued. No way we will see tomorrow 2,5 pounds.
The answer has been given by many here on this board over and over again. It depends on your style, some are in it for daytrading and are happy chasing 3-5 % profits in out. Others like me look bottom up business and try to exploit a recovery thesis here with basically 3 scenarios, 1 they go bust and you lose, 2 bid from some of the elephants in the room, 3 turnaround works and mean revert to normal margins/fcf in a crowded little moat fast fashion market where Asos has 23 M customers (try to built it for this mcap, impossible) and still 3-4 B revenue potential, leaving aside the non tangibles. The intense internal pain and loss of face after managerial blowups can create an intense drive to show the city is wrong and Asos deserves a place on the table. Does it mean it will go back to 60 pounds? No, but 10-14 is possible if headwinds turn in tailwinds with some luck. This kind of roi % are only for those who can sit and do nothing after you have done your homework and accept the risks. That is what business is all about, you go to work and solve problems that take time to become visible bottom line. It is simple but not easy.
Https://278773.seu2.cleverreach.com/m/15185548
Also look for If the Model Doesn't Work, Don't Fix It: A Look at Traditional Apparel Retailers, Zara, and Shein
Retail Industry Issues, Estimating Demand, and Two Better Models
Fran, in the case of ASOS very simple. Bad management and tailwind of covid making them arrogantly think they could linear extrapolate growth as was possible based on cheap money, low inflation and good macro sentiment. Remember the 7.5 B target? Never believed it myself. Investors and analyst hate uncertainty and can not deal with it so left the building and ASOS became rightfully so punished by the sellers. I would personnaly never invest long term in online fashion business as most have limited moats and are cyclical, these are volatily recovery plays for me but sofar my timing have not been very good with 5 pounds in the mix. We will be fine with asos next year. If not, so be it as only a small part of my wealth is invested in recovery investing. The longer it sleeps arounds 3-4 pounds the more powerfull the awakening. Almost 1 year now.
Hi Fran, high streets are in problems right now. Especially in non food, i am a supplier of several big players in retail and only the ones with omnichannel or pure players are currently doing ok except for the offline discount players. They manage to grow due to the cost of living crisis and selling more and more private label. The rent is up, labour costs is up and expected to stay high, refinancing debt is an issue, stock rotation and theft management challenging, demographic cohort an issue as gen Z and gen alpha is driven by online shopping for many items also from disruptors . Then add A brand stores, the A brands will be selective to whom they will still distribute and remove retailers who do not add value. It is a very difficult environment right now. Also because many owners in the high street are relatively older and want to sell out in many cases.
Update is 26 march
Progress in turnarounds is always being made under the radar, the daily market for buying and selling SP is just a voting machine and I use it only when I want to sell or buy. Who cares if an algo creates this SP, or shorts , a dislike by investors for UK business, passive investing buying Big Caps and ignoring small ones or Santa Claus. What matters to me if I can exploit volatility on the exchange in my advantage based on a bottom up business driven view on the project. The price is the price because it is the price, that is it. Value is what matters in the end. A transaction (buy or sell) is an agreement on price but a disagreement on value. So when I see 3,5 pounds my view is that it is far from the value in the long term taking in account the risks for Asos. It is going to be an exiting year for ASOS holders. Fortune is many times with the brave. Personally I really would like to see the shorts get killed but won't happen as the City is pretty corrupt IMHO. GLA!
Could be but do not see that happening , frasers is a group that excels in spotting bargains in fashion and sports businesses. They have the support of a very strong balancesheet, for example they write of real estate much faster then peers resulting in conservative PL statements. If they would make a bid they have to work with the other major shareholders, especially with Povlsen. Difficult. Furthermore the CEO of frasers is in a hurry to pump up the SP of his own business as he get 6,6 M shares for free in oct25 (yes do that times 8) when SP is up to 1500. Taking over ASOS is a substantial risk that can also work the otherway around if it keeps on struggling. He will probably keep on buying his own stock back and use ASOS in a clever way to make a profit and work strategically with them to reach the cohort of this website with his brands. Most important is a strong update with H2 outlook back to becoming more then a loss making boxmover of clothes and becoming a fashion destination again for 20-30 year olds. GLA and enjoy the weekend!
Agree, just see what happened last week with HelloFresh. Same happened with Adyen last year, this is what creates opportunities if the long term picture looks ok. GLA
5 pounds he does not even get a happy meal at macdonalds. Why go trough all turnaround pain and mess and sell for that price? Check the balance sheet and intangibles and potential FCF. We get paid to wait here. Let the elephants do their dancing and I am a happy ant eating their leftovers.
I hope so! there are several potential catalyst for ASOS in the coming years : 1 Expected lower interest rates and improved macro consumer sentiment creating new momentum for ecommerce in combination with AI. Most likely to happen from summer24 onwards. 2 Shein and Temu hitting a wall of what is possible with their non creative business model based on price only and not adding anything else (would not be surprised new import tax rules for fair play against them from UK/EU/US )3 Bid on the business , the UK is among the cheapest markets in the world right now . Lot of money is ready to be invested. Was confirmed also last saturday at investorshow in London but the problem is quality of lot of UK listed players is poor. 4 More retail liquidity coming to small caps as the passive index investing story will some day eat its own tail, you can not keep blindly buying M7 and neglect small caps with potential for 3 baggers. 5 Turnaround working and reverting to 3 % nett income (the minimum long term in the mix otherwise they better stop). Try building a business like ASOS for the current MCAP, impossible. And last but not least, you need some luck with these investments like ASOS.
Agree but a catalyst here is not needed as long as leadership relentlessly executes the strategy and stay disciplined. added some free of charge at nice prices last month from my dividend, let it compound the coming years and add stores more and more and SP will move along. Getting richer slowly with this one. Discount offline is the only place to be coming years accept for DTC ecommerce in the retail space as I expect inflation to stay high coming decade and further squeeze middleclass.
Will not happen, ego's play a big role in boardrooms. Fast Drop to 2 pounds will also not be very likely, means the end of the story. Just look at the worth of the tangibles and intangibles. If that happens most likely debt it out of control with no room/plans to solve it, then we are talking about game over. My best guess, turnarounds delivers and macro improves. SP moves up somewhere in 24/25. Patience and luck we need. GLA.
Let us hope so, would be nice to see Shein en Temu see following the Huawei path. What we need in the UK and EU is to fully leverage our buying power to the CCP.Do not comply with our rules and that of the WTO, fine you are out thank you very much.