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Coltrane have not announced any more buying since last week, so the large volumes this week must be long funds buying, which is even more positive than short funds buying.
The shorts still have millions more shares they have to buy back.
Coltrane disclosed yesterday, they bought another 400,000 shares on Wednesday.
The price has moved up 60p since Coltrane started buying, and they still have 1.9 million more shares to buy.
Coltrane, the biggest shorter since August last year, have given up, buying back 470,000 shares on Tuesday, according to regulatory filings.
Coltrane have clearly decided that VCP’s share price is only going up from here.
Coltrane still need to buy back another 2.3 million shares, and that is going to put real upward pressure on the share price.
Other shorters will no doubt follow suit and start buying back their positions as well, to minimise their losses.
Dear Baoxiou,
I am surprised you are posting such detailed posts so frequently if you are neither short nor long.
Firstly, VCP is not trading on an EV/EBITDA of 10x, it’s actually less than 7x, nor is its Debt/EBITDA 5x, it’s actually closer to 3x.
The reasons for Interface’s current share price are that over the last four years it has been through three CEO’s, its EBITDA has gone from $178m to $117m, with a further decline forecast for 2023, and its Debt is in fact more than 5x EBITDA.
Over the same period, Mohawk has seen its EBITDA go from $1,366m to $830m with a further decline forecast for 2023.
VCP on the other hand has seen its EBITDA go from £96m to £163m with analysts forecasting a further increase in the current year and even more next year.
Synergies.
Victoria has been investing heavily in the Keraben facilities over the last three years to increase capacity and efficiency, and has now closed the former Saloni facility and moved production to the upgraded and more efficient Keraben facility.
The Group has also now closed one of the Balta facilities in Belgium in order to move that production to the UK, where, again, it has invested heavily to increase capacity and efficiency.
All the details about the investments and the rationale are in the Annual Reports.
These two rationalisations of production will save the group tens of millions of euros without impacting the brands.
This is what big groups do to extract synergies.
Victoria has had a lot of success over the years extracting synergies by moving production around to where it is most efficient.
Looking back through the Annual Reports, Victoria has recently invested a lot of money into its UK carpet factories in Wales and Yorkshire to increase capacity.
It is clear that they plan to move the Balta production in Belgium to Wales and Yorkshire.
A back of the envelope calculation would suggest that the potential labour savings alone would be in the order of €15m p.a., 500 x €30K per employee.
Dear Ace of Clubs,
You keep your short position, and I will keep my long position, along with some of the most sophisticated investors in the world; Koch Capital Research, Spruce House and Camelot.
Let’s see how things pan out.
Dear Lobo87,
Your opinions would have more credibility if your post of 23 January had not been untrue.
There was no investor call that day. The last Headlam investor call was on 19 January. I have listened to the recording of the entire call and the subsequent Q&A session and not once was Victoria or Saloni mentioned
Victoria’s whole business model is based on using acquisitions to grow, and then consolidating production facilities to improve efficiency and operating margins. If you buy many companies in the same industry you want to rationalise production, obviously. It would be worrisome if Victoria was not doing that. They have previously closed the Victoria carpet factory in Kidderminster and moved production to their factory in Wales, they closed the Westex factory and moved production to their Dewsbury factory, they closed and consolidated two factories in Australia, and in addition to this consolidation in Spain, they are also reorganising the Balta factories in Belgium. It is this consolidation and integration that is precisely why Victoria’s operating margins have increased to the level they are. There is nothing unusual about this move and the Spanish CEO has said there will be no impact on the continued development and growth of Saloni as a brand.
"Dutch TTF natural gas futures fell more than 12% to €56/MWh, the lowest since September 2021. Full stockpiles in China are forcing importers to divert February and March shipments to Europe."
https://tradingeconomics.com/commodity/eu-natural-gas
That’s exactly right FredHunt. According to Bloomberg today, European natural gas prices dropped to the lowest level since 2021, almost half the average for 2022, as storage levels in the region remain well above normal.
See Bloomberg today.
https://www.bloomberg.com/news/articles/2023-01-06/european-gas-gets-even-cheaper-amid-warm-start-to-the-year
And according to Trading Economics today, European natural gas prices have tumbled to €65/MWh, the lowest level since October 2021, falling 52% since mid December.
See Trading Economics today.
https://tradingeconomics.com/commodity/eu-natural-gas
Very promising to see another US investor, Capital Research, one of the biggest funds in the world with $300 billion under management, announcing today that they have bought 2.5 million shares.
Things are looking up and there are a number of indicators that point to things continuing to improve;
Victoria recently bought a solid business in the US delivering $7m of Ebitda for a great price, only 4x Ebitda in Cash on Completion, plus an Earn-Out arrangement.
The business has confirmed EBITDA in excess of £100m for the first half of the year, despite all the well-known headwinds (many of which are now easing).
Always bet with the insiders, and in this case that’s Spruce House who very recently bought more than 1.4m shares, Victoria itself which has bought nearly 2m of it’s own shares in recent months, and the CEO, Philippe Hamers, who has also bought shares in recent months.
A lot has been said about Geoff Wilding not buying shares recently. My guess is that a fair portion of his net worth is already tied up in his approximately 22 million Victoria shares, which is plenty to ensure his motivation and commitment. He and the rest of the board would not be directing Victoria to buy its own shares if they were not confident in the future of the business.
The share price has this week been touching the 200 day moving average. If it breaks through this level, many investors will see that as a very solid signal for a continued upward trend.
While it’s clear that the next 12 months are going to be difficult, the medium to long term outlook, which is what matters, must be for a much improved share price over what it is today, which is still less than half what it was at the beginning of the year.
IWT looks like a great acquisition for Victoria. Only 4x Ebitda in Cash on Completion, plus some sort of Earn-Out arrangement.
IWT is an import distributor of ceramic tiles, and Victoria has factories in Italy, Spain and Turkey producing ceramic tiles, so no doubt there are loads of synergies to be had.
Completing an acquisition in the current economic environment suggests that the board is very confident with Victoria, a view supported by international rating agency Fitch after viewing inside information no doubt, as these agencies do.
Victoria continues to buy tens of thousands of its own shares every day.
It’s starting to look very interesting.
Dear Hawkeye,
£100m of Ebitda is really a fantastic result given the economic situation this year, more than the pundits were expecting no doubt, I’m sure it’s given the shorters a fright.
I have loaded up over the years on Victoria stock and I am a firm believer that the current situation will reverse in due course, as it did last time the business was attacked by shorters.
As I’ve said Hawkeye, I don’t speak for the company and I write all my own posts from scratch. I have never cut and pasted anything onto this platform.
The company posted a trading update this morning that confirms a half year trading result of more than £700m of Revenue and more than £100m of Ebitda, in line with market expectations for 2023, a fantastic result considering the economic challenges this year. The business has clearly found ways of dealing with the increase in gas prices.
Dear Alfista, your repeated calls for the company to re-explain the Ezi Floor and Hanover Flooring transactions are naive. I provided all the facts around these transactions on 16 September in the thread “Iceberg Nonsense”. These facts are all verifiable from publicly available information.
Victoria is an audited public company. The details of the transactions were outlined in the RNS statements and set out in detail in the Annual Reports. There is no requirement for the company to explain again what it has already explained multiple times. For the transactions to not be real, for them to be elaborate scams as Iceberg implied in its report, as you keep suggesting in your posts, would require the lawyers that worked on the transactions, the auditors, the Chairman, and the board of Victoria to be complicit in a £42m fraud. The directors would go to jail.
I have read the RNS statements and the Annual Reports, spoken to the company, and studied the Companies House website to confirm that the company’s explanation of the transactions are correct, as set out in my post of 16 September.
If you really are a genuinely concerned investor, and not just trying to propagate Iceberg’s nonsense for the benefit of the shorters, you should do the same.
Dear Hawkeye11, I can assure you, I write all my own posts from scratch. I am a long term (minor) investor in Victoria, I have not been engaged by Victoria to write these posts, I do not write for the company.
I see from the TR1 notice that Spruce House have increased their shareholding from 19.00% to 20.44%, which means they bought 1.66m shares yesterday.
Spruce House’s Zach Sternberg is a director of Victoria, which means that the insiders are now starting to buy, in meaningful volumes.
Spruce House is a major long term shareholder, which means that this is another 1.66m shares locked up and therefore unavailable for the shorters to buy when they finally realise that they need to buy their shares back.
The official total short position is now 4.83%, but that is only shorters with positions of 0.5% or more. The real short position is more like 10% due to the many smaller short positions below the compulsory disclosure threshold.
A short squeeze is definitely coming, all it needs is a catalyst to to set it off, a positive results announcement or a decent acquisition.
The NPBT of -£12.4m is after numerous deductions from Ebitda which are mandatory deductions under IFRS accounting standards, but which are never included when calculating the NPBT or NPAT for valuation purposes, because they are non-cash (eg goodwill amortisation), non recurring (eg redundancies from closing a factory to obtain production synergies), or because they should be capitalised for valuation purposes (eg costs related to an acquisition). All analysts exclude these line items (not just the analysts writing about Victoria).
These adjustments are set out in detail on page 85 of the Annual Report which shows an Adjusted NPBT of £74m and NPAT of £56m.
There is only one sentence regarding the Iceberg Report in the FT report you reference;
“Victoria has not commented publicly on the report, but equity markets largely shrugged off its findings, with the company’s shares actually finishing the day nearly 9 per cent higher.”
The rest of the article is largely an irrelevant story about Mr Wilding’s personal finances and in particular, the size of his boat.