Member Info for bobbyaxelrod

That made me chuckle, agreed!

I think there needs to be re-assessment (perhaps philosophical) of what Huddled is doing... excuse my historical simplicity. In the old days, a group of informed bargain hunters would crowd around a gathering point where a van may appears with discounted goods. That same process is playing out with Huddled, only now people do not need to travel, can easily and transparently transact, and is available 24/7. But philosophically it's the same. And in the same way, a contigent of motivated returning customers can make the business very profitable over the long run.

They difficulty they will have is understanding how to convert new into returning customers. I think this is tricky without a regular offering (see recent Boop posts giving customer education around why they "don't do refills") that is reliably available. So the returning customer base will be motivated discount hunters. Eventually with better stock range (breath and depth) and possibly consistency this could change, but of course this brings inventory risk, which may be partially mitgated by recently communicated consignment purchasing strategies.

Brand penetration remains very low (on Instragram for example, Boop c10k, Nutricicle c30k, and DD 20-30k), and despite TikTok engagement with Boop they still have very low stats. So marketing will be well rewarded for plenty of time to come. If they can sell own-branded goods cheaply as a regular offering (so Nutricircle cheap whey, DD cheap cleaning products, Boop cottom pads, etc) that might give enough reason for more new customers to return.

The amount of stock being let go as waste is simply huge and a big risk would be retailers realising there is a market, acceptably promoted and built by Huddled, that they can sell into without Huddled. How can they start to solidify their position... maybe by introducing some sort of Huddled approved rating for excess inventory, and over time consumers equate this with being still fine to buy. Gives the Quality Assurance person some extra work, but something like "all goods are checked in accordance with the following audit process (e.g. consume before dates, product unaffected by packaging imperfection, no safety recalls, etc" and are given the Huddled approved metaphorical stamp = insert good name("greenmark" / "check" / "checkd".

Overitme this metaphorical stamp becomes recognised, and looked for (similar to Tesco clubcard yellow offers), and maybe even valuable. Although retailers can always copy like Aldi copied Tesco.

Sorry - complete post got cut off (will try to recollect where I was going with this).

Talia Stevens (

Interesting to see the AGM results today. My reading more generally is that they are able to issue a small amount of shares to attract new team members, but also to quickly raise from any interested institutions (less likely in my view). Interestingly, there was a buy back motion that was passed - it think it's unlikely this for any shareholder return (especially when not pre-announced or promoted) but more to buy back shares for treasury to issue to directors and staff.

More interestingly, I note that the motion to re-appoint Paul Simpson (from Nutricircle) as director had a significant opposition. In fact the size of the opposition is exactly equal to Talia Stevens (

Any read across to here from Liontrust's update? Similar to Jupiter's decline. CLIG also suffering outflows. Whilst capital continues to flow into newer outfits, like AJ Bells, etc.

How does CLIG turn outflows around?

Competely agee. Recent updates have provided insight into business strategy but little tangible information. But I do think the sustainability needs to be front and foremost for successful execution in bringing on partners and improving basket margins. All 3 businesses are still very small with extremely low brand penetration so still plenty of room on the demand front. I think they can reach around £50m in sales - give or take depending on order mix between the 3 brands - in the current warehouse set up (with some extra staff). So partners and consumers-wise all is ok.

Next question is, is Huddled Group actually sustainable? i.e. covering costs, no need for future cash, and creation of shareholder value - as of yet unknown. It's early days but management should recognise that in presentations to investors (i.e. via IMC or trading updates) there should be stronger emphasis on the aim and strategy around creation of shareholder value, even if long term.

Looking ahead to Q2 2025/H1 Trading, I think we can expect sales growth and possibly for June to have been "operationally profitable" with guidance for H2 to be cash flow positive for a FY profit. I don't think April and May were operationally profitable. Then lower cash burn H1 and a re-emphasis that business is now self-funding. Valuing the business is hard because the future is uncertain, but, if this was the H1 2025 picture, I would say 2x today's valuation in the lead up to Q3, with momentum building into Q4 and early 2026 - BUT obviously this is not how investing works!

The point I forget to say was some of those FY2024 Cost of sales will likely include start-up/set-up costs that won't be repeated in FY2025. There may be some similar costs due to the life and new floor coming line, but unlikely to be as high. This creates additional margin (in addition to other variable costs like marketing, packaging and deliveries possibly getting proportionately cheaper).

There are still some risks.

We don't know that the business model is actually viable, especially in terms of profit and any future shareholder return (with continued top line growth, any talk of this will likely be nowhere near on the agenda). Is it a profit-making enterprise?

Too early for a clear margin picture, especially without a good idea of fixed versus variable costs. We can make fair judgements at their cost of sales in terms of cost of goods, any staffing, and lease costs... but we have no idea how their marketing, packaging and delivery costs are scaling with higher sales volumes.

They only because a profit-making entity capable of shareholder return if they: (1) spend proportionately smaller amounts of sales/gross profits on marketing , (2) their delivery costs are not scaling at similar rate as sales/gross profits.

I think these two unknown spends will impact gross marign and profits and therefore the ability to cover administrative (head office) costs and result in positive cash flow/profits.

Marketing spend could be estimated from new/returning customer mixes. Delivery is harder, because we need to know how it is scaling as a cost with sales growth.

Raising AOVs also addresses these issues and is more a durable lever in overcoming cost base. But raising sales without raising AOV from current level might spell trouble. So the main sign will be evidence of increasing AOV on a backdrop of increasing deliveries (will be hard to show this because new customers have lower AOVs). But I'm bullish nonetheless.

Hi BBN, this might be a useful related to your post on counting boxes/pallets/pallets per box. I've been trying to understand costs better whilst accepting a full picture is not really necessary, especially how much of the AOV gets spent on purely delivery.

https://cloudcommercepro.com/cheapest-uk-courier-services-available-to-online-sellers/

Agreed. If they can make a success of it in Paris (competing in a very strong confectionary market) then it is really a bullish sign for the future. With Cake Box, I don't entirely buy the halal angle because normally cake is halal (eggs are fine, and usually contain no gelatin or alcohol), but within Hindu/Sikh populations the lack of eggs is definitely important. Re financial loss, given that the beauty of Cake Box is that its expansion is funded by franchisee funds then I think the risk of loss is mostly shouldered by the franchisee and not the holding company tha we invest in.

On Amabala, I still think the acqusition was massively overpriced and involved taking on debt. After listening to the interview, I still believe the CEO has made an ego driven purchase, but that same ego may be what makes it a big success. He overplays the Ambala brand too much. But thinking longer term, I think the cross-selling will be good. I'm unsure about the planned Amabala store expansion, but this can be slowly tested. There is a lot of Ambala and Cake Box stores that are co-located in the same area. On the acqusition price, it's difficult to see how fast payback will be.

Offering mithai through Ambala may help with Cake Box's international expansion too. I think they should be pursuing this more aggressively (Canada and USA) sooner to improve the payback on Ambala.

I think the company will be saved by its business model, but I still need to "wait and see" or "see it to believe it" on the sucess of the Ambala acqusition. For this reason, it just remains a hold for me.

Https://www.primestart.capital/video-series/www-primestart-capital-video-series

Free sign up to view the interview.

CEO talks about Ambala and states the plan is for expansion to 60 Amabala stores (currently c20), cross-selling of Ambala products into Cake Box shops and vice versa, larger Cake Box stores to incoporate Ambala (like a double shop), and bringing online delivery and personalisation to the Ambala offering.

Interestingly CEO said that Paris expansion is expected the next few weeks, with Belgium being explored.

Https://www.piworld.co.uk/company-videos/huddled-group-hud-interview-november-23/

Most notably at around 9:15 for discussion around margins. CEO says Discount Dragon margins are 5-8x that of a normal supermarket. As the business scales, costs become lower ("once a certain level of deliveries is reached" and through reduced processing fees) leading to improved marigns. In this case we could assume - to be safe and also accurate - that supermarket net profit margins are around 1-2% meaning DD could be achieving 5-16%. Still, time will tell.

I've increased my position by c30% this week.

I think the tweaks and offers that increase AOV will pay off. If they didn't pay off, then the company can refocus on new customer acquisition and then try to nudge AOV's higher again. My feeling is that Q2 has lots of expectation (higher AOVs, increased advertising) but as long things are moving in the right direciton then the set up for H2 is really bullish. A realistic best case scenario would be H2 is profitable and combines with H1 to give full year cash flow positivity (with background of continued fast growth).

Another point is the nature of FMCG companies. These companies turn their inventories over quickly, and Huddled is a hyper FMCG. This faster churn leads to faster accumulation of cash and also reduces inventory carrying risks whilst giving rapid feedback on what product they can shift more of. I'd point to a different FMCG company, Supreme plc, who were able to rapidly pounce on the disposable vaping sales opportunity over the past few years.

Sharing an interesting podcast with the CEO (may have already been shared). Discussed of Huddled is towards the end. Some key points is that they were historically getting product from retail and national wholesalers, but increasingly it is directly from the manufacture.

https://zeuscapital.co.uk/exclusives/2955608360/

Re the buyback, some key points:

- up to 5% of the company shares, all shares to be cancelled, max price 105p

- reflects confidence in long term outlook for the group (if it then doesn't happen this creates a feeling that there is no longer confidence)

- funded from existing surplus cash resources

- broker, Shard Capital, to execute buyback. they can make purchases of shares independently and uninfluenced of the company in line with the buyback agreement

- low liquidity means that the company can buyback shares on any trading day materially in excess of 25% of the average daily volume.

no guarantee that the buyback programme will be implemented in full or any purchases made.

My reading of this is that the low liquidity of the stock creates difficulty buying back shares for the broker. For the time being, we have to assume the buyback is planned but the question is when (it will happen) and if (it can be completed). This company has returned money back as dividends to shareholders, therefore there is more credibility supporting the notion that the buyback is planned and will happen, otherwise there could be an argument for larger dividend instead (if liquidity remains a concern).

For the company itself, I think this is an attractive firm. The awards they have won are highly prestigious within the advertising agency. Their size and focus is an advantage, but we need a better idea of how variable their cost base is (to protect against downturns or contract delays) and their sales cycle seems continually uncertain. That said, Cheerful Twenty First's appears to be making good progress setting up at Cannes.

Key takeaways for me:

- Seen the pick up in mining grades continue since the end of the quarter (Q2 mined grades should be higher).

- Segun said contradictory things about inventory stockpile in presentation versus Q&A. He said in the presentation that they "can now start to blend in inventory stockpile" and in the Q&A he said that they plan to process the stockpile in H2 2026 to 2027. My view is that they already been blending (high- and medium-grade inventory). The problem remains the low-grade inventory stockpile and limited processing capacity (using max capacity these low grades would result in only c20koz). This means that the risk of any delays in mine life extension (as seen with nearly all mining projects, especially Thor's) could create extreme difficulty, if left only with the low-grade inventory, in maintaining production.

- Note no certainty has been provided about mine life extension, but he is aiming for H2 2025 (previously said Q4). I think it can be fair to assume this is delayed til at least 2026 as drilling results are assimilated and built upon plus any other delays. No new information was provided in relation to Segilola mine life extension. I believe the extension is a certainty, just the timing and nature (including when and how the transition to underground has to take place, which may result in a production drop)

- Segun sign poste satellites again as a source of potentail high-grade ore, saying over 5g/t. Based on the drill results provided (and the experience with Segilola) I think it's fair to assume the overall resource grade of the satellites will be much lower, perhaps around 3g/t. Based on previous comments we could assume at least 30koz ounces here.

- Ivory Coast aiming for MRE this year of 500koz-1Moz, but looks likes very oxide predominant resource.

Not sure how applicable the Tietto Minerals buy out is to Thor:

"Abujar gold production is unhedged. It has a current mine life of 11 years with estimated Mineral Resources of 3.83Moz gold, and there is scope for Tietto to extend this with further near-mine and regional exploration success."

Note their main asset, Abugar is much biggger with LoM over 10 years.

Completely agree those are the key metrics to watch. It is probable that DD surpasses Approved Food’s most recent annual revenue (which is well over 10 years in the making) this year, which speaks to how fast their growth has been.

Supply of product is derisked - the presence of entire wholesale B2B arm (Morris and Son) within Surplus Group also speaks to this.

Demand is evidenced by fast growth only contained by warehouse capacity, presence of competitors and Motato’s annual sales, plus macro factors like UK population growth and cost of living pressures. Plus possible future regulatory change.

Approved Food’s - a slower growing established player - has already helped to “create” the market and in consumer education.

I’m still most excited about the potential of Boop, and also Nutricircle (the massively increased cost of whey protein, for example a 5kg bag from MyProtein used to sell for £40-50, now RRP well over £100). However, it’s reassuring to know that regarding DD there is an established player who has remained in operation for a decade plus and is profitable. The two other competitors I provided links to below do not seem close to DD (one very small range and the other a terrible website with long delivery times).

Some further research on competition:

Approved Food has a turnover of c£25m, from a 53 square foot warehouse and 85 staff. They are much more advanced than Discount Dragon - but still DD's fast growth is remarkable. Approved Food is part of Surplus Group, with an interesting part of this overall structure being Morris and Son (a discount B2B wholesaler) and I wonder if DD buys any stock from here. The CEO of Approved Food estimates that there is comfortably at least £2.5bn worht of stock available to purchase in the UK each year. Currently they have around 13,000 active SKUs at any given time with a churn of 150-200 products per day. Their new website is expected in June - this may already be the one live now (I think this must be the current live one and, if so, I haven't seen the previous website) and it looks pretty good.

The CEO talks about France where he says it is illegal for supermarkets to allow product to go to waste. If the same was implemented in the UK, then this may help outfits like Approved Food and DD.

Interestingly in the first CEO interview (below), on minute 47-49:00 the CEO talks about his desire to actually dispose of Approved Foods, and it made me wonder if this was an opportunity for Huddled Group.

Dragons Den Pitch

https://www.youtube.com/watch?v=FMDVpwKry7M

CEO Interview

https://www.youtube.com/watch?v=JiTivDWwGW0

Further CEO Interview

https://www.youtube.com/watch?v=DI1Kr9is66U&t=2067s

Apologies previous post sent before I was done. Some competition faced by Discount Dragon: Approved Food, cheapfood.co.uk, clearancexl.co.uk.

Most interesting of these is Approved Food, now part of Surplus Group. They've been established for 12 years and have more than 500,00 customers. They oeprate with a 60,000 square foot warehouse in South Yorkshire with over 50 staff.

In 2015, their warehouse was processing 600 orders per day. They appeared on Dragons Den but were not successful in gaining investment - still need to watch the footage. As of 2022, their turnover was £22.5m and had shipped over 1.2m orders.

On Trust Pilot they have a rating of 2.6 stars (poor) on 63 reviews.

They offer free delivery on orders over £55.

I haven't done a deep social media dive yet, but cursory look on Facebook shows 119k likes and 116k followers (Discount Dragon has 32k and 40 (as in forty, not 40k) respectively). However, there is not much recent activity for Approved Food. I haven't yet checked more active and reflective social media such as IG, TikTok, etc but would expect Discount Dragon to be standing up well, if not beating, Approved Food.

I would recommend checking out Approved Food's website, but also Surplus Group to get an idea of how it is being positioned.

https://www.thesun.co.uk/money/20837980/dragons-den-reject-food-business/

https://www.independent.co.uk/news/uk/approved-food-entrepreneur-rejected-by-dragon-s-den-makes-millions-selling-food-that-has-passed-its-best-before-date-10084381.html

https://www.express.co.uk/finance/personalfinance/1719168/dragons-den-success-story-business-approved-food

https://en.wikipedia.org/wiki/Approved_Food

I've been doing some digging around competition that Discount Dragon faces. There's an interesting cast:

Approved Foods

cheapfood.co.uk

eclearancexl.co.uk

Yes , very strange. They said the buyback will continue until completion of the data of the next AGM (based on 2023 and 2024, likely in December). Current market cap is £4.8m. There is probably a way of using current liquidity to work out how long it would take for them to buy back 5% of the company (so roughly £240k) worth of shares.

What's caught your interest about this company? I believe it to be undervalued, but part of me wonders if this type of company will always be undervalued in public equity markets.