Member Info for BrokeNSmoke

PP1 - Most of us invested here, including me, wanted to see BOO improve margins, not chase growth. I was happy that BOO has been working on their margins. The pandemic brought so much revenue growth to the business, if a decent margin can be sorted than a reasonable EPS can be attained even if revenues stay flat or decline a short amount. This is whilst in middle of the current bear market. It is likely that when macroeconomics shift, so will the growth and sentiment side of the business too.

Come the next TU I will be interested in the revenue figures, but I will be more interested in what they have done to improve the margins and whether liquidity have improved or declined since the last TU( taking into considering investments into REVB). These are the things that truly matter and will inform my decision to continue holding or not.

Like I said I’m not ramping, I am simply calling you out for cherry picking figures in order to put a negative spin on the situation.

Again this is disingenuous as plenty within the FTSE 100 itself are significantly down from their highs, the whole market is in a bear market not just the AIM. In bear markets most investors tend to stay liquid or go for very safe too big to fail stocks, basically safe harbours to ride out the storm.

I look across the UK stock market and there are loads of good medium to small cap stocks being decimated across many sectors, plenty which released decent TUs. Its not a uniquely online fashion issue which you are making it out to be, which is the problem I have here.

I have no idea what BOO's next TU will be and as per my previous post I'm not expecting any turnaround anytime soon, i.e I'm not ramping here, but I don't like this singular online fashion problem narrative you are trying to build here.

PP1 - I'd argue that seasonal variation will come into it here re the dip. I am unsurprised that bricks and mortar retail sales would be up during the summer hols. A YoY comparison I think is better suited here, for example look at Next PLC's YoY online vs retail sales.

'No institutions are interested in buying Boohoo. Boohoo is out of favour with investors. There are 1.3bn shares in issue. Mike Ashley may put the price up because of what I call sucker buyers. Then the share price comes back to reality.'

Your being very disingenuous here. There are a ton of UK small cap stocks being punished by the market right now. You cant just point to one and go, clearly this business is out of favour with investors when most of the market is a sh*t storm. I'd argue that the fact that we DO have big buyers interested is a point in our favour in terms of positive speculation.

Alex - I agree with what you said with the exception of online being niche. While the official online to offline sales figure stands at 26%, clothing within that niche is significantly higher. The bricks and mortar side gets propped up things which you would expect to be lower, like groceries, food vendors, car sales etc.

Agree with the overall sentiment of it being cyclical and needing to be patient though.

Pedro - to be fair didn't Mr Buffet go on record like a month ago about the UK looking unreasonably cheap and would be looking into picking up cheap UK investments?

Ronny - I suspect your right and they haven't been the low cost manufacturing base that they once were. They have had a middle class slowly growing there so a slowly increasing cost of labour and additionally they have been burning through their human capital and are left with an ageing population and a disillusioned youth. Its likely wrong to completely count them out since they are such a large % of global GDP in manufacturing, however, other countries do appear to be nibbling away at the mantle, like Vietnam and India. I think the CCP is probably aware of its vulnerabilities and its growing aggressiveness is it trying to pivot strategy. You are right about the rare earth argument and the west being blind to China's ambitions, the west should of changed course when IP started being stolen. At least its a mutually leveraged situation with China needing the west's silicon manufacturing capabilities and its software. Its been a tinder keg for a while now.

I can understand why investors are spooked.

Readon - Yeah, analysts have been warning about the China debt crisis for a while now. I feel like I have been following the unfolding story for ages now so kind of thought it was already priced in. The market is always more fickle and reactionary than I think it will be.

'MA may decide to put on hold any further investments in any companies,to conserve cash ,in what could be a troublesome period. This could carry on dropping for some time...'

Or he may see opportunity where others see fear?

Ah sorry, I wasn't in NEX in 2020 and my chart is showing £1.15 as the low. Thank you for the correction

Lol it was like the £1.15 range, which is probably why people thought this was a steal when it went back down to those levels.

Reardon - I don't see any bounces coming soon. The whole market seems spooked.

I cant tell what is driving it but it appears like a full market crash is being priced in and people are panic selling.

'I offloaded £70k at 4.28pm... I think this is an AA - too much debt I am afraid...'

I cant see any £70k sells at that time? Sus.

Realistically, how low can this go. We are well below NAV point, what like just over a third? The last trading update showed liquidity being fine with increases FCF and lower gearing.

Not saying this wont go down further but I am not panic selling.

I think there is more to this than just the trading update and II selling up. This week my portfolio looks like someone has a fetish for the colour red. My stock seems to have conspired together and formed an Olympic diving team.

Best I can see is:

Rumblings about further rate increases

China's debt crisis

Effing Michael Burry going taking mass put options out

Anyone have anything else to add to the list?

Pearls - I would argue it depends what you want out of S4 re the golden share.

Yes getting rid of the golden share may see some SP appreciation but it would also put us at risk of a takeover. This may be good if you are wanting to see some SP recovery to sell, but as a long here, I don't want to see my investment scooped up on the cheap by a vulture capitalist and be forced to sell.

Personally I want to hold S4 until 24/25 and see what matures out of it.

PP1 - I disagree that REVB is BOOs only method of growth, I think they could achieve it organically with better market conditions. They have a wealth of good IP, they just need to leverage it.

All – Maybe lay off PP1 a bit, maybe some of his figures were off but I don’t necessarily think his insights/opinions were wrong. You guys kind of went full on attack mode. I suspected he was he for nefarious reasons in the past, but his posts have seemed somewhat well balanced of late.

Hex - 'I just don't get the logic unless you think they are going to raise funds later when the sp is higher and so make a profit on the shares effectively (at shareholders' expense).'

Wait why would it be at shareholder's expense? Surely if they were to buyback and then raise funds later, lets say to same amount of shares. Providing you don't sell then if anything, existing shareholders wealth would be increased as we would have raised additional equity and still own the same proportion of the company for our shares?

I don't think its on the cards, but I do think it would be one strategy to maximise shareholder wealth.

Ouch - Sorry to hear you peeps are down so much here. A bit less for me – 15% down now.

The trading update we had wasn’t horrific, I mean lowering of guidance is never great but the financials still seemed good to be and it was mentioned that the weighting was going to be more towards H2 due to the usual seasonal variation. It really didn’t warrant a 40% drop so there’s more going on here. I suspect its more wider macroeconomics with equity sell offs along with all the uncertainty here and a dash of lost faith in S4. S4s communication hasn’t been great, and it feels like they are limbo with SMS’s health and his successor and the lost faith coming from S4s reduced growth and the poor ROCE.

I’m not going to give advice here to anyone else, but I think the fact the fear is taking hold and people are almost at panic sell stage, to me is more a sign that this is driven by hysterical sentiment rather than an objective look at the company. The company’s liquidity appears fine with a decent balance sheet so I am not concerned about this going to zero. The financials are still moving in the right direction.

Additionally, one of my main fears about my other UK stocks trading well below NAV point is the potential of a hostile takeover, especially from US\Saudi rich equity funds, but the SMS’s golden share reduces that risk somewhat.

For me this is a stock to forget about for a while, until the next trading update at least.

GLA – I hope you recover.

Oke – I don’t fault your logic, I just can’t see a buyback happening mate.

Time and time again when BOO has had cash in its pocket, it has wanted to acquire more IP. Additionally, every recent strategic move has been REVB related, I don’t think it’s a stretch to assume this latest move is also REVB related. I think getting REVB is central to BOOs strategy of a fashion/beauty powerhouse.

Why pay a premium on entice ex-founders to sell? Because it would be a premium on close to all-time lows. It would still be a great deal for BOO.

I know they pretty much control at REVB at the time being, but I suspect they want 100% of that juicy margin.

You could also be correct on a full premium listing ofc.

Ah ok thanks for the correction T4G, didn't catch his twitter only the RNS.

PP1 - I personally think your on the money here. All the strategic moves lately have been REVB related so a full acquisition makes the most sense re the broker. Also killer time to do it when REVB is so beaten down. If it transpires that this is indeed what is happening then I wouldn't be surprised if there had been back room deals with the primary shareholders and management team.

Also as you say, BOO should easily have the cash to pull this off.

Interesting time to be a shareholder with this and the USDC going live.