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Done. Added another 20% to my holding. I really can’t see much downside to this share now. Any pull back should be minor.

MCprice.

It’s a dilution which ever way you look at it. It may not be a bad one as it’s not happening out of desperation and will enable growth. But there will be more shares in circulation, it will therefore mean dilution.

It seems there’s around support at 50p and my gut says this is the bottom. But that’s not to say the capital raise won’t change that. If it’s rejected, the market may take it badly. Or if it’s approved, the dilution may also knock us into the 40’s.

I’d prefer the later as I’d load up on the 40’s as the horizon still looks good either way.

I agree, the large tech firms that have gone crazy this year, and the lines of AO etc are due a large correction. This will happen when the market returns to some form of normal in the coming months/years.

But I don’t think many boohoo investors are looking for sustainable growth. I wouldn’t call this a portfolio share, it’s a smash and grab share right now.

I agree the PE ratio is very high. Which in general can be a red flag. But a high PE ratio also indicates that the market is bullish on a share and expects strong earning growth in the coming years.

With the additional brands they’re acquired, boohoo is now more diversified and in a strong position to continue that growth path.

Shares like this don’t work on fundamentals alone. If they did, Amazon wouldn’t have a PE ratio north of 90 and Tesla wouldn’t be worth a rub!

Look at the half yearly results year on year, every measurable is up by massive margins, but at 275p we’re still trading at around sept 2019 prices. That is why investors expect this to move north by some margin. It’s been held back by bad PR, but that will blow over in time.

I don’t think the bad PR will deter their core customer base, I think that’s what the market is really waiting to clarify. If the next trading update confirms continued growth and that the bad press hasn’t effected sales, this is going to rocket.

I’m no expert. For me, I don’t see the point of taking up and share issue at a price higher than the current market price. I added another 20k shares yesterday at 51.5p as I believe this share will have a good run next year. But that’s just my opinion.

What we don’t get know. Is whether the market has priced in the share dilution or not. I’d like to think it has and that we have a support level at 50p.
But on the flip side, this could drop to 40p on the day that the share issue is approved.

My advice would be, if you’re not sure, then don’t buy into it. Sit on your current holding, IF the price dips after the share issue is approved, buy then.

This is a good and profitable business that’s on a good path, so I wouldn’t be too nervous, I’d be very surprised if I’m 12 months time this share price isn’t well north or where it is at current.

I agree that If this was rejected by shareholders, it would be deemed as a negative by the market and adversity effect the SP

I’ve also been guilty of referring to it as an RI. Hands up! Ha ha

ishum,

Because an OO is deemed fair and honest. When they only offer to major shareholders, it can adversely effect the OM price.

It is clear that Alliance want to aim for a controlling share. But the fact that they are willing to do that at the current market price, shows utter confidence in the future of the business. So this really doesn’t present a good shorting opportunity in my eyes.

This is not a capital raise out of necessity, this is a tactical move by Alliance to benefit from the perfect storm.

Whether people are ready to jump on planes or go to the cinema has no bearing on the recent share price movement. Those shares were so low as the risk of failure was priced in, so they had so much headroom and the perception is that the risk of failure has been greatly reduced.

Cine for example, even after 75% gains (115% at one point! ). Are still 80% down on the year!! When they re open; we will most likely see another large jumpy to between 80-100p. Any further gain back toward ore covid level will likely requires positive trading updates.

But, on boohoo, I totally agree with all
Your comments. This company is doing well regardless of Covid and nothing is going to stop the continuous shift towards online retailers.

Nodder,

For every 18 shares, 11 new shares will enter the market. This is called share dilution as the market value of the company is now spread across more shares. As a rule, that would usually devalue your current shares.

This one is a complex capital raise though, as usually they’re offered at a reduced price to take the dilution into account. In this instance they’ve offered them at the current market price. Which means if you were going to buy them, you’d be better off buying them at today’s price rather than 57p.

It is suspected that the price was set at this level to deter investors so that the owners can Hoover up all the new shares to given them a controlling stake in the business. This would imply that they are very confident in their future plans, which should benefit our current share price over the coming months/years.

Like many others, I expect this to head to someone near the £1 mark in January. But that’s nothing more than speculation on my part.

Hey Arnold,

Why would shorters increase their position on BWNG?

I can’t see this share offering a great shorting position I’ve the next 12 months. Seems very strong resistance at 50p.
Do you think the dilution will have much of an impact? I can’t see it myself given the RI price and the underwrite. I think the damage is already done there with the current SP

I agree, Fundamentals are no1 for me. It goes without saying I miss out on a lot of momentum stocks, but they all look like ticking time bombs to me.

The results are good when factoring in the journey the company are on. But market expectations for online retailers has got out of hand unfortunately.

Even then, I think without the capital raise announcement today, the results would have yielded a 15-20% gain. But we’ll never know now.

I’m sitting on this one for 12 months.

Building merchants. I know my local tile warehouse is staying open, so I’d imagine they will too.

Your feelings alone should be enough to get the market moving then ha ba

But a capital raise announcement will nearly always hamper the share price into the issue is complete, unless of course it represents a bargain like RR did.

The difference is how the price responds after the capital raise is complete. So it is way too early to draw comparison to SHI.

They chose a different response by slashing their marketing. Maybe it was the wrong choice, but they have a different core market than the likes of boohoo and ASOS, so it’s hard to say.

I think the results are ok and we’re they released without the capital raise announcement, I think they would have been enough to see healthy gains in the share price.

Prof, your constant comparison to SHI is so off the mark. There is little to no parallel to draw between these 2 companies. SHI has got a long road to travel to return to profitability, it’s core products are low margin and their business model is tired. They need a complete overhaul. I’ve got a small holding in SHi that I’ve locked away and thrown the key away to come back to in a few years. I think Francis will turn SHI around, but as I said, it will takes years and you drawing comparison is misguided.

Ian, I’d say it’s the only logical explanation for the RI price.

They’re not desperate for the capital, so no need to put a silly discount offer to the market. This is purely about acquiring more of their firm at what they know is a ridiculously low price in context.

The current share price in no way reflects the company performance. I think if we had the results alone today and not the capital raise announcement, this would have seen a massive gain. All very clever timing to keep the price low and make the RI look unattractive to investors.