The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
I've sold today, having built up s take in the low 600's almost a year ago , and despite a good product ,well marketed and well supported,I have been somewhat amazed at the SP rise since then .My decision is primarily because I am risk averse and profit -oriented and feel that with a P/E of somewhere between 30 and 40 and a MC of almost £10 bill, the SP has got a good bit ahead of reality. I expect good figures for this year and excellent progress to be maintained but cannot see justification for significant SP rises from here. If I leave profits on the table then so be it , I wish continued holders good luck.
See
https://www.forbes.com/sites/amyfeldman/2023/07/31/billionaire-behind-walmarts-warehouse-robots-gains-more-than-7-billion-in-a-day/?utm_source=newsletter&utm_medium=email&utm_campaign=dailydozen&cdlcid=5d1670d61802c8c524d45722§ion=facts
The site is paywalled but you normally get to read at least one article before being locked out.
The article features what, I guess may be OCDO's major competitor and as usual In the US valued at way more than OCDO. Also worth noting is that one of their customers is Albertsons, the subject of Krogers takeover bid.
Update I've just been retracing the background to the insurance claim and I think I've found why the SP has cratered today. Imay be wrong because I've only spent an hour or so and there may be much more detail out there but it looks as though there were expectations that GRG's claim would pay out much more than the £16m shown in today's RNS see
https://www.retailgazette.co.uk/blog/2022/10/greggs-wins-150m-high-court-covid/
this article suggested the claim was for £150 mill.
I've been out of touch for much of the summer in darkest France with limited Internet access, but I haven't until today seen the figure of £16 million quoted and that's a long way from previous assumptions, so even though GRG's business numbers are good it may be that a much bigger insurance payout was being factored in by analysts.
Anybody care to add anything they know?
I've added today on the drop, which is, as is becoming common, an overreaction to sound results.Growth is still brisk, LFL up 16%, PTP up 14%, and expansion plans are on track. Divi is modest at 2.5% but more than twice covered. The figures were flattered by the insurance win which adds a one-off £16mill to the half-year earnings. I plan to hold here for a while even though at 22X the P/E is high, and somewhat anticipates the rapid growth the company is planning.
My exit point is ~£30 and I expect/hope to see that in the next year or so.
A big piece in the FT today
https://www.ft.com/content/3e0322ee-276b-45e5-8aef-76ce951fda14
For those without access, it says roughly, Drahis right-hand man is embroiled in a potential fraud based on channeling contracts through friends to rake off a percentage. If Drahi knew he's in trouble , if he didn't he's out of touch , so pretty damning either way. It also re-iterates the concerns about Drahi's debt pile and the costs of servicing it as interest rates rise.
While it may blow over there is always the chance that in order to address problems elsewhere Drahi may become a forced seller of his BT holding, and as we all know (don' t we?) a forced seller of a big wedge of stock is not conducive to a strong SP. May explain recent SP weakness
Retireguy I keep on making the point that shorts often have a function other than the obvious intention to make money as a SP falls. In BlackRock's case, it is "portfolio insurance". They hold 5% of OCDO stock long, worth at the mo. about £350 million. They know from experience that OCDO is volatile , so being sensible, they hold 1% Of OCDO "short" so that any short-term loss on their long holding is partially compensated by a gain on the short.
This also explains why , when OCDO rises sharply, they may increase their short, not because their conviction of the SP falling increases, but because the risk attaching to their "long" does.
There is NO chance of a bid for BT which places it at greater risk of interference from agencies external to the UK being approved. We are already in a hybrid war with China, Russia, North Korea... and a whole host of international rogue groups who engage in hacking and electronic blackmail. Cyber warfare is with us every day, even a cursory following of the news makes that obvious. No UK government of any colour will risk compromising our electronic connectivity by allowing control beyond these shores.
BT's fortunes depend upon a successful rollout of fibre, the reduction in costs it will bring and the long-term financial opportunity presented by an oligopoly supply of rapidly growing demands on connectivity.
That's not to say that there is the certainty of massive profits , an incoming labour government might exert price pressures on suppliers of energy, water, and telecoms as a vote-winner and Ofcom has repeatedly shown its ineptitude. Nonetheless, IMV there are better times here for the patient, I hold and will continue to do so even as I trim holdings and take profits elsewhere.
Just to say that I am cashing out here having held at an average of ~70p since buying just before the RI a couple of years ago. While I know that the more outlandish price targets here are nonsense (£7 ???) I do feel that there is more to go here but my lifetime habit of pocketing significant profits is hard to break. I am confident that RR's major income stream based on air miles-related engine servicing is almost back to pre-pandemic normal, though futuristic forays into SMR's , "green" Aviation fuel and the like have both time delay and implementation risk. The future here is at worst stable at best promising. However, RR has had a long history under various managements of failure to grasp prizes when in reach and hence I'm taking my profits while they are on the table. I suspect that the SP is at or near a short-term plateau, nevertheless I wish all longer-term holders well .
Boyo.... while I'm not a convinced chart follower my analysis based on "best guess" is similar. My view has been for some time that if/when OCDO has fully rolled out all the CFC's in the pipeline and assuming that many of the contracts are based on a lowish single figure percentage share of sales(NOT profits)then OCDO's revenues could be > £ 1billion pa and thus could justify a market cap of £ 10 bill+. That indicates an SP around 50% higher than now. BUT , that ignores any major changes in the world economy, falls in interest rates to more (recently) normal levels, execution errors and the absence of any other unknown unknowns. So like you, I have now taken some of my chips off the table, I still hold but at only 40% of my previous level and am happy to bank a profit here for the fifth time in under three years . It is by some way my most lucrative investment(punt?) in that time. I am also taking profits elsewhere and moving cash to other more stable interest-earning positions, not because I think a market crash is coming, but rather because my personal circumstances are now best suited by lower-risk investments, into which category OCDO does not fit!!
GLA all who continue to hold (including me!)
Robo yeah that's right - Shorteurope has a problem with its decimal points and remember that Blackrock is long 5% of OCDO stock so their short position is portfolio insurance, overall they will be up substantially in the last few days.
Phoenixy..... read my past posts here - I do my best to offer useful info and declare my positions AT THE TIME I take them, setting out my investing logic, I hold here and the evidence for that is visible. To that end I will report that I have sold 30% of my holding here into the latest rise at a substantial profit, Tho' I still hold a four-figure number. I have learned that taking profits, even if it means foregoing potential greater profits in the future is a sound strategy. Had you bothered to review my past posts you would see that I have been at various times profitably long here and I am again.
I also feel the need to call out posters whose posts are inconsistent, inaccurate, and TBH, probably untruthful, so that others are not unduly influenced by them. A brief review of your posts showed such inconsistency of view, with misplaced gloom followed by equally improbable optimism.
I leave the board to you to reply, I will not, as I do not engage in long-running squabbles.
best wishes .
Phoenixy.......
" OMG! My average is 720p and at this speed might breakeven this week...lol"
Your post of 1 Nov 2022
"I was scared when I bought initially around 400p with all the doom and gloom, some are scared now buying around these levels..."
your post today
Need I say more ?
Good find value.. I posted here on 31 March that the only outstanding claims were by OCDO against Autostore and they appear to have taken the pragmatic view that a mutually agreeable deal is better than a drawn-out court battle. The £200 mill is handy cash in the short to medium term and we may be near the point at which OCDO can fund the rollout of CFC's from cash and revenues. As a former holder and well-informed commentator are you contemplating buying back in? OCDO's history has been littered with false dawns but maybe just maybe....... ?
Hi Mapper, AFAIK once shorters exceed the 0.5% threshold they are required to report all position changes within 2 working days , so if you're interested you can have some idea of the price level at which they added or reduced a position, tho' with the intra-day volatility of OCDO that's not easy. It is also worth remembering that many /most? shorts are not naked , it could well be that the holders of short positions are using it as a hedge to a larger? long position in a volatile stock. I have a family member who spent ten years working in a hedge fund and he learned and passed on to me some of the complex positions run by "quants". What I describe above is typical of the sort of complex positions they create and manage on an hourly basis.
Volatility is their friend and OCDO has that in spades.
Mapper.. it's not quite that straightforward. Holders of a short know what their break-even position is and, initially it is, approximately, the price at which they borrowed and then sold into the market. As the SP moves up their position worsens. but, if they borrow some more and sell on their break-even rise, thus diminishing the risk of loss though increasing the stake in the bet.So for short holders, it's essentially a defensive move, forced by the "wrong" direction of the SP .
Do a little mental exercise with simple numbers to get your head around it, or think of it as the shorters equivalent of "averaging down".
if that's not clear I'll set up a small-scale example to explain.
The usual simple and clear statement from 'spoons, illustrating a near-complete recovery from the pandemic lows and signs of steady progress since early 2022.
quite what the free cash flow will be is at the mo' anyone's guess because of investment in rationalising the pub estate and whether the CFO (one of the best) can repeat the swaps wizardry.
My estimate is FCF from ops of ~£500mbut how much of that is ploughed back into debt reduction and estate improvement is an unknown.
Happy to hold for an exit above £10.
PS Jonn's stuff is almost entirely discountable, 'spoons are the most reliable investment in the pub space.
What's the relevance to BT ?
Well, Hermes who run the BT pension scheme owns 8.7 % of TW. I have established that they bought a 13% stake in 2012 and that in 2006 Kemble (the TW holding company in an astonishingly complex structure) was deemed to be worth £8bill.
So , I guess that the sum invested by the BT fund was something like £1bill (+/- 20%). Even before recent events , the value of that holding was probably down considerably and , worst case will tend towards zero, esp. if the gov nationalises it.
However, given that the total value of the BT pension fund (at June 22) was £47 bill and that it fell byover£10 bill in the previous year the current crisis is a drop in the bucket!!! (geddit?)
So have another cup of decaf and relax, no need to sell BT today.
Mapper re your 14.12 post .
It's not unusual for different "profit centres" within an organisation to have contradictory positions, one holding another shorting, they may well have different timescales and conflicting views, indeed legislation makes it illegal in may circumstances (eg acting in a takeover or bid situation) for them to communicate or co-operate , equally, it may be that they run a more sophisticated strategy, such that movement in either direction nets a profit.
Mr Maker - that's the point, the lender will get back the value of the shares he lent, ie he is no worse off than had he held and has received the 2/3/4 % "loan fee "he charges.
simple example
An investment manager (IM) lends 100 OCDO shares to Smart shorter(SS)price at the time 500p, IM charges the shorter a 3% commission, so SS pays IM 500X100(+3) =£515.00.
SS then sells 500 shares in the market at 500p nets £500
If the shares fall to 400p and SS decides to close he buys shares in the market 100X 400p =£400, and returns them off book to IM, makes £500-£415=£85 profit, IM retains the £15 and has his original shares back even though they are now worth less BUT he is still £15 better off than had he merely held the shares through the period.
If the shares rise to 600p and shorter decides/is forced to close he buys the shares in the open market and returns them to IM.
IM has his original shares now worth more and retains his £15 fee he is £115 up.
SS is down £600-(500+15)= £85
Whts in it for the shorter?
Well, if he gets it right, his profit is £85 on an initial outlay of only £15, about 570% up if he's wrong
he's down a similar percentage so it's a high-risk high-reward play.
For the IM its a steady revenue earner with no more risk than simply holding the shares.
hope that makes sense and the sums add up !!!