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I wouldn't say these forums represent the feeling of the market. People say all kind of crazy stuff that has no bearing on reality. Those saying 30p might as well be saying 3p, it isn't based on any information rooted in reality.
IAG, like other stocks is correlated to quarantine restrictions being lifted and a vaccine. Once the market starts pricing in that airports will reopen and air travel will resume, this stock will rise hugely.
Great rise this. The market is pricing in the fact the shares may never again be this cheap with the rights issue fully subscribed.
Maybe those waiting on the sidelines for 60p pipe dream will miss out due to their greed.
Best to buy now and enjoy the inevitable rise. The sooner the better.
Lots of chat on this board is about a vaccine as being a silver bullet for epicentre stocks like Cineworld, I am also a champion of a rapid test being possibly a stronger silver bullet than even a vaccine, but there is a third 'event' that could prove hugely beneficial for epicentre stocks, namely, the realisation that a second wave is simply not going to come.
This conversation with Dr Mike Yeadon from Pfizer is very interesting indeed, watch the video below:
https://www.youtube.com/watch?v=Su0wMysBYPM
The key tenets of the argument are as follows:
1 - The initial model by imperial college wrongly assumed that because COVID-19 is a novel virus, that nobody would have any innate immunity to it. However, there much evidence against this. 30%-50% of people innately have circulating T cells which provide protection. This means herd immunity can be achieved with a much lower figure of viral circulation than first thought (as low as 20%). This is backed up by the very low number of hospitalisations and deaths despite the surge in 'cases'. Sars and Mers were one wave each.
2 - PCR swab test are producing a huge number of false positives. The false positive rate is 10 times higher than the virus prevalence rate. The UK government has already revised its PCR protocol so 'weak positives' are retested as they may be erroneous. This is a huge U turn in policy and has been kept quiet in the media. This is significant as if it wasn't for the constant media attention on 'cases', we would make the rational conclusion that the pandemic is effectively over.
In conclusion, if this is true, and it seems as though it is on current evidence, governments will be under more pressure to reopen society and this is very good for epicentre stocks, including Cine.
National Express is one of my biggest holdings. Why was it priced near its March low last week? I always thought that was strange given we are now nearing the end of the pandemic.
The decline in share price since the rights issue is very disappointing, but is largely reflected across the whole of the tourism sector. I am also invested in Easyjet, Carnival, Dart, Whitbread, IHG and many other tourism stocks and all were battered over the last couple of weeks. This is lagely due to one thing, government restrictions. Virtually every country is now quarantined. It is nothing to do with consumer demand for flying, it is to do with consumer demand not to be quarantined against their will for 14 days just for travelling.
In my view, this situation cannot last and is like a tidal wave being held back. Rapid testing or a vaccine will break it.
In a years time, people will look back at this time of maximum pessimism, maximum quarantine but very close to vaccine/rapid testing announcements and wonder why they didn't buy in at 90p.
Rarely has something so seismic for markets, namely, the return to normality, been so predictable and profitable.
@Esrjm222
I didn't say normal capacity, but much closer to normal. I think there is actually significant pressure on governments to allow all those activities to happen. Not least that they are being considered by other countries already which would make continuing closure of these crucial industries politically unacceptable. United Airlines for example are already in the processes of introducing similar testing as is Al Italia.
There are three events that would trigger major upside for epicentre stocks:
- Announcement of an effective vaccine
- Rapid testing along the lines mentioned in the article
- A change in strategy regarding case control e.g. if deaths continue to remain at very low levels despite more cases, the government will be under immense pressure to reopen society may instead focus on shielding the vulnerable whilst allowing the virus to spread amongst under 60s with no underlying health conditions in a controlled way. This would probably only be considered if the first two were not imminently expected which they are.
With everybody focussed on a vaccine as the silver bullet, the media and also the financial markets have overlooked what I consider the more likely candidate to end the lockdowns, namely rapid testing.
German pharmaceutical company has developed a rapid covid test that can test large volumes of people accurately with results given in just 15 minutes.
https://www.cnbc.com/2020/09/08/qiagen-to-launch-rapid-coronavirus-test-it-says-could-be-used-in-airports-stadiums.html
This would allow cruiseships, cinemas, stadiums, bars, and of course airlines to function much closer to normal capacity. Anybody with covid would simply be turned away from the entrance, those on the plane would have all tested negative moments before. This has the added bonus of appealing to anti-vaxxers who seem to make up roughly 20% of the population and also no side effects which may put some other people off a vaccine. It is clear to me the market is not pricing the development of rapid testing in, especially for IAG where long haul flights maybe the first to benefit from this development. If you look at the performance of airlines from around May 14 to June 7, when air travel was pricing in a return to relative normalcy, share prices roughly doubled.
What I am personally doing is investing heavily in UK epicentre stocks - Airlines, industrials, big oil, hospitality, retail banks, leisure and the likes. Some are priced near March lows.
Nice portfolio, with huge upside when we come out of this. I looked at First Group, Stage Coach and RR but was worried a bit about high debt levels.
Aviva is one I am looking at closely, and also the builder MJ Gleeson.
@Kevc100
I also hold Bodycote, SSP and Cineworld.
My strategy is basically a UK index fund of epicentre stocks (stocks battered by lockdown which would materially rise in valuation should a vaccine or rapid testing be introduced). The biggest positions are IAG, Easyjet, Carnival, National Express, Meggitt and Whitbread, all others are 1-2% o the portfolio each. I did previously have a balanced portfolio including US tech but sold that down and ploughed profits into these. I'm currently at +28% from 6 April which is in line with the SP500 since then, but with a return to even June prices my fund should be at +60% at least. A return to pre-covid prices would be well over 150% but that is only realistic once a vaccine or rapid testing re widely implemented, something which is more likely than not to happen by the end of next year. Remarkable returns, and the diversified nature of the fund reduces the volatility somewhat.
I reduced my holding slightly but am holding a sizable proportion, I feel the worst news is passed and lenders will likely waiver covenants.
I think the important thing with corona battered stocks with huge upside on vaccine/rapid testing is to diversify across many investments. Some others I am invested in now include:
- National Express
- Meggitt
- Melrose
- Crest Nicholson
- British Land
- Great Portland Investments
- Marstons
- Mitchell and Butlers
- IAG
- Easyjet
- Dart Group
- Carnival
- IHG
- Whitbread
- Fullers
- Youngs
- Hollywood Bowl
- Gym Group
- BP
- Shell
- Santander
- Natwest
- Barclays
- HSBC
- Lloyds
- Greggs
- ITV
- M&S
- WPP
- Revolution Bars Group (Tiny position)
Does anybody else suspect many of the negative posters on here are actually the same person under different aliases?
I'm not criticising the posting of negative things per se, or even shorters, but some of the posts on here are just mindless one liners of negativity like:
'It is October next month, will be colder and make second wave inevitable, Cinewrold will go bankrupt I think'
or after an effective vaccine is discovered, they say:
'There's no evidence the vaccine doesn't cause blindness, bad news for cineworld, 15p finish'
@Indepthwins
I think even if a 100% effective vaccine with no side effects was announced that could be distributed to all humanity within 5 minutes, you'd be doubting its benefits.
I'm long on epicentre stocks big time, and I recognise the risk of this strategy if coronavirus was, for example, to mutate into a virus much more deadly, or no rapid tests of vaccines worked.
If I was shorting them, I would recognise the risk of this strategy was that any binary event that would materially change the outlook of stocks current depressed by coronavirus, such as rapid testing or a vaccine, could be dangerous. Epicentre stocks are still in a bear market, some priced near March lows, arguably for good reason. But the entire human capital of humanity is dedicated to changing this. Betting against humanity now has huge downside.
@Indepthwins
Why would knowing that make a difference? Track and trace is valuable because it stops those who may be infected spreading it further. If these rapid test gateways were place outside cinemas for example, nobody with covid can get in, fullstop, therefore the activity is risk free, same goes for air travel, cruiseships and even stadiums.
It is definitely a huge downside risk for those shorting epicentre stocks, or actually those invested in stay-at-home stocks. A binary event that changes the game could cause the likes of amazon and zoom to crash and signal a rapid rotation of capital from stay-at-home stocks to going-out stocks. And society wants to go out. And this kind of binary event isn't just a vaccine, a rapid test would be as effective in many ways. It is something to think about I'm sure you will agree.
@indepthwins
You wouldn't actually need track and trace for this to work, providing it was widely available enough. Those who were positive wouldn't be allowed in anywhere covered by the rapid test gateway.
If you are shorting, it is something to keep in mind as this kind of thing would materially affect the valuations of epicentre stocks, many of which are near March lows. The world has never seen so much human capital put into solving one problem. My advice: you can bet against cineworld but never bet against humanity.
This news seems to have passed the market by and is undoubtable of material interest.
https://www.cbsnews.com/news/qiagen-covid-test-15-minutes/
Qiagen, a German pharmaceutical company has developed a portable coronavirus test that provides results within 15 minutes and can handle volumes of upto 30 patient samples per hour. This would solve covid safety issues with stadia, cruise ships, airports and of course, cinemas.
Society and the markets are fixated on a vaccine being the exit strategy, but a 15 minute test may actually be the silver bullet. Anybody who tests positive would be denied entry and forced to isolate, and compliance would be high as they would know they were infected. Those who test negative could enter the ship, departure lounge or cinema etc. This would have the added bonus of appealing to anti-vaxxers who would refuse a vaccine, which is actually quite a lot of people.
In my view, the market has overlooked this potential exit strategy, my portfolio is largely 'epicentre' stocks and my fund will be on +100% for the year providing prices return to June 7 levels, +200% if they return to Feb 18th levels (unlikely this year in my view).
Potentially this could be the case but its likely just that the Cineworld shareprice is massively undervalued and seems to be pricing in all the worst outcomes. Therefore, any correction to this negative hype and the price will rocket simply due to regression to the mean and realistic value. If I was shorting at 45p, I would have closed my position, very risky given tomorrows earnings call.
@Investroid
'Short positions increasing for a reason'
This is a very weak argument. Shot positions were increasing at Tesla before it jumped 800% earlier this year and ended many analysts careers in finance. Short positions on Cine had increased before it shot up numerous times earlier this year. I know this as I have profited from said short squeezes. Its worth noting the hedge fund average has horribly under-performed indices even this year so it is not as if they know something the market doesn't.
@alissirribbex.c
I couldn't agree more with your post.
Investroid - Are you over-ramping PVOD as an alternative to cinema? It is important to consider the obvious downsides it has in the long-term. First of all, we are living through a once-in-a-lifetime pandemic event. During this unique time, there are very obvious reasons why PVOD may be appealing now, but once normality resumes, and it is a certainty that it will at some point, likely mid next year, the experience watching a blockbuster e.g. Tenet on your TV at home will not compete with IMAX. They are very different experiences. Both can coexist.
I think the question for cinema in the long-term is whether the experience has deep value, and is something people will always want to do rather like flying to other countries, socialising in groups, eating at restaurants, going on holiday etc. I have never met a single person who has said they will never go to the cinema again after the pandemic, or any of those other activities.
Alternatively, you may believe cinema doesn't have deep value, rather like commuting to offices to work every day, or doing the majority of shopping at malls instead of online. I know many companies who have said employees can work from home forever if they want to for example.
I think it is the former. I'm not sure whether you agree or not.
Hi All,
This may have been posted before but here is Mooky (Cineworld CEO) on CNBC discussing Cineworld performance under COVID-19 restrictions and social distancing. Apparently it has sold out many shows.
https://www.cnbc.com/video/2020/08/27/we-had-many-shows-sold-out-under-the-restrictions-cineworld-ceo.html
CC