The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Maybe in the short term. I think over the medium term earnings will continue to decline as membership churn continues and new customers sign up at lower rates
Auson don't hold your breath!
Doubt it. They generally don't take actual positions (except by accident if you read the latest annual reports!). IG takes the equivalent position in the actual market through their prime broker and just makes money on overnight fees, commissions etc. At least that's what they're supposed to do......
No not long SPD, used to be short SPD but closed at a profit.
My open here is above 5p and not that much money, so I don't really care. Plus, I don't think it's 50/50. Personally, I think it's more likely that he doesn't bid, purely because it's economically irrational – that isn't to say that he definitely won't. Therefore, I stand more to gain using my own probabilities than I stand to lose.so I'll keep it open. Plus, it keeps things interesting. If I'm wrong, I'll just be handing over my cash to one of you fine gentlemen
Then by default you think there's no bid.
I tend to agree, hence my short position – it would be massively overpaying. Only an economically irrational agent would do that. But the board included this offer in their proposal so that (i) if MA wants to go rogue and overpay, he can (and lenders would get a huge return) and (ii) they can say they involved him in the process and gave him the opportunity to bid.
Auson, of course it is. If MA takes over the business and they get paid out at par after buying in at 50¢ 3 months ago, they've done exceptionally well. If they take over the business they will have to make improvements before seeing a good return, but they could also do well. But it's not necessarily buying the debt "on the cheap" – the debt trading prices have remained low as the value of the business is quickly deteriorating. There are plenty of situations where funds buy debt at 30-40¢ and end up with nothing
Depends. All this stuff goes through the distressed desks at GS, DB, CS, Citi etc. so it's hard to get good info. May have done, though, yes.
Not sure, but probably around that level, if not a little higher. Dropped to the 40s in Jan and bondholders organised shortly afterwards
I asked for Theresa May. That's bound to send the share price to 0!
LOL
Yup, myself! I'm pretty sure hedge funds can short for themselves lol. I don't think the opinion of anyone on here moves the share price!
I don't really know the link between them – is there one? I thought Odey's short price was quite high, so it may make sense to just close it out at 2-3p rather than risk losing a couple of pence. I don't know to be honest, could've also got a little volatile and just best to close for internal risk management?
Ha, gave you a recommend for that.
All I can say is, likewise my friend ;)
Just as you are, good sir
Themiur – was in a meeting, can't post all day every day lol
Auson – I believe their short is derivative-based and may contain restrictions on closing or expire at a certain point, meaning they have to buy shares to close it in the meantime. It's pretty common practice. Once they can close the derivative position, they will close both at the same time
KNIGELK – not that many short as main investment method. Although, companies like IG and PLUS500 have made such practices easier (but have turned it into semi-betting rather than investing). Even people in my industry don't bother with shorting or even individual longs. Personally, I just go long the S&P500 and short individual names (with the occasional individual long). That allows me to benefit from stocks going up in general and also allows me to profit on my interest in distressed situations. Going short is always risky (as your gain is capped at 100% and your losses are theoretically unlimited) and needs strict risk management discipline!
themiur – I am short here, as I've said many times, but not in any major capacity and at a price level above MA's potential offer so I don't really care what happens. I do not claim to know exactly what will happen, just as I do not know that Elon Musk won't come in and bid 100p for Debenhams. It doesn't mean that's economically rational or likely. My point has always been that a bid from MA needs to include taking out the debt at par, which would be over-paying for the business. You keep saying "MA knows the value" and if that's true – meaning Ashley can make it worth more than it is today – it still makes sense for him to buy it as cheaply as possible. Otherwise you're relying on him giving you a handout.
Auson – JPM I don't know, but Odey was covering short
officemanager – I'm sure there are others on here who work in the financial sector lol, it's not a particularly uncommon profession in London. I started to post on here because PIs get burned way too easily in distressed situations as they are never given enough information about what could happen, what legal rights are available to various parties etc. If you don't like my skeptical tone, then you don't have to reply. But you'd do everyone a favour if you stop acting like a child
It's not about protecting an investment. The investment has been terrible. The shares have declined 90%. It was a terrible terrible financial decision by MA. All that matters now is the future. He can own or control DEB in many different ways if he wants to (many of them don't require him to bid at 5p). Or he might not throw good money after bad and just write it off. You seem to be so adamant, but the truth is you don't know. You don't know him, you don't know how he thinks and you don't know what he's going to do. Of course, if he turns around and bids, you'll turn to me and claim you KNEW it was going to happen. But he could just as easily walk away
You keep saying it's so easy for him to cough up the money. He has the money, sure. Will he overpay for something just because he wants it? Who knows. All I'm saying is that he's either going to bid or participate in a rights offering (pursuant to DEB's RNS on Friday) or he's going to kick and scream as lenders take the business. He's probably not going to launch some hostile tender offer for your shares, as it would be way too high-risk
They have no restriction on price as they last bought shares early March 2018 (as was established last week)