Member Info for DC2007

Past couple of days this has been. Not often to see bounce of this level with such a large cap. Does everyone think this is an inflection point, or will it soften again?

It's dirt cheap and many things about it say it's Buffetesque and a deep value/contrarian play. I wonder to myself if I wasn't already interested, whether I would now view it as a buy. Suspicion of the SP, lack of confidence in one's own judgement, then paranoia at having got it wrong are amongst the internal tussles to resolve with this sort of proposition.

30% in one day would be extraordinary - happens a few times a year only on the main markets. With the prevalent sentiment for Debs so hostile, I can't see even outstanding news being met with change of this magnitude. Atb

Can't believe this was 750p *less* that two weeks ago.

Yes, somewhat nervous here Pearls. And from the rest of the market too judging by today's new slump. Expecting deep all time lows to be struck tomorrow.

Wow, the market is jittery. Wish I'd had room to add to my portfolio a couple of weeks back when this was 750p. Had a feeling this could happen. Well done to those on board.

that my buy order around 188p never got filled. Dodged a rock even though I lamented the broker-platform at the time. Never sure what to make of buys vs. sells since they can only ever be equal. The trailing yield now says this is firmly in the danger zone for a cut. At least it isn't being shorted.

Thanks for the detailed reply Pearls - good points made. I agree that you don't build a stake of 29.7% in something in happenstance or mere hobby. I'd wondered in the past if it's the estate he's interested in. A network of property that's a burden on one business could be an asset to a different company with different usage - Gym@Sports Direct, for example.

Perhaps a controlling, rather than a majority, stake will satisfy him. Much over a third would near ensure he'd have effective control for as long as he wanted; as you point out though, over 50% and control would be unassailable. I don't expect to recover much of my principal here any more, but it would be particularly annoying to have it ripped away for peanuts.

Atb

Hi Pearls,

Been reading your thoughts on an MA takeover. In your theory, where do you see current holders agreeing to sell at? How much would his % holding need to be to give him a controlling stake?

Atb

More alarmist coverage from the FT (OQ column) on Debs where the journalistic source is apparently the Mail's innuendo. Very poor quality stuff from the FT who have joined the 'destroy Debs' bandwagon.

""I personally dont donate to charity because in my opinion the only way you can truly help someone is with advice not with money"...

That warped justification just made me laugh out loud!

Those involved in the corporate governance that allowed this LTIP to be drawn are at fault. They couldn't deny him the bonus without being in breach of contract. That said, he could have refused or returned it without any such infringement. Some of the money really ought to have been retained by the company for the harder times which look to be ahead. CEO should have prudence to see that and exercise self-control by making a hard call instead of a greedy one.

Broker recommendations (viz. those of the press/magazine too) are not reliable at all. They have their own agenda of what they want to buy and sell from their own books. And how often is the price target a suspiciously round number about 20% away from the current SP? They are making it up. Following their recommendations would make one doolally and undoubtedly lose you money, from churn if nothing else.

Did you have any concern over the cautionary note the company sounded about Brexit in their results? Atb with your buy-in.

The dividend will be passed entirely - it's the only sensible thing to do. As a poster mentioned below, it was one of the reasons for my investment too (along with a pension surplus; small but consistent earnings; modest and reducing debt).

There are new accounting regulations on the horizon that may radically alter the balance sheet. These have been known about for some time though. Separately, the goodwill on the BS is now being viewed sceptically if the reports are to be believed. A big impairment charge here would weaken the BS further and leave a company with much reduced assets along with a market cap 1/3 of outstanding debt. Not good at all for covenants, borrowing or re-financing.

Can't see likely that anything will excite the SP come Thursday beyond a blip and then back to about where it is now. If there is any new bad news or news worse than originally revealed, the the SP will be battered down further to 7p. The commentator reckoning on 12-15p is wishful thinking.

I'm looking for good reasons about why the debt has been allowed to get to where it is. And an honest evaluation of Redesigned and the costs this has incurred vs. the return. Until Redesigned began, annual profits were ticking along at around £100m and debt was coming down.

Next big 3/4 events of potential inflection are: results; UK budget; Christmas trading update; Brexit. Think shorters will keep their positions open as any of these could be catastrophic for Debs.

Agreed. The results were excellent and very pleasing. Question is, will the market re-rate the SP or keep it supressed?

What did everyone make of the reports? Market has received them kindly or even a trace of optimism with the trading that has followed.

HTB is certainly relevant but I think the reason it's slumped since June is all the gathering uncertainty around Brexit next Spring. This is giving the market jitters for UK focused companies. If the economy is hit in the short-term, then the housing market will feel that worse than markets for other consumer products. To me, this explains why builders are so cheaply priced at the minute; many have excellent balance sheets and good current earnings; some sport yields that are sufficiently high as to be a yellow flag.

Cigarette smoking though is shrinking at an increasing rate. There was something about a reduction in sales this month of 3.8% in the FT. That's a lot and enough to wonder if this is a trend reversal. A major change in the trend of smoking would hugely hit that cashflow stream of producers.

There US operation was an important part of my reason to invest - diversified income streams not solely dependent on the UK economy. It's a sizable portion of revenues. Don't think the rush out of tech will benefit this much though. SP being held down by Brexit shadow and uncertainty of whether a Labour government could be formed sooner than later. Once these factors are priced out, I'd expect the SP to rally closer to true value.

The base case would be good to know. I.e. what is the typical outcome on the LSE of previous equities that have shrunk by a factor of six in a year? A solid number about what each has then gone on to do would inform the current situation.

I'd expect a good proportion of the equities exhibiting the above characteristics subsequently go bust within the following year.