Member Info for DC2007

Another red day on the cards. After it's customary bow just before close, looking at (6-7%).

A few posters below have commented that MA has indicated what he values the stake at. When did he say this?

Atb

Hi, the third option you don't mention is holding; wait and see how it pans out. Lastcall & Hereshopin both make sensible responses.

How to proceed depends on the rest of your portfolio, your current financial position, what you intend to use your investments to fund, and what return you'd accept from an investment. Be clear about these things first and then you have a foundation for consistent decisions; risk and time frame are crucial contexts.

If you're uncomfortable at your current amount of loss, averaging down concentrates more risk in a position you're already uneasy with. If you go for it, have clear reasons why: what indicators of success or not you'll look for, where you will pull the plug if it fails. How much can you afford/are you willing to lose?

As for what will happen next, no one knows. Keep that in mind - it's only ever a guess of varying quality. The SP could easily half and half again; or it might treble. Work out what that would mean to any new investment and your current one and see how it strikes you. ATB

Great work with the IR email oldtimer. I'm pleased to see they offered some detail in the reply. ATB

Hi n1shares, I've kept telling myself the same about the profit and respective EPS. What's your reasoning for the market valuation being so low and deteriorating day by day?

To me, the market is either: (a)vastly wrong; or (b), onto something that'll shortly unravel. In the abstract, the latter is unfortunately far commoner. Rebutting this basic probability then requires reasons in excess of their nominal weight to be persuasive. I can't see enough there anymore - the bleak end described by pastyc will probably come.

Owners will be left to mull the earlier signs they ignored or explained away to justify holding. And one's own rejoinder to doubt - be patient, reversal is imminent - appears stripped of wisdom and reduced to childish naivete.

Many will be sensible to look at salvaging residual value now.

Keeps breaking record after record; still it's customary dive at the bell to go - another (5-6%) day coming.

Seems ages ago but there were a few modest BOD buys in January. Could fill their boots at this bargain price and reassure the market; or issue some RNS, or both. That'd give something positive for small investors. They're either very chilled and know it'll be rosy, or in denial But the 'do-nothing' stance is very frustrating.

After brief hope with this morning's rally, it ended about where I'd expected. Story was thin on details and lacked confirmed facts but at the moment it's hard not to see it as smoke with fire on its way. It's only going to encourage the shorters more; their recent reduction might now reverse.

Yes Boraki, hoping so, and more than anything, stabilised margins.

Hi Boraki, Interesting to note your comments about website speed. It's been a core part of the digital strategy over 18 months to upgrade the website and improve online sales. They commissioned a specialist (called Mobify) to streamline the site; it should be especially slick on smartphones and similar devices. The aim was that with a quicker, better digital offering, more 'looks' get turned into sales. Recent results do show promise with this side of the business.

October is when they announce FY results and declare the dividend. On previous schedules, it's paid in the early part of the following year. I think they'll pass on the final. That news story today is not good either; thankfully can't find mention of it in the FT, so hopefully it's just Sunday-paper talk. Even that takes big bite from the SP in the morning.

It's all in the margins and the sales mix. That's where the problem has come from. If I see improvement in the margins, I'll be a lot happier; and the £300m debt forecast for FY18 will be less daunting too. Don't see MA bidding yet; he'll keep quiet until market rules allow him to offer less, somewhere around 30-35p. Stakeholder value has been eroded for anyone that has been in this long-term. Such a shame. Next market update in October is critical - simply must be in-line with most recent expectations, or better. Anything else and the SP will be battered, along with calls for BOD change. If I was eyeing up Mothercare vs Debenhams, well Debs is solvent and profitable and likely to continue that way so it would be Debs. But both are in a sector with unprecedented turbulence - got to be better investment choices elsewhere.

Agree with your sentiment. It's like something isn't right with those in the know. Most painful investment I ever made. And own RBS stock.

What pattern is it you see that suggests a bid is imminent?

No, that's new to me. Thanks for the link. I've read it once but the article has the hallmarks of quality you allude to. I'll be giving it another read or two.

Hi Velo, thanks for your thoughts likewise. The negative value is direct from BT's latest balance sheet: book value less intangibles is -£4143bn (about -41p/share). It's good they are addressing the pension deficit and £2bn is meaningful. That contribution, and the increasing capex requirement of network modernisation, have to be funded from somewhere; the dividend maybe a more prudent choice than debt. A lot of competitive advantage is in BT, but it has to be at the right price. With the Italian hangover, rapid growth of cellular communications instead of copper, the paid-for football, they seem a bit behind and off-key with the strategy. That and declining EPS and the questions over the balance sheet will outweigh positives for the moment. This is why I see a good chance it will duck under 200p.

Velo: on the balance sheet, I couldn't ignore the growing debt, but there were other things too. The goodwill pumps up the assets; strip that and intangibles away and book value is negative. The big pension deficit has the potential to add strain to the balance sheet and the dividend (as will the debt). The stagnant earnings you point out make it hard to see where improvement will come from. This is why I think they'll trim the dividend; the SP will then decline in sympathy. I read the news of Peterson's departure as the main reason for the recent fillip to the SP.

Learningtoinvest: yes, that was my understanding of the dividend policy and how it recently changed. That change concerned me since bearish news - like profit warnings - usually emerges in instalments rather than being a one-off. I hope your stake gives you an acceptable return over the intended timescale.

leas: yes, the invisible hand is never still. For the long term investor, an average in the low 200s does not seem an unreasonably expensive buy in - good luck with it.

Agreed. The rot just does not stop. Another -3% today. The company should make a statement re. the SP; the silence about it does nothing to reassure.

The dividend is not safe and probably will be cut, let alone yield 7% for two years. No guarantee of that or anything. I researched BT a few months ago and thought it overpriced. My conclusion was that medium term it'll drop under 200p; and only something nearer 150p would convince me to look at it afresh for being too cheap. It's a lot of risk to be heavily in anything and worth giving some serious thought about revising positions and getting more balanced. Good luck to you of course.

Lack of RNS about the SP creates a certain look. So does the absence of meaningful director purchases - show confidence in the business and buy a huge holding on the cheap. Otherwise their claims of increasing shareholder value are risible. In 3/4 of a year, 3/4 of the value of the business (according to the market price) has been wiped out. This warrants comment and response from management.

MA is probably waiting for the anniversary of his 50p purchase to lapse in October 18. The mandatory minimum drops progressively after that: about 40p until the first week in December; 28p until Feb 2019, and so on. No idea how the SP has become so disconnected to the fundamentals. The gulf has become so vast though as to be probably irrecoverable. A bid is probably the only way out and salvage some residual value for owners.

N1 is correct - Debs did make a profit of in H1 FY18. A large exceptional charge helped put it well down on the previous year, but still £13.5m for the period. £6.1m of this is to be returned to owners by a dividend payment next Friday. The John Lewis news makes this seem quite good.