Member Info for Doodoo1987

Hi Sucafoods,

Do you have a link for this, I can't find it anywhere.

Hi Tom231,

I also had Hotel Chocolat and made similar return to yours. Hotel Chocolat was stagnant for years and hadn't recovered fully. However, the fact that the owner and CEO had a staggering 26% of the business helped a lot to make sure that the business will be sold at a fair price. This type of manipulation is common ground with small caps but this volatility provides great opportunities for real longs that buy and hold. Imho, YouGov is in a much better position than Hotel Chocolat and the fact that the major sole shareholder returned to the CEO position (I believe that a good portion of his wealth is tied to the business) makes it a very compelling opportunity. The fair value for me is more than 9 GBP and at these levels it will most certainly attract a lot of companies, as the intellectual property that YouGov owns is huge and very important.

This is great because it comes from the Chief Operating Officer, which seems that they see expansion ahead.

Hi ggplyr,

What I'm saying is that if a company pays a 7+% one off dividend, this decreases the share price by7+% and if there's no buybacks to support it, this can create a negative trajectory, see for example some ship or oil related stocks. If a company pays a modest dividend this can't happen, it will barely affect the price. If a company pays a modest and predictable dividend this is even more impossible to happen etc. I agree that buybacks are bad if a company is overvalued. But how can a company be overvalued when they return 13% last year only with dividends and buybacks? The free cash flow to enterprise value metric for Plus500 is one of a company with high single digit negative growth ahead, which is not the case. This company is always undervalued, so buybacks work all the time. Now, if you mean that the company is overvalued relative to its historic superundervaluation -Plus500 bought 8 million shares from a fund the summer of 2023 at a super bargain price- this is correct, but now the company is more diversified than ever.

Conclusion: I want the price to remain here for a long time and give me opportunities to re-invest my dividends again and again. Because at the moment and with a base scenario that they keep margins above 40% and steady revenue, they will have returns way above the market.

You should love buybacks if you like the stock, you'll pay 20% tax on the dividend and zero on the buybacks. I love buybacks, yesterday the price went down on earnings, they immediately bought 84000 shares to support the share price. Big dividends decrease the share price after the ex dividend date and sometimes this can create a negative trajectory. These buybacks will be circa 28000 shares per day. With an average daily volume of 166000 this is 16.8% of daily volume. This is huge, the stock will eventually win. Investors that love dividends are the ones that cannot properly value a stock and let it on the dividend. When you buyback stocks, you can increase the dividend next year with the exact same profit. It's maths.

Most people don't understand this business, that's why it is misspriced and helps me and others make massive returns over time and beat the market comfortably. So, the business is massively undervalued since 2019, after the run it had due to the big bitcoin run of 2017 and the fall of 2018. They always have excess cash in their balance sheet, between 800 million and one billion dollars. 550 million of these are regulatory requirements, they comfortably allocate capital with the rest. The amount required for regulatory purposes is a burden for others to enter, keep that in mind. All these money are gaining interest, 59 million was the amount this year. The return on capital employed is superb since IPO. If we hypothesize that the market will keep undervaluing the company for years to come, they will be able to buyback 5-8% of the shares oustanding every year (although they shared big bonuses this year). So, if we don another hypothesis that they won't grow revenues or free cash flow, they will be able to increase returns, because fewer shares will be shared the same profit. In addition to that, this is a crash/recession bulletproof stock because it has negative correlation with the VIX increase. If volatility in the market increases, Plus500 makes a ton of money like it did in 2020. This is the cherry on the cake.

I went through all the previous annual reports. This company had a average ROCE of 17% all the past years from 2012 to 2022. This is a ROCE of a high quality business, thus the valuation at a premium until 2021. The free cash flow of the business reached 45 million at the peak. The revenue of the business still grows with a great rate, but this is partially driven by acquisitions. The organic growth declined recently and last year it was just 2%.

Now, lets hypothesize that they miss their guided mid-term target to hit 650 millon pounds revenue and 25% operating margin (annual report 2024) and achieve 600 and 22%. The capex of this business is predictable. Let's say 30 million. So, we have a free cash flow of circa 100 million in three years time. I discount it though, because I may have made a mistake and have it as 75 million (that's an additional factor of safety). I will also discount the present value of this cash flow to 55 million due to the weighing of inflation and interest rates. According to this hypothesis, this company will maintain a ROCE of at least 15%, so the growth ahead in combination with the ROCE can suggest an enterprise value to free cash flow multiple of at least 25 (that's also discounted, I would say 30 to be honest). This means an enterprise value of 1.375 billion pounds, which means a market cap of circa 1.2 billion pounds, which translates to a share price of 10.22. This for me is the bottom that a clever leader should accept for this business. 6 pound is laughable for an acquisition. The current share price is a joy of us buyers.

The annual revenue is 50 million pounds, the annual recurring revenue just from this contract only will be 30 million pound. That's a 60% increase in revenue with just one contract. The stock is a strong buy imho for long.

It's the 4th of Feb, look at the company's financial calendar and you'll find it.

I believe that the update was pretty good, as it shows signs of stability at the moment. However, all these trading updates provide very limited information, the company should provide more information and uniformity of information in my opinion, it's not very professional this way. In addition to this, the new CEO and other people from the company or the board should also start buying the stock to show strength and faith. The company is massively undervalued, I believe that there are many potential buyers out there that would love to buy the company for more that 1.5 billion pounds. I understand that many buyers of the stock at 2021/22 resist to the idea, but this is how the market works.

So, the company is growing and is keeping its margins without problems. The free cash flow to enterprise value ratio is one of a company that shrinks. And although all these things seem paradoxical, this company is the best performer in the FTSE since IPO.

New all-time high for this gem of a stock. This stock is a stock with dividends and buybacks, a bond (1 Billion in cash yielding 59 million without even the business operating) and one of the best hedges against volatility out there. If a crash happens, this stock will make tons of money. That's why its my biggest conviction stock in my portfolio.

Wise has now partnered with Morgan Stanley. B2B going very strong.