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As you just highlighted and I forgot to mention...think a bid is highly likely and the opportunity cost is worth it.
Curry's received a bid from one of the most astute operators out there...that is a pretty crap business. Card is probably now quite a bit cheaper on very clean earnings now vs. Curry's...and it has real sustainable competitive advantage.
Very few positions where you can feel the upside is very healthy vs. (I would argue) a pretty limited risk profile.
In this tough market, it's my favourite!!!
Basically...we have a really big opportunity here. What is fair value? Well it certainly in my mind isn't a single digit PE, not for a business that throws off these margins (and growth)...and certainly not for a business with its competitive position / marketing leading position in an attractive sustainable niche.
I don't know where we end up, but certainly 1.50 would be a good start. interested to hear other views!
Nice to see some chat on here for once. I just cannot get my head around the lack of interest here...but to be honest, thats what makes it so exciting.
I've had many instances of things getting to extreme valuation levels over the past year and snapping back hard rapidly and near bagging. However, in terms of raw quality of business, and lack of complexity to the story, Card Factory takes the crown by a mile. At 6x earnings (potentially under 5x for january-26 YE), you get the highest margin / return on tangible equity (CF's is negative i.e. they have to put up no equity of their own to run the business and are completely financed by their payables / landlords) in the UK retail landscape. Additionally, you get one which is value focused and performingly strongly currently, with lots of growth upside in the form of gifting / baloons / international expansion. Customers are sticky, and competition is completely withdrawn e.g. Clintons + expensive crap selection of cards at supermarkets.
I find the online/moonpig debate quite funny...people who shop at card factory are never going to be spending 4-8x as much at moonpig. the obsession of the city and other people on here with online highlights why this is being so massively missed. as an earlier poster has said...you can't argue with the numbers. and the resilience of card buying has been clear for a long time.
I think you have a few big things going on here - 1) there is still a large seller, fine but that will at some point clear and so while this has been frustrating in terms of opportunity cost I don't want to miss the inevitable clearing of him which will alone send this much higher, 2) people in the city are rich males predominantly who really really do not get the clientele of card factory - more so than the different socio-demograhic, the fact +80% of card purchases are by females adds to the lack of 'getting it' and its hard for them to understand that for many people xmas might be a budget of 80 quid for 6 loved ones and card factory allows them to fill an entire basket of cards and goodies, 3) the card factory shopping experience is not appreciated unless you really travel around and spend time in the stores speaking with staff...they provide a truly excellent experience for everyone which other value retailers simply don't do - they are generally messy and grim to be in...every CF I've been into is immaculate, clean, nice lighting and staff that make you feel good; as was pointed out to me recently which I hadn't picked up on, every person who goes into card factory is buying something for a loved one...I can't think of any other retailer where every time you buy something its for someone else and part of a little emotional journey.
if I have one criticism...they have been far too slow to do something in terms of capital allocation ie a buyback with this seller around. they could create a lot of value!!
As ive said mwilliams (as someone long here)....the complexity of this business has only become more and more apparent. so many moving parts and potential pitfalls / risks...not helped at all but the sluggish consumer environment right now, particularly in tech and gaming.
i think in all honesty this could be a very long road, but a very rewarding one if a few things go right from these levels.
key is the company avoiding any downgrades this year; unfortunately, if that happens, short term this could be extremely painful as market is very concerned about structural risks to the business with AI/ChatGPT etc. And those risks...are not unfounded because quite a bit of future's content is actually pretty factual (i.e. laptop / gaming reviews...ChatGPT can do a very good job of getting people to the same answer...and it doesn't help that Future's websites are of poor quality IMO).
difficult one.
There is a lot of moving parts at this company atm...the AGM was an awkward experience with mgmt looking very very dismal and not engaging at all with each other.
i think over long run it will recover under steinberg, but not burying my head in the sand. it is a business facing not just cyclical headwinds, but potentially very severe structural ones. the hedge funds, of which there are now a good few, shorting this will have done their homework and unfortunately now I possibly think that they may have found something the rest of us don't know about. if i were to guess...its the fact they will be able to pay 250k or whatever for granular website traffic analysis...and potentially this has shown them weakening audience trends/time spent on websites etc...i have to say, post buying the share was when i really went through the websites and I was quite shocked at their poor quality e.g. Toms Guide or Tech Radar...they are truly awful.
we have to hope steinberg is the man to turn things around.
Massive massive well done to holders here....epic patience has been rewarded. I was a complete mug selling months back...the value on offer was more than clear but I was impatient.
genuinely always great to see patient investors rewarded like today! Hats off!
Great post Lorenzo and many thanks. I just hit gym and reflected on day....
There are times like with a profit warning that one can feel justifiably scared but today is just one of those true rare moments where the mr market has offered up a prize opportunity to those who know this company well...it is the most clear example of a 'paper loss' in its most real form.
re read my note, reflected on today and just realised how insane this all is.
anyone who is feeling nervous or doubtful...i'd advise to get your head screwed on here and really take advantage of the value on offer.
It really was trendz...absolutely horrific.
only in the UK small/mid cap markets could this kind of thing happen...give punters here a man at the top of a hole in the ground exclaiming there is gold, and you'll do fine here in the UK. but give punters a quality name with an infinite return on tangible capital, the highest retail margins in the market, strong LFL levels of growth, and a quality management team....and see your net wealth smashed 10%.
today has been so laughable its just absurd...like a bad dream.
really the only thing to do is to try and stay mentally strong and realise that mr market is just giving you an irrational opportunity to buy more at a ridiculous price.
Its a quant fund so not worried...surprised they are opening at these levels...but its systematic mathematical rules based fund.
peel i think released a new buy upgrade today...so assuming that is causing the uptick.
I'll jump in here as been over on ADVFN mostly for Future. Investor here who bought in the 6's earlier in the year, convinced we would never see anything like it again. Proceeded to make a ton of money and was close to selling on the day we reached 10 quid...took off a minor amount and loss most of what I'd made.
This has been a very interesting opportunity...most incredible because the trading update in September which confirmed a good outturn saw such a hard rally...and then the actual numbers were actually ahead slightly vs. the guidance given in September. Cash generation was also much stronger...quite extraordinary...the business has lost almost half its value in 2 weeks off the back of good numbers.
I was very emotional on the drop...but am starting to see clearly again now. A lot is being made of the US organic growth driven by tech/gaming...not sure what anyone would expect here...we are in the middle of a very deep aggressive tech hardware cycle...plus the broader macro picture is weak. It just comes with the territory I'm afraid and might be a while before green shoots appear.
while the company has its issues...this is far too undervalued now. By my estimate, GoCo on an EBIT basis is throwing of MINIMUM £32mm...Moneysupermarket is trading on a 13/14x EV / EBITA...so right there you have effectively nearly half the total enterprise value. it simply cannot be that the rest of the business, chucking off as it does more than £200mm in operating profit, is worth max 3x EBIT. there are issues with the business, but opportunities as well. might take a while to recover but I think this is a rare opp.
Cheers for this info - very helpful. Yup...Qube must have been absolutely hammered here. Very odd to short a company doing decent double FCF yields and possessing ownership of GoCo (at least a multiple of 20x). 2nd biggest position since this hit the early 7s and ever more bullish. Lots of really exciting news in background I thought I'd point out to you...A combination of very positive indicators for Future:
Moneysupermarket Q3
Amazon Q3
Ascential digital commerce business Q3
EA games
Other players across the gaming space….
Broader news on the gaming space including the news around. Grand Theft auto Vi
None of them stand alone massive, but in combination all bode reasonably well for a much healthier backdrop for games and consumer tech – hopefully shows through when they update early December!
We are also potentially selling the very high margin B2B units...if we get that news and its a decent multiple...this thing really will take off.
Good to see someone else following this absolute anomaly of a valuation discount...has to be one of the biggest opportunities in UK market, with Parameta worth potentially £2bn...you are getting the rest of the business for a negative value.
The Shore target of 200p is way off in my opinion...given the above and the fact that Global Broking has strong tailwinds behind it now.
Might have to be patient but paid a huge yield in the meantime.
Also you...you say massive geopolitical disruption could affect us...I tend to disagree, this is one of the few businesses out there which benefits from macro volatility! So happy days...
Very well spotted - hadn't realised they had closed out.
happy days here...unbelievable they have made it through this year with numbers in line with expectations. shows the strength of GoCo...which by the way is worth a multiple more in line with 20x (like moneysupermarket). Ridiculously undervalued here and no one on here seems to care
I'll never get my head around how there can be so few comments on such an undervalued share...it's insane!!!
Very out of the blue the chairman buying today....he hasn't been quick to in the past given his net wealth. Perhaps something brewing...
Very positive given where the share price is currently on 5x earnings...market was pricing in total collapse. This is potentially one of the most wild valuations for such a cash generating machines in the market right now. Makes no sense.
Ragnar....you put it brilliantly. The extent of the absolute slash downs being given to names who miss targets is just absolutely brutal. BRUTAL. A lot of these AIM names are cheap and then you'll see it down another 30% in a day - absolutely relentless market to be operating within.
Exactly the same here....was thinking in all honesty it would be a serious cut to sub 100 given the frantic news. Excellent to see how its performing...I guess the fact is, its the London to Birmingham leg that counts for Kier. And there is a lot of other exciting work outside of HS2 anyway.
It's a complex set of numbers to be honest....and yes it looks like numbers from Cenkos (now Cavendish) have been cut materially...
The definition of income / adjusted income has always been odd for VL...Singer vs. Cenkos always had different numbers and it looks like Cavendish are using another set now. Don't quite get it. Did anyone go to the presentation?
The best comment in Q&A was from CEO: 'we are miles away from breaching a covenant...'
what planet is he on?! it is tightening at the end of this quarter!!!!!!!!!!!!! one of the most shocking management teams ive ever seen. and he sold of course at 3.20!!!!!!