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It’s the hope that kills you…
For what it’s worth, what has struck me from recent events is the degree of disclosed value signals I.e activist investors bringing wider visibility to the optionality value, more positive press, clearly greater informed circling of the asset. Maybe I’m naive, but in this context, should Apollo fail, then the chances of another party stepping in and continuing the momentum is I would have thought quite high, particularly as the golden share runs down. So I’d be surprised if this were to drop to 50p in these circumstances as there’s wider literacy on what the asset could realise (in private hands). But I’ve been wrong before and it’s been such a crazy ride, you’d have to be pretty brave to say it can’t happen.
219k
Again all valid points, but to private equity and the optionality this asset provides, it’s seriously undervalued and THG themselves have done some of the forward looking heavy lifting (reduction in force) and macro tailwinds will land. So it feels ok to take a bit of a gamble at sub £1. Mind you, I might have said that at £1.70…
I absolutely see where you’re coming from, but at anything under £1 a share, it’s still worth another throw of the dice
I agree. Hysteria around a 500m “loss” fails to understand or recognise the better forward signals. Of course it’s hardly knocking it out of the park, but cutting fat, optimising revenue to higher margin segments and partners, appointing smart grown ups to the Board and tightening up the balance sheet are all completely sane things to do and shout about. And macro headwinds are, or will shortly, more materially abate. I bought some more yesterday, god help me. The instagram thrashing might appear undignified to the pearl clutchers, but indulge him that given the attempts he is making to address the issues.
I always admire your optimism above your capacity to predict the future
As people on this board endlessly point out, there are multiple reasons to love this share, the trouble is, none of them ever materialise. And then following each crushingly disappointing half year reporting, we all lick our wounds, put bad thoughts to the back of our minds and 3 weeks later trot out all of the positive reasons again with a sort of cultish hope (whey prices are falling/full listing/goodbye golden share/beauty market flying/alignment of the stars) that this thing will take off. Anyway, I’m a material long term holder wishing for something positive. But it’s always manjana and that’s quite frustrating.
This is edge of your seat stuff
Objectively (and I am long and underwater), the issue seems that all of the suggestions of good news just never materialise. Of course there are multiple reasons to be optimistic, but sentiment won’t turn until something actually lands. That’s what’s so frustrating. Whey prices coming down - hasn’t been evidenced as helping, a whale is coming - hasn’t happened, beauty spend holds up in a recession - still misses, doesn’t profit warn so that’s a good sign - misses numbers. So I’m trying to stay positive and I believe there is value here, but please hurry up, I can’t be looking at this wretched board every day, I’ve got things to do.
Agree with all of this. Manjana, manjana, manjana. More fool me for being in too deep.
It’s because Ocado project themselves as a tech Co, with a sticky repeat revenue subscription model and low acquisition costs. And THG is perceived as a boring old transactional model, with transient customers you need to pay for every time. Subscription high multiple, transaction low multiple. Which is why they keep banging on about ingenuity.
He hasn’t lost anything
I absolutely agree with the point on the carry. The wrong question is being asked when it is framed as “why sell it at a discount when the best is yet to come?”. If the best is yet to come, MM is heavily incentivised to go private at a discount. I think he has pocketed a huge share award in the last year, and if it goes private, he and employees will be given a large share of the sweet equity opportunity, at a considerable discount to fair value.If a PE buys out at a discount in this market, the they will be more than accommodating on the share of the upside, as their entry level is a steal. Obviously I have absolutely no idea what the outcome will be, but I do think there’s a completely rational financial reason to pull it at a discount. And if you add to that the miserable experience to date and the loss of control once the golden share is surrendered, then it makes little sense to stay public.
The Amazon reporting is garbage. It comping against a quarter that grew 41% last year, the loss on the EV investment is meaningless quarter on quarter, it’s ad business is growing faster than Google, AWS is a cash machine, it’s thrown a ton of investment into logistics infrastructure which will come back in spades. The share price is now an absolute gift, the comps bounce back in Q2.
It’s a weirdly disproportionate story for a national newspaper around the standard pain of integrating a bought asset and then some imagined hysteria around normal working capital management.
Well, that’s cleared that up then
How will we tell?
Ocado attracts a premium valuation (though half what it was) on the premise that it licenses technology to third parties enabling the sale and distribution of food/goods. It monetises using long term recurring revenue contracts, a model the market rewards because of certainty, profitability and efficiency of growth. Ocado emphasises less that it is a transactional direct to consumer online supermarket, as the market assigns a discount to this inefficient low margin revenue. Straight e-commerce businesses which are transactional and require expensive repeat consumer acquisition or retention costs are less efficient and have less operating leverage, hence lower market caps. Hence THG’s emphasis on the importance of Ingenuity and the strategic sense in disposing of the nutrition and beauty propositions whilst retaining fulfilment on long term contracts through Ingenuity. Resulting in the share price popping. And then we can all go home.