The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
That really has given me a good chuckle. I'm going to predict we will see 345 in the next 18 months. I feel like I'm on the path to genius now.
At this stage they are not looking at company fundamentals and all that being mentioned on here. It's simply math and how the SP can work for them. They have little exposure to big broker/investor purchases so it's just a matter of balance between their millions of units and the free float.
Shared my thoughts earlier and seem like they are pumping more into the system to help bring the SP down. Hoping that 26p level is the worst if it comes. It'll bounce as there comes a level where the algo says 'no'!
I lost a lot of money on the 'physical media' argument back when HMV popped. Really believed it would survive alongside digital. Anyway, irrelevant now since the CD/DVD stuff will always decline bit by bit each year until it bottoms out for the hardcore hoarders.
This business is not doomed. It's just not destined to be as big as some want it to become. I've seen many companies in the secondary space and all are challenged when delivering both profitability and scale. Most end up downsizing a little and then selling for a decent multiple based on a sustainable business which is cash generative and can produce YoY returns.
This applies to other sectors than just devices. Consumer driven solutions are just too hard to scale I guess.
The actual effective scale sits with the IBM GRS / Ingrams etc who you'll never hear too much about - simply a different space not dependent on low transactional volumes. Plenty of large businesses with secondary units making more margin than their primary business.
That said, I hold a good amount here now. 10-11p is seriously undervaluing the business. Whilst I do not share the optimism of others in terms of business value, I do think an MBO is a likely outcome and from there, this can be run as a lifestyle business without the hassle of additional compliance.
Personally I've factored my buying into the 20's. I started at 37 and simply bought on each penny drop. Could do without it going sub 26p mind! That run to 40p+ was something but it's been pulled back way too easily. Just have to have patience as I assume news will be a way off relating to what solution there will be ... particularly when operating within covenants.
My 10 penneth worth is…
A. ii’s are releasing shares to them and a consolidated investor structure with them taking the lead is being put in place to take private. Towards last knocking, some familiar eqt name will pop up who’s managing much of the financing/structure. There’s then a remaining share purchase which will see it sold sub 180 or lower. You’d know by end of Jan.
B. Cosmens increase sub 30% and it’s simply a money play in anticipation of dividends/special dividends outstripping any finance cost/opportunity cost.
C. There’s an approach they don’t like and they’re taking a lead in defending a potentially hostile takeover. However you’d raid the free float for that and 70m shares would have far more impact on the SP.
D. Things worse in the business and something afoot which could present them with an opportunity to grab on the ‘very’ cheap.
As I say just the accumulated nonsense running around in my head. Whatever the outcome, at least something is finally happening.
To put some perspective on this, between the asset company and express holdings, 7% of the stock has been acquired in recent weeks without an RNS on the other side showing any significant reduction from a key holder. Then at some point Systematica need to clear their 1% plus all the non-notifiables. Outlook even in the short term finally looks rather good. Well overdue!
Just watch the spread and trades. Guessing, but I don't think it's an institution dumping. Its a flush out. That said, I'd like it to have another run into the 330's again.
Personally I gave up on holding long on this share a long time ago. Nice to dip into when it gets a bit hammered and that's about it. Someone should buy it and put it on the US exchange ... listing on the UK exchange was the biggest mistake.
It's defies logic but it's simply a 'fear ' attack and flushes out the weaker holders. A 'seller' is a little more structured and a steady decline. When your CTO in a software company sells their shares you'd expect it to be managed a little better in terms of communication.
I expect a lot of stop losses were triggered this morning. I was a brutal drop. The same kind of thing happened when Poppy sold.
It's all guesswork messing around like this and don't be fooled by those who treat it otherwise.
Wow that was fast, have a shower and it's gone up 12p!
I don't see a pullback. I think some have sold waiting to buy back in but I think this time it will not present itself. Whilst someone is at play trying to keep it down, this seems to have a little more attention now.
Just an attack on the director sell. Probably needed a day to co-ordinate. Started buying in tranches from 345 as believe this will simply be back in the mid to high 300s in a few weeks if not sooner. Just becoming too predictable with their activity now across multiple tickers so imagine they will change plays soon.
Well there's a lot of thrush on these boards.
Relating to the share, once Cannacord stop clearing out along with others who built positions speculatively for a bid, I think this will re-rate pretty quickly in the new year.
The thing with all secondary market business is that at some point they get ahead of themselves believing in huge scalability and the like. They load up on overheads and margin quickly diminishes as more enter the space which is generally low cost entry business. So sticky elements are frictionless interaction which captures the product and strong sales channels across the spectrum of devices leveraging demographic 'hotspots' for certain lines.
So, have a significant overhead reduction plan in place and seek strategic partnerships to support the flow of outbound devices, reducing the in-house cost of managing consumer driven solutions which are high cost/maintenance and don't seem to be delivering on the bottom line.
The business just needs to take a slice of humble pie and focus on bottom line, not being the biggest and 'baddest' out there.
Tackle that corporate market ... go work with Restore's asset management arm which seems to be struggling with direction from outside looking in.
Shorts aren’t doing much at all at the moment. Don’t be surprised if they dump a load in here as PI surge weakens. A lot of stop losses to be triggered.
The shorters have played a good game here. I’m sure they will try and have the news feeds focus on the ebit loss.
Within covenant and guarantees put in place was what I considered to be the gamble here. Can buy the kids some socks for Xmas now.
Don't see it being a problem. Does not sound like there's a suitor and the market is reacting solely to that. It continues to be a great opportunity to buy as the SP slides. Whilst I might not believe the £50m hopers, this will climb back to mid teens and I'd anticipate a good start to 2024 for them. Just needs some patience into the new year.
I'm just gloom and doom with this share. Have them just tucked away and try not to think too much about them now. I doubt they can be much cheaper but I fully expect this to be back in the 60's again without news in the New Year. It's either the most overlooked share or we are all wrong and serious buyers have stayed away for good reason.
I was rather hoping for this to be taken private but probably wishful thinking. Probably left money on the table but sold out on Friday.
Negotiating down with suppliers is one thing but since many are small businesses and likely insure credit, I consider that the next risk faced. They don’t have much in the tank if credit insurance limits are reduced.
Bold call to move the range up. I'm going to guess the other way and say we will see the 160's again. I just don't think there's enough participation in the share and scheduled news is quite a way off. So my thinking is this only rises sustainably (in the near term) on a general flow of money into equities again ... and more precisely the UK exchange!
Probably nice prey for low level shorting and MM play for a while...and remember they will know how many shares are sat in retail at any one time.
All guesswork but at least its something to do until we hear from the company itself.
@Mikey279 - 6 times at best on a debt free basis. VC would go for 4 and hammer the intangibles on top of that. Not enough clearly defined annual recurring revenue. It's more like a trading house trying to punch out the numbers.