Member Info for LorenzoLynch

Manlse,

I agree. £145m adjudged operating profit reads very, very well to me. Moreover, it shows that RCH are successfully transitioning from print to digital. As soon as this stock catches some positive momentum, I think we’re in for another rally. If not, I wouldn’t mind the SP falling to 60p, so I can buy aggressively at those levels again

Roxbury,

It looks like the shops will remain open from what I've been reading. Covid-19 deaths remain low and stagnant. Those who need an antibody top-up are getting booster jabs and Boris has just strongly implied that instead of announcing another national lockdown, if need be, the U.K govt will instead simply discriminate against 'the unvaccinated' by placing them under house arrest (just as Germany and Austria are doing; you know, those countries that were pioneers for human rights in the 1930's). He also said he'll also reintroduce mask-wearing, social distancing and star-of-David-like 'vaccine passport' checks, because even though the vaccine is clearly working effectively, the unvaccinated proles of the U.K need another taste of tyranny this Xmas. In the article that I read, Boris was quoted saying 'this isn't about civil rights', so he cares about our health, but not about our human rights. N'aww, bless his cotton socks. Get that man a nurse uniform

Usernames,

Throughout the pandemic, I've been reading reports on the Bank of England website; they're far more informative than anything you'll read in the mainstream media. One of the reports that I read on there a few months ago was about the extent at which they'd inflated the money supply in the U.K. In that report it was explained how they intended to get consumer price inflation under control, in the event that it should exceed their modest inflation target (something I'd have wagered my life on). Long story short, their plan was/is to increase interest rates until inflation falls back into line, but they're looking to do it as an exceptionally slow pace, so they're not going to hike rates in some sort of panic. Some of the increases we've seen in CPI are temporary as well, as you know. It's been a while since I've read a BoE report though, so they might have a different plan now. I'm personally not concerned about how interest rate increases will affect CARD, as I can't see interest rates rising significantly over the next 2 years at least, at which point I expect most of our debts to be a distant memory. I do, however, think that interest rates could have sizeable impact on overvalued stocks and fairly valued stocks, as even a modest IR increase can create a large rotation from stocks with low potential upside into bonds

Stevebt,

I've been a very busy man of late, but I was able to spend a few hours looking at CARD's financials last night. I feel crystal clear on the company's financial situation now and must admit that I'd overlooked one or two details previously, but nothing major. I think the main reason we haven't seen a dilution here is because Darcy has options. Personally, I think he's waiting to see how the share price performs following the Xmas results. If the share price rockets to 90p-£1 per share, I think he'll announce a dilution, so that we can pay off the remainder of the £62m (apologies Roxbury :D ) early and benefit from:

> having to pay less interest; which will go straight to the bottom line
> attracting institutional investment, which will result in further share price upside
> seeing dividends reinstated much earlier than expected
> having a strong liquidity position, so that we can implement the growth strategy aggressively
> putting to bed all of the irrational fears of a placing (many CARD investors are treating this situation as if CF is a loss-making tech company that would be issuing shares to merely keep the lights on)
>having a much stronger balance sheet, which will make the company, and consequently the share price, much more resilient in future as challenges arise

Alternatively, as you've said, the company can steadily pay down the debt for next x months, before refinancing. I'd personally prefer the former by a country mile. To conclude, I have absolutely no doubts about my holding here.

Stevebt,

Because he's assumed that if a dilution takes place, those new shares will be offered to the market at 30p per share. What I find quite bizarre is how he doesn't fully explain the implications of a raise. If - and my word, it's a incredibly big if - a £70m raise takes place at 30p per share, this is how I believe it would likely impact myself, step-by-step:

1) I would increase my holding by participating in the raise.
2) Following the raise, I would own as much of Card Factory (in % terms) as I did prior to the raise.
3) The money raised would increase the equity of Card Factory by £70m. The valuation of the company would therefore by £70m higher.
4) The market cap of CARD would increase by £70m at least, so I wouldn't have lost any money by participating in the raise.

His understanding of how the raise would affect CF investors is completely different to mine, but he's a fellow CF investor nonetheless.

Mary,

Maybe they were both expecting a 5:1 share consolidation :D

All exposure is great for the short-term movement of the share price here, but I'd like to continue topping up at these levels for the next decade, so I'm hoping that the below article doesn't attract too much attention

Mary,

Liberum had a price target of £3.45 for Card Factory in 2017, when it was a poorly ran company. At that time, Investec had a price target of £4.05! It amazes me that they have the audacity to even comment on the company after making such appalling predictions in the past

N1shares,

I think there are several reasons why CARD remains so cheap, but imo, most of them are invalid. For instance:

- I went through CF's previous annual reports the other night and I was astonished at how poorly this company was managed by the former CEO. The share price consequently nosedived, and justifiably so. That will leave a sour taste in Mr Market's mouth (just ask PFen).
- Most retails investors clearly don't understand CF's financial situation, even though it was clearly explained in the latest interim update. Alternatively, a basic cashflow forecast would tell Mr Market everything he needs to know.
- Momentum traders will be waiting for positive momentum before buying back in.
- Technical astrologers will be waiting for 'confirmation'.
- The current debt ratio ensures that CARD fails to meet the criteria of many institutions, so I imagine that they're praying CARD's share price remains depressed until the balance sheet is sufficiently robust for them to invest here (hence the de-ramping on here from various accounts).
- Dividend investors will be waiting for the dividend reinstatement.
- Highly risk averse investors will be waiting for the next set of results and for the balance sheet to improve.

To summarise, I think some of the value investors on here make the mistake of assuming that the market is full of value investors with the same level of knowledge, experience and risk appetite as themselves, when it certainly isn't. As you've probably gathered, I don't buy into the market maker theory at all. After my most recent evaluation of CARD this week, my only genuine concern (as a working man who was laid off 2 weeks ago) is not being able to buy enough shares before we see the share price revert to the mean. Hopefully, the share price remains at these levels or lower until 2022 at the earliest. Paddy, if you're out there, please come back :D

Simes20,

Ok, I see that you’ve ignored my question yet again, just like your predecessors (well, you on your other accounts). What are your holdings?

As RH has said, if the company has no prospects at all, why would anybody buy it? Moreover, the company would surely be sold at a premium, thus rewarding shareholders. Look at recent purchases of Morrison’s for instance; a ridiculously high valuation. If we got anywhere near fair value we’d see 100% gains from here imo. As I’ve said previously, let’s wait until the results in the new year before making ridiculous assumptions based on nothing, but poor judgement. Inadvertently, you’re actually making me more confident in my valuation of CF as you (a blatant de-ramper) is incapable of formulating a criticism of CF that has any substance. Where do you want me to send the card to? Moonhog HQ?

RH,

I completely agree, although I'm going to reserve judgement on whether the term loan repayments can be paid organically until we've got the results from H2. We certainly won't need to raise anywhere near £70m and I think a bond issuance is more likely than a dilution; especially while the share price is this depressed

Simes20,

When we were last engaged in a discussion, I asked you this: 'what stocks are you invested in? I’d love to know, because judging by your disdain for CF, you must have a portfolio of fast-growing companies trading at P/E multiples of 2-3 weeks'.

Can you please enlighten us all by sharing your portfolio with us?

Funnily enough, I've asked several other de-rampers (some of those accounts belong to yourself, no doubt) the same question, repeatedly, and I'm yet to receive a single response. Anyway, all the best with your de-ramping, I'd love a sizeable top up at 40p or lower. Should you succeed, I'll send you a thank you card and a gift of your choice from Card Factory

Ian,

I also think that the share price will remain somewhat suppressed until the equity raise is no longer looming over us, but I must say, I'm quite perplexed as to why the market is so fearful of a raise. Should a raise occur, as Dan90 has mentioned on here previously, it'll strengthen the balance sheet immediately. A £70m raise, for example, would theoretically result in the intrinsic value (and therefore market cap) of CF increasing by that amount. CARD would also start appealing to investors that have a lower risk appetite and institutional investors. It would also shorten the wait for the dividend reinstatement (which would attract dividend investors and even more institutions). To summarise, I think the destination for this stock is already determined, save a black swan event; it is only the details of the journey that are yet to be decided

Pfen,

Pretty much every other U.K stock I've looked at in the past few days has seen a slide similar to the one we've seen here, so I don't think we should treat it as an isolated incident. With all due respect, I think you're a little bit too obsessed with short-term share price movements. Positive news (or even satisfactory news) followed by a fall in share price = an increase in the value on offer (a very good thing, obviously, providing that you have the capital to buy more shares). In fact, it's exactly the situation that I get excited about as an investor! Imo and in the opinion of George Soros, the market is never right, because humans have imperfect judgement. Consequently, there are always opportunities to be taken advantage of. Follow the market, and you'll get the returns of the market. What's your valuation of CARD? Ballpark? You didn't sell at 90p, so it's evidently above that.

On another note, I strongly agree that the management team need to earn their bonuses by delivering on the growth strategy and by adequately managing the finances of the company. The early signs are positive imo, although I think it would be prudent for all of us to reserve some judgement until we've had a fully operational H2 of trading

RH,

That had me in tears (of laughter) :D

I’m not remotely concerned either. In fact, I’m grateful for the opportunity to top up. I thought these days were gone when the share price was around the 90p mark. I recall reading in one of the Naked Trader books that the buys and sells presented on here are useless, but the data on Level 2 is accurate, as L2 shows genuine buy and sell orders, whereas the basic data is essentially just the algorithms’ best guess

...As a consequence of topping up today. As we’ve seen for the past 12 months or so, this stock loves round numbers e.g. 30p, 50p, 60p, so whenever we fall through support, I start preparing for a top up at just above the next round number. I won’t be topping up further until we see 41p (should we be so fortunate).

On another note, I can’t say I buy into this ‘x buys and x sells today’ data at all. The share price never seems to follow the direction of this data, so surely it’s inaccurate? Are you guys using Level 2 to gather this information?

Simes20,

I don't think you understand value investing. Nobody is expecting Card Factory to join FAANGM anytime soon. Most of us invested here have done so as the company is significantly undervalued based on probable future earnings. Read this and then do some further reading:

https://www.investopedia.com/terms/v/valueinvesting.asp

Simes,

This is the last time I’m going to respond to one of your ridiculous posts, because I haven’t got the time to educate you. Let’s keep this simple: you [pretend to] have the most negative outlook on CARD of anybody on this BB and you evidently lack imagination, yet your ‘best case’ scenario for CARD in the short-term is £40m net profit per annum. Do you think the company is going to go bust, but you also think the company could realistically earn £40m per annum, should there be no additional adverse events. I don’t know what your game plan is exactly, but what I do know is that you’re certainly not intelligent enough to execute it. Based on today’s market cap of £182m, that would give us a P/E of 4.5. Your perspective summarised: investing in a proven, highly profitable company with a sizeable dividend, sufficient moat and a realistic, yet attractive growth strategy, whilst it’s trading at a forward P/E of 4.5 is a terrible idea. What stocks are you invested in? I’d love to know, because judging by your disdain for CF, you must have a portfolio of fast-growing companies trading at P/E multiples of 2-3 weeks

Paperhands,

I posted that last message in error. No idea how to delete it.

Apologies for taking a while to reply, I haven't had much free time this week. My 3 largest positions at present are CARD, BWY and HAT. Each of them are weighted between 17%-20% of my portfolio. Other value stocks that I'm holding are RCH (this was one of my largest positions until recently, but I recently trimmed quite aggressively as there isn't too much value on offer anymore imo, although Reach has one of the most interesting growth strategies I've seen since I started investing), REDD (recently trimmed for the same reasons I trimmed RCH) and DISCK. In terms of spec plays, I'm holding some DGHI (I personally believe that BTC is worthless, but should BTC's value remain approximately where it is today for another year... well... I'll let you do the maths. Look at the hash rate they should have by next summer, convert that into approx No of Bitcoins mined per month and go from there) and some PRD (I despise gas and oil exploration stocks as much as I dislike the crypto market, but I see PRD as a lottery ticket where the odds are much more favourable than the Euromillions). What about yourself?

Paperhands,

Apologies for taking a while to reply, I haven't had much free time this week. My 3 largest positions at present, by a distance, are CARD, BWY and HAT. I

Simes20,

I'm a value investor, not a growth investor. If CF recovers to even 60% of pre-Covid earnings, I'll make a pretty penny (in fact, I already have done with CF since May 2020). The growth strategy is simply the icing on the cake for me, but I'm not concerned about that now as I don't think anybody has the ability to predict what's going to happen over the next 5 years. My focus is on recovery. How is the growth strategy 'already proving to be ridiculous'? I must have missed the RNS that said it would only take 3 months for the full benefit of the growth strategy to be reflected in the income statement and balance sheet. Whatever planet you're on, please stay there