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Well what can I say? No sooner than I made my excellent prediction the price started going down straight away!
TRINNY, I'm keeping a close eye on the share as it has the potential to be a multi bagger. Also there is so much confirmation bias on this board that I feel it is my duty to balance things out a bit.
Look matt, you're the one that is invested for the longterm. I don't currently own any SIG shares. I expertly sold at the top of the market.
Your plan to just hold and hold could seriously backfire on you. The least you should do is buy the report and let us all know what's in it for free. There's a lot of people on this board who have gambled on the SIG share price going up and it would be useful for them to learn a bit about the insulation market.
No I haven't read the report. I got my information from the brief synopsis. I'd appreciate it if you or someone else could buy it so the rest of us could gain a better insight into the insulation market for free.
As for Morrisons, they've got too much debt for my liking. That said they've been profitable now for several years. The same can't be said for SIG.
2016 £122m loss.
2017 £60.2m loss.
2018 £17.5m profit!
2019 £124m loss.
2020 £139m loss.
2021 £10.8m loss (projected).
Their previous record and projected future profit does not fill me with confidence.
Melseth, what is it that you have against your fellow posters? Just because mobs rationale appears to be a simplistic 'investors invest' there's no need to be hard on him. OK, he might be a bit sheeplike in thinking he should invest just because CD & R have used a tiny fraction of their huge fund to gamble on SIG but that is no reason to criticise him.
matt, forgive me if I don't take your word for it and prefer the advice given in the report I listed. I was surprised when I read it and would be grateful if someone would buy the report and let us all know what's in it for free.
Fair play to you for outlining the fact that there is going to be a lot of insulation required in the coming years. However that is not a good enough reason on its own for investing in SIG.
The main question all of you that have gambled your money on SIG have to answer is how is the share price going to go higher when the profit margin is so low? it is profit that drives a share price higher and SIG are sadly lacking in that regard.
Would you pay £579m to buy a company that is projected to lose £10.8m in 2021 and only make a profit of £10.8m in 2022?
Would you buy a company with a net debt of £239m?
These are some of the issues than concern me as a professional investor/trader. I can't possibly make a case for investing in SIG given this backdrop.
I'd love it if someone could destroy my argument but know they won't be able to.
Mobs, I think you'll find I post very regularly no matter what is happening to the share price. Some may say I post too much. A short term rise in the volatile SIG share price is nothing for me to be scared of. If I get things wrong I'll be the first to admit it.
So far my record has been exemplary and I expect it to continue that way.
2rei, on your other point the share price has risen recently due to irrational exuberance. A few days here and there is irrelevant. It's the bigger picture you should be looking at. A 20% fall in the last few weeks especially after a trading update is nothing to get excited about.
I've given plenty of reasons why I hold my point of view. No one else has explained why the share will rise considerably. It seems to me this board is full of gamblers who take a punt based on the flimsiest of evidence then cross their fingers and hope for the best.
Not what I'd call trading/investing.
2rei you do make me laugh. May I remind you that I predicted a 20 to 30% market correction by the end of September not in September. So far my prediction has been absolutely spot on. SIG is currently down 20% from its recent peak and we've still got 10 weeks to go until the end of September. I'd say my predictive powers have been brilliant so far.
On the wider market I correctly predicted the market top in May months beforehand. I'm still certain the main market will end up down 20 to 30% by the end of September. Its currently trading sideways at the moment getting ready for the fall. Another brilliant prediction.
I've also predicted the biggest boom of all time over the next 5 years. As you can see the doom mongers who thought Covid was the end of the world have been shown to be clueless and its another brilliant prediction I've got right. The economy is booming and will continue to do so.
Another brilliant prediction was that we'd experience a housing boom. Hello. If you can't see that's already happening as well there's something wrong with you. I'm making £500 a day just in capital appreciation on my housing portfolio and I expect this to continue for the next 5 years.
All in all I'm feeling very pleased with myself and it would be nice if just one of you congratulated me on my stellar record so far. I'll be dishing out many more pearls of wisdom over the next 5 years before the massive bust that will occur in 2026/2027. I'll be explaining how to make a fortune when this happens by shorting the market and selling everything before the crash.
I can't say farer than that.
Has anyone bought this report? If not, I'd be grateful if somebody could do so and then share the information in it with all of us for free.
The key take away from it is that the insulation market is expected to decline next year by 14% compared to this year.
https://store.mintel.com/uk-thermal-insulation-market-report
When I worked for Keyline Insulations, SIG were very worried about the competition they could pose. They were part of CRH and had very deep pockets and an extensive builders merchant network. Subsequently Travis Perkins bought Keyline and changed their specialist branches into CCF. Minster came on the scene. Suddenly all big builders merchants became very interested in insulation which drove SIG's margins down. No wonder they've struggled a lot for many years.
I would imagine over the last 23 years, competition has intensified a lot more especially with the advent of the internet. I've come to the conclusion that the glory days of SIG are well and truly behind them as everyone now sells insulation and the product has become to a large degree commoditised.
I'm also of the opinion that SIG will only regain market share by cutting prices and hence their margin. This is not good for shareholders as its the profit a company makes or is expected to make that drives the share price higher. I just can't see SIG becoming very profitable given their poor history and the competitiveness of the market they're in. They strike me as a company that will do well just to break even.
However I'll be keeping an eye on them to see if they can turn it around but won't be investing until 2023 at the earliest. And if i do ever reinvest, it will only be with money I can afford to lose.
Notbot that is not a bad strategy. It's not for me as I consider myself to be a trader not investor (not a day trader). If the company does well it will be a multibagger. You'll need to hold for the next 4 to 5 years for maximum benefit. I'll be providing regular updates as the years go by.
Just make sure you're gambling with money you can afford to lose.
First I have to say it's 23 years since I worked for SIG so bear that in mind. When I worked for a supplier to the company they had extremely strong links to suppliers. I would say they were very powerful and all other competitors were at a price disadvantage. You could almost say the tail wagged the dog. As a supplier I was always aware that SIG's competitors weren't happy that they didn't get as good terms. It felt like there was a bit of arrogance from SIG and they made it plain that they expected to win the big orders and I was expected to support them on price.
When I worked for them I didn't think the way they operated the business was as good as it could have been. Each branch was its own profit centre and almost viewed any of the other branches as competition. They didn't work together very well. When I was a supplier I was involved in a huge fire protection board order for a job in York. In theory this should have gone through the Leeds branch. Instead it went through their Kitsons branch in Lancashire as that was who the subcontractor dealt with. So you had the daft situation where a lorry from Lancashire would travel to York instead of using the local branch as they wanted the sale. Not an efficient use of the transport fleet. This was a regular occurrence.
As I said, all the branches viewed the other branches as competition and were loathe to help each other. Many branch managers had frosty relationships with each other. I reckon this setup cost the company a lot of business. For example I got an order for plasterboard off a big company that hadn't used SHI Leeds for a long time. I did the magnanimous thing and passed it to the Lancashire branch. Because the subcontractor wasn't one of their customers they didn't treat the order with respect and didn't deliver the goods on time. This meant that I lost the big company as a customer as they weren't prepared to give us another chance. Customers only liked to deal with their local branch as they knew if an order got passed to another branch it may not get looked after properly.
More to come later.
Luckily for you I also worked for a supplier, 2 competitors (CCF and Keyline) and 2 subcontractors. I'll give a detailed opinion of what I think later today. All questions welcome.
Given mine and Melseths's background I'm amazed that no one ever thinks to pick our brains. You've all got an inside line on the company and none of you use it.
Crazy.
Not a great start to the week. Looks like the trading update has had the opposite effect most people were hoping for.
At least those of you that took my excellent advice to put a stop loss in place will be very pleased with themselves at the moment. If you remember, I predicted a fall in price by 20 to 30% by the end of September. You'll be pleased to know that my prediction has so far been spot on. We are currently nearly 31% down from the peak. I also predicted we'd end the year at around 40p. I'll be the first to admit I may have been a bit optimistic there. Time will tell.
A thank you would be nice from some of you that I've saved loads of money. What are you waiting for?
You should change your name to Recession.
Mark my words. We are going to have the biggest boom of all time. Its already started just incase you hadn't noticed. I bet you were one of those predicting doom and gloom a year ago as that mild virus Covid19 took hold.
Contrary to popular belief on this BB, its not because I've been recommending a 'strong sell' in my recent posts. Its because many of the fundamentals are not great and the jury is out on whether they will improve much anytime soon.
Analysts are predicting a net profit of - £10.8m at the end of this year. There will be no dividend this year. Next year a modest profit of + £18.0m is predicted and a modest dividend of £0.69.
Net debt on an IFRS basis is expected by the company to be a hefty £284m by the end of the year. Given the modest profits projected by the analysts, and the previous record of the company, it is not going to be very profitable for a very long time (if ever).
There are also many other negatives about the company which I've previously alluded to so I won't bother to go over old ground. Read my previous posts.
All in all, the company is hardly setting the world alight.
It may have escaped the notice of investors in SIG on this BB that there are actually other companies out there with far better fundamentals. It should be no surprise that savvy investors are selling their SIG shares and investing elsewhere. Its a competitive world out there.
I invested in SIG when I was clueless about shares. I got lucky and the price went up and I made a fortune due to my judicious use of a stop loss. I have now clued myself up big time and I wouldn't currently touch the share with a bargepole. That said, if the company can turn things around successfully I can see it becoming a multi bagger due to the massive economic boom we will experience over the next 5 years. However, I will be keeping a watching brief for now and will not be reinvesting until the beginning of 2023 at the earliest.
A final piece of advice. You'd have to be crazy to be buying SIG shares at the moment. The trend is down. Only buy when the trend is up and make sure you put a stop loss in place to protect your capital.