PAUL Scott - Small Cap Value Report - COMMENTS26 Nov 2020 13:49
My view - I think there’s a tremendous opportunity with this share. It’s a fantastic growth business, delivering superb financial performance. Yet the valuation is way below other similar growth companies. Look at $FTCH for example. Listed on the US market, it has similar revenues & growth to BOO, yet it loses money hand over fist! Whereas BOO is strongly profitable, but is only valued at a quarter of FarFetch. It’s a glaring anomaly. I’ve suggested to BOO that it lists in America, where the valuation would be so much higher than on AIM.
That’s one opportunity for a big re-rating. The other opportunity, is that the ESG fund managers who’ve been selling up over the supply chain issues, are likely, at some point (no idea when) to recognise that BOO is doing everything humanly possible to fix the problems, with total transparency, and considerable resources being used - I know KPMG are not cheap, and imagine that Lord Leveson’s hourly rate is not likely to be modest! Therefore, I can foresee all those forced sellers becoming keen to buy back in at some point, probably at a much higher price. Combine that with short sellers being forced buyers, and it's a recipe for a big & sustained move up in share price.
Hence this looks to me like a really terrific opportunity for private investors to get ahead of the curve. I’ve been buying more, and as mentioned before, it’s my largest personal holding.
The next trading update could be good, because we have Black Friday tomorrow, a major boost for online retailers in particular since their physical competitors on the High Street are currently shut.
It should be interesting to see what happens next. I think this is a seriously good risk:reward situation now. But obviously, DYOR as usual.
I wonder how long the UK press will keep trying to re-hash the supply chain problems? They’ve been dining out on this story for a couple of years now. Will any start reporting the fact that, actually the company has responded very positively, and extensively, to fixing these issues? I wouldn’t bet on it.
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