Member Info for mussy

Is it possible that Landsdowne position was to purposely bring down the price to be in a position to buy at a cheaper price and go long? thoughts?

I dont know if you remember the Primark and Banglesh issue back in 2014: https://www.theguardian.com/world/2014/mar/16/primark-payout-victims-rana-plaza-bangladesh

Buyers move on, and Primark continues to make growth on sales and their products are also cheap and they made the fixes. And Bohoo issue with the supply-chain can be fixed quickly. They just need to adapt and make changes - this will hit some gross margin but they still have a strong platform for growth in a market that is attractive. With covid accelerating online shopping, they are further placed.

But this will need to be a long-term investment journey and there will be volatility. And guess who is the CEO of Bohoo? Ex Primary who did well managing the issues and complicated supply chain.

You need to study their supply-chain; 60% of their supply chain is from Asia and they have been migrating away from UK anyway and this will accelerate, from there you can get good quality products and good prices. If you take a long-term look, at this prices with a trend towards online, its oversold.

Most people dont care about the origin, its only a small portion of consumers and their target market dont care.

wow Portland, you really punting at this big!

Its gambling; so many unknowns....its a punt. I guess some people like punting on stocks but I prefer to make an informed decision with facts. There simply lack of facts, various scenarios to play...hard to put money if you are not sure or you just wanna punt like a roulette wheel

Governments will hesitate to open up the borders due to fear of re-infection. Some will argue governments can start testing passengers. But - How many countries will need to install coronavirus tests to satisfy borders that passengers are clean? Can they afford it? Will people be up for queuing for 6 hours waiting for results before going on holidays? https://www.theguardian.com/world/2020/may/15/flying-long-haul-during-covid-19-air-travel-has-never-been-stranger

The thing is is that if there is no vaccine, how can one get comfortable with the demand factors if social distancing is a permanent part of life? Who is going to travel when restaurants, hotels, airlines, airports, etc. have to have social distancing measures? You can't swim because the hotel has banned the pool use, you try to book a restaurant its full because they can only service 10 people at a time. These factors will impact travel demand for a while until life becomes the old normal (before the virus). One needs to factor in a permanent impact to air travel and long haul holidays if there is no vaccine and social distancing becomes the new normal.

If it gets to 80p then you know that AIG Is about to get nationalized, liquidated or run out of money (or a combination of multiple factors!)

Two catalytic events will drive the share price up or down: 1) vaccine has been found (positive impact); 2) AIG is about to run out of money due to demand and restriction factors (negative impact) leading to equity, debt issues

If the price is so cheap why aren't the directors and Willie Walsh buying like they did in early March? Surely they have a more closer view of the dynamics of the business and how its heading. Also how come no other institutional investor have been upping their stakes if the price is so good? Another question to ask :)

With other companies that show value, you have seen management or institutional investors stepping in to either increase their stakes or participate in new offerings to underpin that share price level. Nothing on IAG or other airline companies.

According to Boeing, they expect one of the largest airline companies in the USA to collapse due to debt and liquidity issues. This won't happen to AIG as they have been quick to adapt but highlights the dire situation of the sector.

- IAG will not go bust as they have strong liquidity and will weather the storm by borrowing more debt, etc.
- I laugh at people on this board who can project share price levels without doing fundamental analysis and with no backing
- it will take a long time for the share price to recover; the simple math is enterprise value = net debt + equity. Enterprise value is the valuation of the company. The higher the net debt, the lower the equity. As IAG burns through more cash and increases its debt through burning through new debt and revolvers, this increases. It means that the equity portion of the company's worth decreases.

I am not saying that investing in IAG is wrong; the issue I have is you will have to wait a very long time for share price to recover. Why invest in IAG when there is better value elsewhere? I bought some Informa shares as I strongly feel they are undervalued and have got visibility of steady revenue streams, adapting their conferences to virtual and have deleveraged their balance sheet by issuing equity

John, not trying to be dishonest here but here are the facts

1) AIG has GBP10bn of liquidity and is burning GBP200 a week. This equates to 50 weeks until they burn through (assume 1 year). They will need to either borrow more debt or issue equity that will result in significant dilution and impact on equity. Even if they reach normal capacity in 2023 (as they say), they will have to pay off debt for a while and it will take time for them to pay off dividends. You are potentially looking at a long hold until you see a meaningful share price appreciation. There is just better value else where

2) Demand and Capacity Factors: Demand is significantly affected as people simply won't travel with uncertainty in respect to 1) virus and impact on their own health; 2) travel restrictions and the fact that each country has their own rules (e.g. Argentina said they won't accept any flights until later this year); 3) people saying why should they travel when hotels, restaurants, airports will have significant coronavirus restriction and rules (how can one enjoy a ****tail when the pool is not allowed to being used, etc.) 4) people lessening their travel overall as people don't need to do so many trips can do a business meeting on Zoom or people driving towards more sustainability and awareness of carbon footprint of air travel 5) cost: cost will increase due to companies increasing their prices due to lower capacity hurdle rates which means that demand will be affected --> all these factors will result in short-term, medium-term and long-term impact on capacity and financials. Airplane companies like IAG, Ryanair need to operate with close to optimal capacity to make money

There's too much risk. There's better value in other companies in my opinion. Think about the debt and demand factors. Why do you think Warren Buffet sold all his shares in airplane companies?

HI all - I initially bought IAG stocks but sold at around 205/206. There's too much downside risk and people should look beyond the share price. IAG's debt ratio is going to increase through new borrowings, burning existing cash and potential further equity issues that causes dilution. One needs to understand that even when some capacity is returned, there's so much debt and liquidity burned off before any equity shareholders benefit. The price might look attractive but once needs to do capital structure analysis that shows equity shareholders will not benefit for a very long time.

Uncertainties include: 1) Demand and how consumers will change their long-term behavior; 2) restrictions and when they will ease: 3) vaccine and when that gets administered to billions of people; 3) the fact that there will be too many planes so the operational efficiencies are not there to be competitive.

Too much downside risk but that's my opinion: Look beyond the share price

I agree - there is a real risk of equity rights issue that can have dilution impact

Did anyone see the large trade? 3m shares bought. Thoughts?

08-Apr-20 16:35:24 33.68 9,080,444 Buy* 33.31 33.40 3m UT

I am looking at a 5 year view so daily movements don't matter as long as I feel it is going to be bust :)

The landscape will look favourable for British Gas as smaller players get squeezed out. Don't forget that there will be a sense of nationalism as well for people to switch / retain British Gas. Centrica should rename their company British Gas!

on what basis is this calculation / forecast?

1) Does anyone know how big is the war games market / how many players use their stuff?
2) Do management still have skin in the game in this? I saw allot of sell offs at around 7,000p area

Its hard to say. I am taking a long-term (5 year + view). As long as I am tranching my buys over the next few weeks / months that should average out in terms of looking for a floor. Basically I am saying not to look for a floor but take a long-term fundamental view and tranche your purchases over a period of time.

On a normalised basis this business will generate £2bn of EBITDA and pay £500m of dividends. Will leave it to you all to work out implied multiples and dividend yield :)

This only makes sense for a long-term hold (5 - 10 year) for a dividend and capital appreciation story.