The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Very good and valid question. I am Fevr shareholder since 2015 so know the company and stock quite well. Normally I am not overly concerned with short selling but these guys came from nowehere and the fund is well know, large and has a pretty good track record and interesting portfolio.
Why short the stock at now at these levels and not when it was 3500-4000 ? Valuation has come down drastically already; assuming EPS of 60 for FY 2019 implies c. 35x P/E (excluding excess cash), which of course is not a low valuation, but also not unheard (esp in beverage sector), and it is much lower than historical FEVR P/E multiples.
So why short now if P/E multiple is already low(er) ? I assume they must have a bearisch view on UK sales going forward coupled with limited growth ex-UK. For instance, FY 2018 UK sales % of total was 56% I beleive, if one assume this is 0% growth going forward (or perhaps even negative), then overall company growth will equal growt rates of all other regions multiples by 44%. So for instance 0% growth in UK, 25% growth for all other regions would imply = 11% top-line and EPS growth. Now thats not bad, but it is significantly below historical growth rates and it begs the question is FEVR still a growth stock ? And if its no longer a growth stock, why should i trade at 35x P/E....
I assume this is the case/pitch Lone Pine Capital is hoping for. Seems like a risky bet, unless you have insights that UK sales are faltering and/or international expansion is not working...
I have been in the stock since 2015 and topped up during major dips so far, topped up a little bit as well over the past days but that was before I sat down and actually did the analysis. Now I will wait for the 1H 2019 results to be out.
Will be exciting to follow this for sure. Any suprise in top-line growth should imply nice run in share price IMHO. Conversly, negative suprises in the UK may pressure share price further.
http://gardens.fever-tree.com.au/
Nice to see focus on RoW segment as well.
what i also find interesting is that during this entire decline there has been no RNS with any large fund confirming downsizing its position, so must mean its retail and smaller institutional / hedge funds selling...
Lets assume company delivers 49 EPS this year, so that's 45x P/E. UK growth must slow next year, lets be pessimistic and assume UK is flat, 0% growth. Then rest of business grows 30%. So bottom line would be roughly 15% assuming UK is c. 50% of entire company. That gets you EPS for Fy2019 of 39x P/E. You could argue still very high P/E, but definitely not unheard of for strong beverage/consumer brands.
Now arguably there is quite some upside to this number, assuming 0% growth in UK is quite pessimistic I would say.
I have been invested since late 2015, have topped up at various points, but have to say did not expect the share to slide like it has. I think current price offers a lot of upside and I would frankly be surprised not to see takeover over if share price continues to hover around this level for long.
For me to top up at current levels, I would still like to see share fall another 10% so towards the 2000, that would imply 2019 PE of around 35x which to me means no risk for such a high quality business as fever-tree.
I am quite convinced share will take off after Jan 2019 RNS or there has to be takeover approaches
Fevertree Drinks PLC Director/PDMR Shareholding Fever-Tree, the world's leading supplier of premium carbonated mixers, announces that on 6 December 2018, Jeff Popkin, Non-Executive Director of the Company, purchased, in aggregate, 2,933 ordinary shares in the Company at a volume weighted average price of US $29.54 per ordinary share via US OTC Markets. hTtps://uk.advfn.com/stock-market/london/fevertree-FEVR/share-news/Fevertree-Drinks-PLC-Director-PDMR-Shareholding/78840395
Nice to see work being done to diversify revenue streams away from G&T: https://twitter.com/TeleWhisky?lang=da
I don't think you are :). I added this morning, looking to add more next week, will see how it opens on Monday. My simple conclusions is that if SP would hover around this level for long I see take-over approaches coming.
We are looking at 2018 PE of below 50x right now. With say 20% growth next year you get to 40x territory. For me that's sufficient margin of safety.
interesting article: http://www.morningstar.co.uk/uk/news/167341/jpmorgan-fevertree-stock-has-further-to-rally.aspx/
selling now is really insane in my view. I invested initially at 900, topped up at 1850 when it fell from 2500. will top up again now but will wait until tomorrow/next days to see if it falls more. Arguably 4000 is over valuation but current level does not make sense, I say fair value is 3000-3500 until we have trading statement and know more about growth trajectory.
as an aside the new citrus water seems to unavailable/sold out on amazon US, good sign i guess :)
Agreed. At these levels we are looking at c. 50x P/E for FY2018 which is sort of in the bag already. Even if growth slows to say 20% EPS growth per year I believe current share price provides lots of upside and margin of safety. My only point of concern is that they did not provide trading statement....dont like that but guess they just took view lets wait until Jan...but why do that if you have good things to report....
Why dont we all buy this: https://www.waitrose.com/ecom/products/fever-tree-gin-tonic-advent-calendar/829681-675095-675095
...while we wait for the trading update :)
+ have a look at their Twitter accounts, seems like nice activities going on stateside...
I spoke with friend who had contacted fevr IR and they confirmed end of Jan 2019 next update. Whatever the reason, I think its odd that they skip the November update given the company is growing, international investor base, multi billion market cap company, investors curious about US etc. If numbers would be great, why not come out with RNS ?
Not sure what the UK takeover code says about trading update in case fevr would be in take-over discussion with 3rd party. I think you are not supposed to issue any forecasts in such situation but I guess they could still report historical growth rates.
Anyways now we have to wait until end of Jan - and drink lots of G&T in between to support sales :)
So the financial calendar on their webpage has been updated. Says trading update 31 Jan 2019 - does this mean we do not get anything before that ? Last year I believe there was a short RNS out in November, as would be the case for most UK companies. Can AIM companies opt out ? I am a long term holder since earlier days and very long term value focused but would still view this a slight negative if they don't come out. If you have strong numbers why would you not issue statement; but it could be that they feel they need more momentum in US before reporting. Thoughts ?
I wonder when - and if ? - they are planning to come out with trading statement in November, last year it was 7 November, but there is still no date on the IR page under financial calendar. Perhaps they are trying to do as late as possible this year given SP slide to get more orders to include in growth rates :).....are trading statements mandatory or can companies opt out ? Would be a pity to wait until 1Q 2019 until any news, how US is going etc
In case of stable / upbeat RMS in November and SP continues to hover at these levels, along with weak sterling, I would not be surprised to see takeover approaches from perhaps Coke or Pepsi....
yes, the same guy who bought at 3850 I believe - he seems very confident about the prospects :). This is the gentlemen who runs Unilever beverage business btw....so he probably has good market insights :)