Member Info for SFH300

Yeah, no one's convinced, though, as the share price keeps confirming.

And now the share predictably falls back.

If I sit any tighter gangrene will set in :D

Disappointing that, after yesterday's big buy which was recorded after closing, the SP didn't open higher this morning.

It'd be nice if it was a PDMR ;)

I should have said that the stock I was quoting as up for the day is SMT, not AV.

Yep. I think brokers' stock screens are generally pretty amateurish in their presentation of figures. HL can't even make the daily gain/loss of a share tally with the daily gain/loss of one's holding of that share. As I type they're showing that the price is up 2.68% for the day, but my holding value has only increased by 2.64%. Basic programming.

Thanks for your effort there, casapinos, much appreciated. It still looks like I'll be under after those five years. Oh well.
< rolls eyes >

I haven't seen the article, but I can't believe IC didn't actually refer to the RoC being paid by 31st May as per the AV announcement.

While these CFCs could become a major revenue generator for the group by the end of the decade, (customers will pay capacity-linked fees when they’re in operation) the high cost of getting them up and running is weighing on Ocado’s bottom line.  
Capital spending has quadrupled since 2018 and could rise even further this year. Last year, spending totalled £680m as it ramped up spending ahead of what has been described as a “crunch year” in 2022. By the end of this year Ocado will be managing 12 live CFCs, up from four at the start of the year. A further 19 are in various stages of construction.  

Capital requirements are growing and so are losses 

With £1.5bn of cash in reserve, it’s clear Ocado will need to return to the capital markets in the near future as it pushes forward with new CFC developments.  
Analysts believe it will tap the debt markets for more funding either this year or next, although with the cost of borrowing only set to become more expensive, the group needs to act quickly.  
While Ocado is facing slowing growth at its retail arm and growing demands for cash from the tech side of the business, it’s also having to fight legal battles around the ownership of its technology. 
Norway-based Autostore has claimed that its grid-based technology formed the basis of Ocado’s CFC platforms. The two parties have been slogging it out in the courts for years with Ocado spending £28m on legal bills in 2021 alone. It looks as if this fight will continue for some time.  
Considering all of these challenges, it’s no surprise that the Ocado share price has slumped more than 60% since December 2020. Now the pandemic is in the rear view mirror, the market is focusing on the risks ahead.  
Refinitiv analyst estimates have the company losing £316m in 2022 and £251m by 2023. Even the most optimistic analyst projections don’t have profits arriving until the end of the decade at the earliest. In the meantime, Ocado is going to have to continue to tap investors for funding to support its capital spending and legal battles. Despite the firm’s technological prowess, investors might want to sit this one out.

2/END

Ocado faces a “crunch” year – should you buy or avoid?

Ocado was one of the big winners from the pandemic as customers moved online. But now it’s struggling, and losses are growing. So, asks Rupert Hargreaves, should you buy Ocado shares or steer clear?

by Rupert Hargreaves, 27-May-2022

In December 2020, my colleague Matthew Partridge suggested in MoneyWeek magazine that adventurous investors might consider shorting the Ocado (LSE: OCDO) share price (or at least avoiding or selling out of the stock) due to its excessive valuation and growing operational challenges. This call was right on the money (quite literally). Since then, the stock has fallen more than 60%.
The FTSE 100 retailer was one of the big winners of the coronavirus pandemic, but it has not been able to sustain its performance. In its latest trading update, Ocado announced that sales fell 8% in the two months to the end of April, compared with a 5.7% decline in the previous three months. Management now expects sales growth of less than 5% for the current financial year, compared with an earlier forecast for 10%.  
Even Ocado’s joint venture with Marks & Spencer (LSE: MKS) is not helping it navigate the current retail environment. The cost-of-living crisis combined with a “return to more normal consumer behaviours as restrictions have ended,” is driving a shift away from online shopping.  
Still, there’s more to the story here than just the cost of living crisis and reopening of the UK economy. 
Ocado is facing several big challenges  
Ocado is really two different businesses, both of which are currently having to deal with some major challenges.  
Ocado Retail, the online grocer jointly owned with M&S, is poorly positioned for a tough economic climate. According to the consumer magazine Which?, Ocado is the second-most expensive traditional supermarket after Waitrose, judged on a basket of 63 groceries.  
In an environment where consumers are watching every penny, that puts it at a disadvantage to other retailers. It’s no wonder the value of the average basket has fallen by 9% compared to a year ago.  
Still, at least this side of the business is earning a profit. Retail earnings before interest, tax, depreciation and amortisation (Ebitda) totalled £150m for the fiscal year 2021.  
The other side of the business, the logistics technology side, is still bleeding red ink. Ocado is selling its robotics and automation technology around the world. Demand is high for these systems and it has only increased after the pandemic exposed the weaknesses of a human-backed fulfilment system.  
The group has inked deals with major retailers to roll out 48 customer fulfilment centres (CFCs) by 2035. This could increase the share of revenues from the “International Solutions” segment from 2% to 16% (at the high end) by 2026 according to projections.
1/n

And THAT was a sell < rolls eyes >

"There are gainers people on here bought in at £3.90 recently, a 50p gain.Funny that because I was banned from buying around that time."

Maddmax, there was no buying ban. It would have been your investment platform trying to handle the complexity of the issue, during which they stopped trading in AV. Different platforms handled it with varying degrees of competence.

Retirement - I'm not sure why you're calling bull**** on £3.90 buy-ins. It would have been perfectly simple to set up a buy limit order and fund it with money unlinked to the return of capital. I bought more immediately after consolidation at £3.95, well before I'd received the RoC. GL.

Yes. Hopefully your Halifax screen will show the true cost basis after 31st. Many other platforms haven't caught up yet, so Halifax is probably among them.

< thumbs up >

According to its latest factsheet, the two top holdings in the portfolio at the end of April were the biotech Moderna (Nasdaa: MRNA) and industrial technology group ASML (Nasdaq: ASML). Both of these companies have substantial competitive advantages. Moderna is the world’s leading mRNA vaccine developer while ASML is one of the world’s largest producers of equipment for the semiconductor industry.  
After falling 44% and 31% respectively in the year to date, Moderna is selling at a forward price/earnings (p/e) ratio of just 4.7 while ASML’s multiple is around 10% below its five-year average.  
These holdings are a great example of Scottish Mortgage’s investment style in action. What’s more, their current valuations hint that maybe the sell-off in both the trust’s shares and those of the underlying holdings has gone too far.

Rupert Hargreaves owns shares in the Law Debenture Investment Trust

ENDS.

To put it another way, yes, recent losses might be painful to watch, but investors need to focus on the investment process used by Scottish Mortgage, rather than its performance figures.  
The man responsible for the trust’s market-beating performance was James Anderson, who recently stepped down from his position at Baillie Gifford, the fund manager behind Scottish Mortgage.  
In a recent interview with MoneyWeek, Anderson explained that much of Baillie Gifford’s (and as a result Scottish Mortgage’s) performance can be traced back to the decisions the organisation made after the great financial crisis. The group reviewed its entire business model and decided to become a “truly global, truly long-term investment firm.” Its analysts realised that the majority of long-term returns come from just a tiny fraction of stocks (the estimate is 4%). So, Baillie Gifford decided to focus on finding these super-star businesses.  
Of course, there was never any guarantee this strategy would work. Trying to find the top 4% of stocks means there’s a 96% chance of failure – the odds are stacked against the fund managers. That’s why even after the firm’s run of success over the past 20 years, Scottish Mortgage still has its critics. 
A sprinkling of luck combined with a long-term mentality  
Some critics have argued that the firm got lucky with its bets on companies such as Tesla (Nasdaq: TSLA), which have seen their valuations explode beyond any reasonable expectation.  
There is always going to be an element of luck in investing, that’s just part of the process. Still, I think it would be a mistake for investors to attribute too much of Scottish Mortgage’s recent success on luck alone.  
Baillie Gifford has built a culture based on long-term principles and ideals, and that allows its fund managers to look past short-term headwinds. Anderson noted that after the financial crisis, the firm “ended up buying Apple on three to four times earnings.”  
Many investors do not have the “strength to endure” the vicious ups and downs that come with growth investing, giving Baillie Gifford’s managers an edge. The fact that the investment trust structure also provides permanent capital is another benefit. The managers do not have to worry about selling assets to meet redemptions.
That lets the team focus on doing what it does best, finding brilliant individual companies with competitive advantages and holding onto them.  
While I think investors should be focusing on the trust’s process, not its performance or indeed the performance of individual equity holdings, I do think it’s worth looking at some of the top holdings in the portfolio.

https://stocks.apple.com/A2ZcUm_UeQkGXS_QKg2rtfg

Scottish Mortgage Investment Trust has fallen hard. But is now the time to buy?

After a spectacular couple of decades, the Scottish Mortgage Investment Trust has fallen by almost 45% so far this year. Rupert Hargreaves asks if now is the time to buy.

The Scottish Mortgage Investment Trust (LSE: SMT) has been part of the MoneyWeek investment trust portfolio since its launch in 2012. It’s likely that this trust features in many of our readers’ portfolios and it has been a winning bet for much of the past decade.
At one point, the shares were up 1,000% on our purchase price, making it a key contributor to the 17% per annum return the portfolio achieved between launch and the end of 2021.  
As the trust has soared in value over the last decade, we’ve resisted the temptation to take profits mainly as a hedge against being wrong. At MoneyWeek we’ve always had a value bias, but we’re also aware that value doesn’t always work. Some growth stocks have achieved far better returns than value equities and it wouldn’t be sensible to ignore this fact.  
Putting all of your investing eggs in one basket is never a sensible strategy (even the best investors make mistakes occasionally). So, owning a growth-focused trust such as Scottish Mortgage alongside more value-focused entities such as the Law Debenture Trust (LSE: LWDB) offers the best of both worlds.  
Unfortunately, after a decade of market-beating returns, we’re now seeing what happens when the market turns against growth stocks. Shares in the investment trust have slumped nearly 45% this year. Meanwhile, its discount to its underlying net asset value has blown out to around 13%, one of the highest levels in recent memory.  
This performance will certainly have a negative effect on the performance of the MoneyWeek investment trust portfolio, but diversification across the equally-weighted portfolio should cushion that. 
The question investors might be asking after recent declines is if now is the right time to bulk up their holdings in the Scottish Mortgage Investment trust?  
The Scottish Mortgage Investment trust’s mentality should persevere  
The last time Merryn reviewed the MoneyWeek investment trust portfolio at the end of March, the investment advisory panel recommended that investors take a long-term view of the trust’s recent losses.  
Simon Elliot of Winterflood pointed out that while SMT is best-known for its large holdings in giant tech groups, it has also been highly successful at recycling capital into “less well-known companies with greater long-term growth prospects.”  
Sandy Cross of Rossie House and Investec’s Alan Brierley also noted that the MoneyWeek investment trust portfolio was designed for long-term wealth creation and it is a “mug’s game trying to call short-term, albeit painful fluctuations.”

Ah, yes. Typo, I guess. Selling at 438p sounds more like it.

I'm not really sure about ii. Thus far it's done nothing for ABDN except contribute to its plummet.

No sign of your extra 30k today, though.

Indeed. I can't believe I'm only 5% down now, having been >40% down not so long ago.