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Https://news.sky.com/story/superdry-landlords-face-pain-in-fashion-chains-survival-bid-13115957
To be honest, its very much required. Unfortunately, the shareholders have been shafted by the CEO and his management team. Its been a colossal loss of shareholder value over past 5 years since Dunkerton took over as CEO.
There had to be someone who comes in and challenges the existing management and make them accountable for their cavalier attitude towards shareholders.
Goodluck Oasis, Goodluck shareholders!
Looks like Oasis is taking interest in SDRY. Based on the latest RNS issued this morning they seem to have accumulated a stake in SDRY.
Oasis is an activist investor, look at this link below:
https://oasiscm.com/category/engagement-campaigns/
They are been calling out companies with bad corporate governance with a view to change existing management practices to protect the interests of shareholders.
Seagull had issued RNS at 7am on 26th Mar. He has fully sold his position. 0 holdings.
As an experienced entrepreneur, I expected more from JD.
There should have been a better way to communicate the decision.
It is possible that the board politely turned down his low ball offer to protect the interests of the shareholders who had entered at much high levels including the ones who invested in the last equity raise circa 79p.
However, they should have communicated with some more clarity in terms of the turnaround plan with some projections for next couple of years along with clearly laid out plans on how they are going to achieve them and not simply an RNS, but a proper media release with managing committee answering investor questions.
At this point, there are too many loose ends with more questions than answers.
No doubt Tuesday morning is going to be ugly.
All of this reflects poorly on JD and poor on the management team.
Goodluck all! Happy Easter!
Deepvalue85,
Yes, its typical market marking activity. As market makers, you don't take a punt on the direction of the price movement. It is also an "acquired title" which the exchange only gives to those market participants they think have the credibility in the market for an orderly functioning of the secondary capital markets. There are also strict rules and guidelines issues by the exchange to market makers in terms of the number of bid/offer quotes they need to provide every minute/hour to ensure liquidity in the security.
In this case, it looks like they'd like slightly more physical shares on their Asset side of the Balance sheet. The reason for this increase in long inventory is due to anticipated demand for shares in due course. Here they would make money from bid/offer spreads. As an example, if there is a buyer who turns up with a buy order, they can deliver from their inventory without actually having to go in the market to source these shares which gives them a competitive advantage in pricing the offer price. Subsequently they reduce their short exposure to keep a net flat position.
Mind you this is the most expensive way to gain long exposure to an underlying as one has to pay entire cash outlay upfront as opposed to Derivatives where one has to pay only a premium which is fraction of the market value of the position. But this is then factored into the offer price to compensate of the higher financing cost of holding a long shares/cash position on the balance sheet.
Hope this makes sense.
Forest34,
In simple terms, there is no change to their overall position. They have been net flat even before this RNS - longs / shorts are equal and offsetting.
RNS trades: They have closed their long derivative exposure in SDRY, and replaced it with long shares in SDRY.
Oops, spellcheck/auto-correct going bonkers!
They have been publishing 2.9 mid-month last month as well. Prior to that before the Takeover code was instated, they were also publish the Total Voting Rights (TVR) everything month usually at the start of the month.
So I wouldnt read too much into the 2.9 issued today.
Https://news.sky.com/story/struggling-superdry-in-talks-to-tap-hilco-for-new-10m-loan-13092579
It is possible that Jefferies are market makers in the security. So, the long position is basically as part of their 'inventory management' in anticipation of client demand i.e. client here is PI's/other II's, etc.
They are then delta hedging their long position, with short position in derivatives. This is a very common structure/strategy for market makers of security on a trading desk of a sell-side firm (e.g. broker-dealer, Investment banks, etc.).
Alternatively, they could also be accumulating a long position on behalf of a client i.e. if appointed by JD to source the stock from the open market; and since the stock is in the interim on their Balance Sheet over a period of time, they are hedging the downside risk/exposure using derivatives. They would then on the day of delivering the shares to the client would close down their short derivative exposure; this cost of hedging is also part of the overall cost charged to the client for the transaction.
Toffers, Enterprise Value (EV) should not be mistaken for the Intrinsic Value of the company.
EV is simply used by potential buyers / M&A to understand what they are required to pay to acquire a company i.e. Current MV of shares + Net debt position (if they have to assume the debt on takeover) - Cash (cash/cash equivalents on the Balance Sheet).
I'm long SDRY, as I love their products - jackets, hoodies, shorts. I love them and own multiple pieces of each of them. I know a lot of my friends and colleagues do as well! (age group 25-45).
Current MV certainly does not reflect the potential of the business.
I'm hoping for a decent offer from JD, which I think will comprise of 2 options which investors can choose from 1) Cash bid and 2) Hold onto the shares whilst he takes the company private with a view to turn it around and re-list in 2-5 years.
GLA.
Thanks Deepvalue. My main objective of joining this board was to gather and share such meaningful insights and knowledge bites.
Goodluck all!
Are you able to share your source of shareholding breakdown please Mikodx?
Last official RNS shows JD stood at ~26 odd % ofcourse he could have increased since then, but if you have an official source please confirm.
I think you missed the one-off complete write down of the deferred tax asset worth circa 78MM, which is skewing the results.
There are trying to streamline the business, lower inventory, lower costs re: improve efficiency and addressing the product mix issue re: more overshirts, fleece clothing as opposed to heavy reliance on jackets/seasonal clothing to insulate from unseasonal weather conditions. They are also trying to address the long term lease agreement across stores to overall reduce the number of stores.
All of these things take time to trickle down into +ve gains on P&L and Balance Sheet.
Underlying message here is the steps are all in the right direction.
For a company which has circa £600MM in revenues; and who has managed to recently sell its IP in Asia to the wealthiest business house Reliance Holdings (India’s richest man) for circa. £40MM when the annual revenue in Asia is nothing more than £50MM.
Just the sheer worth of IP of this mega brand is worth millions out here in Uk/Europe where annual revenues are over £500MM ..
I’d expect to see a great offer from JD; the man is a legend and has skin in the game with over 25% holdings in SDRY. For that very reason, I’m long and will continue to hold!