Beevorma, IMO - it might get a bit toxic and quickly, so be very careful with averaging,
it's a subprime lending segment after all and we're in a serious economic model transformation.
yes - potential market does grow exponentially - but defaults have a strong potential to explode much above it.
plus as already noted somewhere below: operations are not somewhere in a third-world country,
here we've strong customer legal protection (we already feeling effect of) and regulation/supervision..
If amgo hits any liquidity issues - borrowing under current market conditions is crazy expensive (despite declarative gov support/BoE debt financing, etc. - in the end going through this chain of middle-men/MFIs ending up with 12%~25% interest rates with personal guarantees, I do like VAT deferral though), generally it means - amgo might gets toasted instantly on any serious signs..
So it might be safer to diversify into less-debt / high liquidity tickers having same or better attractive upward potential , with higher prospect of survival (e.g. except: non-grocery retail, air-industry, health/life/travel insurers, range of finance players, non-virtual entertainment, property, etc, etc,)..
1) Generally investors do know (more or less, demand pattern, debt structure, etc.) which companies will survive this
2) It's incredibly cheap
3) Very unlikely to go deeper
4) Previously de-invested money sitting there doing practically nothing.
5) It will be too late to enter later after markets recovered half way.
So once Gov/Central bank support kicked in - there's no time to waste otherwise risk is entering at the same point where exit was (or even worse - much higher) - so no benefit.
Well, I would expect range of subprime lenders to collapse (despite these times being their perfect feeding ground especially in third-world countries, but here it's controlled/regulated plus gov support kicks in.. instead of lending sharks), let's just hope amgo manages to get through all these tribulations and monetizes / captures opportunity of strong growth in demand.
For me world indeed goes around, I would expect markets to fall after lock-down announcement, but for some reasons it's rising strongly. Why? (not like I've traded in a last week or planning to in next)..
BoE or anyone else is buying?
Is it business support measures kicking in and everyone throws excess liquidity into markets?
Will amgo be eligible for this announced gov-secured business support loan/credit facility?
Very unlikely to get it interest-free because we're clearly not SME.
Or our credit rating of B2 (prob. downgraded already) isn't high enough for get in scope and get a debt-financing bond boost?
or perhaps amgo not in because of questionable "material contribution to the UK economy" for ethical reasons?
(business banking list: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/accredited-lenders/ )
It looks like amgo clients are already missing the gov-guaranteed loan party because gov more into supporting business debt, and less into supporting residents (apart of salaries instead of paying unemployment benefits)..
Thanks, I'm not sure they really do need 10% though, there're a lot of PIs (even from free-float pool) who wouldn't be happy with it going private without significant premium (even I don't have any problems voting on GM), not to mention other IIs with their significant lots, so it's already blocked, therefore it's very unlikely to be the reason.
BIGBangs - 90%? isn't it 75% rule?
As for Finablr - I think they can salvage 10p-20p+ off the liquidation process, so practically well above bagger of returns.
but if goodwill/intangibles are total write-off (so realistically no equity left) then potentially there's an option to buy good assets from admin at attractive discount.
Not sure if it's worth reviving a whole thing under current global economy and market conditions, especially after Travelex was toasted and Shetty's damaged reputation with deep NMC involvement.
IMO - in a week or two as more info's coming in - if sp hits 140-150p we will very likely to see broad range of short positions opening (crossing mandatory reporting disclosure thresholds) on this ticker (imo - there are already some, just not reported yet).
Squeezing more out of mtro wouldn't make much sense after such deep fall just for a sake of another dozen p... vs a risk of bounce (chances of it going bust ain't that high), so some shorts will inevitably close after scoring sufficient profits, especially considering that atm we've better opportunities (in both ways: up for long positions and down for different shorts) as already has bin mentioned by someone below.
BTW - what impact on UK (or London) and MTRO will be if it goes into 9M lockdown with 70% of population infected? (realistic scenario NY is trying to prepare for)
ups, wrong link, here it comes (perhaps already posted by someone before):
This has some description of COVID-19 test approval problems/delay in US, roughly 1 min through:
Taxation system is representation of distributional mechanism, nothing else - it just makes adjustment on who spends money (and on what goals). So tax cut indeed will channel spending from inefficient (by definition, although it has other justified goals too, e.g. helping those in need/equality, critical infrastructure, competitive markets etc.) gov plans into actual decision by rational people (earners of this income). I also do agree on putting more burden on higher income brackets (partially because I'm not in this band), although it might switch balance more towards wealth based instead of income based mode..
Initiative of paying wages to lower-end earners - is a good move, but IMO should be expanded to broader ranges including those who unemployed or out of L-force in right age range and no-wealth situation (with range of exclusions of course, e.g. institutionalized/having c-record/addicts, etc.)
Initial move of offering debt-finance in BoE announcement to prevent redundancies was one of most ridiculous moves I've seen recently - letting businesses to dig their own graves in mid-term via borrowing to pay wages for non-producing workers therefore worsening future cashflow situation into bankruptcies..
Picking wage bill (otherwise unemployment benefit) by third-party to keep people on work at least formally - does prevent business infrastructure/system deterioration in a way (of course it's most beneficial to low-skilled segment because company/type of work doesn't matter for this category - so extra leverage of free money for nothing)..
sp - 109p, it's priced like it's on consistent inflation-adjusted 16p-17p eps or making £12M profits per year (for 68M shares), and with operating margins of 8% (avg in industry) it needs £140M of annual revenues to justify the price (current margin is very likely to be lower because of ad-hoc resource allocations and associated costs vs temporary higher demand for production capacities)..
The problem is what happens after hype? (already big gun players with billion budgets step in with their huge resources to fight for a market).. It was previously long-term loss-making company year after year.. Very sad outcome expected for whoever dreams about it flying high!!
All IMO/DYOR of course, and gl - I hope it works for you and miracle happens..
hmmm, I'm seeing this rumor with same long but cheap intro only placeholders filled by different company names and slightly different environments and outcomes copy-pasted across whole range of tickers at least weekly-monthly..
btw - loans to the company (aka debt) is served first anyway to whoever holds this debt (with any company) - no much of a twists possible here.
same with (remaining) equity on liquidation (e.g. while naturally transforming from loan form into something more liquid and less risky, at the same time closing debt, and disposing excess via say dividends, etc.).. the only way to benefit from it is by enforcing bias in liquidation process (e.g. selling assets at discount for premiums, etc.) or sitting on top of it (via fees, commissions, etc.).
They still have at least around £200M of equity left, net profit (net running costs/impairments/write-offs and so on.)
bringing liquidation/private scenario sp to at least 42p (which I'll be very happy about!) + perhaps some premium via risk-adjusted eps valuation (if they still decide to continue off ftse market)..
Theosus - I see another alternative as much worse than the one you're resisting.
Without monetary stimulus under current conditions we won't be talking about banking profits anymore because major concern will be about having any equity left..
What better option would you expect for BoE to implement and what impact it would make on Metro in particular and retail MFIs in general?