LK Hyman
06 Sep 2017
Re: But I know we'll meanrevert ....... Games,"we is already in September"[link] on the flybridge wasn't born to follow
LK Hyman
06 Sep 2017
Re: Does it invest wisely? O/T RB / ULVR Bill,"Didn't they have exactly that just a couple of years back, with Noodles in Asia, somewhere? Indonesia?"Nestle had a Maggi noodle scandal in India; not sure about ULVR. The latter had a "mercury in thermometers" scandal, also in India, though I always felt that the Injuns were overegging the damage a bit [plays smallest violin in the world twixt thumb and forefinger].Re RB I'm not really tempted, even at these lower levels. I kick myself for not buying the Durex legend's predecessor company SSL back in the day when I spent a surprisingly interestin' week as a Shell trainee pumping gas in a petrol station near Birmingham.As I may have mentioned before, the most educational aspect of the week (apart from discovering the appalling fiddles that sales reps in Ford Anglias expected pump jockeys to participate in) was learning that the station franchisee made more money flogging rubber johnnies from a Durex machine hung on the back door of the gents' kharzi than I got in salary at the time.I suspect that, if I had geared mesen up to the eyeballs and bought a shedload of SSL shares and kept 'em when RB bought them, I would be considerably richer than I am now LOL.I can't see Mead Johnson being another Durex (as it were). It sounds a bit more like another Casamigos. There is a nice irony (or is it a neat hedging strategy?) in RB simultaneously flogging condoms and baby milk. I can't help thinking that there must be a cross-selling opportunity there somewhere ... Perhaps a suitable opportunity for Bell Pottinger?LKH on the flybridge
gamesinvestor
06 Sep 2017
But I know we'll meanrevert ....... [link] know when, but I know we'll meanrevert some sunny day!!!Games -- The hint is that it'll be in the summer likely -- that's quite soon innit as we is already in September -- Nice one Vera!!
Bill1703
06 Sep 2017
Re: Does it invest wisely? O/T RB / ULVR "... what you won't get (I hope) with ULVR is the sort of scandal that could hit DGE from out of the blue..."Maybe not a major scandal, LKH, but why not a minor one? Didn't they have exactly that just a couple of years back, with Noodles in Asia, somewhere? Indonesia? Not a huge financial hit, of course, but potentially disproportionate in reputational terms ... and it's exactly the sort of thing that would likely see the market running disproportionately scared. From the current elevated rating... I think we were back down around more reasonable levels with the Noodle affair?One of these is bound to come along every so often... RB's turn today (so to speak), tomorrow - who knows? But as you say, if the market were to give it the full punishment in such an event, it'd likely be not a bad time to top up... as long as the scandal stays minor, of course.Talking of which... given your oft-expressed hankering after the RB register, maybe you are thinking of deploying part of your ample cash wad in that direction? A bit of a falling knife, still, perhaps... but a particularly blunt one IMHO. Still not obviously screaming-buy cheap, but no longer vertiginously (!?!) expensive...
LK Hyman
06 Sep 2017
Re: Does it invest wisely? Beware the RB... Bill,"We'll mean-revert again, don't know where, don't know when."Yeah, you may well be right, m8, though [hope springs eternal] we haven't yet seen the results of the spreads "sell or demerge" thingy or the corporate simplification thingy [the prefs buyback don't count in my opinion]. Good news on either front could cheer Mr Market up a bit ... or not.In addition I've still got over 30% of my much shrunken wad in cash and, in the event of any mean reversion on ULVR's part, I wouldn't be averse to jacking up my ULVR stake despite the fact that it already represents 12.2% of the wad (ex cash).Notwithstanding my usual aversion to having more than 10% of the wad in a single share I'd make an exception for ULVR for all the tired old reasons I've trotted out in the past ad nauseam ... ethical company, high exposure to EMs, big moat, great brands, people need their stuff, the stuff isn't susceptible to politics (much), Anglo/Cloggy mix is a good 'un yadda yadda.And although Polman is a bit goody two shoes (and won't stay for ever) he looks like a safe pair of hands .... sort of like Rex Tillerson to Rakesh Kapoor's Trump.Ah, I've just realised that we're on the DGE board ... sorry about the O/T.But what you won't get (I hope) with ULVR is the sort of scandal that could hit DGE from out of the blue. There are people who distribute DGE's delicious brands in the USA who, I suspect are a bit iffy. I have no reason whatsoever to believe that that outrageous suspicion is true [he hastened to add] but I do like to keep my investment risk nice and low. DGE's big expansion in Mexico [regardless of the extent to which Ivan may have overpaid for it] also brings its own risk of association with unsavoury types who may not have DGE's shareholders' interests at the top of mind. Mind you, Shell is currently investing in petrol stations in Mexico (that raised the old Hyman eyebrows a bit!) so perhaps the Mexicans are all pussycats these days, though that is not my impression.[link] on the flybridge ese pendejo
Bill1703
06 Sep 2017
Re: Does it invest wisely? Beware the RB... "RB's margins are much higher than ULVR's and therefore susceptible to setbacks such as those they have had in Korea..."More susceptible in margin and actual earnings terms, perhaps, LKH... but this is all about market ratings, and mean reversion. My point is, in this regards, DGE and ULVR (inter alia) are every bit as susceptible at 24x P/E (give or take) as RB was, a mere few weeks ago...Very broad geographical and operational (brand) diversification means that a blip can appear anywhere, at any time... and often does. Perhaps in Korea, perhaps elsewhere... such diversification means that the actual financial impact on the wider group is usually pretty minor, but it won't save the stock from a disproportionately savage de-rating, if the market is so minded."... DGE is likely to revert to the mean... ULVR is much less likely to revert, my humble..."So... Yes, DGE is a disaster waiting to happen... or at least, a significant de-rating in waiting. I am very happy to reiterate (as the brokers say) my £20 price target, as previously detailed on here (actually, it was £19.70, for precise reasons I now forget, but no need to be picky).But with ULVR, not sure I agree... Polman may have had his backside kicked, but it must now be getting increasingly comfy again in his voluminous (I'm sure) leather C-suite chair, safe in the knowledge that Kraft ain't coming back. Sure, he'll have half a mind on a possible alternative bidder elsewhere... but he knows, as do we, that there are not too many Krafts around - and of course, as the chant on the terraces goes, there's only one Uncle Warren!!So I wouldn't be surprised to see some backsliding on the urgency front... that might well be the catalyst here? As long as Polman retains his comfy seat... just as stock ratings revert to the mean, people always revert to type.So ultimately - while there are always the odd exception or two - when it comes to mean-reversion, I can't help nodding at the wisdom in Dame Vernon's words of warning ... "We'll mean-revert again, don't know where, don't know when... but I know we'll mean revert again.. (etc, etc, ad nauseam....)
LK Hyman
06 Sep 2017
Re: Does it invest wisely? Beware the RB... Bill,Your remarks about RB are interesting. With hindsight (even after its latest travails) I wish I'd bought RB years ago. However it has always seemed excessively hard-nosed to me, certainly relative to ULVR. RB's margins are much higher than ULVR's and are therefore susceptible to setbacks such as those they have had in Korea and the latest worries about the simultaneous departure of four hotshots for pastures new.Also the CEO clearly dyes his hair. Soft factors such as that resonate with me LOL.I agree with you that DGE is likely to revert to the mean. Ivan is incredibly smooth, but he looks and acts like a lightweight with too large a chequebook and I wonder whether Kathryn Mikells (the CFO) is capable of standing up to him. OK, American women can be prime ball busters but she's an outsider and DGE must be a very macho environment despite the fact that they have a surprisingly large number of ravers in their top ranks.ULVR is less likely to revert, my humble. Pol Pot Noodle has had one helluva kick up the backside from Uncle Warren but he's got a lot of levers to pull if only by virtue of the fact that ULVR is a decent company (in the ethical sense) and that means that there's a lot of fat in the system which can fairly easily be trimmed. That should help to maintain the current admittedly generous share price.Interesting times.LKH on the flybridge
Bill1703
06 Sep 2017
Re: Does it invest wisely? Beware the RB portent... "... but if it takes him so long to rehash Train's stuff.."Indeed, abeetle. And Train himself was merely rehashing the stuff we'd already had from LKH... some weeks after the event. Or at least that's how it looks to me...Don't ever trust the journos... even the supposedly more "reputable" papers and columns don't really know what they are doing with such "stuff" and are just as (at least) likely to mislead and misinform as the other.There is a very salutary warning for the likes of DGE (and of ULVR, etc) in the Reckitts experience over the past few weeks. They hit a couple of headwinds, partly bad luck, but nothing too major overall... no real change to earnings forecasts for the current year, and a pretty modest hit for next year (3-4%) - wouldn't be too tough to make that back in other areas.And the SP reaction? Down 13%, in a pretty steady straight line... who's to say where this might end? And this is almost all de-rating, rather than reduced prospects... The current yr P/E down from 24x to 21x... from the high end of the historic range to somewhere much nearer the "mean", in a mere blink of an eye (in any long term investor's terms, anyway).That's this market folks... TBH, that's the market most of the time. It pumps them up, then can't wait to let the air out in a hurry. Asymmetrical risk... you buy at the high end of history, your risk/reward is very heavily skewed - and not in your favour.Who knows what the catalyst will be for a DGE, or a ULVR... it can be different every time. Maybe these ones will dodge it, for now... maybe they won't. But they're not going to "dodge" the forces of 'mean reversion' forever...
abeetle
06 Sep 2017
Re: Does it invest wisely? This Questor seemed to me rather better than the previous one but if it takes him so long to rehash Train's stuff and then come up with a 'Hold - I'll watch what he does' - then perhaps not so much.I recall a cryptic clue (OK simplified) for provenance - North America in Southern France - as good a definition as any!
LK Hyman
06 Sep 2017
Re: Does it invest wisely? Games,The paywall did for me though I got the drift of the article first.The fact that the legacy brands really DO produce a tsunami of cash is the precise reason why Ivan can waste money on fripperies like Casamigos.He seems to blithely assume that, having taken the reasonable enough decision to scale up Diageo's tequila biznay, which took a frightful clout in the yarblockos when they lost the Jose Cuervo brand, he can simply pile Pelion upon Ossa, after buying Don Julio, Peligroso and DeLeon, by buying Casamigos for an amount of spondoolies that completely beggars belief.Likewise Roe & Co Irish whiskey will find it next to impossible to get the traction that Diageo could have had if it had made a bit more effort with Bushmills, which has a long and distinguished provenance (whatever the sam heck provenance is).LKH on the flybridge
gamesinvestor
05 Sep 2017
Re: Dollar Surge Bill - Indeed it would -- I must have had a few two many when I penned this one.Games -- what we might get at some point is £ surge
Bill1703
04 Sep 2017
Re: Dollar Surge "If this comes to pass, it's likely to take some of the steam out of the latest stock surges in the FTSE big players."Games - surely a dollar surge would have the opposite effect?Much as it has for the past year or so...
gamesinvestor
04 Sep 2017
Dollar Surge [link] this comes to pass, it's likely to take some of the steam out of the latest stock surges in the FTSE big players.It might take some out of Spirax Sarco as well -- as they are full of the stuff right now.Games -- puffing away watching his Victrex holding rise nicely
abeetle
31 Aug 2017
Re: Diageo ...(sotto voce) - it's still going up, or maybe the still's going up - something like that.
gamesinvestor
30 Aug 2017
Re: One for nimbo ""to generalise the young wanted in and old wanted out. It won't make for a cohesive society especially when the young are supporting even more oldies massive triple locked pensions whilst owning no assets and coping with rising living costs and stagnant wages.""Nimbo, yes it is a generalisation isn't it, and like many generalisations, like the one that bangs on to all that you have to be a member of the EU or your brain isn't wired correctly or you are going to cease trading -- It's baloney of course, as 80% of the world is NOT in the EU -- but that fact seems to pass by the blinkered.The young supporting the old -- interesting one isn't it?" rising living costs and stagnant wages"So you allow a mass invasion of people into the UK, and wonder why your NHS bills keep rising, your wealthfare bills are off the scale, your housing benefit is stretched to the limit and you then sit back scratch your head and say -- ah but it's all about social cohesion.Sounds like tosh to me, as the vast majority (some 75%) of all immigrants are a net cost to the tax payer -- simply because, like many of the indegenous peoples of the UK themselves, they can't afford a house or even the rent so it's subsidised.Companies don't pay enough to their workers and allow the government to take it as tax credits to supplement their living costs. You sit and strangley wonder why house prices are through the roof and you can't get ancillary workers in many parts of the cities. So if the young are disgruntled, they better wake up and realise that the work they should be doing for higher pay is largely taken by low wage guys, who for no fault of their own, undercut them, massively.The EU is a net taker and it's largesse is beyond belief -- it's hard to understand why anyone keeps wanting to support it.Free Trade yes, but all the crxp that goes with it -- No.The Americans wouldn't accept it, neither do the Swiss, neither does - of well as I said earlier - 80% of the world that's NOT in the EU.Games - pussyfooting in the negotiations is a waste of time - these people have no economic timeline or responsibility - they just want political control and it's killing the southern states -- hard to understand why people see this evey day yet choose to ignore it.
