Bill1703
13 Jan 2017
Re: Results "Bill, Bertie, have you guys run your slide rule over Next of late?.... It's either a once in a lifetime entry level or it's a BHS in the waiting!!"Games - had a quick look post the recent "warning", but not dug around more deeply as yet... initial thought is, more likely to be the former rather than latter - but with caveats.The profit shortfall is hardly too major - and valuation metrics are screaming "value", particularly the all-important FCF yield profile. It has one of the best regarded management teams in the market, seen (rightly, as far as I can see) as master capital allocators. Many investors will be more than happy to back them again, with any evidence of positive upturn, etc.However, however... as you say yourself, Games, the retail environment is in the midst of pretty seismic shift, and who knows where that ends, or how it will look 5 years from now? Next were early "winners" in online, particularly against laggards like M&S, but others have now caught up and this is an advantage which is probably never coming back.Worth noting that the SP is only back to where it was in early 2013 - not that long in secular change terms, and the current upheaval could be a multi-decade, rather than multi-month, process. And the best managers in the biz can still be powerless to hold the seas back if their product goes out of fashion, who knows when (if) to return?It's not a BHS... that was a long, slow decline, exacerbated by persistent failures of management and stewardship. I don't see any of the latter at Next, quite the reverse - as long as the current team remain in place, anyway, and I don't see any rush to unseat them. So on your "either / or" question, it must be cheap. Assuming that profits now stabilise, more or less, I can tell you what I think it's worth... probably more like £50 than £40. But the bigger question is, whither profits 3 years from now? It's also not notably cheap, even down here, compared to quite a few peers - though probably for the same reasons!
gamesinvestor
13 Jan 2017
Re: Results Bill, Bertie, have you guys run your slide rule over Next of late?It's half it's peak now at around £40 This is a useful article on it :-[link] when the stock was still at £50+It's either a once in a lifetime entry level or it's a BHS in the waiting!!Games
Bill1703
13 Jan 2017
Re: Results "Finally MRW are takeover potential and IMO remain a good investment"Possibly a good time to trawl out my long-standing hobbyhorse - MRW and SBRY should merge!Good geographical fit... shouldn't be competition concerns, with combined market share still below Tesco... big synergies to realise, plus proceeds from selling off a few stores with close over-lap.Of course, the major obstacle is two founding families with proud histories... can't see one which would give up their identity without a fight. As it happens, market caps are pretty much identical currently, so a straight 'merger of equals' is possible - though with both management teams doing well at the moment, could be difficult to apportion the roles? Would have been easier under the previous, moribund MRW regime...Definitely a deal to be done IMHO, and managements have a fiduciary duty to their shareholders - this is what the industry needs, I believe, and with the rise of the discounters, I believe any concerns over 4 major players becoming 3 are now obsolete. Could preserve legacy identities and call it "M&S"!! Not sure "S&M" works so well...Otherwise, not sure who would have a go at MRW? And less clear why they'd be tempted @ 240p when they could have had a pop down @ 130p? At a stretch, you could see one of Aldi or Lidl tempted by a step-change in UK scale... though it could be they think it cheaper to continue to build organically.
Bertie Biddle
13 Jan 2017
Re: Results Games"The Amazon thingy won't amount to more than a cup of the warm stuff - it's a very small part of the offering and if it's with Amazon the margins will be less than the store base and even Morrisons own online offering."As I understand the deal it is that Amazon looks after the logistics and the final customer is an Amazon Prime subscriber (at the moment only in the Greater London area) and MRW just picks the stock for Amazon from its nearest store. Easy peazy.To my mind this is a very cheap way to get into the online grocery business and all the risk and hassle is Amazons. It may not be worth "more than a cup of the warm stuff" at the mo but it has great potential.I doubt that the MRW online competitors are making much profit if anything out of the actual delivery logistics and web site maintenance. It is just another indirect overhead which MRW does not need.More growth potential will come with a shake out of MRW major competitors. ASDA and Tesco have their problems while I have a feeling in my water that the Deutsche Discounters have done their dash.Finally MRW are takeover potential and IMO remain a good investment. Hope you didn't get out too early Games and hope I haven't overstayed my welcome ;-{
latife
13 Jan 2017
re Maybe the rise is due to unused land they own nearby some of their stores!
give the dog a bone
13 Jan 2017
MRW and AMZN have been a shopper at MRW and like their ranges. then there are the free £5 vouchers at Christmas which added an element of something for nothing. cant see what is driving the price upwards but definitely not complaining .... can it have anything to do with Amazon ? any chance of them taking over the bricks and mortar.
Bazil_Brush
13 Jan 2017
Re: Results I admire your honesty and direct approach Games.... you apear to be a genuine investor and your opinions are appreciated, even if we do differ slightly B_B
Bill1703
12 Jan 2017
Shares magazine says Buy From the latest edition, published today:"We continue to believe the market has got it wrong on Morrisons. At the time of writing there wasn't a single 'Buy' rating on the stock by analysts, according to Reuters data. We are big fans of the business and firm buyers at 244.3p.The supermarket revealed 2.9% like-for-like sales growth for the 9 weeks to 1st January, its strongest Christmas performance for seven years. Latest figures from Kantar Worldpanel show the fastest recorded growth in the UK grocery market as a whole since June 2014."
gamesinvestor
12 Jan 2017
Re: Results "a more home grown philsophy even if it is just hyp"Fabius -- not a bad thing to push, although they all have some marketing message or another.I guess most people care most about how far the shop is from their home or work, do they get a good range of products and am I getting good value for money (perception or reality).As an investment going forward, I think the price is already allowing for continued growth, since a P/E of 20-23 is very high for a thin margin company operating in a massively competitive environment where there are few barriers to entry.Half my holding has gone, only prevarication or procrastination is holding me from leaving the party altogether.Shame really because I like Morrison, I just don't think there is much upside return potential to compensate for the potential downside if it hits another bad quarter or two or it becomes apparent that there is nowhere for it to grow without slimming down the overall margin even more (online, Amazon etc).Games - and they say procrastination is the thief of time.
markdalton
12 Jan 2017
Re: Results I got out of MRW post xmas trading stmt....still like the story here but after avg buy price of £1.76 i thought it wise to bag a 38% profit. I'll buy back in on any dips (was thinking of a general market malaise at some point post recent jumps upwards rather than singe big downturn in MRW share price).......wisely or perhaps not wisely I've reinvested some of sale proceeds into Debenhams. Only time will tell if that proves to be a wise move but i bought into MRW when it seemed very much an unloved retailer......Debenhams seems a similar story...We'll see......good luck to all MRW holders.
Fabius1
12 Jan 2017
Re: Results GamesThe one thing which strikes me about Morrisons it that it appears to be developing a marketing strategy which could be alligned to 17.6 million votes. The lads up north know about 'muck and brass'. This suggests promoting a more home grown philsophy even if it is just hyp. Implications of reducing exposure to exchange rate fluctuations. Don't forget inflation. Concentrating on profitable regions rather than building empires (Tesco). Sainsbury is the steady Eddie in the pack in my view but not sure about growth. I won't bother with the other big players because they are not directly listed (Asda Walmart/Aldi Liddle private). Re the brokers, always amusing. I am expecting to test 195.F1
Spain Fund
12 Jan 2017
Re: Results Bertie, I have a More card and can assure you I am correct about the 5.000 points. Everytime I was in there before Christmas, people were buying a full trolley of stuff, approx £100 worth, and paying less that £20 after handing over many £5 and other coupons. Magnify that around the country and you could have millions of 'sales'. If would be interesting To find out how much sales were actually free vouchers.Aldi and Lidl will continue to ear away at market share on the Big Four.
Bill1703
11 Jan 2017
Re: Results "I believe that MRW was being heavily shorted (I've got it in my head that something like 15% of shares are currently on loan, but I could be wrong). Are we seeing a short squeeze now or is this yet to come? "SB - yes, with MRW and now SBRY up over 6% today, definitely seeing a short squeeze I would say. Good operational updates, sure (though mostly Argos rather than grocery for SBRY) - but only one period, and no detail on all-important margins or free cash flow as yet.The cautionary tones from the likes of Games should be closely heeded up here IMHO... I think there are some reasons to be a tad more upbeat than Games, if only selectively - but competition isn't going to drop away in this sector, and margins will remain under pressure from both internal and external factors.I like what management are doing with both companies, but MRW looking increasingly stretched on fundamentals up at 250p. And with SBRY now up at 275p, much as I still don't think it's expensive, even it is getting close to my 'fair value' level which looked highly optimistic only a few months ago.I am a long-term holder so not feeling any compelling reason to exit my (not huge) positions in both MRW and SBRY, but the risk/reward beginning to look pretty unfavourable IMHO.
Herald
11 Jan 2017
Re: Results Despite the chunky volume of the last few days there are still over 400 million shares shorted that have to be bought back to close at some stage. These guys have deep pockets but they are liable for dividends, stock loan fees as well as closing their shorts. Desperate Dalton and his ballooning debt of 2.8billion was a company in prime position for shorting, does that still apply to the revived Potts company.Many shorters will now be underwater. For example the biggest position by Maverick with over 80 million shares short is costing it over £8m for every 10p movement in the price. Their average sale price was around £2 so that's a 50p loss on their position if they close now (plus the loan fees, divis etc).The shortracker report [link] has the size at 15.84% of the total shares in issue but this understates the total position since any shorters under 0.50% are not listed. So at say 18% short that amounts to over 400 million shares which could keep this current sp rally ticking along for a while yet.
Speedo Boy
11 Jan 2017
Re: Results I believe that MRW was being heavily shorted (I've got it in my head that something like 15% of shares are currently on loan, but I could be wrong). Are we seeing a short squeeze now or is this yet to come? Won't really affect me as I'm with Bazil on this and am in for the long term as people will always have to eat and I think it'll be a few years yet before we see the sky filled with drones dropping off your weekly shop!
