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Real-Time news about Monsoon (London Stock Exchange): 0 recent articles
Jeffian - the main risk from shorting Monsoon was that Peter Simon would take it private,that was a known risk. However, because the shares were already significantly over-valued, there was never going to be a large bid premium, so the risk was modest.
As it turns out, Simon has done the deal, but it's only cost us shorters about a 5-10% loss, nothing to worry about.
Ironically, if he had just let the share price go into freefall, then it would have found fair value around 200-250p, and he could have bought it back at 300p.
Let's face it, this share has been in a false market for some time - being supported at a level, with pressure no doubt being put on Simon to take it private by the hedge funds who had hoovered up the rest of the shares.
Incidentally, I also had my short position pulled by IG - the stock lenders recalled all Monsoon stock last Friday. So this Bid was obviously known about.
Given the sad passing of Frank Butcher, maybe we could migrate to a new thread.
In the meantime, Monsoon remains a great business, but significantly over-valued right now, IMO.
Personally I'm long Sportsdirect & short Monsoon. Both have complete megalomaniac loonies running them, but one is cheap to reflect that fact (sportsdirect - PER of about 10), and the other is expensive (Monsoon is probably on about 25-30 times this years' earnings).
I think Monsoon will warn again on profits soon, because summer has not really happened this year, and this means that both sales & gross margins will be massively down on last year. As a summer-reliant fashion retailer, this means that their results for this year will almost certainly be well below broker estimates.
That does not mean that Monsoon is a bad business. On the contrary, it is a fantastic business - great product, fab margins, good management.
But at 400p a share, it's priced at about twice what it's actually worth, on a sensible multiple of forward EPS.
That said, assorted loonies like to keep the share price high, to qualify for the Sunday Times Rich List.
|scburbs: Hi PP,
Thanks. Any views on who/why? No disclosures so presumably through CFD/SB's, but then presumably the CFD/SB provider would have had a disclosure obligation if there was a significant buyer?
The share price seems to have defied logic since I first shorted after last years rise to £4. It has stayed pretty much at that level since despite a quite terrible set of announcements.
In terms of downside risk, PS walked away from a bid estimated at c.425p when the business was performing much much better so it is difficult to see significant downside risk (for those who are short). Significant downside risk for any longs.|
scburbs - someone is supporting the share price at 380p. I shorted another 20k shares at that level today, and it was hoovered up. Also, very illiquid share, so easy for someone to maintain price support.
But in the absence of a bid from management, it can't defy logic or gravity forever. This stock is clearly overvalued significantly now.
|scburbs: LFL sales down 13% off a weak comparative! Now that can't be good for margins which are being hit by running two distribution centres.
The share price continues to defy reality. Amazing to see the share price fall so little on such a bad set of results together with an atrocious current performance/outlook.|
Any one have any strong views?
Yes, I used to be a big fan of Monsoon, and remember buying the shares at around 55p years ago, and then again at 160p. However, currently I am short of this stock, because it just looks significantly overvalued.
The figures announced today for y/e 26/5/2007 are "very disappointing" (in the words of the Monsoon Chairman), with PBT down 16% on last year.
Moreover, current trading is dire, with LFL sales down an astonishing 13% for the first 7 weeks. This will mean a complete wipe-out for the summer season, with stock levels probably way too high by now & the necessity to go into Sale early & take a massive hit on markdown, to shift the stock.
Mind you, there's no doubt that the appalling weather this summer is partly to blame.
So with EPS of 17.18p for last year, and terrible current trading, I can't help thinking that the house broker will have to slash their current year forecast from 22.4p to maybe even something as low as 15p ??
Incidentally, the house broker only has a "Hold" recommendation on the stock, which as we know really means "Sell" !!
With earnings falling, a PER of about 12 looks about right to me, so 12 * 15p gives a price target of 180p, or less than half the current share price.
Therefore I shall probably be adding to my short position here.
The main risk is that the egomaniac Chairman & majority shareholder, Peter Simon, will buy the business back. Although whether he could get the necessary funding together when trading is so poor, is questionable.
|jeffian: Blimey! Spooky or what?! I promise I hadn't seen this before posting -
22 July 2005
Monsoon plc ('Monsoon' or the 'Company')
Statement with respect to possible Offer
In light of recent share price movements, the Board of Monsoon confirms that it
has entered into preliminary discussions with its Chairman, Peter Simon,
regarding his family interests making a possible offer for the 24.6 per cent of
the issued share capital of the Company not already owned by them. These
discussions are at an early stage and there can be no assurance that any offer
will be forthcoming.
In accordance with Takeover Panel rules, the Company is currently in the process
of appointing an independent Rule 3 adviser to provide advice to shareholders on
the value of any offer.
A further announcement will be made in due course.
22 July 2005"|
|jeffian: I do! And I went along to the AGM to tell Peter Simon so. (Not that it'll do me much good, but it does no harm to remind them of the uppity minority shareholders). Good as the recent share price performance has been, it was patently undervalued before (which is in no small measure due to Mr. Simon's 'difficult' relationship with the City compounded by the Stoneycroft manoeuvre and the subsequent dividend cut) and is arguably so now. Restoration of the divi would have an even more beneficial impact on the share price IMHO.
Still, as you say Kingsize, the share price performance helps ease the pain while we're waiting!
|jeffian: That's too simplistic, Paul. Yes, it's clearly worth more than 140p (actually, the 'family' only offered 126.5p net as you had to buy an option off them for 10p and then they knocked off the dividend!), but will the share price be allowed to reflect that? Much of the 'detail' you feel to be irrelevant was actually posted in the run-up to the option exercise date when, had the Simon family succeeded in their intentions, the free float would have been reduced to 7.5% traded on AIM which wouldn't exactly have helped the share price. In the light of that, the 140p option was as much a 'ceiling' as a 'floor'. The threat to cut the dividend - clearly raised as an inducement to sell to them - remains hanging over the shares. If it's as "Simple as that" that the shares are cheap around 140p (and therefore a "buy", you mean?), would you still think so if they stopped paying a dividend?
Anyway, the fact that the owners of around 32m shares didn't take up the option despite having paid 10p per share and the others (me included) didn't even think it worth seeking the option confirms your view that the offer was simply too low. The recent rise into the 160's may reflect the idea that the family will have to raise their sights to achieve whatever plan they have in mind, but it is within the power of the controlling shareholder/managers to take such actions as suit their own agenda without regard for the minority shareholders and this will affect the share price regardless of the strengths of the underlying business.
Simple, innit?! Well no, not quite.
It sounds as if you may not be aware of the shenanigans carried on by the Chairman and his family who now control over 75% of the shares. If not, click on "all messages" above and read some of the links to recent newspaper stories.
Yes, by rights the share should now move ahead on the basis of strong trading, growth in like-for-like sales and margins and a strong brand moving forward in both UK and continental Europe....BUT!...if the controlling majority shareholders insist on exercising their power in their own interests at the expense of minority shareholders (the move to AIM is thought to have been driven by Inheritance Tax issues within the family, and hoarding cash within the business rather than distributing dividends also looks like a private agenda) then the share price is effectively at their whim and control. At the time of the Stoneycroft 'offer-that-wasn't-an-offer-it's-a-put-option', one of the Independent Directors told me the reason they hadn't felt able to comment on the value of the 'bid'(which was based on only 8.6x current earnings!) was that the controlling shareholders could pretty well adjust the price at will, and both Independent Directors resigned and disappeared before the AGM which must say something!
Anyway, if Peter Simon has learned anything from all this, rests happy with his 75%+ and AIM quote and focuses on running the business to increase sales, margins, profits, EPS and, hopefully, dividends rather than thinking up convoluted ways to duff up his (otherwise supportive) minority shareholders then...yes, the shares should be a good investment!
Monsoon share price data is direct from the London Stock Exchange