Robbie Burns
Robbie Burns's columns :
13/12/2010OIL BE BLOWED
01/11/2010SHOULD YOU BE SPREADBETTING?
20/08/2010TIME FOR SPREADBETTING?
22/07/2010THIS FLOAT DOESN'T DELIVER >>
24/05/2010NEW FINANCIAL THRILLER
13/05/2010RISE OF THE MACHINES
09/04/2010Oil Woes
08/03/2010Return of the IPO ?

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Robbie Burns – The Naked Trader

Robbie has been trading full-time since 2001. His book "The Naked Trader" (which also has useful information on how to use advfn) has become one of the biggest-selling finance books, reaching the top 150 books on Amazon - order it here. Trades made for Robbie's website have amassed profits of more than £300,000. You can read about his buys and sells daily at www.nakedtrader.co.uk.


THIS FLOAT DOESN'T DELIVER

22/07/2010

THIS FLOAT DOESN'T DELIVER 

 
When I heard Ocado was going to float on the market I was quite interested.
 
After all, I use Ocado quite a lot myself and we get regular deliveries.
 
And Ocado is very, very good! The drivers are always on time and pleasant, the food is top notch and it is an excellent service.
 
So I thought I would buy the shares. That is until I looked into it.
 
When thinking of buying a share I try to take emotion out of it. So just because a company provides a good service doesn't mean its shares are buy.
 
A bit like the Dragons in the Den, you've got to look at the figures and then figure out what any forward return might be.
 
And sadly with Ocado I couldn't see one for a long time. No profit, a risky business and a valuation of near a billion at its projected float price. 
 
Even when the shares eventually came on the market priced at 180 they looked too expensive.
 
Removing the name Ocado and looking at the business objectively I wouldn't be a buyer till it hits about 100p. I just can't see how it's worth much more than £400m and even that's pushing it a bit.
 
It'll be heading into the FTSE250 so funds will be buying in and so the price is likely to stay above the 150 area at least short-term. However the future doesn't look great and I can imagine picking these up a lot cheaper late this year or early next.
 
So while Ocado delivers brilliantly to me I'm in no hurry to get a share certificate delivered.
 
It's always better to buy companies with great growth prospects already making good profits and recent float Supergroup fits the bill.
 
 It's already making profits of over £25 million and its recent statement reveals more growth is to come.
 
It's a fashion online business used by the likes of Posh and Becks and this is its time.
 
I've already kicked myself hard for not taking part in the original float at 500. However I did get some in the mid 650s and early 800s. I think 1200-1300 is achieveable this year. However given this is fashion and fashion changes I'd take my profits at around that sort of price.
 
Looks like it'll be the best float of the year with Ocado the worst.
 
So next time you look at a market float and try to decide whether to take part take a good look at the figures. And be wary of any company coming onto the market that isn't making a profit.


You can read Robbie’s daily market comments together with his latest buys and sells at his website www.nakedtrader.co.uk

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