Smith (ds) Share Discussion Threads

[moorsie2] 18/6/2019 07:28

I think the prospects are good. But their two big acquisitions were very expensive. Bought at the wrong part of the cycle by a management team who had never lived the full cycle before. Rookie mistake.

Ebitda will do well from the acquisitions but ROCE will not be so pretty and hence EPS.

This is why the shorters moved in.

They well close out circa 280-300

[rik shaw] 18/6/2019 07:13

By comparison Questor in the Telegraph today is positive about prospects

[salpara111] 17/6/2019 20:24

I was all set to take a stake after the results but now I am somewhat confused!
Keeping it on my watch list for the moment and if it hits 300 again I think I will jump in.

[togglebrush] 17/6/2019 16:25

Press DS Smith opens new HQ in Atlanta USA
as it targets expansion in North America
'

[moneypenny2018] 17/6/2019 16:02

They are the masters of price manipulation...

[gabsterx] 17/6/2019 15:57

How do these algorithms work? Do they scan broker ratings for changes and mindlessly buy/sell based on the revised target price?

[moneypenny2018] 17/6/2019 15:37

Heavy volume after the close...

[moneypenny2018] 17/6/2019 14:56

Computer driven hedge funds in da house but they need to get out soon :)

[moneypenny2018] 17/6/2019 14:49

Put several 10k wort of physical share buys and trades appear as sells ... I can see what they are doing.

[moneypenny2018] 17/6/2019 14:46

Citadel trying their best not to lose any money on their short... need to close it but they need to do it tactfully :)

[nickname27] 17/6/2019 13:53

wtf is going on today? Multiple 5% intra day swings are not normal, even for this.

[petersinthemarket] 17/6/2019 13:43

Ignore brokers, they are only playing their own book.

btw, I am also wholly against share buyback. Waste of money. Plough it into the business or pay it back to investors. Without investors, there would be no business.

[nickname27] 17/6/2019 11:23

Not exports though, they have hundreds of mills and plants inside the EU. If there's a no-deal that affects trade it will also crash Sterling which will make their foreign revenue much more valuable.

Of course foreign investors may just be peed off with the whole country and be dumping them anyway but I suspect that has already mostly happened.

[gabsterx] 17/6/2019 11:01

It seems that 70% of their revenue comes from within Europe, fear of a BJ government could be weighing on the price. Fundamentals are still rock solid so it's a strong buy at this price.

[nickname27] 17/6/2019 10:33

The latter. Not just the MF though, pretty much as soon as anything is highlighted in a the press it plummets shortly after ;)

[gabsterx] 17/6/2019 09:58

nickname, why "touch of death"? Last few articles from MF were positive. Or has there been a trend where once they praise a company the share price tanks?

[nickname27] 17/6/2019 09:39

It was meant tongue in cheek. I also think buybacks are a terrible idea for a company but when everyone else is doing them you might need to go with the crowd. Companies are basically competing for investor's love and your share price is bound to fall behind the ones who are if you don't, all else being equal.

I'm wondering now if this is at least partly what's attracting hedgies because they don't look overvalued or to have any systemic problems other than being British. Well run profitable and growing company with international revenue and an in-demand product that increasingly has the regulatory and environmental winds behind it. What is not to like?

I see it got the motley fool touch of death last week but honestly, 5% yield and 10x forward p/e? They're going to need an almighty and unforeseen crash in earnings to justify the current price.

[jeffian] 17/6/2019 09:36

Absolutely agree with loganair. Buybacks are management using real (our) cash to try to boost the share price by massaging the NAV and EPS upwards. Unfortunately, the market is an emotional, rather than mathematical, mechanism so every £1 spent will not necessarily be converted into an equivalent increase in the share price. As a shareholder in Whitbread, I am currently waiting to see how much of the £2bn(!) cash being "returned" to us following the sale of Costa will actually find its way into my pocket or added directly to the share price. I am not holding my breath.

As for buying back "undervalued" shares, that rather depends on how "value" is assessed. There may be a case if a company's shares are trading at a substantial discount to its underlying assets (the argument currently being used by EI Group whose shares trade at a discount of 40% to its freehold property portfolio) but in the case of SMDS, its 'Net Asset Value' of £3.112bn (equivalent to £2.34/share) actually includes £3.2bn of Intangible Assets.

[loganair] 17/6/2019 09:28

I completely disagree, how ever undervalued shares may be as good management would be able to deploy this money some where better to grow the company.

If do not know where to invest, then I think far better to pay a 'Special Dividend'

I'm reminded of BWIN, who's management kept buying back shares and yet the share price kept falling until taken over by GVC.

In the long run, it seems to me share buy backs just waste a companies money rather then returning any long term value to the share holders.

[gabsterx] 17/6/2019 09:04

Buybacks are a good idea when shares are undervalued, in the case of DS Smith right now their shares are trading at a bargain, so buying them back would return value to the shareholders and show that the company has confidence that their shares are undervalued.

That being said I don't know why people are selling off SMDS, could it be Brexit fears and many of their customers being in Europe?

[loganair] 17/6/2019 08:56

I am never in favour of share buy backs, shows the senior management have no idea of where best to invest any excess cash.

When it comes to the S&P 500 in the USA, over the past 10 years 65% of all increase of EPS has been because of share buy backs and in the past 4 years 85% of EPS increase have been because of share buy backs rather then real growth.

[nickname27] 17/6/2019 08:35

This company needs a buyback program. It's the only way to keep up with the index these days.