Headlam Share Discussion Threads

[thorpematt] 18/7/2017 19:25

Positive update for sure. Certainly not seeing much cause for concern. The margin growth is welcome too especially as it is driven by lowering of costs which is always preferable to price hikes. The share price has lost momentum of late but in turn the value has grown and I do think companies of this quality are hard to find at these prices. This company does not dilute stock for acquistions etc. historically (rare these days). Despite this, there is quite a bit of net cash. This gives rise to the possibility of additional acquisitions to fire growth, or a return to shareholders to supplement the already hefty yield.

[sphere25] 18/7/2017 10:25

AGM update: "Total revenue for the first four months of the year to 30 April 2017 was GBP221.2 million, up 2.2% compared with the same period in the prior year" Todays update: "Total revenue for the six months ended 30 June 2017 increased by 4.0% to GBP341.9 million compared with the same period in the prior year" There are variations in sectors, but this bump up in growth (as well as meeting forecasts) isn't consistent with the stock having fallen away significantly from its highs. Plenty of 50k buys hitting the book at 560p, chart turning up and a nice near 5% yield for holders here whilst the stock recovers some of its losses so I've bought. Time to start buying and stop selling you institutional fund manglers.

[rhomboid] 20/6/2017 09:01

Good post Matt I agree with all you say but sold out recently as I cannot see how they and their customers can avoid being impacted by any future consumer spending weakness. I'm sure they'll be resilient and acquiring bolt on businesses will help but imho headwinds are increasingly strong

[thorpematt] 19/6/2017 23:07

Well absolutely a different league indeed. I also see them as FAR less consumer/ retail facing. A recent TS highlighted the ease at which price hikes were passed on to its clinets (indicating good pricing power). From the perspective of value here I see a company with an EV of circa £400 eith PBT abilities of around £40/ yr. I see those valuation s on stocks with flat growth prospects only. Adding into the mix that it does grow (EPS) and adding in further that its yield is generous and has been for a while leads us on to look at its cover (not that tidy)...but not at all at risk because the simplicity of the business dicates that cap-ex is always pretty low and that caash conversion is from operating to FCV is again very good - hence WHY we have historic growth, good yield AND no debt. All of that above is a good sign of a quality company. Recently the broker forecasts have been cut to a level which is closer to those predicted at the start of the year and I think it this which dictates that the Market must price this as a stock with moderate growth valuations for PER etc. The previous 3 years have seen EPS growth in the teens % wise. The next 2 have rather moderate predictions and this of course effects PEG and other ration upon which growth investors in particular base decisions. What I believe we have seen the last few days is some churn with respect o the investor-base. Personally I have been buying stock this week since I think, as explained above, that this is a very good company with good mid- long term prospects, nice yield at a very reasonable price.

[essentialinvestor] 19/6/2017 12:49

My own take fwiw is Headlam is in a different quality league to DFS.

[essentialinvestor] 19/6/2017 10:32

As any long term holders know only to well Headlam is a cyclical business.

[jeffian] 19/6/2017 10:23

I think it's probably a read-across from the DFS profit warning last week - "The trading environment has however recently weakened beyond our expectation, with significant declines in store footfall leading to a material reduction in customer orders. We believe these demand effects are market-wide, in line with industry indicators, and are linked to customer uncertainty regarding the general election and the uncertain macroeconomic environment."

[essentialinvestor] 19/6/2017 10:07

Cycle turning?

[essentialinvestor] 19/6/2017 09:12

Support ebbing away atm.

[jimmywilson612] 01/6/2017 17:11

Nice timing by me buying the day before the announcement :(

[martinthebrave] 01/6/2017 11:20

Topped up on recent weakness.

[effortless cool] 01/6/2017 10:31

Top line growth for the first four months of 2017 per the latest update was slightly disappointing, hence the fall. I consider this an excellent business, however, and it is starting to look like very good value at these levels.

[jeffian] 01/6/2017 10:28

True, but the final is 15.85p, the 'special' is 8p............but we're 65.5p down on the month, 52.5p of which was in the last week!

[joonas] 01/6/2017 10:09

Ex dividend today

[jeffian] 01/6/2017 10:06

Is this profit-taking or has something spooked the market?

[jeffian] 13/5/2017 19:25

I have quite a lot of Headlam shares and have held for ages. I intend to hold on. I'm not particularly worried about it as Headlam's business isn't financially complex. I just thought it was interesting to pick someone with a bit of a cloud over his CV rather than someone with a clean bill of health (particularly as the Headlam business model includes growth by acquisition of small independent carpet distributor - just the accounting area that tripped up Mitie!).

[pugugly] 13/5/2017 18:11

jeffian: Thanks for above info - Market reaction was interesting - has been a long term hold but only recently started to out perform - will have to have another look especially if City start to associate with Mitie problems.

[jeffian] 12/5/2017 22:48

"Finance Director for Mitie's technical services division - led the financial integration of the Dalkia FM acquisition" Still Hmmmmm! "Investors such as Mr Steer say that they were sceptical about the way in which Mitie accounted for goodwill associated with its acquired businesses..... ....distrust of Mitie’s accounting was widespread in the City.... .....Investors such as Mr Steer say that they were sceptical about the way in which Mitie accounted for goodwill associated with its acquired businesses"

[effortless cool] 12/5/2017 21:36

jeffian, I had the same thought. At least he seems not to have been involved with the two divisions mentioned in that article. From his linkedin: "Led the commercial, financial and legal function for Mitie's decentralised energy solutions division. Also Chairman of Mitie's pension governance committee". "Finance Director for Mitie's technical services division - led the financial integration of the Dalkia FM acquisition increasing Divisional revenue to over £500m".

[jeffian] 11/5/2017 10:41

Hmmmm! That's an interesting appointment as FD. "Chris......was previously at Mitie Group plc, the facilities management and consultancy company, between January 2008 and July 2013 where he held two divisional Finance Director positions." I seem to remember that Mitie had a little difficulty with its accounts! "A former top City fund manager with a reputation for unearthing accounting problems at listed companies has criticised the regulator for failing to intervene in the bookkeeping practices at Mitie. In an outspoken opinion piece for The Times today, Tim Steer claims that the Financial Reporting Council was aware of potentially “significant problems” with accounting at the troubled contractor as far back as May 2015 but failed to act. Mr Steer, who made his name at New Star before moving to Artemis, claims that distrust of Mitie’s accounting was widespread in the City and that British fund managers stayed away from the company’s share register, leaving bargain-hunting American investors to take positions in the company instead. Last week Mitie offloaded its homecare division to Apposite Capital for £2 and agreed to pay the buyer £9.45 million to cover potential future losses and the costs of turning it around. Acquisitions of Mitie’s healthcare businesses were made under the leadership of Baroness McGregor-Smith in 2012 and 2014 at a cost of just under £120 million, but late last year the group wrote off its entire investment and took a charge of £128 million. Investors such as Mr Steer say that they were sceptical about the way in which Mitie accounted for goodwill associated with its acquired businesses, as well as the start-up costs associated with contracts for the wider group. “One has to ask: where were all the checks and balances? Auditors, management, non-executive directors and audit committees all failed,” Mr Steer writes."

[the big fella] 05/5/2017 11:58

I have held these for many years. I was a holder of Eclipse Blinds so that tells you how long! It has been a steady core investment over the years and at present I can see no reason why I wont continue to hold.

[thorpematt] 05/5/2017 10:42

Still very quiet here. I thought the last TS was very positive. I also think that the strong cash position masks the true value here. On MC the PER looks around 15. (A little low given the quality IMO). HOWEVER take the nett cash out and the EV to earnings ratio reveals a much lower ratio. Undervalued company which is likely to outperform in the mid-term is my view.

[essentialinvestor] 19/1/2017 11:20

Mentioned a couple of times that forecasts looked too low, you only needed to look at what they did in H1 coupled with the updates. Not sure why analysts were so slow, not a particularly followed company perhaps.

[jeffian] 19/1/2017 10:08

Agreed and nice to see it break significantly above £5 which it's had trouble breaching before. Let's hope it stays there!