Hi Boon! I really like these emails. So engaging and useful. As a result of this one I have made a note to improve my share selection process as follows "Consider what important information management have failed to mention in their update. The reason that they do not mention it is likely because it is not going well." Thank you.
Excellent post-mortem, very instructive. But you would need to be a genius to spot the warning. Many companies will say similar things when actually everything is fine.
First, thank you! As well as being entertained and informed by you, I always learn something. Today it is that I need to REALLY crack down on the research before buying, and also that taking a wider view of current news events can guide my decisions. Regarding profit warnings, Stockopedia did some analysis a few years back, and suggested that, like buses, they tend to come in threes. The best time to sell up is after the first, and any buying back should wait until after the third. I failed to observe this and paid the price today with a second warning at TET. I have scarpered, and learned a lesson (hopefully).
As far as SOS goes, if you cannot make money by flogging overpriced frocks to middle-class bints in Harrogate and Bath, you had better give up! I think the bricks and mortar ventures are misguided myself. I believe the firm was founded by people with no retail or rag trade experience, but rather a background in publishing. If they are still involved, that inexperience may finally be surfacing.
Indeed. Very thin line. That's what makes it so exciting 😂
The two improvements rtant questions I ask myself... (1) has there been some big fundamental change in the company or market, so the past "serial" poor history is no longer relevant? (2) are investors still placing too much weight on past performance instead of future potential?
I use that to try to gauge which side of that thin line a share falls on!
Thanks for this close-up analysis Boon. My take is that in the end we are reliant on the clarity shown by management. Was their sufficient disclosure here?
Having worked with c-suite teams (but not part of) on the messaging that goes into RNS...
I've come to appreciate that a lot of time is spent finessing the wording. They are very conscious not to overpromise or say untrue things. So I sometimes see so much time and effort to choose the right word, metric, phrasing.
Management have a duty to tell the truth AND give shareholders a rounded accurate picture. But the former is more important than the latter to avoid going to jail. So if there is bad news, they usually just omit it completely, until it really cannot be left unsaid because it has a large impact on profits, risk, or prospects.
It is hard to prove that management isn't giving sufficient disclosure or willfully misleading investors by leaving things out. As management can hide behind the excuse of "not giving away too much trade secrets to competitors".
Hi Boon! I really like these emails. So engaging and useful. As a result of this one I have made a note to improve my share selection process as follows "Consider what important information management have failed to mention in their update. The reason that they do not mention it is likely because it is not going well." Thank you.
An excellent read Boon! Indeed, what is not said is often as important, if not more so, than what is. Easier said than done in spotting it though!
Thanks for posting, as ever
Jon
Excellent post-mortem, very instructive. But you would need to be a genius to spot the warning. Many companies will say similar things when actually everything is fine.
First, thank you! As well as being entertained and informed by you, I always learn something. Today it is that I need to REALLY crack down on the research before buying, and also that taking a wider view of current news events can guide my decisions. Regarding profit warnings, Stockopedia did some analysis a few years back, and suggested that, like buses, they tend to come in threes. The best time to sell up is after the first, and any buying back should wait until after the third. I failed to observe this and paid the price today with a second warning at TET. I have scarpered, and learned a lesson (hopefully).
As far as SOS goes, if you cannot make money by flogging overpriced frocks to middle-class bints in Harrogate and Bath, you had better give up! I think the bricks and mortar ventures are misguided myself. I believe the firm was founded by people with no retail or rag trade experience, but rather a background in publishing. If they are still involved, that inexperience may finally be surfacing.
Love your stuff mate.
I’ve found it’s a thin line between value investing and buying a serial warning / liability stock. A risky business mate.
Good luck to you
Indeed. Very thin line. That's what makes it so exciting 😂
The two improvements rtant questions I ask myself... (1) has there been some big fundamental change in the company or market, so the past "serial" poor history is no longer relevant? (2) are investors still placing too much weight on past performance instead of future potential?
I use that to try to gauge which side of that thin line a share falls on!
Yes mate. Forward looking and catalyst for change.
If you ever fancy chatting about stocks on a spaces on X, it be good.
Just trying it out at the moment with UK investors as we don’t really have anything
Thanks for this close-up analysis Boon. My take is that in the end we are reliant on the clarity shown by management. Was their sufficient disclosure here?
Indeed.
Having worked with c-suite teams (but not part of) on the messaging that goes into RNS...
I've come to appreciate that a lot of time is spent finessing the wording. They are very conscious not to overpromise or say untrue things. So I sometimes see so much time and effort to choose the right word, metric, phrasing.
Management have a duty to tell the truth AND give shareholders a rounded accurate picture. But the former is more important than the latter to avoid going to jail. So if there is bad news, they usually just omit it completely, until it really cannot be left unsaid because it has a large impact on profits, risk, or prospects.
It is hard to prove that management isn't giving sufficient disclosure or willfully misleading investors by leaving things out. As management can hide behind the excuse of "not giving away too much trade secrets to competitors".