Bell Potter downgrade 23 November 2015, page-117

I like to think of MSB as a 15 year old girl who has an aspiration to become a supermodel in Paris or New York or Milan.

This girl certainly has the goods, i.e. Good looks, nice body, the confidence and most importantly the aspiration.

The problem is she doesn't have money to leave her small town or to buy cosmetics or to buy clothing.

But the girl is not stupid, she knows that there are lots of punters out there who are eager to believe her story. In return for cash now, she's willing to sell some portion of her future income to all of these punters.

Unfortunately, the girl's spending is quite high. Who can blame her? She needs to get the latest dress, buy the latest shoes, get the latest handbags, go to the salon every 2 days, fly to Europe for an audition etc. This results in whatever money she raised last time being quickly spent and her having to go back to new punters to ask for money in return for more portion of her future income.

But there are lots of her backers who point out that she currently has 5 auditions that are already in the final stages. Surely, there must be one that will go through. Unfortunately nobody knows, as far as I'm concerned, she might miss her flight on that day, or she might get flu and be unable to attend, or she might fall on the stage.


I think I know what Madamswer is trying to say in his previous posts. Madamswer, please correct me if my understanding is incorrect.

Madamswer believes, we should wait until the girl has proven that she can really secure a contract, that she can earn monthly income, that she doesn't have stage fright, that people really like her, before investing his money to back her up.

If she is indeed the biggest super model that the world will ever see, it's not too late to back her up when she's 21 years old and has steady income and has proven herself in several big fashion shows. After all, she still has a long career ahead of her and will still be able to produce more than adequate rate of return on the capital that we invest in her when she's still 21 y.o.

Sure, backing her up when she's 21 y.o. doesn't mean that it's risk free, she might get injured in a ski accident, she might be involved in a car accident, she might let her early success get into her head and start taking drugs.

Let's say, she lands her first contract at the age of 18. Her conducts in the first 3 years of her career (between 18 y.o. and 21 y.o. when we first invest in her) should provide sufficient pictures on the kind of person she is, i.e. whether or not she is sensible. If she is sensible, then we can invest in her and keep monitoring her developments.

For those who are true believers of MSB and believe that bots and algos and shorters are manipulating MSB share price down, you should be super happy because you are being given a once in a lifetime opportunity to buy more MSB price.

Just make sure you are not one of the many punters who back a girl who turns out to be just a small town girl. For every one supermodel, there are thousands of girls who never made it beyond their local areas.

Just like if VB is your favourite beer, and there are silly bots/algos/shorters who manipulate the price of VB by selling them on Ebay 50% cheaper than what you get at Dan Murphys, what are you going to do? Buy as money as you can from Ebay, or complain at HotCopper?

For the record, even if these bots/algos/shorters do operate in our market, I don't get bothered by them at all, because in the long run, the performance of the underlying business will determine the share price. All of these are simply noise to my ears.