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clock Created with Sketch. 30/10/23
01:39
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Originally posted by professorsharp
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As you saw with the B&L takeover Blundy and his partner dont like to share with the public they takeover 100% - IMO this will get run down till CCX is left with AUS/NZ, then they will come in and swoop it up.
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Entirely possible mate. But unless they convince Spheria to sell their stake for a fraction of their average, it might be difficult. They and Pinnacle both own approximately 21%.
Detractors to performance over the half-year period included City Chic (CCX.ASX) down 74%, Adbri (ABC.ASX) down 30% and FlightCentre (FLT.ASX) down 17%. City Chic is worth delving into. SEC previously owned CCX around the time the business separated itself from Speciality Fashion Group in late May 2018. CCX grew both organically and via international online acquisitions (namely of Avenue in the US and Evans in the UK) with the share price improving almost tenfold over the period that we owned it. Having exited most of the holding in late 2021 we bought back into CCX after its initial profit warning in August this year. CCX along with many other retailers had interpreted the strong demand over Covid as being more sustainable than the surge proved to be, this was compounded by supply chain issues in China due to rolling lockdowns that pressured the company to purchase stock ahead of schedule. As a result CCX acquired too much inventory which put the company into a modest debt position whilst earnings were falling due to clearance activity, bringing into play banking covenants. As the shares have fallen we have added to the position. Our logic is that whilst earnings will remain under pressure cash flows will be relatively strong, which will repair the balance sheet. The company has restructured its debt providing breathing space for this process. The market heavily imputed potential solvency issues into the share price prior to the debt restructure with little relief since. On a longer term view as margins recover we believe we are paying a very low single digit multiple of EBIT for the retailer. We have often made outsized returns for investors by selectively taking on stocks that other investors have abandoned on the back of what we believe are temporary business setbacks.
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They're adding at the lows and looking for outsized returns, specifically.
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