Ann: 2023 AGM Presentation, page-74

First 74 Last

Share
Profile

Follow
SethKlarman

295 Posts.

28

16/12/23

11:51

Post #: 71484469
Share

Originally posted by PabloB: ↑

I have no special insight but I agree the T/O probability is high.
Lots of reasons point towards this which we all know, such as:
* price - cheap once you ignore FY24 and look to the next cycle (bond market suggests interest rate cuts already coming)
* strong B/S - net cash (conveniently omitted in Ords calc)
* strong biz model - PK did the turnaround a decade ago and it is now a capital-light biz in easy store roll-out mode (women wanting gifts & nice-smelling things is not a fad! )
* good opportunity for international growth - easy model to roll-out à la LOV and no country has a dominant candle maker, the absence of ambition has turned fundies away but private guys would see this opportunity
* weak register - incredibly loose register, mainly retail folk, no SC fundies and even backers appear disinterested (Blundy sold down LOV at IPO but maintained a strong interest whereas here he has been AWOL, Catalyst have jumped completely & not sure why Trent still there)
* lack of mgt skin in the game - following on from above, exec mgt hold minimal shares and so are easily persuadable by PE in exchange for keeping their jobs
* private market is strong (T/Os happening every week)

Arguments against low-ball T/O
* T/O price below $2 IPO price looks iffy - granted brokers have no shame (could argue changed macro environment blah blah) but anything below $2 indicates that they overvalued the stock at IPO.

Anything I missed?

Re BBs, I am not against BBs but not really in favour either.
Ultimately the price will rise when the market gets a clearer view of future EPS and thus divis (assuming still listed of course).
IMO BBs waste f/cs and due to ASX price/volume restrictions they actually take a long time to play out - BBs are never the immediate sugar hit people expect.

P.S. DSK is really missing the retail bounce - some have had a 50%+ bounce.
Bond market pricing in cuts

Expand

Well written. There is no blocking stake shareholder so its a sitting duck.

imagine a luxury global brand house who looks at the footprint and database and goes we can do a better job. I would not restrict the yawn to PE but ratger look at Hermes, Richemont, Bath & Body Works (Dan Leob pitch at Sohn) etc.

DSK Price at posting: $1.09 Sentiment: Buy Disclosure: Held
3 Upvote

0 Great analysis

Reply