Ann: Trading Halt, page-52

Impossible-to-win business model.

Because it is a publicly-listed company, it hangs its washing out for all to see, and the minute it starts to garner any half-decent financial returns, its gorilla clients see it and they promptly bully the company out of those returns.

My view of these sorts of businesses was formed even before the GFC, when I shared a beer or two with one of the buyers for Macphersons (MCP); I clearly recall him saying that every day he went to work he knew they were going to be Woolworths' whipping boy and that had it not been for the ability of the company to source products at ever declining costs - from places like Vietnam, Thailand and China which was emerging onto the scene - MCP would never make a buck.

As it happens, that company has barely earned its cost of capital over time (just enough ROE to keep it alive to serve the needs of its customer base, but nothing more); unsurprisingly, MCP's share price is today no different to what it was in 1992, when it first listed.

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