M&S 30-40 day trade - my first published Idea
M&S
Been the back bone of UK retail store fronts for a life time, has been in general decline for the last 15 years. It has many of the features of an attractive short:
legacy, disrupted (not disruptive) business model
shrinking revenues
not much evidence of any economic/competitive moat
low margin
capital intensive
financially geared (financial net debt £1.5 BN, excluding lease liabilities)
With T/O of £10BN and £33M of profit trading on a diminishing margin year on year (half'd in last 2 years to 1.46%).
Presently trading at a forward PE ratio of 10.3, which is 17th (out of 34) for its sector, so still over valued compared to it competitors.
It is like an old horse, needs shooting or putting out to pasture, like many UK retail businesses it hasn't adapted to the changes in the high street.
Reason for Idea
Each year for the last 2 years the share price has dropped 2017 9%, 2018 8% over November December due to poor Christmas trading figures.
There is no reason to not expect the same this year and added on top the increasingly worse trading statements each year.
My trade was:
Entry 190p
Limit 160 (15%)
SL 210 (10%, which the share price hasn't hit since July 2019.)
Been the back bone of UK retail store fronts for a life time, has been in general decline for the last 15 years. It has many of the features of an attractive short:
legacy, disrupted (not disruptive) business model
shrinking revenues
not much evidence of any economic/competitive moat
low margin
capital intensive
financially geared (financial net debt £1.5 BN, excluding lease liabilities)
With T/O of £10BN and £33M of profit trading on a diminishing margin year on year (half'd in last 2 years to 1.46%).
Presently trading at a forward PE ratio of 10.3, which is 17th (out of 34) for its sector, so still over valued compared to it competitors.
It is like an old horse, needs shooting or putting out to pasture, like many UK retail businesses it hasn't adapted to the changes in the high street.
Reason for Idea
Each year for the last 2 years the share price has dropped 2017 9%, 2018 8% over November December due to poor Christmas trading figures.
There is no reason to not expect the same this year and added on top the increasingly worse trading statements each year.
My trade was:
Entry 190p
Limit 160 (15%)
SL 210 (10%, which the share price hasn't hit since July 2019.)