It happens to us all now and again. On a warning I try to mentally set a price in my head where I think the stock could go, before the open, a pretty aggressive estimate always. I might then sell in tranches in order not to sell at the low.
If 3% of your portfolio halves you are down 1.5%. I try to take it on the chin. If you lost 1.5% over a few months it would likely not bother you half as much, it is because its sudden and it makes you question yourself.
Try to blot it out fast and carry on like it hasn't happened and make sure no position is too large to do lasting damage imo.
Thanks! May I ask whether you put a limit on position sizes (as a percentage of portfolio)? Do you have any suggestions to add to my investment rules? Appreciate all your articles and your stoic advice - keep up the great work
Cheers, yes, there is that and agree it is a genuine cost. Actually Stocko work on trailing 12 months so it isn't as accurate when CARD have a lot of cash coming in in H2.
On a trailing 3 years Sharepad has 8.6. I think with the cash likely to come in this H2 the number loweres for both Stocko and Sharepad.
I am not so keen to add the leases as debt to be honest. I am no accountant but if you are going to add say £100m in leases to net debt, those forward leases have a value that needs to be taken into account too and I'm not sure they fully are, but I may be wrong.
With free cashflow I like to look at what a business is doing. Are they acquiring, paying down debt or paying divis or better still doing the lot. CARD are doing all three.
Meanwhile net cashflow has gone from negative £23m in 2023 to roughly £1m net cashflow this year according to Edison while Panmure are forecasting £26m free cashflow this year.
So yes, how it is calculated is subject to variation but I like to see actual stuff being done with the cash because it makes me believe the company has confidence in it being sustainable imo.
"Wake up with Rebel" - sounds quite horrific to many I should think Mark :-)
I dare say CARD was tarred by the IGR warning by many yesterday when they are completely different the way they are run. I actually picked up a few more yesterday. Mathias Seegars the CFO is German I believe, he certainly has a methodical German approach about him. He was CEO at Costcutters when Darcy was there, Darcy waited 6 months for him to be able to take his job - it's clear why Darcy wanted him. I've been back and watched the presentations over and over again and they have delivered on everything ever promised, aside from online, but I believe there is good reason for that. Getting Personal needs to be sold off imo, it's too niche, there isn't the volume. The Cardfactory site will cannabalise some retail, it has to, and it isn't any cheaper than the retail model, they are better increasing retail. Online comes into its own for personalised cards and speed of delivery, where it has a place imo. Anyway, misunderstood by many, way too cheap, fantastically well run and highly cash generative. The market will wake up like having cold water thrown over it at some point imo. LIO is risky but it also has strong dir buying and we are seeing others see inflows now. If markets firm it may be the bottom for them here so it definitely is high risk but potential high reward. Let's see what this week brings.
They are in the same industry but distinct businesses. IGR manufacture and source mainly wrapping paper, bags, kids play sets, stationery, they don't have shops. They are wholsale.
Cardfactory just manufacture their own cards and only cards. As such they don't have all the multiple tooling and spread of products that lower margin, Cardfactory have shops in the UK where they sell Cards that they manufacture plus wrapping and bags they source. I'd say IGR are like a farmer selling their goods at market, Card are more like a farmer selling through their own retail outlets so they get the full value for what they produce. They also sell gifts to go with those cards. The Card business is very vertically integrated, they design, make, distribute and retail cards that the make from start to finish. They have a history of good margins and cash generation.
I can't post images here but Card have operating margins of 13.3%, IGR operating margins are negative. Card's return on capital is 14%, IGR is negative, I could go on but CARD is just a better run business despite the similarities.
I don't think the industry IGR are in is the problem, it's the business and how it has been run. The two clowns there heading it up can't hold a candle to Darcy Wilson Rhymer and Mathias Segars. It's a bit like saying Poundland and Next are both retailers. They are, but there's retailers and retailers.
I think if you search back through this Substack 18 months ago or so, I did a whole note on CARD which may help.
Richard
MCB reaction today tells you where they are going imo. I notice they say they are inline with management forecasts, not market forecasts. I think co's that say that in a positive sense like today, along with reinstating the divi, means that may be a bit more than the market expects. MCB does have a history of surprising the market in both directions!
Today I said to me broker sell the lot at 75p or better if you can but he only got half away. once the share price was firning I sold two more tranches into the strength at around 64p I think.
I did that as I know ow mad these move. A less volatlie stock I'd sell all in one go or tranches, especially on short term rallies.
You just can't avoid the odd bad apple. But over a year, if you do things right, the good stuff far outweighs the bad that you can never avoid entirely.
Deep breath and move on. The less you let it disturb you the faster you make up the loss and more imo.
Thanks for your comments on IGR, Richard. I got whacked today (sold early doors) and have taken a bit of a confidence hit. I focus entirely on lower risk investments and truly didn't even contemplate the possibility of such a savage drop. Feel lied to by management on this one, so I'm semi forgiving myself. Frustrating, as I was up nicely so far this year and I'm now back to even (fortunately IGR was only 3.3% of my portfolio). The worst part is that I'm now questioning the other companies I've researched heavily and am invested in. These are: Marks and Spencer, Filtronic, Warpaint, TP ICAP, Card factory, Water Intelligence, Games Workshop, Serica, Serabi Gold, XPS pensions, IG Group, JET2 and Eurocell. I've recently sold Bloomsbury Publishing, Deliveroo and Carclo as they fell firmly below their 200 moving average (one of my firm rules), although I may buy Carclo back.
Copied my investing rules below (I keep them in Notes on my phone!). Any new additions welcome - I'm keen to learn from this IGR shocker...
No more than 16 stocks
No more than 15% (original stake) invested in one company
Quality focus and long term hold until change of investment case or long term trend broken (firm close below 200 day MA)
Be patient with buys
Only trade if you have to not through FOMO
Don't panic if in a loss (or sitting on a big unrealised gain!)
Don't throw good money after bad - focus on winners and cut clear losers (you can always buy back in - but only do so if long term trend is positive - either a clear bowl or over 200 day MA)
Be emotionless about buying and selling and past positions
You cannot account for incompetent management who I simply don’t believe didn’t know what was going on in November. Potentially misleading the markets……should be investigated.
Anyway other positive updates more than made up for it
Hi Richard. Yes interesting week. I’m a big fan of McBride since early last year. Still confident they’ve more to go (>£2) plus divi reinstated soon. I’ve never been in Card or IGDesign - but aren’t they both in the same business? And yet you’ve 2 very different write up for companies which are both in the celebration trade. Immediately thoughts on your write up was - Card should bid for moonpig. That would set some fireworks off.
Thanks Richard. A fascinating post, as always. Even director buying can sometimes be misleading. I followed the example of a director in Vistry after his huge £7m buy and I lost a packet. Goodness knows how he feels atm. Thanks again.
Look forward to reading your missives in bed every Saturday morning with a bacon sandwich and a cup of Yorkshire Gold CR. Long may you continue. Worked in retail but had some very bad experiences investing in retail. Reeves may have more up her sleeve by way of taxation and I do worry about that but even so took a position in CARD yesterday. Also bought into LIO at what I thought was a good price 446p, had to average down at 392p a few days later, what a game.
Hi Richard, I’d be very careful using the price to free cash flow from Stoclopedia because their FCF calculation does not include lease payments. IMHO leases are a genuine cost of doing business, particularly for retailers. I think you’ll find the Price to FCF including lease payments for CARD is more like 11 as shown on Sharescope.
It happens to us all now and again. On a warning I try to mentally set a price in my head where I think the stock could go, before the open, a pretty aggressive estimate always. I might then sell in tranches in order not to sell at the low.
If 3% of your portfolio halves you are down 1.5%. I try to take it on the chin. If you lost 1.5% over a few months it would likely not bother you half as much, it is because its sudden and it makes you question yourself.
Try to blot it out fast and carry on like it hasn't happened and make sure no position is too large to do lasting damage imo.
Thanks! May I ask whether you put a limit on position sizes (as a percentage of portfolio)? Do you have any suggestions to add to my investment rules? Appreciate all your articles and your stoic advice - keep up the great work
Cheers, yes, there is that and agree it is a genuine cost. Actually Stocko work on trailing 12 months so it isn't as accurate when CARD have a lot of cash coming in in H2.
On a trailing 3 years Sharepad has 8.6. I think with the cash likely to come in this H2 the number loweres for both Stocko and Sharepad.
I am not so keen to add the leases as debt to be honest. I am no accountant but if you are going to add say £100m in leases to net debt, those forward leases have a value that needs to be taken into account too and I'm not sure they fully are, but I may be wrong.
With free cashflow I like to look at what a business is doing. Are they acquiring, paying down debt or paying divis or better still doing the lot. CARD are doing all three.
Meanwhile net cashflow has gone from negative £23m in 2023 to roughly £1m net cashflow this year according to Edison while Panmure are forecasting £26m free cashflow this year.
So yes, how it is calculated is subject to variation but I like to see actual stuff being done with the cash because it makes me believe the company has confidence in it being sustainable imo.
Thanks for pointing that out.
"Wake up with Rebel" - sounds quite horrific to many I should think Mark :-)
I dare say CARD was tarred by the IGR warning by many yesterday when they are completely different the way they are run. I actually picked up a few more yesterday. Mathias Seegars the CFO is German I believe, he certainly has a methodical German approach about him. He was CEO at Costcutters when Darcy was there, Darcy waited 6 months for him to be able to take his job - it's clear why Darcy wanted him. I've been back and watched the presentations over and over again and they have delivered on everything ever promised, aside from online, but I believe there is good reason for that. Getting Personal needs to be sold off imo, it's too niche, there isn't the volume. The Cardfactory site will cannabalise some retail, it has to, and it isn't any cheaper than the retail model, they are better increasing retail. Online comes into its own for personalised cards and speed of delivery, where it has a place imo. Anyway, misunderstood by many, way too cheap, fantastically well run and highly cash generative. The market will wake up like having cold water thrown over it at some point imo. LIO is risky but it also has strong dir buying and we are seeing others see inflows now. If markets firm it may be the bottom for them here so it definitely is high risk but potential high reward. Let's see what this week brings.
Hi Michael.
They are in the same industry but distinct businesses. IGR manufacture and source mainly wrapping paper, bags, kids play sets, stationery, they don't have shops. They are wholsale.
Cardfactory just manufacture their own cards and only cards. As such they don't have all the multiple tooling and spread of products that lower margin, Cardfactory have shops in the UK where they sell Cards that they manufacture plus wrapping and bags they source. I'd say IGR are like a farmer selling their goods at market, Card are more like a farmer selling through their own retail outlets so they get the full value for what they produce. They also sell gifts to go with those cards. The Card business is very vertically integrated, they design, make, distribute and retail cards that the make from start to finish. They have a history of good margins and cash generation.
I can't post images here but Card have operating margins of 13.3%, IGR operating margins are negative. Card's return on capital is 14%, IGR is negative, I could go on but CARD is just a better run business despite the similarities.
I don't think the industry IGR are in is the problem, it's the business and how it has been run. The two clowns there heading it up can't hold a candle to Darcy Wilson Rhymer and Mathias Segars. It's a bit like saying Poundland and Next are both retailers. They are, but there's retailers and retailers.
I think if you search back through this Substack 18 months ago or so, I did a whole note on CARD which may help.
Richard
MCB reaction today tells you where they are going imo. I notice they say they are inline with management forecasts, not market forecasts. I think co's that say that in a positive sense like today, along with reinstating the divi, means that may be a bit more than the market expects. MCB does have a history of surprising the market in both directions!
Yep, director buying no guarantee, but it's nice to see than not to see imo.
Every trade is different.
Today I said to me broker sell the lot at 75p or better if you can but he only got half away. once the share price was firning I sold two more tranches into the strength at around 64p I think.
I did that as I know ow mad these move. A less volatlie stock I'd sell all in one go or tranches, especially on short term rallies.
You just can't avoid the odd bad apple. But over a year, if you do things right, the good stuff far outweighs the bad that you can never avoid entirely.
Deep breath and move on. The less you let it disturb you the faster you make up the loss and more imo.
Thanks for your comments on IGR, Richard. I got whacked today (sold early doors) and have taken a bit of a confidence hit. I focus entirely on lower risk investments and truly didn't even contemplate the possibility of such a savage drop. Feel lied to by management on this one, so I'm semi forgiving myself. Frustrating, as I was up nicely so far this year and I'm now back to even (fortunately IGR was only 3.3% of my portfolio). The worst part is that I'm now questioning the other companies I've researched heavily and am invested in. These are: Marks and Spencer, Filtronic, Warpaint, TP ICAP, Card factory, Water Intelligence, Games Workshop, Serica, Serabi Gold, XPS pensions, IG Group, JET2 and Eurocell. I've recently sold Bloomsbury Publishing, Deliveroo and Carclo as they fell firmly below their 200 moving average (one of my firm rules), although I may buy Carclo back.
Copied my investing rules below (I keep them in Notes on my phone!). Any new additions welcome - I'm keen to learn from this IGR shocker...
No more than 16 stocks
No more than 15% (original stake) invested in one company
Quality focus and long term hold until change of investment case or long term trend broken (firm close below 200 day MA)
Be patient with buys
Only trade if you have to not through FOMO
Don't panic if in a loss (or sitting on a big unrealised gain!)
Don't throw good money after bad - focus on winners and cut clear losers (you can always buy back in - but only do so if long term trend is positive - either a clear bowl or over 200 day MA)
Be emotionless about buying and selling and past positions
Position size based on confidence and concerns
Don't rush execution of trade
Great post thank you for sharing your rules, I know I need to be more disciplined, the 200 ma seems a very sound rule
cheers
Cheers Rebel
So we’ve had our WOSG moment this week with IGR.
You cannot account for incompetent management who I simply don’t believe didn’t know what was going on in November. Potentially misleading the markets……should be investigated.
Anyway other positive updates more than made up for it
Hi Richard. Yes interesting week. I’m a big fan of McBride since early last year. Still confident they’ve more to go (>£2) plus divi reinstated soon. I’ve never been in Card or IGDesign - but aren’t they both in the same business? And yet you’ve 2 very different write up for companies which are both in the celebration trade. Immediately thoughts on your write up was - Card should bid for moonpig. That would set some fireworks off.
Thanks Richard. A fascinating post, as always. Even director buying can sometimes be misleading. I followed the example of a director in Vistry after his huge £7m buy and I lost a packet. Goodness knows how he feels atm. Thanks again.
Look forward to reading your missives in bed every Saturday morning with a bacon sandwich and a cup of Yorkshire Gold CR. Long may you continue. Worked in retail but had some very bad experiences investing in retail. Reeves may have more up her sleeve by way of taxation and I do worry about that but even so took a position in CARD yesterday. Also bought into LIO at what I thought was a good price 446p, had to average down at 392p a few days later, what a game.
Hi Richard, I’d be very careful using the price to free cash flow from Stoclopedia because their FCF calculation does not include lease payments. IMHO leases are a genuine cost of doing business, particularly for retailers. I think you’ll find the Price to FCF including lease payments for CARD is more like 11 as shown on Sharescope.