Today I’d like to share with you my notes from The Bears Session at The UK Investor Show 2014 which included Evil Knievil, Lucian Miers and Matt Earl.
This is in addition to the previous posts on my attendance at The UK Investor Show 2014:
- 10 Things I Learned From The UK Investor Show 2014 – Part 1
- 10 Things I Learned From The UK Investor Show 2014 – Part 2
Many of the issues that the panel flagged up are reasons not to buy a stock or at least think about going short.
I’m not saying you ought to go short on the stocks that the panel mention it’s just that what they flag up and how they look at individual stocks can give you clues as to the type of stocks you ought to avoid altogether in your portfolio if you actually want to make money, not lose it.
David’s Notes From The Bears session
Avanti (LSE: AVN)
- Pointless RNS
- Missing Sales Targets
- Recently refinanced existing debt from 5% to 10%
- CEO is a ‘salesman’
- Bottom line: cashflow will eventually run out
Globo (LSE: GBO)
- Negative cash flow
- A lot of business (customers) is in Greece
- Lots of changers of auditors
- Stated they have EUR 42 million but there is no evidence of it
- Majority of revenue is from emerging markets
- Are promoting ‘Bring Your Own Device (BYOD)’ and people are not buying it
Quindell (LSE: QPP)
- Impossible to understand the company
- It’s valuation is not in tune with reality
Naibu (LSE: NBU)
- Possible Chinese fraud (although there is no proof of this yet)
- The mother-in-law of the Cheif Executive borrowed $1 million to buy a property for the company, did not buy it and did not return the money
- Matt has a small position becaue ‘the upside is massive and the bear case is not robust’
Gulf Keystone (LSE: GKP)
- 13% bonds = junk
- Equity is now unsafe due to the junk status of bonds
- Unintelligable accounts
Of particular interest among the bears was Globo due to their lawyers being in attendance at the show in order to ensure that panellists do not say nasty things about them.Grab Your Free Value Investing Ebook
Whenever a listed company spends shareholders money instructing lawyers to try and silence public debate about them it is always interpreted (and rightly so) as a massive red flag and a green light to go short: a prudent/sensible management team should focus on winning new business, cutting costs, i.e. doing things to create value for their shareholders.
For greater depth about the issues facing these and additional stocks, check out The Bears Session video from The UK Investor Show 2014.