Lots of bits and pieces about in the regulatory updates...but I cannot really rouse myself to talk about why William Hill (WMH) finally got religion to evolve its CEO or why I am not too surprised Dixons Carphone (DC.) is a better business than the market gives credit for, nor even why latest numbers and comments from Barratt Developments (BDEV) and Redrow (RDW) are not enough for me to change my (negative) views on the housebuilders. By contrast I am pleased to read a positive update from boohoo (BOO)…
I do not own shares in the stock but, as I recounted back in June, I saw value up to 250p and it has done this (and quite a bit more) now. So well done them – and well done any shareholders. It is instructive to understand why it has done well and other rough peers - such as ASOS (ASC) - have continued to have a shocker. As the link above suggests, in my view it is all about the respective strength of the management teams (as well as naturally the inherent growth potential in online clothing). The hardest thing in management to do is...manage. In today's oh-so-correct world sometimes managers forget what they are there to do. Before you write in and start to highlight the business charlatans who are overly short-term and generally the 'unacceptable face of capitalism', being a strong manager and leader is all about setting a positive example, being meritocratic and taking responsibility – including admitting when you are wrong. These are traits very consistent with building a sustainable and successful business.
I see this at boohoo, with the business and creative combination of the co-founders plus a willingness to not only squeeze out a Chair who was past his sell by date but also bring in a chief executive with some new and relevant skills. I think the stock is now firmly and fully priced (and if I held I would be getting out the top-slicer at a minimum) but I applaud the way it has been grown via smart branded acquisitions and that it has guided the market. ASOS can learn a lot from it.
Of course the other reason for the squeeze is the material short interest that Steve noted in the most recent of his updates. What a fascinating list of mostly dogs! I imagine some will now fall on their sword here and the short interest abates – but the better news for them is that there are a number of other businesses on that list where redeploying further shorting exposure maintenance capital might make a bit of sense.
Filed under: Boohoo, ShareProphets podcast, Altitude, finnCap, Bearcast, ProPhotonix, Ashmore
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