Markets, eh! Don't you just love them? Acres and acres of doom and gloom in the press but - when I last looked - the FTSE 100 was up. Now admittedly October was dire and the safety valve known as the pound is down, so comps and the backdrop are supportive. I am far from aggressively bullish - you cannot be without much more of a focus on mitigation, workarounds and basically liberating the private sector again to do what it is good at (making money in innovative ways) - but the old adage of 'being greedy whilst others are fearful' is whirling around my mind. You have to stay opportunistic...
Anyhow so far I have not done anything with my portfolio, but two regulatory updates strike me as worthy of note as they are both change-focused. Change is good for investors...so long as you can spot it before the majority of the rest of the market naturally. Reflecting this perfectly is my old mucker GVC Holdings (GVC) which - as per my late September observation - I did halve my position in above ten quid a share as it was a material winner and actually bigger than even my position in Barrick Gold (NYSE - GOLD)! The latest update observing the ebitda (comedy earnings measure) hit from closing its betting shops for lockdown mark two, has been accompanied by a broad shrug of the shoulders by the market relative to the 'excitements' of March/April. The market knows that the online betting genie has left the bottle years ago and the events of lockdown #1 just accelerated the transition. All another lockdown does is accelerate the already ongoing radical estate pruning. Good of GVC though to let us know the predicted impact very quickly: that suggests a management team who are on top of its game. Naturally, it could all be prolonged with all the accompanying messiness that would bring to this part of its business and its overall profitability, but you get the general gist of what I am saying: good companies just get on with it. And then there is Ocado (OCDO)...
Now I don't get the valuation of this business in a conventional sense but the notion that it is some kind of mainstream supermarket delivery service does need to be disabused too. The announcement about its acquisitions of the piece-picking robotics names Kindred Systems for $262 million and Haddington Dynamics for $25 million might be relatively small beer for a company now with a market cap of £18 billion+, but it highlights that really this is a technology facilitation name. Certainly, watching the videos online of its automated warehouses is a technological marvel and, whilst not completely unique, is night and day differentiated from the 'picker' who facilitates my online order (yes, I have joined the 21st Century and now have a regular online order).
The market naturally loves anything which appears to bolster this prowess, aided too by the company saying that firm demand (thanks the burgeoning M&S (MKS) link-up, means that it now sees full year ebitda at 'over £60 million' from a previously guided 'over £40 million'. Hardly a value name but at least it is trying/changing, hence a further vote of confidence by institutional investing types who must have technology to placate risk committees and management types. Whilst we wait for the politicians to catch up, focus on companies who are the change. Some will have it aggressively already factored in (Ocado), others will still offer a bit of interest for future gains (GVC). Suffice to say, this is an active and not a passive market.
Filed under: GVC Holdings, Ocado, US election, Inspirit, Telit, Pressure Technologies, DS Smith
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