An interesting week, when Theresa May gave an infomercial on how to take a cough sweet in front of the Tory Conference, Catalonia demanding independence, UK car sales slumping by 9% and no threats from North Korea (hopefully they don’t start on the weekend).
1). The Infinite Ways to never sell a great company – By Vintage Value Investing.
2). This research has on DFS Furniture has some interesting pieces – By Wert Art Capital. What struck me about DFS Furniture are the following:
A). It already attracts 40% of upholstery web traffic in the UK.
B). The increase in market share of furniture increase from 9% in 1994 to 26% today.
C). They produce 30% of their products in the UK, due to operating five factories.
3). A writer made some dashing claims about China’s debt to GDP being 400% by using “Productive GDP”, a definition that excludes wasteful investment in China’s economy. Even more astonishing is China’s debt to GDP can be as high as 700% if you include $37 trillion of shadow loans (off-balance sheet liabilities) – By Deep Throat (nothing to do with porn, and everything to do with evading China’s internet police).
1). Stanley Gibbons reported on Monday and it was horrifying. The raised over £14m last year and spent most of the cash to money heaven. Cash balance stands at £2m. Shareholders’ equity is down 70%. The current cash burn stands at £7m-£8m.
– It needs to raise £10m to survive for another year.
-Their inventories may have value, but the pace of sales is super slow. By the time, they sold their valuable inventories, the expenses for holding it outweighs the benefits.
Verdict: Continue to sell Stanley Gibbons.
Daily Mail post on Stanley Gibbons.
2). Nighthawk Energy is struggling to meet covenants requirements meaning the risk of default and suspension is high.
Information on Nighthawk death spiral.
3). Tesco has finally made a decent first-half profit. They made £424m in net profit. Using unadjusted earnings, it rose to £386m from £254m. The change is their pension deficits which have fallen from £6.6bn to £2.9bn. Also, it manages to reduce debt by £700m.
There is one caution as Tesco shorten the lives of their former employees by one-and-a-half years from their 2017 annual report.
Verdict: Tesco is improving, but need more information for a turnaround to take shape.
Here is Tesco’s interim result.
Other Financial News
1). UK Construction Activity contracts for the first time since Brexit – The Independent.
2). Spend your old £1 coin before it expires in October – The Week.
3). Someone made £7,200 from selling a £10 note because of the serial number being special. – Daily Mail.
That was my first ever weekend reading post. Hope that was a nice round-up.