AX1 - Accent Group

[galumay]

Every time I try and understand retail, I just get more confused.

Well thats a consolation! If someone so much more experienced and knowledgable than me is confused then I feel better about my confusion!!

 

[Klogg]

Well thats a consolation! If someone so much more experienced and knowledgable than me is confused then I feel better about my confusion!!

Some of my recent decisions seriously contradict the bolded part...

 

[Tightwad]

even the more knowledgable have been caught on this, ausbil microcap being one (amongst other retail stocks), now the managers have suddenly decided they need to leave and manage their family finances.

 

[tinhat]

I'm still keeping my eye on RCG. The one thing that has never impressed them with me are their websites. Compare RCGs Hype DC to their competitor JD Sports. All the models in the fashion shots have half their heads cut off - WTF?. Their Platypus shoes site template is very similar to Hype DC. In fact most of the RCG brand websites are too generic and commoditized shoes. Too many shots of shoes on the home pages and not enough brand personality. All these sites are more or less selling the same sneakers but the JD Sports site is a lot more targeted to the personality of the target market.

As for The Athlete's Foot, I've never been impressed with that website.

 

[Tightwad]

yep the Athletes Foot site is very plain, it's fine for me but it's not what you'd call engaging. the blog section is a slight improvement.

 

[galumay]

What looks to be a good AR released today, I havent had time to fully digest it yet, but overall it looks like they have bedded down the acquisitions and seeing some good growth. What caught my eye was the 79% growth in online sales - off a low base, but impressive none the less.

The strategy for online sales is also clearly driven by looking at what others like Amazon have done. This is one of the problems for disrupters like Amazon, the low hanging fruit at the start of disruption is easy - no one realises whats going on. Down the track though competitors learn from the disrupter and copy their business model - with some advantage from being already embedded in the market.

 

[galumay]

Nice jump of 12% or so for RCG today, due to an off market sale at a premium of 20% to the previous close. Lovely to see the shorters bleeding out of their orifices!! A timely reminder to those who believe shorters have a special insight into businesses, they get it wrong just as often as those of us that go long.

 

[System]

On November 29th, 2017, RCG Corporation Limited (RCG) changed its name and ASX code to Accent Group Limited (AX1).

 

[tinhat]

I'm back in today. The stock has "jumped the creek" and my timing is based on a hunch that, now that it has closed the gap, it is going to get support around the 30 week moving average. In terms of fundamentals they have good brands, good management, good track record and my expectation is that the dividend is sustainable.

 

[galumay]

BOOM! What a HY report, revenue and profit up 20% on PRP, share price up 25% in early trading. I hummed and hahed about selling out of AX1 at one stage this year, but decided all the noise around disruption in retail was overdone. The continuing growth in online sales is especially impressive. (although the 179% growth is a little misleading because being a HY report its comparing PRP.)

 

[Boggo]

Seems to be heading in the right direction. (I do hold).

 

[stevo2]

I subscribe to a service which reports on "financial health". They like them.

 

[galumay]

I see AX1 hit a 12 month high of $1.25 today, that means its once again run a fair way ahead of my range of calculated value. It takes some pretty heady growth to support this sort of SP in any of my modelling. I think the optimism coming out of the HY results is a bit OTT. The fact that the PRP was pretty poor made the figures look better than they really were.

I am thinking I might sell out of AX1, its a double bagger at that price for me and I think it could drop pretty fast and hard with anything but the most positive of news going forward.

 

[Miner]

I see AX1 hit a 12 month high of $1.25 today, that means its once again run a fair way ahead of my range of calculated value. It takes some pretty heady growth to support this sort of SP in any of my modelling. I think the optimism coming out of the HY results is a bit OTT. The fact that the PRP was pretty poor made the figures look better than they really were.

I am thinking I might sell out of AX1, its a double bagger at that price for me and I think it could drop pretty fast and hard with anything but the most positive of news going forward.

Galumay

If you recall how RCG fared badly and every Tom Dick and Harry was doubting on RCG. Then takeover came and AX1 came to limelight. I am more hopeful on AX1 than I was on RCG though held them well.

 

[galumay]

Hey Miner, it wasnt really a takeover, RCG bought Hype and a couple of others and then decided to change their name to Accent Group (AX1). No doubt the business was sold down, the shorters were attracted (and got it wrong as they often do), the fears around retail and Amazon were factors in the negative sentiment, as were some softer results than expected.

The thing is the SP price has not just recovered, once again its run ahead of value and from my strategic point of view, once the SP is significantly ahead of my range of calculated value, and I cant find a compelling reason for the increase, then its time to sell.

 

[Miner]

Hey Miner, it wasnt really a takeover, RCG bought Hype and a couple of others and then decided to change their name to Accent Group (AX1). No doubt the business was sold down, the shorters were attracted (and got it wrong as they often do), the fears around retail and Amazon were factors in the negative sentiment, as were some softer results than expected.

The thing is the SP price has not just recovered, once again its run ahead of value and from my strategic point of view, once the SP is significantly ahead of my range of calculated value, and I cant find a compelling reason for the increase, then its time to sell.

Galumay
Thanks, and yes RCG was not a takeover.
I hear your strategy and that makes me think twice to develop a good and robust strategy with an exit clause too.
Take care and Regards

 

[tinhat]

I see AX1 hit a 12 month high of $1.25 today, that means its once again run a fair way ahead of my range of calculated value. It takes some pretty heady growth to support this sort of SP in any of my modelling. I think the optimism coming out of the HY results is a bit OTT. The fact that the PRP was pretty poor made the figures look better than they really were.

I am thinking I might sell out of AX1, its a double bagger at that price for me and I think it could drop pretty fast and hard with anything but the most positive of news going forward.

"Let your profits run" is the old saying. I must admit I am guilty of not cutting my losses but bailing out of winners out of nervousness from making a profit. Any experienced trader will say that is no way to make money from the stock market.

I subscribe to Lincoln Stock Doctor for fundamental analysis and the share price is above their valuation, but if the company continues to achieve above expectation growth then that valuation will also rise in time.

That said, RCG (the old AX1) was one of the few stocks I managed to successfully active invest in over the past few years. It displayed unwarranted volatility but had enough liquidity of trade in the stock to make it easy for a small scale retail investor like me to trade into and out of.

I must admit I've been thinking about taking an exit too. Perhaps it is worth setting up both an automatic stop loss and take profit position through your broker?

The problem I have is that I like to look mainly at companies with strong balance sheets and positive outlooks but I don't have a clue about retail. I don't understand popular culture, the materialist society, fads, fashions. All I know is that there are acres and acres of land and media messages dedicated to selling **** to people at stupid prices.

 

[galumay]

Any experienced trader will say that is no way to make money from the stock market.

I am not a trader though! Any experienced value investor will tell you to sell once the SP exceeds your calculated range of IV by a significant margin, with no compelling explanation, its time to sell!

Perhaps it is worth setting up both an automatic stop loss and take profit position through your broker?

Thats not an approach I had considered, also its not really consistent with my strategy, once I have worked through my decision making process I will take action - be it buy, hold or sell.

...but I don't have a clue about retail.

I am hearing you! I just concentrate on the business, there a a few sectors I don't have a clue about!

 

[galumay]

I am out, sold today for $1.265, an 85% return of invested capital, plus dividends so total return on capital, 124% over 3.5 years so 35% per year, I have learnt my lesson about sticking to my strategy and selling when a company's price runs well ahead of my range of calculated value.

I believe there is some possibility the SP will run on to make new highs above $1.90, but a similar possibilty of negative sentitment would likely see it drop back well below $1, the most likely outcome IMO is that it will continue to sit around the current price until the future is clearer about their ablity to grow earnings.

 

[tinhat]

I sold today at $1.495. I want to hold a bit more cash going into June and the new tax year.