COL - Coles Group

[Miner]

Hmm - last posting was March 26!
Any way, I have repeated this posting on WES as well.

WES and COL holders
I thought to share the snippet from Motley Fool Share Advisor - the following are their reported performance following recommendation in 2015 (I have not checked the calculation) and today 20 June they have said SELL both the shares.
Incidentally at the COB today 20/6, both WES and COL closed with increased price.

Wesfarmers Limited and COLESGROUP DEF SET ASX:WES ASX:COL 26/06/15 BUY N/A N/A 53.2% 43.8%

"Today we have decided to close out a recommendation we made back in 2015 by selling Wesfarmers (ASX:WES) and Coles (ASX:COL).

As you’ll likely know, Coles was spun out of Wesfarmers, giving us a (smaller) parent and a newly listed child. We sat on them both while we waited for the dust to settle, but now we know enough.

And, unfortunately, there’s a twist in the tale. Read on, Fool!

Coles was always a curious case.

The business is arguably one of the most mature businesses on the ASX. Despite some newer players, such as Aldi, taking market share over the past few years, the supermarket duopoly between Coles and Woolworths (ASX:WOW) remains strong with both players still owning around 30% of the market each according to Roy Morgan." ​

Disclaimer - I do hold COL and always mix wine and salt with MF recommendations. DYOR

 

[fiftyeight]

Coles at ATH.....in this market???

What am I missing?

1) My initial thought was that the average spend will take a hit in the medium term. This may be the case or the less well off customer, but is this countered by people not going out and therefore spending more money on their home cooking and liquorland, hence the rise in price?

2) Lets say my initial thoughts were correct and the average spend does decrease and Coles reduces divs. It is plausible relative to other companies, the div decrease will be smaller than companies. Therefore for those who need/want to park money somewhere Coles is the least worst option at this point, hence the rise in price.

Case 1 = don't short
Case 2 = don't short yet

3) I am completely off the mark and there are factors that my novice brain is not even considering

 

[sptrawler]

Coles at ATH.....in this market???

What am I missing?

People still have to eat, people still use their phones, people still need their rubbish picked up.
COL, WOW, TLS, CWY.
Why would their earnings change?

Just my thoughts, I do hold.

 

[fiftyeight]

People still have to eat, people still use their phones, people still need their rubbish picked up.
COL, WOW, TLS, CWY.
Why would their earnings change?

Just my thoughts, I do hold.

Yeah I get that, but personally and speaking to people within my circles, if **** really hit the fan, there is a lot of room to cut spending in the grocery bill if required.

Maybe this spending cut wont be required as entertainment spending will decrease instead, I guess it depends on how bad things get?

 

[fiftyeight]

WOW dropped over 30% during the GFC, what is different this time? We have a potential credit crunch AND a pandemic

 

[InsvestoBoy]

Coles at ATH.....in this market???

What am I missing?

You're reading too much into a small move in a crazy market.

Maybe some big fund was short and had to liquidate all their positions?

Maybe some insto is looking to put fresh money to work in Consumer Staples?

Maybe this coronavirus thing will keep rolling and COL will be down 50% in a few weeks as overseas funds liquidate all their ASX holdings?

 

[sptrawler]

Yeah I get that, but personally and speaking to people within my circles, if **** really hit the fan, there is a lot of room to cut spending in the grocery bill if required.

Maybe this spending cut wont be required as entertainment spending will decrease instead, I guess it depends on how bad things get?

People will give up a lot of things before food, the more worried they get, the more comfort food they eat. Human nature, I'm not saying it wont get hit, just that if it gets hit most others will clear the fence.
Just my opinion.

 

[fiftyeight]

You're reading too much into a small move in a crazy market.

Maybe some big fund was short and had to liquidate all their positions?

Maybe some insto is looking to put fresh money to work in Consumer Staples?

Maybe this coronavirus thing will keep rolling and COL will be down 50% in a few weeks as overseas funds liquidate all their ASX holdings?

I am more intrigued by the lack of move in a crazy market, not so much that it has ticked up

 

[Dona Ferentes]

Dropped this graphic into
https://www.aussiestockforums.com/threads/good-asx-listed-stocks-to-buy.35272/page-2#post-1062015

Coles and Woolies versus the index. But asked the question; defensive or consumption brought forward?

 

[sptrawler]

Coles and Woolies versus the index. But asked the question; defensive or consumption brought forward?

There would have to be a lot of that, but when the scare is over, the baked beans will take years to be eaten, people will still buy their 'normal' food IMO.

 

[fiftyeight]

Maybe ill take a punt with some play money and see if I can buy some out of money puts. Something like a strike of $13.25 to expire in May. This is either gonna tank or not.

......

Wow there is like no liquidity, like none. If I throw in a random bid of like $0.05 AND it was taken AND it went in my favour, would I even be able to close it out?

This might be a live lesson in 'how not to learn options'

 

[InsvestoBoy]

Wow there is like no liquidity, like none. If I throw in a random bid of like $0.05 AND it was taken AND it went in my favour, would I even be able to close it out?

Are you looking now for liquidity on ASX options?

Check back during market hours.

In the worst case you can always exercise and become "short" then close your short by buying at the market price.

 

[fiftyeight]

Are you looking now for liquidity on ASX options?

Check back during market hours.

In the worst case you can always exercise and become "short" then close your short by buying at the market price.

I was looking at open interest, and the lack of it across almost all strikes and months. Maybe a poor proxy for volume?

Not sure I would have the bankroll to fund exercising the put if I got enough contracts on haha

 

[Ferret]

Sold mine today. I get that it is defensive, but all-time highs makes no sense to me.
I think the strength is a reaction to the hoarding and is not going to last.

 

[fiftyeight]

Well maybe this shows my lack of confidence in this trade and lack of options knowledge.

My option order went through on Wed but I had redic low price, so was not filled. The order was purged over night and when I went to put a more reasonable one in, for some reason it was not processed never hit the market??? Waiting for a reply why.

On Friday I was using IG to try and get short with a CFD. Crazy busy at home, I kept trying to get sell at a good price and kept missing it. I have never been a d!ck for a t!ck before, normally the opposite and I just pile in at market. Not sure if this is the volatility, shorting a rising stock, that I dont short often or I am just more risk averse at the moment and dont feel like losing money even if it is the play account.

 

[fiftyeight]

After being a d!ck for a tick on Friday and missing getting short $17.50, I scaled right back and just placed a small token trade yesterday, more to keep my opinions honest tbh. Sold 100 at $15.76, grrrrr should be short $17.50+

Immediately have trade regret, why short the only company that will stay open during a lock down

My 'how NOT learn options' is also going well. With no bids or offers, my orders not hitting the market who knows what is going on, I guess someone does but it is not me. I learn best by making mistakes unfortunately so, my fist lil options trade is underway.

I have been mostly reading up on selling puts to accumulate long term holdings or buying long dated calls deep out of the money. First trade executed, buys puts 2 months from expiry......plan is going well so far.

 

[fiftyeight]

Had to post, maybe the only time it is in profit.

However as there is no action at all, no idea how they came up with market price. I suspect if I did try and close I would NOT be filled at anything like $0.215

 

[Dona Ferentes]

Any offer they can't refuse?

Coles has extended a lifeline to wine, craft beer and spirit makers by offering to buy stock that would otherwise have been destined for the restaurant and hotel trade. Beer, spirits and wine makers are facing a cashflow crisis as hotels, bars and clubs around Australia are forced to close and restaurants are suffering a sharp drop in bookings. Many have shut their doors to all but takeaway customers.

Coles has taken out a series of advertisements offering to buy product from wine, craft beer and spirit makers in NSW and Victoria who would not normally sell through its Liquorland, First Choice, Liquor Market and Vintage Cellars chains

 

[basilio]

I think COLES like all supermarkets will hold and increase their profits through the corona virus. There won't be as many specials. They will bring in more non food items becasue they can. There will still be enough money for people to feed themselves and because people can't spend on much else eating at home will hold or increase.

Alcohol sales will rise with the collapse of hotel trading. It will be good defensive stock to hold for the next few months

 

[Trav.]

As can be seen below announcement out this morning and SP dipped accordingly. I expect it to bounce back but timing of sale is not the best for COL