Great article on DSH from Forager Funds Management's blog:
https://foragerfunds.com/bristlemouth/dick-smith-is-the-greatest-private-equity-heist-of-all-time/
Currently trading for less than Anchorage paid for it.... although, clearly retail investors can't play tricks with funding their purchase with inventory liquidation and just have to watch as management write-down the bloated value of said inventory instead.
Ouch!
I'll be very curious to see if Dick Smith survives. Paying that debt down is going to be really tough without any cash flow and any capital raising will be extremely dilutive if they can even get any willing investors.
Great article on DSH from Forager Funds Management's blog:
https://foragerfunds.com/bristlemouth/dick-smith-is-the-greatest-private-equity-heist-of-all-time/
Investment View
We are attracted to Dick Smith’s new leadership and strong balance sheet. Within a short period, management have achieved an outstanding operational turnaround. Their substantial shareholding incentives further improvement amid a stabilising competitive landscape. Whilst its rebound is expected to moderate, historic brand investment ~$500million and upside to sales per square metre supports the outlook for new investors.
Offer Price: $2.20 | Listing: 4th Dec
"Dick Smith Holdings Ltd (ASX: DSH) this week announced improving sales and stated that it saw significant opportunities to expand its store presence. With the stock trading on a forecast price-to-earnings (PE) ratio of just 10x and sporting a forecast yield approaching 7%, it’s a stock worth considering."
Gerry Harvey’s recent comments on Australia’s high wages were also mentioned as a challenge to the business.
All in all, the 60-page report comes to the conclusion that Harvey Norman as a stock has reached its peak at $3.70 per share:
At 3 year highs of A$3.7 and current valuation, we believe Harvey Norman (ASX: HVN) stock seems overvalued and a compelling short, no durable moat, slow-growth Australian retailer facing multiple headwinds from intense competition. From extensive fundamental analysis of studying competitive position, growth and hundreds of footnotes from public filings over many years, we believe current valuation seems unlikely to be sustained due to slow growth, intense competition exacerbated by limited financial disclosure for investors.
The reason Harvey Norman’s share price got so high, according to the report, isn’t because it’s a good business, but because of positive market forces in Australia like the housing “bubble” and the weak Australian dollar in 2014 compared to the $US.
Electronics retailer Dick Smith has jumped as much as 24.9 per cent on news that Algy Pereira, the boss of Woolworth's Big W division, has resigned to take on a senior role at struggling electronics retailer Dick Smith.
Dick Smith has confirmed Pereira has been appointed director of retail operations but denied speculation he was hired as an immediate replace for chief executive Nick Abboud. Pereira, worked with Mr Abboud at Myer for many years, including two years as general manager of electrical, resigned from his role at BIG W
And this –
Mr Murray, who took the chair in February from Anchorage Capital Partners chairman Phil Cave, denied reports in online trade publications that Mr Abboud had been given four months notice
Might buy in soon. It's still a high revenue / profit business, and for the price a bargain. What do you guys think?
In the Sydney CBD store, there were probably around 20 people max browsing, and I saw only two people at the counter buying.
I don't have much to add wrt investment on DSH, but Melbourne shops were full to the brim. Full load of staff working seeemingly to the maximum of their ability. Lots and lots of purchases - all counters manned. This is the two main cbd stores in Melbourne. The suburb stores, my mate has advised was no different.
Strange you and your friends have all of the DSH stores under surviellance and scoped out. Noone I know, and I work with a lot of young people, even consider going into a DSH if they live within cooey of a JB-Hifi, let alone bothering to report on it to all and sundry. They have less stuff, a lot of their stuff is seemingly just random **** you wouldn't even expect to be in that kind of store (blenders, wat??) and whatever they have costs more than it should.
Strange you and your friends have all of the DSH stores under surviellance and scoped out. Noone I know, and I work with a lot of young people, even consider going into a DSH if they live within cooey of a JB-Hifi, let alone bothering to report on it to all and sundry. They have less stuff, a lot of their stuff is seemingly just random **** you wouldn't even expect to be in that kind of store (blenders, wat??) and whatever they have costs more than it should.
"New" Dick Smith Holdings is just another place to buy TV's, phones and kitchen appliances but doesn't have the biggest range or lowest prices in any particular field. So there's no reason to go there given that someone else always has more and/or is cheaper.
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