Category Archives: The In & Out

VodaMed: Generic QE?

Another cosy consensus: The Vodafone payout will not only benefit shareholders but is going to act as a corporate version of quantitative easing, injecting a massive dose of liquidity and, as one top-20 Voda investor said, “pep everything up”! Investors will want to reinvest the proceeds and with money burning holes in their pockets, they will be rushing out to buy stocks with a profile similar to that of Vodafone. After all, “it’s a good time to buy” according to another top Voda shareholder.

Disclosure: Pinkers, too, is a happy Voda shareholder and delighted to receive the generous freebie… but Pinkers will SELL (Verizon) and SIT on a bag of money. Better to have money burning a hole in your pocket than burning the contents! “A good time to buy”… a bad joke, indeed.

Merryn is right!

Merryn Somerset Webb, Editor-in-Chief of Money Week, advises to “steer clear of the FSTE 100″. Merryn is right. Dead right. There simply is no way escaping the fact that shares are frightfully expensive. Investors’ greed has driven valuations well past the point of fair value. In recent weeks it has been raining profit warnings across the board, from minnow to giant, followed by brutal s/p markdowns. Overdue, too. At the same time, a float frenzy is upon us: always a reliable indicator that the top has been reached.

This is not the time to buy. Wait for the sales. And in the meantime, read Merryn’s excellent blog:

The Amazon factor!

It’s official: Ocado doesn’t give a toss! Tim Steiner, the co-founder, said that the reported widening annual loss “doesn’t concern as at all”. Just as well because if it did make a profit, its s/p would dive for Britain, posing a serious threat to Tom Daley’s gold medal chances at the forthcoming Commonwealth Games in Glasgow. Clive Black, of Shore Capital, may “continue to struggle with the notion that we should be looking at Ocado on a twenty-year horizon” but that’s ignoring the ‘Amazon factor’. Mr Steiner is keen to point out that “shareholders want us to invest in the platform and not to worry about short-term profitability.” The former Goldman Sachs banker has got it sussed: No profits, no worries. What matters is growth, growth and more growth.

The pursuit of market share at the expense of profit is, of course, a tried and tested recipe, especially in the fast growing tech sector, and if it works for Amazon, why shouldn’t it for Ocado?

Let’s get real: Waitrose on wheels (with the real thing nipping at its heels!) isn’t quite the same as the¬†international electronic commerce company that has grown into the world’s largest online retailer. That doesn’t seem to spook investors who continue to believe the tie-up with Morrisons, the loser of the supermarket race, will serve as a template for partnerships on an international level.

Mr Steiner adds:”We discuss options with third parties every week. We are not looking to conclude anything at the moment.” How very reassuring.