Sainsburys have been in decline for a long time but the shares seem to have found a floor (whether they will hold above that level or not is a big question), and there does not seem to be much mileage on the downside. The Sainsbury family control a very large block of shares and it is almost impossible for a hostile bidder to succeed as such, the only chance of a bid is if the family wish to take it private.
SOCRATES
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The fact that an enterprise may show fundamentally not to be in the best of health does not detract from its technical position in the market. This is because the supply~demand function is not always related to the fundamentals. For this reason, perfectly good and healthy companies may experience their stock being marked down, and the opposite the case with others. This serves to baffle and frustrate the management who have not a clue as to why their shares may be behaving oddly, and not in line with current thinking. It can be quite entertaining to the knowledgable observer but very frustrating to others.
In recent years there have been many, many cases like this with British Equties, huge press comment, every cat and dog expressing an opinion, and so on, but the root core of the problem of poor share performance is always attributable to the supply demand function, then everything else to follow. I have seen companies undergoing bear pressure getting desperate and changing the board, the co sec the chairman, the MD, the product and hell know what in an attempt to improve the share performance, including raising the divi., to no avail until the campaign to depress the price to accumulate it has been completed and then suddenly whoosh ! up it goes, HA ! HA ! ....And all the bad stuff behind appears but like an unpleasant dream that never happened.
In recent years there have been many, many cases like this with British Equties, huge press comment, every cat and dog expressing an opinion, and so on, but the root core of the problem of poor share performance is always attributable to the supply demand function, then everything else to follow. I have seen companies undergoing bear pressure getting desperate and changing the board, the co sec the chairman, the MD, the product and hell know what in an attempt to improve the share performance, including raising the divi., to no avail until the campaign to depress the price to accumulate it has been completed and then suddenly whoosh ! up it goes, HA ! HA ! ....And all the bad stuff behind appears but like an unpleasant dream that never happened.
Soc,
I take your points and generally agree.
Lion,
What & do the Sainsbury family own, I guess this ownership could make things interesting.
However, the business is really going down the pan, so bad that if it carries on as it has, there won't be a business soon. And I can't see anyone allowing that happen.
On a plus side, I think the purchase of the Jackson stores was a good move.
Porks
I take your points and generally agree.
Lion,
What & do the Sainsbury family own, I guess this ownership could make things interesting.
However, the business is really going down the pan, so bad that if it carries on as it has, there won't be a business soon. And I can't see anyone allowing that happen.
On a plus side, I think the purchase of the Jackson stores was a good move.
Porks
Porks,
The family own about 34% of the shares and there is no chance of them selling out without good reason or an equity stake in the buyout vehicle.
Technical and fundamental traders always disagree as to who really moves the markets or has the most influence on the share price movements; but I would say that the real medium to long term movements are due to the fundamental investors and traders as opposed to the other way round. For a start, they trade in much larger blocks and hold for longer periods, that is why the shares seem to have found a base. The Company is not a basket case and at certain levels represent value to different types of investors. You have the dividend yield of 5.47% which is not to be sneezed at and the PE ratio is 12.25; these compare favourably to other companies in the sector.
The family own about 34% of the shares and there is no chance of them selling out without good reason or an equity stake in the buyout vehicle.
Technical and fundamental traders always disagree as to who really moves the markets or has the most influence on the share price movements; but I would say that the real medium to long term movements are due to the fundamental investors and traders as opposed to the other way round. For a start, they trade in much larger blocks and hold for longer periods, that is why the shares seem to have found a base. The Company is not a basket case and at certain levels represent value to different types of investors. You have the dividend yield of 5.47% which is not to be sneezed at and the PE ratio is 12.25; these compare favourably to other companies in the sector.
Lion,
Div yield/ pe ratios etc don't mean much when there's a rapidly dwindling customer base, and sales are falling accordingly,
It may not yet be terminal, but its not far off, IMHO,
How should it be played ? Wait for bad news and buy the crash with a view to sell higher when a takeover seems likely, or short and wait for the bad news to cash in your chips ?
Porks
Div yield/ pe ratios etc don't mean much when there's a rapidly dwindling customer base, and sales are falling accordingly,
It may not yet be terminal, but its not far off, IMHO,
How should it be played ? Wait for bad news and buy the crash with a view to sell higher when a takeover seems likely, or short and wait for the bad news to cash in your chips ?
Porks
Porks said:
Porks
That Sainburys have problems I will not deny but as to crash and terminality I will keep my powder dry.
I thought a couple of charts might help to bring a little perspective to the discussion. The blue lines show my perceived s/r zones.
It is interesting to look at the 10 year chart and to see how far back s/r re-asserts itself at a similar price zone.
The 6 month chart shows my thoughts relating to s/r.
So Porks you pays your money and you takes your choice
If readers of this post analyse the charts differently please feel free to say so.
Regards
bracke
Attachments
Porks,
Your post says it all.
Unless the sales decline is arrested, the dividend will have to be cut and the PE ratio will rise; not a palatable prospect for holders or potential buyers.
If I knew the answer to your question, I would be a very rich man. However, I will sell the shares with a tight stop if there is a general market decline or wait for them to drift lower and buy for the medium term on the basis that the business will be turned round by management.
What are your views?
Lion63.
Your post says it all.
Unless the sales decline is arrested, the dividend will have to be cut and the PE ratio will rise; not a palatable prospect for holders or potential buyers.
If I knew the answer to your question, I would be a very rich man. However, I will sell the shares with a tight stop if there is a general market decline or wait for them to drift lower and buy for the medium term on the basis that the business will be turned round by management.
What are your views?
Lion63.
Talk about coincidences.
Just come back from the supermarket, and while at the checkout overhead the customer in front saying to the checkout girl 'Yes, we used to go to Sainburys, but we can get twice as much shopping here' (Morrisons) and the checkout girl replied, 'Yes, everyone says Sainburys is too expensive'
And this after their big campaign about lowering prices.
But it has got some great stores, I wonder what its book value is...
Porks
Just come back from the supermarket, and while at the checkout overhead the customer in front saying to the checkout girl 'Yes, we used to go to Sainburys, but we can get twice as much shopping here' (Morrisons) and the checkout girl replied, 'Yes, everyone says Sainburys is too expensive'
And this after their big campaign about lowering prices.
But it has got some great stores, I wonder what its book value is...
Porks
Absolutely spot on Porks. Unfortunately for them, they are left with customers like me who now have divided loyalty ie. I go there but my wife goes elsewhere and berates me for paying too much in Sainsburys. How long will it be before I also have to listen to reason and shop elsewhere? When the loyal customers desert them what will be left?
One of their major problems is that they never seem to stock what you want or the bargains so shopping in itself becomes a chore. The suits at headquarters should get off their backsides and tour the stores.
One of their major problems is that they never seem to stock what you want or the bargains so shopping in itself becomes a chore. The suits at headquarters should get off their backsides and tour the stores.
"Sansbury' s in trouble"..not as much as Asda !
http://uk.news.yahoo.com/050204/140/fbs1l.html
I just want to know..what's his top speed and does he find cornering a problem on a full tank !
http://uk.news.yahoo.com/050204/140/fbs1l.html
I just want to know..what's his top speed and does he find cornering a problem on a full tank !
It’s hard to believe that Sainsbury were top dogs at the supermarket game less than twenty years ago, isn’t it?
If Sainsbury have a number of problems, then it’s widely acknowledged that their distribution system is not the least of them. Here’s an insight into what went wrong:
http://www.theregister.co.uk/2004/10/19/sainsburys_v_accenture/
http://news.bbc.co.uk/1/hi/business/3855559.stm
My guess is that Sir Peter Davis is probably looking forwards to an unexpectedly quiet, if comfortable retirement.
Cheers
Mayfly
If Sainsbury have a number of problems, then it’s widely acknowledged that their distribution system is not the least of them. Here’s an insight into what went wrong:
http://www.theregister.co.uk/2004/10/19/sainsburys_v_accenture/
http://news.bbc.co.uk/1/hi/business/3855559.stm
My guess is that Sir Peter Davis is probably looking forwards to an unexpectedly quiet, if comfortable retirement.
Cheers
Mayfly
Sir Peter Davis did a shoddy job at the Prudential got a knighthood and proceeded to run Sainsburys into the ground. In the event that he pops up in any other boardroom, you know what to do; even if you do not short the shares, you will be well advised to steer clear or dump any existing holdings.