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Marksandspencer

M&S 30-40 day trade - my first published IdeaM&S Been the back bone of UK retail store fronts for a life time, has been in general decline for the last 15 years. It has many of the features of an attractive short: legacy, disrupted (not disruptive) business model shrinking revenues not much evidence of any economic/competitive moat low margin capital intensive financially geared (financial net debt £1.5 BN, excluding lease liabilities) With T/O of £10BN and £33M of profit trading on a diminishing margin year on year (half'd in last 2 years to 1.46%). Presently trading at a forward PE ratio of 10.3, which is 17th (out of 34) for its sector, so still over valued compared to it competitors. It is like an old horse, needs shooting or putting out to pasture, like many UK retail businesses it hasn't adapted to the changes in the high street. Reason for Idea Each year for the last 2 years the share price has dropped 2017 9%, 2018 8% over November December due to poor Christmas trading figures. There is no reason to not expect the same this year and added on top the increasingly worse trading statements each year. My trade was: Entry 190p Limit 160 (15%) SL 210 (10%, which the share price hasn't hit since July 2019.)
LSE:MKSShort
by OldManFit
1
POTENTIAL MARKS & SPENCER (MKS.L) SHORT SELL @564, 558, 551The brilliant thing about good news in stock trading is that it opens up opportunities for both bulls and bears. Bulls want to jump in on the hype (along with the herd) hoping that some other bulls jump in right after they do so that they make money. They expect to buy and hold because the company is seen to be in good shape. Bears, on the other hand, look for areas where supply overwhelms demand. They want to short sell to these bulls. In other words, borrow from a broker to sell to those who want to buy. Then buy at a lower price to return to the broker. Usually, there is good news just as price reaches an area where institutional supply overwhelms demand. Therefore, the bears wait on the bullish run to pounce. Here we see MKS.L rising quite well over the past few weeks. Business must be good. The FTSE100 is beginning a rally back to 7000 and so everything is rosy. Marks and Spencer also happen to have broken their 14 quarter run of declining earnings this quarter. This is fantastic news. Investors buy stock based on this "news". Excessive demand causes prices to open 4% higher on April 2 (Late April Fools' prank). This rally, which presumably profited some in the short-term, drove straight into an area where willing sellers were in their numbers. We know this because price fell dramatically from here the last time (in 2008). If there is still plentiful supply, price should now fall to at least 530.00. Entry was missed at 555.70 on this one but hopefully there is a retest of that area before prices fall. Orders were placed on the M5 chart to allow risk of 2-3 base points.
MShort
by _mightymanny