Disclosure: The author has a short position in one or more of the shares mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Lucian Miers share tips of the year Number 1 – Short Purecircle

By Lucian Miers

26 December 2014 00:55

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I last wrote about Purecircle (PURE) in March and predicted that 2014 would be the year for the big collapse. I was wrong: the permascam that is Purecircle has remained rock solid while all around it our favourite bear trades have borne fruit. Indeed, for the price of Purecircle (£940 million) you could now buy Quindell. Gulf Keystone Petroleum, and Globo combined and still have change left for Iofina.

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Comments

Warun Boofit

26 December 2014, 07:20

Just looking at the fundamentals, I am not really well up on this stuff but with a P/E ratio of 666 the sign of the devil its hard to imagine the share price could do anything other than descend. I think even a ratio of 66 should be ringing alarm bells but 666 is ridiculous, problem for me never having shorted before is figuring out the best position to take, seems there are an infinite number of possibilities . I will go away and see if I can figure it out and come back with a plan. My only reservation is that Numis and Liberum both think its got upside although I know from experience that most brokers are pillocks so probably can be ignored.
Forty Two

27 December 2014, 02:33

I’ve just had a quick gander at this, which also came up on the tall poppies screen. Obviously a weird and wonderful shareholder list with the exception of Wellington. Trades about £80k a day?. Not brilliant for trading despite the implied cap. As far as I can see inventories were c. $86m as at Sept (flat yoy), when revs were $100m up from $70m (seems organic). Obviously high but not over a year’s worth on y/e no’s (and cons forecasts are for another $30m incremental revs this year – not that I have any view on that). With the Coke Life launches rolling out I’m not really sure you have a dead cert miss catalyst to get this to work on a sensible time frame, despite the bonkers valuation. Jun16 revs look more hockey stick at $184m than this year’s $130m though. I also note that Jun13 numbers saw an accounting profit booked, positive CFO and net FCF losses reduced from some $30m to some $5m. Talking to my calorie-obsessed gf she wouldn’t touch Coke Life at 27cals per 500ml vs. nowt for diet coke or water. It is hard to see how this would get much purchase amongst the calorie counters and the “organic” crew can’t be anything like the size of the sugar behemoths. Also even if you are 18 stone, why not go for diet or zero than the 27cals. She also says Coke Life tastes crap – anecdotal evidence I have not yet followed by parting with £1.25 at Tesco online (I do every little to help Tesco), which at least is the same price as Diet Coke. So will watch the Coke Life rollout with interest and buy a bottle – but a mon avis it’s not ready for shorting yet. Thanks for the tip mind – on the radar screen…