This month has been the opposite of December 2018 which saw a steep decline on Christmas Eve which marked a year low on Wall St. Now we are seeing new all-time highs posted practically every day. Even the derided stock markets of Europe and the UK - as represented by the FTSE 250 - are at or near all-time highs…
In the demise of Thomas Cook (TCG) there was a degree of focus in the Press on the use on Non-GAAP metrics (“GAAP” being generally accepted accounting policies) and Ernst & Young’s role as auditor in auditing those measures. However, the Deadwood Press as usual missed the wider story.
The Financial Reporting Council has announced that it is to open an enquiry into the accounts of Thomas Cook (TCG) for the year ended 30 September 2018. Too little too late you say. Well perhaps, but what is at stake here is the poison at the heart of capitalism, the incestuous relationship between auditors and PLCs.
I wrote recently that, as a bear, one should not worry too much about big names appearing on the share register of a company of which one is short and have noticed that when a company is on the verge of failing, it is often the case that some bright spark decides to have a go and hoover up some equity…
Having sat on the fence for a while now, I have, somewhat belatedly, come off it and shorted a few Thomas Cook (TCG) at 13p. Last time I did this was in November 2011 when it was in a similar predicament but was bailed out by direct intervention from David Cameron, who effectively ordered the recently nationalised bankers not to pull the plug. Sadly, for shareholders this time round, I suspect that Theresa May has more on her plate right now than bailing out the company a second time...
I did warn my pal Andrew Monk, as he greedily filled his boots with Thomas Cook (TCG) shares and for a time he looked smart. Now the stock has collapsed to just 10p but that still values the company at c£150 million. The bad news for Monkey and Chris “three brains “ Bailey, a fellow bull, is that this is likely to be a zero.
As I write it is beautiful staycation weather outside which is wonderful news for many but potentially not so good for travel names such as Thomas Cook (TCG) which are focused almost exclusively on sending holidaymakers to foreign climes. Of course I have spoken about the company before - and my February call was looking downright shabby, even if there has been a touch of moving away from a Brexit cliff edge (the Halloween postponement) which has aided some of my other travel sector plays such as easyJet (EZJ) over the last week or two.
The tweet below is self explanatory. What on earth is Thomas Cook (TCG) thinking?
Travel operators TUI AG (TUI) and Thomas Cook Group (TCG) both featured in the top five most frequently tipped companies over the last seven days in a busy week for trading updates. Homebuilders Barratt Developments (BDEV) and RedRow (RDW) also received an influx of tips after both released interim results, while there was increased tip activity for GlaxoSmithKline (GSK) and Smith & Nephew (SN.).
I made a brave positive call on Thomas Cook (TCG) in late November after its share price shocker, noting that: 'The stock is cheap (less than 4 times EV/ebit) but clearly not without risk. Would I roll the dice here as a 2019 punt wrapped up in politics and climate realities? You know - rather than buying one of its holidays - just maybe I would given the range of assets'...
A number of trading updates caught the eye this week, but perhaps none more so than Greggs (GRG) and Thomas Cook (TCG). In terms of market reception, the two couldn’t be more different; while shares in Greggs soared, the price of Thomas Cook shares plummeted. In this week’s issue we cover current tipster and broker sentiment towards both UK firms.
The stock market can be a cruel mistress and whilst I am enjoying a celebratory sausage roll due to the strong trading update from Greggs (GRG), Thomas Cook (TCG) has disclosed more local difficulties...with a second profits warning in about two months…
