Tuesday, 1 March 2011

HMV warning

Thanks Robert Swannell, are you going to pay HMV shareholders a golden parachute?

trading update

can't believe the guy rocks up and leaves after such a short period of time when the firm was already in a difficult position. Its not even being a mercenary, and the excuse is very poor.

net debt of £130mm is worse than the City was forecasting, its a little worse than the Raven was thinking given their update, and leaves less room for further restructuring costs and makes meeting their bank covenants a little harder.

The news in January that credit insurers were restricting insurance to HMV's suppliers should be in the stock price by now. The point the Raven feels the retail market is not pricing in so clearly is that between October 09 and the release of full year results in April 2010, inventories fell from £319mm to £248mm, a reduction of £70mm of stock, roughly one would expect a similar % move this year, and so inventory should fall to ~£234mm ie £68mm, which should mean that HMV naturally should be able to trim payables to £420mm. So in reality the demand for insurance should have been lower over the half.

Bought a few more shares, however its still a tiny position and should HMV fall to zero it would cost less than 1% for the portfolio, which is the maximum risk. Gut feeling that this is going to come with a rights issue that it should be able to get away if it does it sooner rather than later, the worry is that creditors get to extract the value from this firm.


  1. You're braver than me, buying bust retailers. You never know if you're gonna get a DSG or a Woolies surely?

  2. I back the three legged blind dog if the odds are good enough. When the odds are so wide, then you only need to risk a very very small amount.

  3. and it looks like that three legged dog is getting shagged senseless by the alsation next door.