15225 replies to this topic

[Investment novice]

its interesting how the lawyers are trying to rush through a settlement. it is also interesting that Steinhoff requests waivers for a limited period until end june 2018.

Is this an indication that the market thinks that there may be salvation by end June and restoration of some value???

I look forward to the following news in the coming weeks:

 

1. reserve bank permission granted to take money out of SA

2. feedback to Parli

3. updated Q1 results for end DEC versus 2016

4. appointment of new directors

5, timeline for investigations

6. consent for sa bond redemption

 

sufficient reasons for some stability

 

 

 

[Investment novice]

yesterdays Parli session was fantastic- I think strategic for Steinhoff to be able to communicate to the market on what it has been constrained.

so the following assumptions hold from my previous comments:

1. they legally constrained to inform the market- this is due to the nature of the fraud impacting internal and external- this is a massive investigation and Steinhoff is playing ball with the authorities

2. business is operationally sound and liquidity sorted- we knew this

3. CFO unimplicated thus far therefore the fraud related to nature of interactions and not necessarily a massive hole in the balance sheet.

4. may have been some enrichment but there are other issues at play

5. price sensitivity works both ways- down and up

6. Insider trading assumption is massive and not limited to Steinhoff- knowing the relationships this could impact Capitec trades in the past year and PSG trades- FSB net will have to be wider

7. Delloiite may be laible and some money for Steinhoff from Delloites potentially from malpractice insurance

8. February is going to be an exciting month- nice upside opportunity

 

Going forward

 

there will be fines , legal challenges etc but this is a company that will come out of this scenario for the better

1. clean with full disclosures

2 operationally integrated

3. financially integrated

 

I am a strong buy to hold for 3 years expecting an upside from R7 currently to R60 in 3 years

[Investment novice]

Last part of your statement re countersuits are incredibly far fetched in my opinion, cannot see a logical chance of success on any of those issues.

far fetched for sure-

everything with this story seems far fetched? the contravention of ifrs , the audit failures; board ignorance?

[Procrastinator]

there was massive insider trading- the regulators and analysts will have fun with this debarcle. Viceroy may also be compromised if there is evidence that they had assistance that unduly positioned them.
 
Regarding legal challenges- this must still be determined and the extent. with the share recovery the payout reduces. if you look at all other companies with similar challenges the legal cases can take up to two to three years and a settlement is favoured rather than a court ruling especially In the dutch system where it is promoted.
 
That just means no dividends for a year? or two???
 
Steinhoff may also be able to file counter law suit against the investors that shorted the share, market regulators and the stock exchange that did not have a circuit breaker to prevent the excessive shorting.

Last part of your statement re countersuits are incredibly far fetched in my opinion, cannot see a logical chance of success on any of those issues.

[Investment novice]

there was massive insider trading- the regulators and analysts will have fun with this debarcle. Viceroy may also be compromised if there is evidence that they had assistance that unduly positioned them.

 

Regarding legal challenges- this must still be determined and the extent. with the share recovery the payout reduces. if you look at all other companies with similar challenges the legal cases can take up to two to three years and a settlement is favoured rather than a court ruling especially In the dutch system where it is promoted.

 

That just means no dividends for a year? or two???

 

Steinhoff may also be able to file counter law suit against the investors that shorted the share, market regulators and the stock exchange that did not have a circuit breaker to prevent the excessive shorting.

 

 

 

 

[Procrastinator]

In hindsight, the reason the share couldnt find a base was because of insiders offloading, must have been people in the business with firsthand knowledge about what was going on, must have leaked to some fund managers too. (Clearly not all though)

[Procrastinator]

This is certainly true-
however if there is agreement to debt restructuring will see both go up nicely next week
in the short term the share price will track downwards unless there is a steady stream of positive news or dislosures from SNH- market will continue to punish the share- close your eyes and buy low, lower

One has to wonder about all the pending legal action against the company such as class actions being put together.
Surely this will not help, if the company folds then the losses to the litigating parties would just be compounded.
The more legal cases brought almost prejudices the shareholders bringing the lawsuits.
I would imagine that the legal problems may offset any positives that may still emerge.

Pity, before the implosion, I was looking to open a long trade on this one, share just couldnt find a base so I did not enter, followed it from about 75 bucks, was a rand hedge too, couldnt understand why there was no support for this one given outlook for rand in 2017.

[Investment novice]

In the event of a wind up of the business, bonds and prefs are a diiferent tier of debt in importance, if there are funds left after a liquidation, the bondholders and pref share holders are paid first and then ordinary shareholders would be paid anything leftover. (In the event that there are any funds left)

This could be the reason, maybe not, have the share swings been outside normal movements since the bomb exploded, prob not.

This is certainly true-

however if there is agreement to debt restructuring will see both go up nicely next week

in the short term the share price will track downwards unless there is a steady stream of positive news or dislosures from SNH- market will continue to punish the share- close your eyes and buy low, lower

[Investment novice]

I don't think there is disagreement on the hole or the potential size of the hole- the market has already painted a doomsday scenario-

Majority of the assets are trading successfully.

short term liquidity is sorted for the next few months.

expecting some collegiate support by end of today to provide comfort for sustainability

trading update end Feb will also add to comfort

 

the value erosion is not permanent. This was a poorly integrated business that will come out of this with operational and financial systems integrated, cost efficiencies, and improved governance to the nth degree, and full disclosures on irregularities but also on the positive findings- audits are not only negative.

 

we have read all the negatives on what is transpiring- but it would be good to see some constructive view points if at all anything to give hope to those holding the shares - not false hope but a balanced perspective

 

perhaps in time in the market rather than timing the market that may once again be a reflection point in June 2018

[Procrastinator]

You make some good points. However, the issue for me is that we still have no idea what skeletons are still lurking in the closet. What will the restated (true) numbers reveal? Granted, there must be value in most of the underlying businesses, but what is the value? Have the sales, costs, profits, etc in underlying businesses been manipulated for the past few years?
Was it tax avoidance or evasion?? Will the tax authorities also come after them? Just too many unanswered questions!
(If you are brave enough, you could profit handsomely!)

this for sure !

If they dont know the size of the hole, how can the business be valued correctly, by assumption only.
Viceroy said they paid double the RP to buy the matress biz/conforama , cant recall offhand.
A big hole right there, also if they had a big book of credit sales, how are those books performing, they hid lots of stuff so prob rolled these books too to make them all look sweet.
Not for widows and orphan funds i think the saying goes.

[Procrastinator]

Does anybody knows why the ordinary shares have been down for a few days, and yet the preference shares are going up?

In the event of a wind up of the business, bonds and prefs are a diiferent tier of debt in importance, if there are funds left after a liquidation, the bondholders and pref share holders are paid first and then ordinary shareholders would be paid anything leftover. (In the event that there are any funds left)

This could be the reason, maybe not, have the share swings been outside normal movements since the bomb exploded, prob not.

[galton]

Does anybody knows why the ordinary shares have been down for a few days, and yet the preference shares are going up?

[Investment novice]

did Steinhoff give over documents easily to PSA as they wanted the market to get information that they were bound not to or unable to share???

 

[Investment novice]

sorry for the additional posts- the PSA finding of complete collapse of governance is interesting- this suggests that Jooste signed some cheques which exceeded his mandate and his delegation of authority.

nice- some nice information coming through

 

This may indicate the reasons behind the depth of the investigation and the lag- this is definitely a criminal case that Steinhoff itself will build up against jooste. Wiese needs to clear his name and recoup his losses. I wont be surprised that the is a collaboration between Steinhoff and the german entities on this

 

 

[Investment novice]

You mean why did he ride off into the sunset on his stolen horse! LOL

Sorry, couldn't resist.☺

there is certainly some wrong doing and management enrichment- we will find out in time the extent of this. the German investigation into jooste and the 4 cowboys points to legal and financials issues. I also think there could have been significant insider trading and accounting issues with non consolidation and non payment of debt from the related companies mentioned in Viceroys report.

It would be good for Steinhoff to at least inform the market as to the scope of the PWC investigation even if they just indicated some of the nature of the irregularity and what is pertained to. spoke to some analysts coincidentally and they are obviously barred from investing on behalf of clients. their view is hold of course, and their personal opinion which they are exercising currently is buy. post blood shed recovery we looking at a share that can surpass R25 especially if a detailed PWC audit uncovers all skeletons positioning a brand new "new-born" entity. also interesting is the management buy-out and steinhoffs current book value which makes it quite an attractive acquisition target despite their current issues.

Hee Hah

[Spree]

If that was the case why did M Jooste disappear?

You mean why did he ride off into the sunset on his stolen horse! LOL

Sorry, couldn't resist.☺

[Spree]

the financial hole cannot be as massive as that- the CFO would have been sent packing. there are accounting irregularities but this includes finances, reporting, consolidation, methodology, tax avoidance, etc. The term irregularities has somehow come to be all representative of fraud- but this is not the case. Including restatement of financials may be due to reporting requirements. there is certainly fire- but not necessarily comparable to enron. the fact that they are able to raise new liquidity suggests that they have been able to make a compelling argument to position strongly that the company in all likelyhoods will definitely survive this after the full disclosure and restatements.

You make some good points. However, the issue for me is that we still have no idea what skeletons are still lurking in the closet. What will the restated (true) numbers reveal? Granted, there must be value in most of the underlying businesses, but what is the value? Have the sales, costs, profits, etc in underlying businesses been manipulated for the past few years?

Was it tax avoidance or evasion?? Will the tax authorities also come after them? Just too many unanswered questions!

(If you are brave enough, you could profit handsomely!)

[Polly]

the financial hole cannot be as massive as that- the CFO would have been sent packing. there are accounting irregularities but this includes finances, reporting, consolidation, methodology, tax avoidance, etc. The term irregularities has somehow come to be all representative of fraud- but this is not the case. Including restatement of financials may be due to reporting requirements. there is certainly fire- but not necessarily comparable to enron. the fact that they are able to raise new liquidity suggests that they have been able to make a compelling argument to position strongly that the company in all likelyhoods will definitely survive this after the full disclosure and restatements.

If that was the case why did M Jooste disappear?

[Investment novice]

the financial hole cannot be as massive as that- the CFO would have been sent packing. there are accounting irregularities but this includes finances, reporting, consolidation, methodology, tax avoidance, etc. The term irregularities has somehow come to be all representative of fraud- but this is not the case. Including restatement of financials may be due to reporting requirements. there is certainly fire- but not necessarily comparable to enron. the fact that they are able to raise new liquidity suggests that they have been able to make a compelling argument to position strongly that the company in all likelyhoods will definitely survive this after the full disclosure and restatements.

[Bullhunter]

Few fund managers have the courage to buy Steinhoff, even at R6.50. One who does is John Biccard, manager of Investec Value, which since the beginning of December has increased the Steinhoff weighting from 0.5% to 2.5%.

"There is talk that this is a fraud along the lines of [that of] the US energy group Enron," he says. "The difference is that nobody ever really knew how Enron made its money, while Steinhoff is made up of retail operations selling everyday consumer goods."

Biccard says that even if the accounting fraud has led to a R120bn hole, Steinhoff is still worth R29-R35/share — conservative, considering the break-up value. He is confident that Pep in SA, as a clean cash business, is still worth R50bn and the businesses that clone the formula, such as Pepco in Europe and Poundland in the UK, are of a decent quality. The French Conforama chain is second only in value to Pepkor.

The weak link, he says, is Mattress Firm in the US, which is worth about half the $2.5bn Steinhoff paid for it.

Biccard admits that there will be a binary outcome — either shareholders will lose all their money (they stand behind debt holders in terms of liquidation rights) or investors will triple their money.

Financial Mail