Bargain Hunt - Which shares do you have your eye on as they fall?

Reaper

sabretoothtigger wrote: »

Insurers are exposed to stock values for returns I believe. It can cause solvency problems apparently. I agree its overplayed, SL is the safest

Out of interest why SL? Their dividend cover is weak at 0.9 and their P/E of almost 16 looks pricey compared to RSA on 8.4, but maybe that is because they are seen as safer for some reason?

Voyager2002

What about Apple?

sabretoothtigger

SL has 3bn cash apparently. At one time they hedged the entire market

IronWolf

I have my watchlist but none of those shares are going down unfortunately

I want to get into Whitbread but it's nowhere near the price I want to pay yet. I'm hoping Wells Fargo will drop into the $25 region at some point and I'll go in on that, otherwise I may top up holdings I already have but dont really want to increase exposure to a lot of them. My newest buys were Deckers outdoor and Supergroup, don't really want to increase my holdings though as fashion is a bit of a risky business. I may increase my holding of Arrow Electronics, an electronics wholesaler as they usually suffer heavily in times of pessimism.

My emerging markets fund is taking a battering too, I'll probably put more money in that.

Might take a look at all these high yielding insurers though I hold Amlin but they are not reliant on investment returns for strong profits as opposed to the likes of Aviva that need investment returns as they make losses on underwriting.

gadgetmind

Voyager2002 wrote: »

What about Apple?

A great buy if you have a time machine. What you need to be doing now is finding the *next* Apple!

gadgetmind

IronWolf wrote: »

and Supergroup, don't really want to increase my holdings though as fashion is a bit of a risky business.

Understatement! I like wide moats and high barriers to entry. Fashion seems to have a high barrier to "stickiness".

I may increase my holding of Arrow Electronics, an electronics wholesaler as they usually suffer heavily in times of pessimism.

I do business with Arrow. They aren't a bad disty, but I do wonder where the "value add" of these guys is.

My emerging markets fund is taking a battering too, I'll probably put more money in that.

Hard to argue with that.

Might take a look at all these high yielding insurers though I hold Amlin but they are not reliant on investment returns for strong profits as opposed to the likes of Aviva that need investment returns as they make losses on underwriting.

Aviva are battered, and deeply out of favour. FWIW (not much!) Nomura still have a buy on them and a target price of 600p. I rate them as a hold and am putting the dividends they pay me (today!) into other sectors.

My "system" tells me that Brown N Group, HSBC and M&S are likely candidates, with Morgan Sindall popping up as a smaller long-term recovery play with a very tasty yield.

IronWolf

gadgetmind wrote: »

Understatement! I like wide moats and high barriers to entry. Fashion seems to have a high barrier to "stickiness".

I do business with Arrow. They aren't a bad disty, but I do wonder where the "value add" of these guys is.

Yeh, Supergroup were a bit of a punt, I'm hoping the management sort themselves out quickly and that theres at least a couple of years of growth left. Then whenever the share price recovers by 50% or so I'm out.

Deckers own Ugg which I think has more moat than the usual fashion fads. Im told they're very comfortable, more than anything else around, and I think that's the reason they will last. I've seen the imitation uggs and you can tell instantly they aren't real, Deckers did well branding and making them. Im pretty sure most women (who can afford it) will always have a pair of Uggs in the wardrobe for the days they want to wear something comfortable and still be fashionable.

Arrow I dont think have any particular advantage other than their size. They have efficiencies of scale, but still very low margins so not much incentive to bypass them, or compete. The industry is still consolidating, Im not a great fan of the business but the share price attracted me, and the industry is highly correlated to the general economy so its more of a recovery play. And sales of electronic stuff can only increase long term right?

gadgetmind

IronWolf wrote: »

Im pretty sure most women (who can afford it) will always have a pair of Uggs in the wardrobe for the days they want to wear something comfortable and still be fashionable.

Yes, but fashion is fickle. Why not go for Brown (N) as one thing that's for sure is that women are going to keep on getting fatter!

And sales of electronic stuff can only increase long term right?

Arrow sell to companies who manufacture locally or (more often) do design and small prototype runs and then manufacture in the Far East. Increasingly people are doing their prototype runs on similar lines to MP out in the FE. Even with air freight, this can be cheaper and it lets problems be ironed out sooner.

I do however like the scale and international exposure of Arrow.

IronWolf

gadgetmind wrote: »

Yes, but fashion is fickle. Why not go for Brown (N) as one thing that's for sure is that women are going to keep on getting fatter!



Arrow sell to companies who manufacture locally or (more often) do design and small prototype runs and then manufacture in the Far East. Increasingly people are doing their prototype runs on similar lines to MP out in the FE. Even with air freight, this can be cheaper and it lets problems be ironed out sooner.

I do however like the scale and international exposure of Arrow.

I did look at Brown N but didn't really see any competitive advantage so haven't bought any. I guess we'll see about Uggs, they're releasing a male line too so keep your eyes open

On Arrow, maybe I have misunderstood their filings then, because that's not how I understood they operate. I thought they sold to the mass manufacturing OEMs rather than being focussed on prototypes and local businesses?

Surely all electronics manufacturers will buy their components from a distributor like Arrow?

gadgetmind

IronWolf wrote: »

I did look at Brown N but didn't really see any competitive advantage so haven't bought any.

Strong brands, good business model, looking at overseas expansion. The boss also has a no nonsense-reputation.

I thought they sold to the mass manufacturing OEMs rather than being focussed on prototypes and local businesses?
Surely all electronics manufacturers will buy their components from a distributor like Arrow?

Nope. For any serious volume, you always do direct deals with the suppliers. If you want Altera flash, you get contract prices from Altera, same for displays, same for processors, same for connectors.

Of course, it depends on your idea of what volume is. On high end and specialist stuff, you might be making hundreds of units, or even just tens. This means you'll have a high mark-up and can cope with the high prices from distributors. For real volume (at least 5 figures per month of each SKU?), every fraction of a cent counts, so you work hard on your BOM, and you go direct to multiple suppliers.

The high-volume electronics industry has always had a long-term trend of "disintermediation" and I see no sign of that ending.

Of course, I only see one side of Arrow, and there may be much more to the business than I know. That's why I asked about "value add" as being a middleman is dangerous in this business.