Stobart shares

AJ16

Does anyone have any views on buying these shares today?

jimjames

My view is that I won't be buying them today. Or tomorrow for that matter

badger09

Me neither.

OP why do you ask?

AJ16

I only asked as it was announced in the weekend papers that Stobart was being admitted to the AIM and it sounded as if that was a positive move which could benefit the share price. If it's not a big deal then I also won't be interested but I was curious to get opinions.
Thanks

george4064

I have no opinion of the shares, never really looked into them.

Marine_life

You mean Eddie Stobart the piece that just listed on Aim with a project 3.6% yield?

I don't know the business hugely well but on first sight I think there are better buys out there.

I'm not sure that road haulage really has huge growth prospects and margins are notoriously thin. Given we're likely at or near the bottom of the fuel price cycle thy may not get any better. Likely growth will need to come from acquisitions which are always perilous.

cashbackproblems

Same i dont like road haulage industry and there must be better growth prospects, there is also no real economies of scale associated with the business model

I notice Woodford has bought 115m for his new fund!

colsten

cashbackproblems wrote: »

I notice Woodford has bought 115m for his new fund!

If you believe it's good to do what Woodford does, you should be buying his fund(s), not just randomly buying one of the many shares he is buying (and selling).

bowlhead99

cashbackproblems wrote: »

Same i dont like road haulage industry and there must be better growth prospects

I expect Woodford likes it for the fact that it throws off a decent amount of cash, rather than pure growth prospects per se; he is after all running an income fund. However, operating independently from the former parents with direct access to tap up the markets for cash would help the growth prospects because you don't have to rely on retaining cash internally to fund your acquisitive desires.

there is also no real economies of scale associated with the business model

I don't think that's the case. Set yourself up as a 'man with a van' with one HGV and try to operate a national logistics service. It is undoubtably easier if you control 2500 trucks and have decades of brand recognition. As Marine_life mentioned, margins are thin which means there are smaller players not as well capitalised or efficient which could become more efficient when absorbed into a larger operation; the fragmented nature of the market suits growth by acquisition. Despite the low margins, there are bigger groups like Wincanton, and international listed players like XPO which do alright.

Compared with some 'equity income' plays like tobacco which will keep on selling regardless of the economy's health, logistics and distribution isn't a defensive industry. How busy the ports and freight terminals are and how full the lorries are, is one barometer of the nation's financial health - and in a recession the fixed costs of such infrastructure are still there, while revenues can fall through the floor. Fortunately we haven't had a recession for a while so it is a good time for them to float it. But if you think the uncertainty from Brexit will be hard on economic growth generally, then a business trying to make money by shipping a declining amount of goods around is perhaps not the best choice.

For income from the logistics sector from a different angle I quite like BBOX - was not happy with the Brexit vote outcome for the reasons above but the shares have held up well and I will be taking up my offer entitlements at the placing next month despite it still being priced on a ~7% premium like some other infrastructure and property plays at the moment.

colsten wrote: »

If you believe it's good to do what Woodford does, you should be buying his fund(s), not just randomly buying one of the many shares he is buying (and selling).

Can't argue with that. It's fun to dabble in individual shares that you believe in, but buying just because someone else believes in it (when they also believe in 50 other opportunities to balance out the risk of that one going titsup) is usually not a wise approach.

cashbackproblems

colsten wrote: »

If you believe it's good to do what Woodford does, you should be buying his fund(s), not just randomly buying one of the many shares he is buying (and selling).

I was making a point that he is taking a very large position in this one company, I have no interest in buying this company or anything else of Woodford's and do not like his new income fund. But he is a big name and has given Stobart a lift in the press.

Bazofts_Revenge

Very surprised in some of the responses here as people here are usually better informed. Based on my memory from when I did own shares in them Stobart only own 50% of the fleet of lorries that is their main Public presence. They own a couple of Alternative Electricity Power Stations (biomass) and I believe the land the wood is produced on. They run two airports Southend and a freight only operation just outside London. This may have changed as I have not kept up with the company since I sold my shares.