Richard Beddard's Blog

A lesson in retail
By Richard Beddard | Mon, 21/05/2012 - 14:14

What it takes to succeed in the high street
Fashion retailer Next’s annual report is a lesson in how to run a business efficiently. It’s impossible not to think of struggling retailers while reading it.

Why I’m terrified of analysing Next
By Richard Beddard | Mon, 21/05/2012 - 12:19

The contrarian investor’s nightmare
Next, the clothing retailer, has tormented me for years. A model of success even in adversity, it’s so repulsive I’ve never even opened its annual report. But that’s about to change…
Here’s the chart. Next is at the top of its form. At nearly £30 the shares have risen 1,200% since Sharescope time began:

Guest post: Why I’ll buy 40 random stocks when the FTSE hits 4000
By Richard Beddard | Thu, 17/05/2012 - 09:16

Monkey strategy
Pete Comley’s new book explains why private investors do so badly in aggregate, and how understanding why can help your investment decisions. I asked him how his research influenced his own investing strategy.

There is an old joke about how to make a small fortune on the stock market (by giving a large one to a stock broker). Having spent the best part of the last year researching and writing a book called Monkey with Pin, I think I might be able to rewrite this joke as:

French Connection in 2 minutes 9 seconds
By Richard Beddard | Wed, 16/05/2012 - 11:36

In for the long haul
Stephen Marks, French Connection’s chairman and chief executive, has just experienced the most difficult winter season in all his years in business. That’s saying something considering he founded the fashion company in 1972, and rescued it after the recession of 1989.

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Restoration man
By Richard Beddard | Wed, 16/05/2012 - 11:01

Banking on experience
Stephen Marks founded French Connection in 1972, rescued it from the recession of 1989 and is currently turning the company around again. The bad news is it needs turning around…

The good news is he has the experience to do it and the value of his shareholding is 32.6 times his annual salary, giving him a very big incentive:

Redefining French Connection
By Richard Beddard | Wed, 16/05/2012 - 10:36

Walks like a net-net, talks like a net-net, but it isn’t one
Leases are not only key to interpreting French Connection’s financial position, they affect valuation.

Leases key to retailer’s financial position
By Richard Beddard | Wed, 16/05/2012 - 10:22

Flawed fortress
Leases are key to the interpretation of French Connection’s financial position. With no debt and no defined benefit pension scheme it has very few liabilities on its balance sheet. Bring off-balance sheet obligations into the analysis though, and ratios relating to borrowing change alarmingly.

Ambivalent about French correction
By Richard Beddard | Wed, 16/05/2012 - 10:04

Little strength in numbers
French Connection‘s 2011 results seemed to herald a recovery, but the fashion retailer has suffered a French correction. The good news is it’s still profitable. The bad news is profitability has fallen to meagre levels when investors expected an improvement.

Three earnings yields
By Richard Beddard | Mon, 14/05/2012 - 16:57

Three benchmarks for market value
Premier Foods’ earnings yield is 15% if you divide earnings by price conventionally,  6% if you divide earnings before interest and tax by enterprise value, a method popularised by Joel Greenblatt, or 7% if you multiply median return on capital by how much you’re paying for the capital, the method I chose when I evaluated the company.

Which is best?

Premier Foods in 2 minutes 11 seconds
By Richard Beddard | Wed, 09/05/2012 - 16:03

Exceedingly good brands, damaged company
New management is dealing with Premier Food’s onerous debt, but they only have a two year window in which to turn the company around or it may no longer be making exceedingly good cakes.

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