Even the best investors..........

[Dod101]

can get the timing wrong.

The richest man in Hong Kong, Li Ka Shing via his holding company (CKA), relieved Greene King shareholders of their not too promising brewing and pub company almost exactly a year ago. Yesterday it announced a big loss and expects some time to pass before it will move into profit.

The other and bigger timing disaster was of course the Freshwater family's offer to buy out the minorities in Daejan, their property company. That was in February this year. Wow, timing or what?

Neither party got where they are by regular of acts of magnanimity like that so what chance have we ordinary bods got?

Dod

[G3lc]

Perhaps its a question of the big picture and planning for the future, that we as spectators are not aware of, one has to assume that the time is right, the cash being available, a tax situation and the target price being acceptable etc for these actions, a bit like WB buying gold recently - who are we to criticise?

[GoSeigen]

Perhaps its a question of the big picture and planning for the future, that we as spectators are not aware of, one has to assume that the time is right, the cash being available, a tax situation and the target price being acceptable etc for these actions, a bit like WB buying gold recently - who are we to criticise?

Yes, we made a property investment last year which is looking like equally poor timing -- but it is one I'd been targeting for almost 15 years before all the stars aligned in terms of financing, price, motivation, opportunity etc. Whereas people who don't know that background ask why in the world we bought the property when we did.

GS

[G3lc]

Yes exactly GS, i sold a property that created a large capital gain tax liability, to avoid this liability I had to buy a similar property within a certain time, in this kind of situation the buy price may look high for whatever reason but for those in the know it made perfect sense.
It’s the whinging shareholders that know nothing about running a business that deterred us going public, after our bank suggested we should.

[dealtn]

Yes exactly GS, i sold a property that created a large capital gain tax liability, to avoid this liability I had to buy a similar property within a certain time, in this kind of situation the buy price may look high for whatever reason but for those in the know it made perfect sense.
It’s the whinging shareholders that know nothing about running a business that deterred us going public, after our bank suggested we should.

Yes, and no doubt the "sold a property" decision looks remarkably prescient. These things are best seen as a whole, not in isolation.

[Dod101]

Perhaps its a question of the big picture and planning for the future, that we as spectators are not aware of, one has to assume that the time is right, the cash being available, a tax situation and the target price being acceptable etc for these actions, a bit like WB buying gold recently - who are we to criticise?

I am certainly not criticising, just commenting that they both look like particularly ill timed buys. Obviously if you were a shareholder in either company you would have been delighted. Sadly I was not.

Dod

[gryffron]

The reason private companies can sometimes succeed where listed ones fail, is that they are able to take a much longer term view on their investments.

A public company has to show profit, improvement, or investment EVERY year, otherwise shareholders rebel, the board get sacked, falling share price leads to takeover, etc.

Show me they were bad decisions in 20 years time

Gryff

[spasmodicus]

Yes exactly GS, i sold a property that created a large capital gain tax liability, to avoid this liability I had to buy a similar property within a certain time, in this kind of situation the buy price may look high for whatever reason but for those in the know it made perfect sense.
It’s the whinging shareholders that know nothing about running a business that deterred us going public, after our bank suggested we should.

[shareholder democracy mode] Well, you don't even have to go public to encounter whingeing shareholders. It really all depends on whether shareholders are there by design, i.e. used their own hard earned cash to buy the shares, or accident. I ran a small private company for almost 30 years and always championed the idea that employees should be given shares as an incentive for them to help the company prosper. [/shareholder democracy mode]

In retrospect I think that dishing out free shares made b****r all difference to the company's performance, but caused endless trouble at AGMs and problems dealing with buying out employee shareholdings when they left the company.

S

[Dod101]

The reason private companies can sometimes succeed where listed ones fail, is that they are able to take a much longer term view on their investments.

A public company has to show profit, improvement, or investment EVERY year, otherwise shareholders rebel, the board get sacked, falling share price leads to takeover, etc.

Show me they were bad decisions in 20 years time

Gryff

Many private companies succeed because they are able to take a longer term and a more conservative view than public companies which have to view the next quarter's earnings, I agree, but all I was trying to say is that I doubt very much that the Freshwater's in the case of Daejan would have made their offer when they did had they known of the disaster round the corner. They did not do badly I guess because they were still able to acquire the minority holding at less than the published NAV, although what that is now is anyone's guess.

Ditto with Li Ka Shing's offer for Greene King.

Both parties can be philosophical about the deals and probably are, known as whistling in the dark. They both have plenty of resources in any case, but all I was saying was that they got their timing mightily wrong, however you look at it.

Dod

[Wizard]

There is a Greene King pub near us, moderately good pub with reasonable food but nothing special and never very busy. But it is in a cracking location and if consent was given to redevelop for housing I suspect it would be worth a lot more than it is as a pub. The local council only allow such conversion when it can be shown the business is not viable, otherwise they do not want to see jobs disappear so refuse. That pub shows no sign of reopening, my guess is that Covid19 will make a redevelopment case a lot stronger. So maybe Li Ka Shing’s timing was not that bad if There is a similar story for a lot of Greene King pubs.

[Wizard]

And it has started...

https://www.bbc.co.uk/news/business-54451739

Greene King cuts 800 jobs as pub curfew hits trade

Could have read, 80 sites released for development. Greene King will probably turn out to be a bargain for a buyer with the right skills an attitude.

[UncleEbenezer]

There is a Greene King pub near us, moderately good pub with reasonable food but nothing special and never very busy. But it is in a cracking location and if consent was given to redevelop for housing I suspect it would be worth a lot more than it is as a pub. The local council only allow such conversion when it can be shown the business is not viable, otherwise they do not want to see jobs disappear so refuse. That pub shows no sign of reopening, my guess is that Covid19 will make a redevelopment case a lot stronger. So maybe Li Ka Shing’s timing was not that bad if There is a similar story for a lot of Greene King pubs.

Private Eye has mentioned him a couple of times recently. In the context of - among other things - his generosity towards our Party of Government and some of its leading members. A £100k sinecure for that well-known expert Chris Grayling to advise on shipping, for instance.

I expect Greene King is already - in all but name - predominantly a portfolio of characterful future residential properties.

[monabri]

There's an empty pub near where I live, it's been like that for 3 years or more, slowly rotting away, weeds coming up through the tarmac, tiles missing, windows broken. I wondered if the owner was deliberately letting it deteriorate such that he could get planning permission for development into houses?