PWR 0.93% $2.17 peter warren automotive holdings limited

Rivkin on DJS, PWR, CPU and QBE

  1. 400 Posts.

    I often look at certain stocks and think to myself, how can anyone buy them? Stocks (at current prices) in this category are David Jones, Powerlan, Computershare and QBE. They are not the only stocks on the list, but these are the stocks that came up this week.
    To say that David Jones is not travelling well is absolutely nothing but the truth. To say that the department store division of Coles Myer is their weakest division is also the truth. Department stores are not generally going very well. Why would you buy DJ's? Would you, for example, think that DJ's has a hope in hell of rising by 20% over the next 12 months? I would not think so. Their strategy in the food chain clearly isn't working, despite denials by the Chairman on TV a week or so ago. They are not expanding the food chain concept and they are keeping a few stores going to see whether they at least can be rescued.
    Powerlan is a company that has fallen by some 90% in the market and now it has become a penny dreadful. The shares are trading at 15c and I hear certain negativity about the company from various sources. So again, to me, this is a company I just would not touch. I know that Neville Wran is the Chairman and yes, I know that I may be wrong, but the rumours may be right and the losses from this level could still be substantial, so why touch it? I wouldn't.
    I gave my views on Computershare last week, and the reasons are similar. There are continuing rumblings of more trouble and today, there was a Financial Review article about the company getting into substantial cost cutting by getting rid of staff. The company will be giving an update in the next week or so to shareholders and analysts and we will see what that brings, but the risks at these levels are still substantial and so again, why would you buy it? I have declared my short position earlier on so of course, I would like it to fall, but I still say that in the stock market, there are various companies that from time to time ought to be taken off investors' radar screens and this is one of them, pending clarification of the massive falls that have taken place in the stock.
    As for QBE, why would you buy it? Last week's BRW article on QBE, labelled "a company under siege", posed many problems that the company may have. I think it is sensible to take it off your radar list as well.
    I always say that there are thousands of companies one can invest in and why does one have to think about companies that are rumoured to be in trouble. We can always make money in other situations. So QBE is, at least in my view, a do not touch at this time. I may be wrong, but whatever the case, we can find better stocks to invest in and we do.

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Mkt cap ! $369.6M
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$2.16 $2.17 $2.16 $1.919K 888

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Last trade - 10.09am 07/07/2022 (20 minute delay) ?
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Last updated 10.09am 07/07/2022 (live) ?
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