Fantasy, Indices And Inflation

Bloomsbury Publishing (LON:BMY) – More Than Fantasy Reading

Yesterday’s very positive Trading Update from my long-term favourite global publishing group certainly made a very good read.

Boss Nigel Newton informed shareholders that the £430m capitalised group’s revenue and profit before taxation are now expected to be significantly ahead of upgraded market expectations for the year to the end of this month.

The consensus market expectation is currently for revenue of £291.4m and pre-tax profits of £37.2m.

Recently a big earner has turned out to be Sarah J Maas, whose latest novel, ‘House of Flame and Shadow’, which was launched on 30 January 2024 and has already reached Number 1 position globally on Amazon, including in the US, the UK, Spain, Sweden, Australia, France and Germany.

The group, with offices in the UK, the US, India and Australia, is a leading independent publisher of fiction, non-fiction, children’s, specialist, academic and professional titles.

It is one of the few publishers with a portfolio that includes both general and academic publishing.

The group’s shares, which were down to 390p when I highlighted them again in mid-October and were up to 456.50p by early December last year, which was when I clearly stated to ‘expect even better reading in 2024’. 

And yesterday’s excellent Trading Update was enough to see the shares hit 550p before closing last night at just 532p.

The final results are expected to be published on 23^rd May.

Expect the price to ease back on profit-taking, otherwise the shares remain an excellent Hold.

(Profile 28.02.19 @ 231p set a Target Price of 257p*) 

(Profile 27.03.19 @ 238p set a Target Price of 270p*) 

FTSE 100 Collapsing

It went all over the place, almost as soon as I wrote my piece about my looking for the FTSE 100 Index to head up again, with a marker being set on a break above the 7,750 level up to and above the 8,000 level.

The FTSE was then 7,644, it went up to 7,687, before collapsing back to 7,501, last night it closed at a slightly better 7,568.

I still stick to my view – that if we see the Index rise above the 7,750 points, then a move to break over the 8,000 level is more than possible.

Could that happen in anticipation before the 6^th March Budget or afterwards in content reaction?

Inflation Stalling – Really?

You just have to laugh at some of the ‘official’ figures that get published.

Look at yesterday’s stunning bit of news that the Cost of Living has risen by 4% in the last year.

Is there any real credibility in the Office for National Statistics publishing such a number?

I will make a bet that the 4% would be considered a totally fanciful number in most households across the UK.

Mortgage Arrears Rising

Apparently some 100,000 mortgage borrowers are having problems.

The arrears rate has risen for the fifth month in a row.

Obviously, the cost of living has impacted household budgets significantly, despite cheap mortgage rates being on offer.

Such pressures knock over to the falling behind of payments of council taxes and to the utilities.

Councils’ Delays Pothole Spend And Dim Lights

We have already seen a concerning lack of the filling-in of the UK’s potholes.

Now the ‘cash-strapped’ councils are, it is suggested, thinking of reducing night-time street lighting.

Could restricted rubbish collections be next?

Recession – What Recession?

Andrew Bailey, the £600,000 a year Governor of The Bank of England, has cautioned about the markets putting too much weight upon the thesis that Britain is entering recession.

It appears that the BOE is seeking reactions to the sentiment that the UK is suffering ongoing uncertainty about the value of Brexit to the UK commerce – but it has yet to apologise for its failed promotion of ‘Project Fear’.

Pernicious Tax

I applaud the view of brokers Peel Hunt in calling for the Chancellor of the Exchequer to repeal the stamp duty imposed on share trading.

They label it as a ‘pernicious tax’ which pushes investors away from the UK towards the US and Europe.

Obviously, all revenues that pour into the Treasury are much needed, but I wonder whether that the £3.3bn raised by the duty, is in fact something of a discouragement for the investing hordes, who already find a significant lack of liquidity in the market, especially for smaller quoted companies.

Body Shop Administering

It is a great shame to see Anita Roddick’s Body Shop retail chain going into administration.

I can clearly remember when the late Broderick ‘The Cad’ Munro-Wilson introduced the Brighton-based ethical products company to brokers Capel Cure Myers to float off on the Unlisted Securities Market.

The colourful Brod was an ex-SAS, polo-playing, amateur jockey, who was also a ‘player’ in the City.

I remember paying for a three-week family holiday in Portugal with my winnings from gambling on him being first past the post for the 1982 Foxhunters Chase at Cheltenham – but enough of that because I am straying into the horse-racing territory of my Master Investor colleague Simon Cawkwell.

The April 1984 new issue proved to be a real success, as too did the company itself as it expanded under Roddick’s control.

She came away from direct management in 2002, with the company being sold out to L’Oreal in 2006 for £652m, a year later Anita died of a brain haemorrhage at the age of just 64.

After having taken £277m of dividends, L’Oreal sold the retail group on to Natura for £877m in 2017.

Subsequently Covid didn’t help the new owners, who last November chopped the business out to Aurelius, the private equity group for just £207m.

That it has gone down so quickly clearly shows that even the PE houses, the normally masterful predators, can get it wrong.

Red Sea Houthi Rebels Not So Stirring

Forget what certain City analysts have said in calling-down the effects of the missile-antics of the Houthi Rebels in the Red Sea.

One of them actually suggested that there would be next to no ripples caused by their actions.

Well already we know that tankers are being re-routed around the Cape of Good Hope rather than tripping through the Suez Canal, adding to insurance, fuelling, crewing and other costs.

Retail chains across Europe have been desperately sourcing nearby suppliers for immediate replacement of delayed merchandise for their shops.

And the price of fuel at local petrol stations has started to rise again.

But – now for the real pain – there are expected to be shortages of tea in the stores.

Tea, which is largely sourced from East Africa and Asia, principally from Sri Lanka, China, India and Kenya, has been subject to delivery delays with major chains like Sainsburys hinting of potential rationing.