Monday, May 30, 2005
Fayrewood impresses me but not the market
Fayrewood's AGM statement came off the newswires on Friday at 7 a.m. The statement read well to me but the market hated it, marking the shares down by more than 6% prior to trading even beginning. The shares ended the day down 7% but still above my buy price of 112.5p.
I liked the trading statement. Despite recent whining from Fayrewood's peers, warning of reduced profitability, Fayrewood re-stated that trading was continuing in-line:
Over the last two or three years we have experienced particularly strong sales in the final quarter of the financial year, especially within our major continental operations. We see no circumstances currently on the horizon that lead us to believe that this trend will not continue in the current year but we remain watchful for any trading downturn.
I later attended the company's AGM in London and got the chance to meet and quiz the management. This was the first time I have attended an AGM of one of my holdings. I'd definitely repeat the exercise for another share. The Fayrewood confab provided company and industry insight that will assist the ongoing assesment of the shares' value.
Some investors believe the mention of possible downturn is what spooked the market into lopping so much from Fayrewood's price. I think the fall was wholly unwarranted and just plain incorrect. But the irrationality of the market is what produces opportunities for investors. The market isn't like a set of butcher's scales. It can't just sample the inputs and immediately report what the price should be. The market is more like a very slow chess player that could require days or even months to fathom out the correct response.
If Mayborn's recent high price continues to prevail and the Fayrewood falls continue, I'll be selling shares in the baby products company to increase my stake in Fayrewood. But I expect Fayrewood shares to recover over the next week, rendering that point entirely hypothetical.
The Artful Dodger
I liked the trading statement. Despite recent whining from Fayrewood's peers, warning of reduced profitability, Fayrewood re-stated that trading was continuing in-line:
Over the last two or three years we have experienced particularly strong sales in the final quarter of the financial year, especially within our major continental operations. We see no circumstances currently on the horizon that lead us to believe that this trend will not continue in the current year but we remain watchful for any trading downturn.
I later attended the company's AGM in London and got the chance to meet and quiz the management. This was the first time I have attended an AGM of one of my holdings. I'd definitely repeat the exercise for another share. The Fayrewood confab provided company and industry insight that will assist the ongoing assesment of the shares' value.
Some investors believe the mention of possible downturn is what spooked the market into lopping so much from Fayrewood's price. I think the fall was wholly unwarranted and just plain incorrect. But the irrationality of the market is what produces opportunities for investors. The market isn't like a set of butcher's scales. It can't just sample the inputs and immediately report what the price should be. The market is more like a very slow chess player that could require days or even months to fathom out the correct response.
If Mayborn's recent high price continues to prevail and the Fayrewood falls continue, I'll be selling shares in the baby products company to increase my stake in Fayrewood. But I expect Fayrewood shares to recover over the next week, rendering that point entirely hypothetical.
The Artful Dodger
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