Paddy Power Shares

why?

Looking at the paddy power shares pre cheltenham, it was only a matter of time before they were going to break on the downside, they were trending sideways and were very much directionless, this is classic stage 3 type price behaviour, with stage 4 being being a bearish downward trend.

So after looking at the technicals I decieded to do a bit of investigation and I wasnt at all surprised to see directors selling off share holdings.

I also read article by one of the chiefs from VC, who reported that their no more money in the Irish economy, the big hitters are gone. Iam sure PP have to same complaints

Think the recent director share sell offs says enough, even tho they had a bumper Chelt harvest, Id also be a little warry that its a world cup yr but while ul have the punters out u wont have many heavy hitters.

Just calling into PP the last few days things are very quiet, think alot people wer quiet sickened over the chelt results.

I shorted PP last yr from 18 down to 12 and sold out bank of ireland shares at e15.

Buy weakness, sell strength.

god you're a great man

I agree with you Bio. I think the increased business over the last 12 months was just a dying kick or people desperate to try and get a few quid.
The recession is really biting now and that has to eat into profits.

Furthermore where is the real growth going to come from. Sure they are expanding all over the UK but the industry is contracting.

Are they the only company to buck the trend ? Sure they are a good company but they are notthat good.

The company they bought in Australia is not going to help much as it is small.

Finally they have squeezed the tits off every supplier out there. I;d say they could not get another shilling out of the company in reduced costs. One thing is certain I think and that is they are not going to get any bigger anyway

a lot of rubbish here. the real growth area is online and in particular the poker. Ireland and uk are but a pimple on a big asre!

Plenty of room for growth as the world comes out of recession. Bio appears to be a know all. I love the aftertiming about selling bank shares at 15 Euro.

Bio is spot on....world cup brings out the €5 First goal scorer and the likes, they wont take 10k bets on match betting as margin too small. Look at their pitches? what is the duke of kent like? an average of 1k per shop per week imo......party over.

directors selling shares says enough to me.Reports back from the stores cant be great, Dont anticipate the top just catch it on the way down. Think the chelt results gave the price a shot in the arm. Even looking at the liquidity on here for Irish racing, its gone to sh..

Iam not saying their going to zero or anything but they could hit e18-20 within the next 9 months.Just think theres potential for a good short, Iam prob in the wrong forum, anyway cheers for contributions, time well tell.

Oh

Selling the bank shares was a no brainer, the live register was begining to climb again and the overcapacity was their to be seen by everyone and if u didnt then tough sh.t, End of

If liquidity on the irish market is so bad why the hell are you using technical analysis to justify your trades?

Sir Ken if ur so bullish then buy em u pauper

liquidity on here,bf, it just tells me theres less money around for this type of activity, Iam sure bf could verify that. Iam sure PP are experiencing the same.Then again favourable flat results an world cup winner could keep them propped up. Ill be keeping eye on em anyway!

gl

just as a matter of interest bio, if betfair floated, would you buy?

The mooted price for Betfair would place them on a price-earnings ratio of 20 times plus. Ladbrokes trades on 10 times by way of comparison. No thanks.

Betfair- monopoly, innovative, no property portfolio,

Ladbrokes -in ultra competitive area, flogging dead horse, must have lots of deadwood in shape of property etc.

20 times value imo.

Go through the history of private equity floatations. Debenhams et al. Very little left for the next man. I wouldnt touch it with a barge pole.

Betfair will only float if they feel they cant get more money out of it themselves IMO. Dont forget theyre greedy buggers.

betfair, would I buy? pending its valuation and the hysteria of its launch ud have to see. I dont know what the gambling rules are in S.E.A, but if they could get in here, then the skys the limit.

also

If they could get their hands on the US customer, but the chances of that happening are as much as Celtic or rangers joining the premiership.

The fact ur a betfairian you should have a fair idea on how its business model is going

come back in six months bio for further analysis.

fully agree bio looks like a really overvalued stock. that is not to tsay they aren;t a good compamny, jsut that everyting has a fair valuation, and current multiple v earnings looks very toppy versus the rest of the index esp with such a hopeless economic backdrop. The only thing I will say is that its a very illiquid stocjk, the bid - offer is almost a quid wide before you pay commission or a spread to a firm. so if you short them your 4% behid marked to market straight away. i shorted them with worldspreads got me a decent price but got carried out, may step back in

No, IG is alot more favourable, its about 30pts in the sept contract and thats includes slippage. I be looking to short them this wk, maybe tomorrow! wish they release a trading statement about Chelt, id short after that announcement. Wel have so see how the week plans out but most likely Il be taking a nibble at them at least, the buying enthusiasm after the cheltenham results looks to have eased off now.

A Question.
If you short them with one of the firms like IG or one of the other spread firms are they taking you on or are they trying to match you with a punter that wants to go long ?

i guess they're taking you on but of they don't want to they could always short it themselves in the market or match you with a buyer in same stock or if not possible in same sector

Not worth a shyte. Don't take bets and deserve to go to the wall like the worthless vermin they are.

.

Just bringing this back up as I have decided to short sell. Couple of things in this:

1) PP undoubtedly a very well run business and Ireland isnt the be all end all for them but their stock has doubled in the past 12 months??

2) They have a major exposure to Irish property.

3) Shops are quieter - cash is scarce.

4) Directors offloading some shares.

5) Possibility of an Irish default (see Morgan Kelly - May 22) would trigger a huge sell off of all things Irish imo.

6) They trade at 20 x PE, higher than any other peer group share i can see. (Lads 8, WH 16)

At 24.30euro, I think they are worth a punt on the downside.

I will probably get carried out.

HEMINWAY. Your probably right about them been over priced but I wouldn't necessary agree with your reasons

1) PP undoubtedly a very well run business and Ireland isnt the be all end all for them but their stock has doubled in the past 12 months??

( They have some good strategic decisions lately with their purchase in Australia and tie up with the French PMU and that is now build into that price)

2) They have a major exposure to Irish property.
(I thought most of their shops are leased so that shall shelther them a bit their)

3) Shops are quieter - cash is scarce. I don't think their future prospects all lie in how their shops are doing anymore. Its now surely on its internet and technology links with the likes of the PMU

4) Directors offloading some shares. Can't fault them for that. As they hardy can increase much more.

5) Possibility of an Irish default (see Morgan Kelly - May 22) would trigger a huge sell off of all things Irish imo.

Nah that won't happen. The whole EU would surely collapse if another country was allowed go like Greece

6) They trade at 20 x PE, higher than any other peer group share i can see. (Lads 8, WH 16)

I would worry about that pps shares price is based on potential growth the lads are based on its profits imo
......................................................

NAH where I see the downfall is

1. The lads and stanleys lost a fortune trying to work their u:k business model abroad in the likes of Italy. pps could suffer the same fate in France and Australia. So far the U/K model for bookmaking hasn't stood up abroad.

2..With goverments now all short of funds. Gambling now looks a prime target for increased taxation.
And also their home markets getting more protectism from offshore bookmakers. Like Betfair in France and is it Norway as well? as restrictions in Switzerland and Holland.

If the above Two go that way pps share price could suffer.
...................................................

But on the PLUS side they must be a very appealing take over target now with their foot in two huge markets for growth such as Australia and France. Along with its excellent internet site especially when compared to Betfair NEW sports page
.....................................................


And YES you will get carried out. As soon as Tallaght reads this and its PR machine gets going.....But at least you won't be alone. .....Cheers

OOPS.

6) They trade at 20 x PE, higher than any other peer group share i can see. (Lads 8, WH 16)

I wouldN'T worry about that pps shares price is based on its profits AND potential growth. The lads are based only on its profits imo

They probably have a fair bit of growth to go in the UK and you can see that by their investment in advert before the World cup.

They've peaked in Ireland but can easily grab some market share from incumbents in the UK which they are doing. Plus they have FOBT's over there unlike in Ireland so make it easier to expand their shops which they are doing.

Still, I wouldn't buy any shares in them.

a man  i respect said they were incredibly overvalued ................3 years ago

a man  i respect said they were incredibly overvalued ................3 years ago

mind u ...french deal looks massive imho

In fairness. bless's synopsis is spot on on all counts.
Who knows what the future holds for them tho, in fairness i think it could be onwards and upwards, i do firmly believe hemingway was way off the mark re; their exposure to irish property, as stated by bless, i reckon they're all rented and all rents should be going down.

debt free imo as well, counts a lot in this day and age as they will probably stay that way too.

Whoever said Paddy Power have "exposure" to the property market is an idiot.

They may not grow at levels in the past, they still have lots of room to grow in Ireland and they are attempting to expand on the continent and in the UK. They are a very solid long term prospect.

While...they may...

Ricky - they have a large retail estate in ireland so I don't think it's idiotic to say that they have a property exposure. Now, I assumed that they owned their property rather than leased it but I stand corrected on that if indeed they are leased.

Some of the comments above are so green tinted though -  ahh sure they're a great comapany, an irish success story, they'll be grand...

They trade at a huge multiple to earnings, have doubled in value in the middle of a massive recession and (whatever anyone says) betting activity is sensitive to availability of cash. Online is going well for them but let's not forget, this is a traditional bookmaker. their business model is not the model that the future of betting will be based on. There is no magic bullet for that.

Do you think PP shareholders en masse realise that the there is better, more effecient model growing day by day eating into all their lovely margins...?

As i said - I may be carried out but at these levels I stand over my belief that PP are overvalued.

They may very well be overvalued, but stating that they are without knowing if they own their own property or not is bewildering to say the least.

This may be a first for me in that I may actually be agreeing with some of what Blessington says or maybe he has learnt from some of what I said a couple of years ago !!

With a share price trading at 20 times earnings it is obvious that a lot of the future earnings growth from the foreign markets has been factored into the share price already.I would not compare trading in Italy to partnership with the PMU in France or their acquisition in Australia.I would think there is every chance of them making their targets in those countries.PP s management are far more capable and innovative than those of the main British bookmakers and I cannot see them making similar mistakes.

However I would imagine the whole issue of taxation might prove more problematic.In view of the politically well connected racing industry in Ireland bleating for money as well as the drop in Levy in England there is every chance that some form of taxation will be placed on either bookmakers or punters.Either scenario would result in serious damage to the bottom line and could have serious repercussions on profit projections going forward.

What does it matter if they rent or own the property. It's absolutely irrelevant. That's why it's idiotic. Do Paddy Power have to cash in at some point on it in order to survive?

As far as I know they lease most of them anyway.

They trade at a huge multiple to earnings? Are you for real?

Welcome to capitalism.

I'd do a double facepalm if this forum didn't mess it up.

As far as I know they lease most of them anyway.
So you don't know if they own their property either then!!!

This thread is becoming boring...Too many people agreeing with auld Bless.

HEY TOLMI...Did you ever thank me for putting you right on how the Betfair Premiun Charge works?

No problem your welcomed anyway.

....................................................

PS..RICKY...If somebody owned 250+ shops and commericial property dropped by around 33% over the last 18 months. Stands to reason the value of your share should reflect the drop in value of those shops....So YES ownership is relevant.

But most of these bookmaking companies are just interested in been bookmakers and taking on bets.

Than making them themselves by buying all their shops and them becoming property spectulators......Cheers

Regarding their property whether they own them or not it doesn't appear their costs on shops are reducing, whilst average stake is. You can't imagine that they're is much more growth (apart from UK) in their shops and costs that will hardly go down much.

No, as far as I do know, without knowing intimate details of their business, they rent most of the shops. Particularly any shop they've expanded into in recent years. In other words, their "exposure" to the property market exists only in terms of high rents, which can be renegotiated. It costs 50-100k to fit out a shop I think. That's their biggest investment but it's fixed cost .

Surely pictures (sis/turf) and staff are two huge expenses here too? The avg shop needs to make c3k a day to cover expenses (so i have been told). I very much doubt that all pp's do and don't get me started on spoils. If they were quoted i would short the sh1t out of them.

No way is it even near 3k a day.I'd guess there are plenty that don't even turn over 3k a day!Maybe 3k a week would break even for a small shop.


As for putting me right on the premium charge Blessington it turns out I had been misinformed by Betfair accounts as to how it was calculated.However as my commision rate and the rate used to calculate commission generated were the same I failed to spot they were wrong. It actually made no difference to me.That said for a man who said Premium Charges were your Mastermind speciality subject I think you will find you were incorrect as well.Stick to Kerry Football 2000-2009 when you are in the black chair would be my advice!

The shops could turn 20k on a weekend.

TOLMI....it turns out I had been misinformed by Betfair accounts as to how it was calculated.

So have we ALL at one time or other.

Still what would you do without Bless to put you right?

Glad anyway I got you sorted on the Betfair Premiun Charges.

caught a 10% fall, thought they fall to e20, buy nay. Their proving pretty resilient, the launch of paddy power trader is crucial to their future growth as of now Iam out and looking elsewhere. Silver is a good play

There is not a bookie share in GB & I you would buy .  It is a decreasing market for the obvious reason that the punter gets better value on the exchanges ( and does not suffer the frustration of knock backs and reductions in what they will lay ).  PP is the best of them as far as I can see , but still in behind the 8 ball industry wise .