(Front) running for the exit
What caught my attention however was the Chanticleer write-up over the weekend in the AFR where:
Responding to criticism he had left the market uninformed, McDonald told Chanticleer he takes umbrage with suggestions he has put up the drawbridge. He has had 30 briefings with shareholders this week, with four on Friday afternoon alone.
This seems to imply that Surfstitch shareholders comprise solely of whoever was in those 30 individual shareholder briefings.
The article goes further, outlining the message to these shareholders:
The message to shareholders is that strategy is on track but the business needs to go through a period of consolidating its brands and e-commerce platforms after a period of rapid growth as the company focused on beefing up its content assets.
Pay special attention to the phrase “after a period of rapid growth”.
You can draw a number of logical conclusion as to what this statement means for investors in this high growth internet retailer. The one conclusion you cannot logically make is that Surfstitch is still in a period of rapid growth.
It’s then interesting to reference this against Surfstitch’s share price movement over the latter part of April on essentially no news to the market.
Note: Here’s my original thesis on Surfstitch’s real underlying growth rate for those that missed it.
Update (5th May 2016): Here’s a timely post on this issue by the guys at Forager.
Update (6th May 2016): It appears that Surfstitch was queried by the ASX as early as 27th of April regarding changes in share price and trading volume.
Note: The above blog post constitutes the author’s personal views only and is not to be construed as investment advice. Being obviously passionate about the art of investing, the author may from time to time hold positions in the aforementioned stocks consistent with the views and opinions expressed in this blog post.