Archived articleThis is an archived article from 2020 - please note that any content within the article may be out of date.
2021: Is THG or LLOY the better call?
Its definitely Thg Holdings (LON:THG) if we have a debt deflation driven depression as Lloyds would need bailed out in those circumstances but aside from that scenario its probably really dull and awful Lloyds Banking (LON:LLOY) ...its just a capital cycle, valuation and expectations thing really. Probability favours Lloyds.
I'll bet anyone a pint on it.
Here's my simple discounting of the deflationary depression https://medium.com/@mojomogoz/...
mojo out
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9 comments
Blast from the past...seeing as THG (LON:THG) is a discussion point.
Post prompted by someone telling me I couldn't grasp the reality that winner take all growth models like THG are good at any price...
I note that THG refer to the easing of whey prices as a reason to be optimistic. Its such a long way down from precious precocious high growth beauty to slovenly cyclical tramp!
Re Thg (LON:THG) and its price collapse this year...a lot of valuation relates to Ingenuity as a global high margin platform to sell to retailers. This may or may not be true. What struck me on trying to dig into it and looking thro accounts was that Ingenuity seemed to be a repackaging of internal IT and it appeared possible that much of its revenue was really internal cost. Left me thinking that they try to package/monetise everything...which is not a good long term approach as leads to perverse incentives and internal conflicts.
So after today's bizarro Thg (LON:THG) collapse my spread is at 105% ytd with Lloyds Banking (LON:LLOY) up 40% and THG down 65% ytd.
Apologies if it seems a gloat...but I was told by many people that my view was rather anachronistic going on nutty (in various bulletin board discussions) what with our new ra ra tech to the moon world. And then look what happens.
Not over yet...banks may be ahead of reality as not really any much sign of credit growth and takes a while for yield steepness to impact earnings too.
Banks are not the most exciting biz but IMO they will be lead performers this decade...we need their credit creation and growth to pull us out of our quasi-depressive state...we are taking a while to realise this as we still view them as evil from 2008. But our need for their money magic is great and in the UK we have 'levelling up' and 'greening' for them to get their fangs into.
PS I've got to be at a fully paid session now in pints, not just the one ;)
97% actually
((780 - 285)/780)x100 + ((48.53-36.44)/36.44)x100 = 96.63
If you want to use the Open price on 4th Jan instead of the close 31st Dec, Lloyds was 37.00p, THG's 791.6
Plugging those in we get 87.75%
...ah well, not so good then...
:D
Maybe the gap is so large here that I deserve a two pint payout...sadly no-one accepted my bet...there were some vociferous Thg (LON:THG) backers who trash ;) talked my suggestion that banks would be a better place near term.
Roughly 70% spread Lloyds Banking (LON:LLOY) vs Thg (LON:THG)
Well Jim Mellon in a recent Moneyweek seems to agree with you "I would buy Lloyds by the bucket load at the moment"