LON:SUR | Lakehouse - The Most Hated Share Around!?

29th Jun '16 by Noodle Hat

3 comments 5637 reads

I wanted to gauge the community opinion on Lakehouse (LON:LAKE). Obviously Paul Scott has written extensively about it in his SCVR and generally believes that, in time, it will come round.

I currently have quite a large position in this company, should have used a stop loss some time ago but was with Charles Stanley who didnt provide one and only just transferred to new broker...

I have to say the sentiment towards this company is absolutely shocking,. At current its trading @ 24p (mid) its on a fwd P/E of 2.94! Current P/E of 1.8. PEG 0.21

Single broker forecast is 7.9p, even if thats 25% off thats still an eps of 5.9 for the year.

Oh and I believe theres a 1p divi out this year - current yield 12.3%.....

Obviously this business faces some problems and hasn't been great for all the reasons outlined in the SCVR but it seems to be absolutely slammed at the moment. Will brexit...if we do ever leave...have an impact on Lakehouse?

SCVR:
http://www.stockopedia.com/content/small-cap-value...

Any thoughts welcome.

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Michael_P

12th Jul '16

I suppose people are worried that it has had a couple of nasty price drops due to profit warnings recently. Also it is a small-cap with lower liquidity so in the post-Brexit environment where people have moved to larger cap stocks and looked at overseas markets more, it has also suffered. On a macro-level I think there are a couple of reasons for optimisim. The mandated 1% cut in budget on social housing might be reviewed post-Brexit as George Osbourne did say that austerity and the aims of balancing the budget by 2020 are out of the window now. Theresa May's initial comments about a country that works for everyone not just for the few may also give an initial hint of a change of government policy in this area. In terms of QVM, Value is very high, Momentum is very low and Quality is a respectable 70. My understanding of the momentum effect is that it may last 3-12 months and from the charts it look like Momentum must have nosedived with the profit warning in early Feb. So the poor momentum may have some way to go, but on the other hand, perhaps a lot of it is already out of the way. I don't think anyone should be putting a large percentage of their portfolio in this one, but if there is an upturn in sentiment, or even an allaying of existing concerns, perhaps at the next results announcement, it could see a considerable rerating upwards.

Ramridge

From a technical analysis, this share is a steal.
But the big question revolves around the management of this company. It is difficult to tell how much of their past woes was due to management cock-ups; whether the new management has the skills and competence to pull this together (jury is out); is another round of kitchen-sinking due; and in the new post-Brexit/ Theresa May world will the public sector cuts in this sector worsen or be lifted?
Personally I am reluctant to invest until a lot of this cloud is lifted, notwithstanding a ridiculous forward PE of 3 or less.

Fegger

13th Jul '16

Its also low margin so hit by the recent flight to quality. But its one of those that could turnaround and be lucrative. Just hard to say at present due to all the above factors mentioned

Lakehouse - The most hated share around!?

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Noodle Hat

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