There has been a lot of hand wringing and infantile shrieks of outrage in the last day or so about Nadia Lim, founder of My Food Bag, being described as “a little bit of Eurasian fluff” by businessman Simon Henry. The usual suspects are having an attack of the vapours of such magnitude, anybody would think Donald Trump just ate two scoops of ice cream!
Mr Henry also claimed this was the reason My Food Bag has been a disastrous, truly shocking investment for the prize bunnies who have purchased the shares since it was listed on the NZX last year. As I write this, every single shareholder has lost money as they bought shares for a higher price than they are currently trading at.
Being a professional capitalist, playing the sharemarkets of the world has been a large part of my life since I was 17 years old. It is huge fun with oceans of money waiting to be scooped up if you know what you are doing. It sure beats working for a living. Over the years I have acquired a great deal of experience and know-how and consequently can spot a dead duck when I see one – such as My Food Bag.
I wrote an essay early last year (which I wasn’t expecting anybody to read), published on another website, where I took the My Food Bag initial public offering apart, forecast it would be a disaster and suggested it was nothing more than a way for its existing shareholders to cash in their chips at the expense of Kiwisaver fund managers, “Mum and Dad” investors who don’t know any better, and anybody else stupid enough to touch it with a ten-foot pole.
The main problem which I saw with the company was the caginess about what its profits were. Using their own figures (which were clear as mud!) the profits were either $800,000 or $8 million (it was so confusing and unclear as to which figure was correct) and telephone calls to clarify the situation were met with me being fobbed off with management-speak twaddle.
This meant the listing on the NZX was going to value a company making $8 million (to take the generous, optimistic number) or $800,000 (to take the less generous figure) at over $400 million. To put that another way, would you pay $1 million or $500,000 to buy a twopenny-halfpenny, hobbyist, lawn mowing business that makes $10,000 a year from your next-door neighbour?
I am just a simple country boy, not a city slicker finance “expert” or fund manager, but is it possible that buying shares for $1.70 which are worth – at best – 30 or 40 cents, explains why the share price of My Food Bag has been a disaster for investors? Is it equally possible Ms Lim’s breasts have nothing to do with it? Just a thought.
When the My Food Bag share price hits, say, 38 cents (and it will, dear reader), were you to purchase them and later sell for, say, 45 cents then it will be a great investment for you (an 18% tax-free gain!). Until then it’s a sure-fire loser. This is all about dollars and cents folks – it’s not rocket science.
If you click the link below to the prospectus, scroll down to page 64 and look at the “Net profit after tax” line, and go along to “52 weeks ending March 31 2021” it says 0.8 (ie: $800,000) but if you keep scrolling along there is a “26 weeks to 30 September 2020” figure of 7.6 (I rounded it off to the $8 million number I mention)