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Will!

Game Group And/or Hmv - Worth A Punt?

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Hi all

I was reading some speculative article a while ago about HMV being a possible target for a private equity buyout. The reasoning seemed to be that HMV's share price was at an all time low and therefore a bargain. However, HMV looks like company in big trouble to me, since everyone buys their music, videos and books online, and I'm struggling to see what assets it has that private equity could strip rationalise.

This got me thinking about GAME, whose share price is also rock bottom. Although HMV's shops usually seem to be half empty, even on Saturdays, GAME's appear to be reasonably busy. It seems like there's no reason why computer games should be different from music, videos books, so am I missing something?

Cheers

Will

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Hi all

I was reading some speculative article a while ago about HMV being a possible target for a private equity buyout. The reasoning seemed to be that HMV's share price was at an all time low and therefore a bargain. However, HMV looks like company in big trouble to me, since everyone buys their music, videos and books online, and I'm struggling to see what assets it has that private equity could strip rationalise.

This got me thinking about GAME, whose share price is also rock bottom. Although HMV's shops usually seem to be half empty, even on Saturdays, GAME's appear to be reasonably busy. It seems like there's no reason why computer games should be different from music, videos books, so am I missing something?

Cheers

Will

No, you're not missing anything...HMV is a dog, Game is slightly less of a dog but will catch up. Don't waste your money.

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HMV is a big gamble. There's a space for high street shops selling books, records, etc, but it's a lot smaller than of old, and they're naturally a company in decline - despite the demise of the competition. The gamble is, if management can do something imaginative and turn the company round, then today's price is a bargain!

Game I know even less.

I'm not buying either of them (and yes I do sometimes buy bombed-out shares looking for a rebound).

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Peston explains it all.

I have to admit I might be tempted to place a bet buy some shares if they fall low enough.

It's a very different story now to when this thread was posted.

If you'd bought HMV back then, you'd now be sitting on an 80% loss (thus needing a 400% gain to get your money back).

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Indeed, and I'm glad I stayed out of it.

I'm not sure HMV will actually go under in the next few months though, as it would be a little strange for its creditors to push it into bankruptcy while it's still making a profit. That said, HMV needs to drastically reduce its rent and wages bill. Most of its staff are probably on zero-hours contracts so that part should be easy. Tim Waterstone seems to want to buy back Waterstone's so that can be flogged off to him. 7digital is probably toast. About the only part of HMV I could see still existing in a recognisable form in five year's time would be the live music venues, because they might be worth something even in our digital age.

Simon Fox seems to be talking the talk though:

HMV shares surge on upbeat chief Simon Fox

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HMV have missed the boat. Their business model is dead. Just like Yell. The future is the internet and these companies have tried and failed and are bested by amazon/google etc.

I like a contrarion punt but think HMV is a shit company so won't buy it.

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HMV Group issues third profits warning

I remember reading an interview with a Chief Exec of a company that went bust. Although I can't remember which Chief Exec or which company, the one thing that stuck in my mind was when he described the period immediately before bankruptcy as being like a near-death experience; he had an epiphany and suddenly gained for the first time a completely clear realisation of all his company's problems and what to do about them, but only when it was too late to actually do anything. He also was able to see all of his previous mistakes and how his personal flaws had led him to make them. I wonder if anything like that is happening in the boardroom of HMV?

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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