Author Topic: NORTHM - Northmedia  (Read 5131 times)

John Hjorth

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Re: NORTHM.CPH - North Media A/S
« Reply #10 on: June 27, 2020, 06:22:12 PM »
Cigarbutt,

Thank you very much for taking the time to elaborate on your own experiences, thoughts and observations. I can assure you, that I'm all ears. [Or should I type "all eyes", because of our communication medium? [ ; - ) ]]

Your post is certainly not irrelevant, it's gold and food for thought.

In a way it all boils down to suspended compounding because of a business in a secular decline driven by a World Wide digitalization trend.

- - - o 0 o - - -

Here, I'm going a bit anecdotal. Since our - more or less volunteer - incarceration started on February 26th, we switched to digital retailing at nemlig.com. It took some hours to set it up with lists etc. over a couple evenings. After that, it has just worked like a charm. And very nice people working there, always interacting with us with a smile and politeness. It's just great.

Since this "transition", it has become clear to me, that I have a partner in life, that is extremely cost conscious. We have evolved over many years a division of duties, that implies that I'm taking care of "the outside of our home", while she is taking care of the inside stuff. I do not consider myself some kind of chauvinist - I just want to spare her from the load of physical heavy garden work. In a way, she respects that, and appreciates that, and she can do in the garden whatever she wants to do [except the heavy work]. I'm pretty sure that she's been using the leaflets - before this Corona situation evolved over time - to make procurement decisions for the household.

She is in mental control by now of more than 200 SKUs in our household. She doesn't have to check inventory on anything when we're ordering - being it stuff for the fridge, freezer or something else. Pretty amazing to me.

The Lady of the House has had ongoing discussions - some times intense - with me now for several years about all that crap [the leaflets] in our physical mailbox. She is just soo tired of it and want it to stop. And I simply won't yield. I use all that crap to browse for all kinds of new products, that I did not already know the existence of. [As if we didn't already have enough of all kinds of stuff already.]

So, this night I have actually softened up a bit - only a bit, ref. below - and registered at the Addsno+ feature [In Danish : "NejTak+"] on the minetilbud.dk website run by North Media. [Please see link in upper right corner of the main webpage.]

"Mine tilbud" in Danish translates to "My offers" in English, btw.

So, tomorrow I'll tell her, that I've created an account at "NejTak+", and she'll likely be very happy with that.

What I won't tell her tomorrow, is that on "NejTak+" I've opted for all leaflets.

What happens on a more technical level here, is that registration on the "NejTak+" triggers an automated registration on the "NejTak" feature, creating a stop of all leaflets in our physical mailbox for 3 - 4 weeks, after which all the crap starts dumping in here again. [I can't help it : [ ; - D]]

I'm taking a personal calculated risk here, to learn something about sales and marketing. I'm a complete idiot & ignorant in that area, but have learned after my time at university, that it matters a lot. [<- That statement alone indicates that I should let this idea go.] But it's never too late to learn something new.

If one can combine learning something new with pulling pranks on one's significant other, it's just great!
« Last Edit: June 27, 2020, 07:51:20 PM by John Hjorth »
”In the race of excellence … there is no finish line.”
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Spekulatius

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Re: NORTHM - Northmedia
« Reply #11 on: June 27, 2020, 07:58:27 PM »
The problem with these declining business is the limited upside. you make some money when you are right, which you. Gibt well be in this case, but you loose a lot of you don’t.

So in other words, you don’t get the benefit of the fat tail upside. Cigarbutt’s example seem to show exactly why cigarbutt’s are a bad idea generally.
Life is too short for cheap beer and wine.

John Hjorth

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Re: NORTHM.CPH - North Media A/S
« Reply #12 on: June 27, 2020, 09:15:12 PM »
Thank you, Spekulatius,

I appreciate the input & push back.

The basic "issue" at hand here is - to me - there is no way to make a qualified judgement about what North Media A/S will look like within 5 years, or for that sake : 10 years.

The only sure thing in life is that North Media A/S will not look the same - say 5 or 10 years from now.
« Last Edit: June 28, 2020, 04:18:05 AM by John Hjorth »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

Spekulatius

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Re: NORTHM.CPH - North Media A/S
« Reply #13 on: June 28, 2020, 09:51:13 AM »
Thank you, Spekulatius,

I appreciate the input & push back.

The basic "issue" at hand here is - to me - there is no way to make a qualified judgement about what North Media A/S will look like within 5 years, or for that sake : 10 years.

The only sure thing in life is that North Media A/S will not look the same - say 5 or 10 years from now.

Key for the bull thesis is not how much the almost certainly dealing leaflet business is worth, it is whether the CEO can pull a “Blue Chip stamp” Hattrick like Buffet did.
Life is too short for cheap beer and wine.

writser

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Re: NORTHM.CPH - North Media A/S
« Reply #14 on: June 28, 2020, 11:48:27 AM »
Thank you, Spekulatius,

I appreciate the input & push back.

The basic "issue" at hand here is - to me - there is no way to make a qualified judgement about what North Media A/S will look like within 5 years, or for that sake : 10 years.

The only sure thing in life is that North Media A/S will not look the same - say 5 or 10 years from now.

Key for the bull thesis is not how much the almost certainly dealing leaflet business is worth, it is whether the CEO can pull a “Blue Chip stamp” Hattrick like Buffet did.

I think that's nonsense. If I can buy the leaflet segment for an EV/EBIT multiple of about two and the company does something sensible with the generated cashflow I'm a happy buyer. Maybe there is no 'fat tail' but I don't need a fat tail when I get my cash back in two years. I can use that cash to buy Tesla if I want the fat tail upside of colonizing Mars.

Declining business, growing business, I don't care. Preferring the former or the latter is just a personal preference, not a predictor of future returns. Solely the price determines whether something is a good buy. Buying FK Distribution for thousand dollar is a better investment than any growth stock you can find.

Back on topic: North Media came with a significant guidance raise last week: https://www.northmedia.dk/en/meddelse/?storyID=14738190 .

John: thanks for your assessment of the tax situation. I'll need to think a bit about that, too tired for that now.
« Last Edit: June 29, 2020, 03:42:43 AM by writser »
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John Hjorth

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Re: NORTHM.CPH - North Media A/S
« Reply #15 on: June 29, 2020, 04:09:04 AM »
writser,

I just got off the phone with Kåre Wigh [President & CFO at North Media A/S]. He was totally baffled and surprised by my question about lack of provision for deferred taxes on unrealized gains [if any, -I'm not sure about that, and mentioned that to him, naturally] on the stock portfolio held by the parent.

He will get back to me by phone on that matter, he promised.
« Last Edit: June 29, 2020, 04:14:10 AM by John Hjorth »
”In the race of excellence … there is no finish line.”
-HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai

Spekulatius

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Re: NORTHM - Northmedia
« Reply #16 on: June 29, 2020, 04:13:46 AM »
writser,

I just got off the phone with Kåre Wigh [President & CFO at North Media A/S]. He was totally baffled and surprised by my question about lack of provision for deferred taxes on unrealized gains [if any, -I'm not sure about that, and mentioned that to him, naturally] on the stock portfolio held by the parent.

He will get back to me by phone on that matter, he promised.


A CFO or  CEO calling you back if you are a private investor is a strong plus, no matter what he tells you.
Life is too short for cheap beer and wine.

Hielko

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Re: NORTHM.CPH - North Media A/S
« Reply #17 on: June 29, 2020, 04:39:01 AM »
writser,

I just got off the phone with Kåre Wigh [President & CFO at North Media A/S]. He was totally baffled and surprised by my question about lack of provision for deferred taxes on unrealized gains [if any, -I'm not sure about that, and mentioned that to him, naturally] on the stock portfolio held by the parent.

He will get back to me by phone on that matter, he promised.

Looking at the 2019 annual report it looks like to me that they do recognize a tax charge for gains on the securities portfolio. In 2019 they had a huge gain on the securities portfolio, and the tax rate in 2019 was almost the same as in 2018 when they had a loss (both years 23.x%, which makes sense with denmark having a 24.5% tax rate and sweden a 22% tax rate).

In 2019 on the cash flow statement the cash amount of taxes paid is pretty close to the amount reported on the income statement. And since there is no meaningful deferred tax line on the balance sheet it seems to me that they just pay taxes on gains every year, realized or not?? (Which would be bad from a tax efficiency perspective!)

writser

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Re: NORTHM.CPH - North Media A/S
« Reply #18 on: June 29, 2020, 04:39:38 AM »
She is in mental control by now of more than 200 SKUs in our household. She doesn't have to check inventory on anything when we're ordering - being it stuff for the fridge, freezer or something else. Pretty amazing to me.

[..]

So, tomorrow I'll tell her, that I've created an account at "NejTak+", and she'll likely be very happy with that.

What I won't tell her tomorrow, is that on "NejTak+" I've opted for all leaflets.

What happens on a more technical level here, is that registration on the "NejTak+" triggers an automated registration on the "NejTak" feature, creating a stop of all leaflets in our physical mailbox for 3 - 4 weeks, after which all the crap starts dumping in here again.

Haha, great post. Thanks for the laugh :)
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writser

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Re: NORTHM.CPH - North Media A/S
« Reply #19 on: June 29, 2020, 04:44:34 AM »
writser,

I just got off the phone with Kåre Wigh [President & CFO at North Media A/S]. He was totally baffled and surprised by my question about lack of provision for deferred taxes on unrealized gains [if any, -I'm not sure about that, and mentioned that to him, naturally] on the stock portfolio held by the parent.

He will get back to me by phone on that matter, he promised.

Looking at the 2019 annual report it looks like to me that they do recognize a tax charge for gains on the securities portfolio. In 2019 they had a huge gain on the securities portfolio, and the tax rate in 2019 was almost the same as in 2018 when they had a loss (both years 23.x%, which makes sense with denmark having a 24.5% tax rate and sweden a 22% tax rate).

In 2019 on the cash flow statement the cash amount of taxes paid is pretty close to the amount reported on the income statement. And since there is no meaningful deferred tax line on the balance sheet it seems to me that they just pay taxes on gains every year, realized or not?? (Which would be bad from a tax efficiency perspective!)

That was also my assumption. Not sure what would happen in a year with big losses, i.e. can the company carry them back? Let's hear what they tell John. FWIW, it's a bit disconcerning that the CFO is totally baffled when you ask him how the huge stock portfolio on his balance sheet is taxed and has to get back to you .. But of course that's just me reading John's summary of his phone call.
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