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I suspect everyone has seen this except me. I am very glad that someone outside of our nerd-kingdom has recognized Gee Dub's ludicrous business practices. I am so convinced that this company's leadership (whose products I love) is so wrong headed and back-asswards that I have been investigating a way which I might invest in a short sell of GW PLC on the London Exchange. My normal account doesn't allow foreign OTCs especially shorts. I am open to any ideas if you have any, but I think this is a viable opportunity for a nerd like me.

Anyhoo, here's a very very British way of saying "leadership is terrible." Brits are so kind sometimes....

http://www.iii.co.uk/tv/episode/falling-out-love-games-workshop

Any islanders out there? Might consider taking a small short position. Just sayin. WE ARE THE INSIDERS!
You'll owe me a beer if you make a killing though!
DrG

 doktor_g wrote:
Any islanders out there?

What, like, Polynesians?

 Vermis wrote:

 doktor_g wrote:
Any islanders out there?

What, like, Polynesians?

Hockey players. They've got cash.

Watched the video. Doesn't really say anything new. Looks like Richard is still stumbling about, grasping for answers that half a million nerds are serving up to him on a silver platter. "Umm... Games Workshop make own IP, write own books, shurely that all it take. Why share price not go up?"

Maybe it's my imagination that he sounds a bit sniffy when he mentions commenters being customers, not investors. His problem IMO, is that he's looking at it as an investor and doing what Kirby-GW did: ignoring customers and ex-customers, and these silly little fripperies of toy soldiers(/jewel-like items of wonder) that they should stop kicking up a bally fuss about and just get on with buying like good little consumers.

@Vermis: Hah! I knew I could troll a Brit with that "islanders" comment. Anyway, yes, I agree he seemed a little snooty about "commenters" on his blog or whatever he has going on. But, on the bright side, I think that the fact that he got some clicks should make him THINK about who's consuming his content and then THINK about what they are saying and why they are saying it. Ugh...

You guys have discount brokers over there like TDAmeritrade, Scottrade, ETrade, etc? Pretty hefty tax on foreign capital gains for us. That's why Tim Cook lost his gak on 60 Minutes a few months ago. Having $250B in off shore accounts and not being able to bring it home is a bummer for him...

ALSO:
I love the way you talk... "silly little fripperies", "jewel-like items of wonder", "Kicking up a bally fuss."

Jolly good Vermis! Jolly good I say!

Historically -- even recently -- if you had shorted GW, in most periods you would have probably come up.... short

The problem with shorting a stock is that you're not only betting on it taking a downturn, but you're betting on when it's going to take a downturn. Sure, there are plenty of periods where GAW.L takes a downturn, but predicting those periods with any certainty is a crapshoot, and there are much easier (more predictable) stocks to short if your goal is to turn a profit.

Shorting stocks is inherently quite risky anyhow. If I felt strongly that GAW.L were headed in a downward direction, my preference would be to sell call options rather than shorting stocks. Obviously, the premium covers some of the risk. Sure, conversely, your potential rewards is a lot smaller, but because GAW.L is a reasonably stable and mature stock that is unlikely to have an epic crash, it's not like your short is likely to hit jackpot either.

I think the comment about customers remarking on his post mostly interested him because it means that the business issues that he see's as an investor(who doesn't even care about the actual share price, only the performance) are so plainly obvious to even the people who buy the product. I doubt many customers for most publicly traded companies that deal in goods notice or even care about how management is working at that company. It is rare that I bother to think about anything corporate for companies whose products I buy. Fantasy Flight Games are hugely successful, yet have insane issues with stock availability and new release schedules, but not to the point where customers are leaving en masse for other games or wondering just what it is they are doing up there in Minnesota.

The main problem with GW management for the last 10 years at least, has been that they don't think they have any competition because "no one else makes Warhammer™ models" or that no other company can match the quality they feel they produce. And that is simply untrue. Fantasy Flight doesn't think they have no competition simply because no one else makes X-Wing 1/270th scale prepainted miniatures. They know other companies offer similar products, and that if they do not stay competitive in both quality and affordability, that they will see their sales decline quite rapidly.

The wargaming/boardgaming community is a very well informed lot, and we tend to latch on to something we enjoy with great commitment. And just as easily, if we feel our patronage is not appreciated, we take our money elsewhere and dump that old game as though it slept with our wife and then shot our dog.

GW needs to realize they are not the only game in town(literally). And until they do, this trend will almost certainly continue until they are forced to sell off a mass of shares to some other company who wants the IP and knows how to properly manage it.

Asmodee is a great example of on such company that does this, granted they buyout private companies. And they are rather successful at it.

 Aerethan wrote:
I think the comment about customers remarking on his post mostly interested him because it means that the business issues that he see's as an investor(who doesn't even care about the actual share price, only the performance) are so plainly obvious to even the people who buy the product. I doubt many customers for most publicly traded companies that deal in goods notice or even care about how management is working at that company. It is rare that I bother to think about anything corporate for companies whose products I buy. Fantasy Flight Games are hugely successful, yet have insane issues with stock availability and new release schedules, but not to the point where customers are leaving en masse for other games or wondering just what it is they are doing up there in Minnesota.

The main problem with GW management for the last 10 years at least, has been that they don't think they have any competition because "no one else makes Warhammer™ models" or that no other company can match the quality they feel they produce. And that is simply untrue. Fantasy Flight doesn't think they have no competition simply because no one else makes X-Wing 1/270th scale prepainted miniatures. They know other companies offer similar products, and that if they do not stay competitive in both quality and affordability, that they will see their sales decline quite rapidly.

The wargaming/boardgaming community is a very well informed lot, and we tend to latch on to something we enjoy with great commitment. And just as easily, if we feel our patronage is not appreciated, we take our money elsewhere and dump that old game as though it slept with our wife and then shot our dog.

GW needs to realize they are not the only game in town(literally). And until they do, this trend will almost certainly continue until they are forced to sell off a mass of shares to some other company who wants the IP and knows how to properly manage it.

Asmodee is a great example of on such company that does this, granted they buyout private companies. And they are rather successful at it.

IIRC GW defines their target market as 'people who buy GW product'.

Which is a horrifying prospect for a company.

They also defined their customers' hobby as "buying GW products."

The same guy wrote an article in September about GW's annual meeting. He says that GW thinks it's customer base is 80% collectors and only 20% gamers. That explains a lot of the changes GW has made in recent years. But since they don't do any market research how can they possibly know that only 20% of their customers are gamers?

 doktor_g wrote:
I am open to any ideas if you have any, but I think this is a viable opportunity for a nerd like me.

It's not. No one is going to make a killing, so you're not going to earn yourself any beers that way.

Short-selling is a high risk, low return way of making money in stocks, because not only are you betting that the price is going to go down, you're betting that it's going to go down enough to make it worth your time. That's especially risky when you're working with the low volumes that an individual investor usually operates at.

Right now, it looks like GW stock is at £5.10 a share. That means, if you buy with intent to short sell, your best case scenario is that GW implodes, it's stock loses all value, and you're able to get about £5.10 out of it. But that's not too likely to happen, so what you're going to make is much, much less.

There's also the question of how much money you have to throw away with this. Do you buy 100 shares? What's your best case scenario there? That if you're lucky, you make a pound or two back per share? It's not nothing, but it's not much of a payoff either. Do you sink serious money into it?

And let's not even think about the worst case scenario where somehow things get turned around and GW stock goes up. There's a very good reason why short selling for small time novice investors is a sucker's game. I short sold BP stock during the Gulf explosion crisis, and even for something that was as much of a 'sure thing' as that, it was an eye opening experience at just how risky, and how dumb a gamble the whole thing generally is.

 doktor_g wrote:

I love the way you talk... "silly little fripperies", "jewel-like items of wonder", "Kicking up a bally fuss."

Jolly good Vermis! Jolly good I say!

That's poking at Richard Beddard. My accent'd be closer to something the average american would need subtitles to. (How's that for trolling? )

(Dear mods: no, I'm only joking)

@Bookwrack. It would be my first short play. Traditionally Im a long value Bogle guy. Thanks for the insight...

 Bookwrack wrote:

 doktor_g wrote:
I am open to any ideas if you have any, but I think this is a viable opportunity for a nerd like me.

It's not. No one is going to make a killing, so you're not going to earn yourself any beers that way.

Short-selling is a high risk, low return way of making money in stocks, because not only are you betting that the price is going to go down, you're betting that it's going to go down enough to make it worth your time. That's especially risky when you're working with the low volumes that an individual investor usually operates at.

Right now, it looks like GW stock is at £5.10 a share. That means, if you buy with intent to short sell, your best case scenario is that GW implodes, it's stock loses all value, and you're able to get about £5.10 out of it. But that's not too likely to happen, so what you're going to make is much, much less.

There's also the question of how much money you have to throw away with this. Do you buy 100 shares? What's your best case scenario there? That if you're lucky, you make a pound or two back per share? It's not nothing, but it's not much of a payoff either. Do you sink serious money into it?

And let's not even think about the worst case scenario where somehow things get turned around and GW stock goes up. There's a very good reason why short selling for small time novice investors is a sucker's game. I short sold BP stock during the Gulf explosion crisis, and even for something that was as much of a 'sure thing' as that, it was an eye opening experience at just how risky, and how dumb a gamble the whole thing generally is.

Yay! Someone who gets it.

If you short sell £5100 worth of GAW.L and it goes down 5%, you have the chance of making £255. But there's just as much a chance that you lose £255, and more likely, it will be somewhere in between, and over the course of doing it for a year, you'll lose a little on the short sells (since GW's stock price actually hasn't been declining recently) and you'll spend a bunch of money on fees. And waste your time, because you could have been doing something else

And, as I said before, GAW.L is just too stable a stock to make big money on short sells. It's just not going to drop from £5.10 to £0.51 in a short period of time, and anyone who bets on that will lose money in a pretty epic way.

The best reason to buy shares in GW is that they have a very good record of paying dividends.

 Arschbombe wrote:
The same guy wrote an article in September about GW's annual meeting. He says that GW thinks it's customer base is 80% collectors and only 20% gamers. That explains a lot of the changes GW has made in recent years. But since they don't do any market research how can they possibly know that only 20% of their customers are gamers?

That's the million dollar question isn't it?

GW stock is relatively illiquid and trades at a low multiple. The company's small size plus the strength of its lore/background IP also makes it ultimately an attractive acquisition opportunity for larger companies in a variety of spaces. This would translate to a 'value at a lower price, even a cheap one' underlying bid.

To short sell, you're betting not only that things become worse for GW, but that somebody who currently holds stock decides they have to sell out of it at a lower price. When the majority share ownership is in a couple large entities' hands, and there is very little of this stock owned on margin or by short-term traders that are likelier to be 'forced' to sell due to short-term capital management or other reasons, shorting is going to be a long, grinding affair, with potential for upside pain from a variety of different angles.

Even though upside in GW is probably nil, downside can also be practically nil when you consider how small the company is, and the likelihood that it can tread water for a timeframe that could feel like a very long time for an amateur investor.

Many 'retail' trade brokers will only allow shorting within certain parameters; if they have someone in their portfolio who is 'long' the stock (wherein they simply offset your and their ownership), by selling you Puts (which you pay a premium for and have exposure to Vega and Theta decay), and some will even charge rent/collateral at a fixed rate/timeframe making the timing piece a crucial piece of your short position, as others have called out.

At the end of the day, your odds of success with all these factors included are very low.