CWL IPO - would you invest?

Post by **welshlad** » Mon Nov 11, 2024 6:53 pm

JAFO wrote: ↑Mon Nov 11, 2024 3:38 pm The CWL IPO...

Just to be clear to anyone casually joining this thread, there is no CWL IPO. This thread is just pure speculation. "A CWL IPO..." would be more appropriate.

WileyECoyote · Post by **WileyECoyote** » Mon Nov 11, 2024 7:00 pm

IPO’s offer the siren’s call of “getting in early” to investors. A fundamental flaw in investing in an IPO, if you could, is not knowing the true market value of the stock. There are many who buy in during the run up after the initial public offering only to see the stock price return to earth as the market figures out the true worth of the company. Most of my investments are in well managed mutual funds with just a few stocks held in a brokerage account to maintain my interest. For an individual stock, I prefer a company already profitable & with a built in moat to competition. Intuitive Surgical with its growing worldwide distribution of Da Vinci robotic surgical equipment comes to mind. I held shares of Union Pacific profitably for years because I understood how the business operated. Warren Buffet has always said don’t invest in companies that you don’t understand. Union Pacific has a moat against competition because no one is going to build another transcontinental railroad anytime soon. I eventually sold my shares with a nice profit due to labor issues & the shift from coal, the railroads biggest source of revenue. Now, let’s look at the watch world. Even though I like the culture & product of Christopher Ward, I realize that they operate in a highly competitive retail niche. I am not seeing the moat to competition as an investor.
More importantly, as customers & enthusiasts of the company, we should consider the consequences of if Christopher Ward were to become a publicly traded company. First, is this something that they need to do for their business model? We are aware that the founders offered a minority stake in their company for a needed infusion of capital to grow during this transitional time in CW’s history. I believe the growth of the company in the past couple years proves that this decision was a good one. The reason most companies go public or offer shares in their company is to raise a lot of cash for growth & expansion. Christopher Ward is already growing at a sustainable rate. Unless the plan was to open showrooms like the one in Dallas/Fort Worth across the United States, what would be the point?
Please allow me to share a cautionary tale of what can result by offering stock & becoming accountable to outside interests (investors). Cabelas was a sporting goods company started by two brothers in the rural Sandhills of Nebraska. Dick & Jim Cabela started their company with a similar humble beginning like Christopher Ward. It all started by selling mail order hand tied flies & operating out of a garage! In the course of fifty years, their little company grew to one of the world’s foremost outfitters. I became a loyal customer in the 1970s back when they had one downtown store in Sidney, Nebraska & a growing catalog business. I remember when they added a second retail location in Kearney, Nebraska in the early 1990s. It was with wonder when I first walked through the doors of that store & saw the many world class museum grade wildlife dioramas & huge aquariums on display with a multitude of quality sporting goods. The people that worked in the store were outdoorsmen that knew the products & used them.
Years went by & the Cabela brothers never left the rural, isolated community of Sidney deep in the cattle country of the Nebraska Sandhills. They built a new showplace store up on the interstate highway & eventually corporate offices employing several thousand people with good paying jobs. Dick & Jim Cabela were growing older & it was their dream to expand their business into a chain of stores spanning much of United States. It takes a lot of capital for that type of expansion, so they went public by offering shares in their company. All seemed good as beautiful stores were built that became tourist attractions & anchors for development in their new locations. The company like CW developed loyal customers like myself that bought their products like their clothing & shoes because they represented quality & would last. I still have some Cabela shirts in my closet from that period of expansion.
Nothing lasts forever & eventually the founding brothers died. This left heirs & a board of directors answering to the shareholders. The company remained profitable with its biggest source of profit, a company branded & Nebraska based credit card. Unfortunately, a New York based hedge fund bought a 10% stake in the company & a seat on the board of directors. Nothing to keep that from happening because they were a publicly traded company. The hedge firm agitated with the heirs that the company wasn’t making enough & to cash in. Basically they forced a sale to Cabelas biggest competitor, Bass Pro. Corporate speak was a merger but such transactions are rarely that. Generally the stronger, larger company is buying & absorbing the weaker party. Not a surprise what came next. The profitable credit card arm of company was sold off for short term gain to satisfy the shareholders. The New York hedge fund took the Bass Pro offered share price for a quick $80 million dollar profit & packed their bags for New York. It wasn’t long before the Springfield, Missouri based Bass Pro declared the Cabelas Sidney headquarters as redundant. Its employees were given the choice of transfer or some severance pay with termination. The Cabela/Bass Pro stores remain open but the trusted, quality product lines of Cabelas were discontinued & replaced with cheaper made (not cheaper) sold goods. I have been to Sidney on my trips west. Where there were new businesses such as restaurants & hotels opening by the interstate & a revitalized downtown Sidney, I now see shuttered businesses & homes for sale. While the hedge fund & heirs made a windfall, the consequences was wrecking a company that took fifty years to build & changing the lives of those that worked for the company.
So, let us imagine what might happen with our little watch company if they were to choose that road. How long until an outside investment group forces a sale in which CW joins a consortium of brands under one umbrella? Would the innovation & the daring to be different remain? How long until the headquarters would be moved out of Maidenhead & local employees face relocation or losing their jobs? What would become of us that looked forward to what is next with our favorite brand? There is an old adage, “be careful of what you wish for!”

Delmar

tikkathree · Post by **tikkathree** » Mon Nov 11, 2024 7:20 pm

exHowfener wrote: ↑Sun Nov 10, 2024 7:12 pm
So if CW list their shares, we can invest and follow the same logic, right?!
It could be very worthwhile: I don't know if it's still the case, but many companies used to offer benefits to shareholders. Often a useful annual discount that could be worth more than the purchase price of a minimal amount of shares. Still, as the question is idle speculation, not much point going there.

I'm mindful of some friends who bought shares in the new-fangled Channel tunnel: they get all kinds of shareholder discounts, treats and bonuses: I like the idea of "perky rates" for new watches

nycWATCHnerd · Post by **nycWATCHnerd** » Mon Nov 11, 2024 7:21 pm

nbg wrote: ↑Mon Nov 11, 2024 6:44 pm
JAFO wrote: ↑Mon Nov 11, 2024 3:38 pm Just a thought. The CWL IPO might be Mike and Peter's exit strategy. One possibility anyway.
Well maybe, except they don’t currently have a controlling interest in CW.

Then who does?

Thegreyman · Post by **Thegreyman** » Mon Nov 11, 2024 8:14 pm

Per Companies House, the founders reassuringly still appear to control the business - Peter, Mike and Jorg Bader have c. 27% each and just over 80% collectively. BGF (the recent new investors) hold just under 20%.

There are different classes of shares however the accounts note that all shares rank "pari passu" in all aspects (as far as I can make out).

nbg · Post by **nbg** » Mon Nov 11, 2024 8:44 pm

Thegreyman wrote: ↑Mon Nov 11, 2024 8:14 pm Per Companies House, the founders reassuringly still appear to control the business - Peter, Mike and Jorg Bader have c. 27% each and just over 80% collectively. BGF (the recent new investors) hold just under 20%.

There are different classes of shares however the accounts note that all shares rank "pari passu" in all aspects (as far as I can make out).

I think you need to have another look!

Unless it has altered since they PE lot put the money in.

Neil

Thegreyman · Post by **Thegreyman** » Mon Nov 11, 2024 8:54 pm

nbg wrote: ↑Mon Nov 11, 2024 8:44 pm
Thegreyman wrote: ↑Mon Nov 11, 2024 8:14 pm Per Companies House, the founders reassuringly still appear to control the business - Peter, Mike and Jorg Bader have c. 27% each and just over 80% collectively. BGF (the recent new investors) hold just under 20%.

There are different classes of shares however the accounts note that all shares rank "pari passu" in all aspects (as far as I can make out).
I think you need to have another look!

Unless it has altered since they PE lot put the money in.

Neil

That is per a confirmation statement of 21 August 2024 so looks up to date?

nbg · Post by **nbg** » Mon Nov 11, 2024 9:15 pm

Thegreyman wrote: ↑Mon Nov 11, 2024 8:54 pm
nbg wrote: ↑Mon Nov 11, 2024 8:44 pm
Thegreyman wrote: ↑Mon Nov 11, 2024 8:14 pm Per Companies House, the founders reassuringly still appear to control the business - Peter, Mike and Jorg Bader have c. 27% each and just over 80% collectively. BGF (the recent new investors) hold just under 20%.

There are different classes of shares however the accounts note that all shares rank "pari passu" in all aspects (as far as I can make out).
I think you need to have another look!

Unless it has altered since they PE lot put the money in.

Neil
That is per a confirmation statement of 21 August 2024 so looks up to date?

Ok. I read the shareholder agreement after the PE lot put the money in.

Let’s just say MF, PF and JB wouldn’t have walked away with the same amount per share as the PE lot in the event of a sale.

So has it changed? Have the PE lot given up significant control?

You are the accountant. Are the rights attached to the A and B shares the same in the event of a sale?

Neil

nbg · Post by **nbg** » Mon Nov 11, 2024 9:17 pm

WileyECoyote wrote: ↑Mon Nov 11, 2024 7:00 pm IPO’s offer the siren’s call of “getting in early” to investors. A fundamental flaw in investing in an IPO, if you could, is not knowing the true market value of the stock. There are many who buy in during the run up after the initial public offering only to see the stock price return to earth as the market figures out the true worth of the company. Most of my investments are in well managed mutual funds with just a few stocks held in a brokerage account to maintain my interest. For an individual stock, I prefer a company already profitable & with a built in moat to competition. Intuitive Surgical with its growing worldwide distribution of Da Vinci robotic surgical equipment comes to mind. I held shares of Union Pacific profitably for years because I understood how the business operated. Warren Buffet has always said don’t invest in companies that you don’t understand. Union Pacific has a moat against competition because no one is going to build another transcontinental railroad anytime soon. I eventually sold my shares with a nice profit due to labor issues & the shift from coal, the railroads biggest source of revenue. Now, let’s look at the watch world. Even though I like the culture & product of Christopher Ward, I realize that they operate in a highly competitive retail niche. I am not seeing the moat to competition as an investor.
More importantly, as customers & enthusiasts of the company, we should consider the consequences of if Christopher Ward were to become a publicly traded company. First, is this something that they need to do for their business model? We are aware that the founders offered a minority stake in their company for a needed infusion of capital to grow during this transitional time in CW’s history. I believe the growth of the company in the past couple years proves that this decision was a good one. The reason most companies go public or offer shares in their company is to raise a lot of cash for growth & expansion. Christopher Ward is already growing at a sustainable rate. Unless the plan was to open showrooms like the one in Dallas/Fort Worth across the United States, what would be the point?
Please allow me to share a cautionary tale of what can result by offering stock & becoming accountable to outside interests (investors). Cabelas was a sporting goods company started by two brothers in the rural Sandhills of Nebraska. Dick & Jim Cabela started their company with a similar humble beginning like Christopher Ward. It all started by selling mail order hand tied flies & operating out of a garage! In the course of fifty years, their little company grew to one of the world’s foremost outfitters. I became a loyal customer in the 1970s back when they had one downtown store in Sidney, Nebraska & a growing catalog business. I remember when they added a second retail location in Kearney, Nebraska in the early 1990s. It was with wonder when I first walked through the doors of that store & saw the many world class museum grade wildlife dioramas & huge aquariums on display with a multitude of quality sporting goods. The people that worked in the store were outdoorsmen that knew the products & used them.
Years went by & the Cabela brothers never left the rural, isolated community of Sidney deep in the cattle country of the Nebraska Sandhills. They built a new showplace store up on the interstate highway & eventually corporate offices employing several thousand people with good paying jobs. Dick & Jim Cabela were growing older & it was their dream to expand their business into a chain of stores spanning much of United States. It takes a lot of capital for that type of expansion, so they went public by offering shares in their company. All seemed good as beautiful stores were built that became tourist attractions & anchors for development in their new locations. The company like CW developed loyal customers like myself that bought their products like their clothing & shoes because they represented quality & would last. I still have some Cabela shirts in my closet from that period of expansion.
Nothing lasts forever & eventually the founding brothers died. This left heirs & a board of directors answering to the shareholders. The company remained profitable with its biggest source of profit, a company branded & Nebraska based credit card. Unfortunately, a New York based hedge fund bought a 10% stake in the company & a seat on the board of directors. Nothing to keep that from happening because they were a publicly traded company. The hedge firm agitated with the heirs that the company wasn’t making enough & to cash in. Basically they forced a sale to Cabelas biggest competitor, Bass Pro. Corporate speak was a merger but such transactions are rarely that. Generally the stronger, larger company is buying & absorbing the weaker party. Not a surprise what came next. The profitable credit card arm of company was sold off for short term gain to satisfy the shareholders. The New York hedge fund took the Bass Pro offered share price for a quick $80 million dollar profit & packed their bags for New York. It wasn’t long before the Springfield, Missouri based Bass Pro declared the Cabelas Sidney headquarters as redundant. Its employees were given the choice of transfer or some severance pay with termination. The Cabela/Bass Pro stores remain open but the trusted, quality product lines of Cabelas were discontinued & replaced with cheaper made (not cheaper) sold goods. I have been to Sidney on my trips west. Where there were new businesses such as restaurants & hotels opening by the interstate & a revitalized downtown Sidney, I now see shuttered businesses & homes for sale. While the hedge fund & heirs made a windfall, the consequences was wrecking a company that took fifty years to build & changing the lives of those that worked for the company.
So, let us imagine what might happen with our little watch company if they were to choose that road. How long until an outside investment group forces a sale in which CW joins a consortium of brands under one umbrella? Would the innovation & the daring to be different remain? How long until the headquarters would be moved out of Maidenhead & local employees face relocation or losing their jobs? What would become of us that looked forward to what is next with our favorite brand? There is an old adage, “be careful of what you wish for!”

Delmar

Is that your own work?

It seems to be rather a long post!

Neil

WileyECoyote · Post by **WileyECoyote** » Mon Nov 11, 2024 9:31 pm

I’m sorry for it being such a lengthy post. But, yes, those are my thoughts on the subject. I realize that this thread is one of conjecture “if” Christopher Ward were to become a publicly traded company. I was trying to illustrate the unintended consequences & the real life ramifications for a company that I did know a great deal about. It takes a great deal of time & effort to build a great business. Unfortunately, a life’s work can be undone rather quickly. The good people at Christopher Ward have a great deal to be proud of in what they have accomplished over the last twenty years. I am sorry if I bored or offended anyone with my post.

Delmar

Thegreyman · Post by **Thegreyman** » Mon Nov 11, 2024 9:52 pm

nbg wrote: ↑Mon Nov 11, 2024 9:15 pm
Thegreyman wrote: ↑Mon Nov 11, 2024 8:54 pm
nbg wrote: ↑Mon Nov 11, 2024 8:44 pm

I think you need to have another look!

Unless it has altered since they PE lot put the money in.

Neil
That is per a confirmation statement of 21 August 2024 so looks up to date?
Ok. I read the shareholder agreement after the PE lot put the money in.

Let’s just say MF, PF and JB wouldn’t have walked away with the same amount per share as the PE lot in the event of a sale.

So has it changed? Have the PE lot given up significant control?

You are the accountant. Are the rights attached to the A and B shares the same in the event of a sale?

Neil

I think you may well be correct but the answer would involve reviewing the (lengthy) Articles of Association. The accounts on the face of it do refer to shares as having equal rights so that would be somewhat misleading.

JAFO · Post by **JAFO** » Mon Nov 11, 2024 10:59 pm

My note about an IPO (flotation) was meant as a semi jocular remark. Having said that, nobody stays on forever, and just as Mike and Peter exited the ELC, I assume at some point they might like to retire from CW. Either they will be sleeping partners taking regular dividends or they will float the company and take a lump sum. The deal may involve some benefit to employees. It's not always just about shares. There's a lot of money washing around when a company floats.

I have no idea what the shareholdings are. I thought there was some restructuring when Mr Chris Ward left the company,

As a note, though, if Chris, Peter and Jorge do have 27% each then any two have them will have voting control of over 50%., and it's a cunning structure. That doesn't mean there isn't a shareholder agreement that affects the way they might use these votes. I wouldn't have thought a s/h agreement would be a publicly available document, but it may be.

15peter20 · Post by **15peter20** » Tue Nov 12, 2024 11:31 am

Thegreyman wrote: ↑Sun Nov 10, 2024 1:08 pm
Woody wrote: ↑Sun Nov 10, 2024 11:59 am I’m afraid the idea of an IPO is pure fantasy (as far as I am aware).

But the idea is tantalising to me, which gets me to wondering - am I the only one, or are there others that would love to be a shareholder in this British success story if the opportunity came along?
I wasn’t aware CW were considering an IPO, has this been reported anywhere or are you just posing a hypothetical question?

I wouldn’t say it is fantasy in terms of a successful venture capital backed company looking for investment to further expand or an exit for existing investors, however I’m not sure if the company has sufficient critical mass to go to a publicly quoted stock exchange at present.

I don't think they are - I think OP was just hypothesizing whether we would if they did. If they did, they'd probably be one of those companies that I'd stick a grand or two in but not much more than that. I tend to agree with Warren Buffet that 99% of people who try to pick their own stocks will lose against the S&P 500, but I do also like putting a little bit of cash in companies I do believe in and do support their products with my own money but that sort of investing is just gambling at the end of the day.

nycWATCHnerd wrote: ↑Mon Nov 11, 2024 2:28 pm
albionphoto wrote: ↑Mon Nov 11, 2024 12:44 pm Depends on the price but I doubt any dividends from these shares would allow me to retire early.
Exactly. IPOs are a fools errand unless you work for the company offering the IPO or the investment bank taking the company public.

Investing in low cost mutual funds for more than 30 years (and never selling through any downturn) allowed me and my wife to retire very early.

I would tend to agree. I got into investing during the pandemic. I made some decent money on some stocks and lost on some others but I was down overall. I've just been filling my ISA every new tax year and just buy Vanguard's S&P 500 fund and I'm up nearly 70% and £41k in profit. Not bad for clicking a few buttons once a year and reinvesting the dividends when I get them. The S&P 500 is by far the safest way to grown your money but it's no get rich quick scheme but your money will definitely start to snowball over the years.

nycWATCHnerd · Post by **nycWATCHnerd** » Tue Nov 12, 2024 4:45 pm

15peter20 wrote: ↑Tue Nov 12, 2024 11:31 am
nycWATCHnerd wrote: ↑Mon Nov 11, 2024 2:28 pm Investing in low cost mutual funds for more than 30 years (and never selling through any downturn) allowed me and my wife to retire very early.
I would tend to agree. I got into investing during the pandemic. I made some decent money on some stocks and lost on some others but I was down overall. I've just been filling my ISA every new tax year and just buy Vanguard's S&P 500 fund and I'm up nearly 70% and £41k in profit. Not bad for clicking a few buttons once a year and reinvesting the dividends when I get them. The S&P 500 is by far the safest way to grown your money but it's no get rich quick scheme but your money will definitely start to snowball over the years.

Don't get confused by returns (good or bad) of the past few years because they are not realistic.

The best way is to dollar cost average by investing regularly, do not sell in a downturn but rather ride it out by doing nothing, and time (aka compounding) is your friend. Think about the next 5, 10, 15, 20, 25, and 30 year returns and do not focus on the next quarter or even the next year. Do not time the market. Ignore the so-called experts in the financial media (because a monkey could give better advice than all of them).

My wife and I have been dealing with historical events since the early 1990s: coming out of the savings and loan crisis of the 80s, 1987 stock market crash, bad job market in the early 90s (which we entered after college/university), dot com blow up in the early 2000s, financial/housing crisis and the great recession of 2006-2009 (really until 2013), and the pandemic market meltdown of 2020.

We stopped buying individual stocks in the late 90s. We only purchase low cost mutual funds. During the 7 years of the recession (2006-2013) we curtailed our spending so we could max out all retirement accounts and put extra money into taxable investment accounts. People thought we were crazy because we kept buying all those years as the market kept going down and it finally started paying off in 2013 with amazing returns on all those shares we bought at really cheap prices. Similarly, we saw March 2020 as a buying opportunity because everything was down 30-40% so in our minds the stock market was on sale. We have literally never sold a share.

We have been able to do what 95% people cannot do: ignore the bad news, do nothing, and keep investing for the long term.

triffidman · Post by **triffidman** » Tue Nov 12, 2024 5:26 pm

I would avoid it like the plague. (I wonder if that phrase will ever get changed to Covid....).

Their current accounts state a net cash position of £2.8 million, yet they made charitable donations of £610,000. WOW!! I'd be pretty peeved, to say the least, as a shareholder, if they gave away 17% of their cash to charity and then distribute any remaining profits to shareholders.

I'm thinking Mike France has some friends in high places in those charities, just my subjective opinion of course, but 17% is a VERY high percentage to just give away, even considering the tax benefits.

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