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AG Barr

Discuss Shares, buying selling, tips and deals
TheMotorcycleBoy
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AG Barr

#237126

Postby TheMotorcycleBoy » July 16th, 2019, 10:08 pm

AG Barr's SP took a nose dive today. I know little about the firm (except that they are the drinks manufacturer of Irn Bru fame).

What do people think of this share since it's now trading at a big discount? Worth buying or barge-pole terrority?

many thanks
Matt

monabri
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Re: AG Barr

#237133

Postby monabri » July 16th, 2019, 10:18 pm

"BAG"....4th biggest holding in Lindsell Train Investment Trust (LTI). Nick Train obviously likes them.

https://www.hl.co.uk/shares/shares-sear ... st-ord-75p

ROCE a respectable 19% (18% three years ago so 'stable')
Very little debt

Sugar tax ...effect of the introduction of sin tax on sales?
Reformulation of certain drinks to reduce sugar and caffeine not that successful ( people don't like the new taste )

The P /E was quite high (27) but has reduced today!
Last edited by monabri on July 16th, 2019, 10:26 pm, edited 3 times in total.

Dod101
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Re: AG Barr

#237134

Postby Dod101 » July 16th, 2019, 10:19 pm

Apparently its profits are likely to be down about 20% on last year which was apparently a particularly good year because of the hot summer in Scotland. This firm has a superb record and has a strong family connection. My only interest is that Caledonia IT have a substantial stake. I cannot believe that it is going down the spout. I suspect if you do one of your analyses on it it would come out well, so it could be a good buy at current prices. But I have not studied it too closely.

I do not think that it is barge pole territory.

Dod

TheMotorcycleBoy
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Re: AG Barr

#237138

Postby TheMotorcycleBoy » July 16th, 2019, 10:34 pm

Thanks for the quick replies people!

Yes, I have frantically whacking figures into spreadsheet etc. Should have been in bed ages ago......I'm up at 4.20am tomorrow!

Matt

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Re: AG Barr

#237141

Postby kempiejon » July 16th, 2019, 10:49 pm

I have a dozen or so FTSE250 shares selected for growth and when I looked a couple of years back BAG had beaten the for a few years and the dividend has been rising steadily with other metrics growing too. I bought in about 3 years ago and topped up beginning of this month, if I'd waited until post announcement I'd probably be buying next month at a better price. If you think about it it's bleeding obvious that a cold drinks firm wouldn't have done so well in less warm spring/summers. This could be an opportunity, I might visit the numbers but at first glance this looks like short-termism.

TheMotorcycleBoy
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Re: AG Barr

#237144

Postby TheMotorcycleBoy » July 16th, 2019, 10:57 pm

kempiejon wrote:I have a dozen or so FTSE250 shares selected for growth and when I looked a couple of years back BAG had beaten the for a few years and the dividend has been rising steadily with other metrics growing too. I bought in about 3 years ago and topped up beginning of this month, if I'd waited until post announcement I'd probably be buying next month at a better price. If you think about it it's bleeding obvious that a cold drinks firm wouldn't have done so well in less warm spring/summers. This could be an opportunity, I might visit the numbers but at first glance this looks like short-termism.

Hi KJ,

What do you mean by

This could be an opportunity, I might visit the numbers but at first glance this looks like short-termism.

do you mean a short term overreaction to the recent bad news on the stock?

Matt

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Re: AG Barr

#237149

Postby kempiejon » July 16th, 2019, 11:07 pm

Matt,
Yes, as I said I could have bought cheaper than my last buy and I think this is probably a short term over reaction to recent news but as I said I've not investigate further than the commentary https://sharestobeclosed.telegraph.co.u ... 4&epic=BAG

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Re: AG Barr

#237156

Postby Alaric » July 17th, 2019, 12:24 am

Dod101 wrote: I suspect if you do one of your analyses on it it would come out well, so it could be a good buy at current prices. But I have not studied it too closely.


The price hasn't dropped enough to take it into HYP territory. Even with the latest price drop, holders over 3, 5 and 10 years would have beaten the FTSE 100 with this share. But is it a temporary blip?

Dod101
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Re: AG Barr

#237157

Postby Dod101 » July 17th, 2019, 12:41 am

Not all my buys are for a HYP. I do not directly hold but if I had some spare cash I think this would be at current prices a good place for it. In fact I might take a look in the morning.

Dod

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Re: AG Barr

#237168

Postby SalvorHardin » July 17th, 2019, 6:28 am

I don’t hold A.G. Barr shares directly, but I do indirectly via Caledonia Investments and Finsbury Growth & Income (FGT).

FGT is managed by Nick Train, of Lindsell Train (it’s effectively the investment trust version of one of their funds). A.G. Barr is the subject of FGT’s most recent video, which is on the front page of the trust’s website as I type this (it was FGT’s 14th largest holding as of 31st March 2019). Link below:

https://www.finsburygt.com/

Whilst A.G. Barr is best known for Irn-Bru (and its associated adverts, many of which are on YouTube), its also owns Rubicon soft drinks.

https://www.agbarr.co.uk/

https://en.wikipedia.org/wiki/A.G._Barr

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Re: AG Barr

#237176

Postby JamesMuenchen » July 17th, 2019, 7:34 am

I bought AG Barr after a post on TMF by ValueMargin about companies with a long record of double-digit CAGR. The original post is lost but I still have the headline figures in my notes … BAG compounded at 13.1% 1970-2013.

I held it for a while but sold out in 2017 at 6.25. I see it quoted at 6.23 this morning.

It's a shame really, a great company brought low by excessive regulation.

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Re: AG Barr

#237177

Postby Dod101 » July 17th, 2019, 7:50 am

I am not sure excessive regulation is the real answer. The numbers for this year are being quoted against the excellent ones for last summer when we had the hottest summer for a long while although removing sugar has presumably had some effect.

Dod

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Re: AG Barr

#237184

Postby simoan » July 17th, 2019, 8:47 am

Dod101 wrote:I am not sure excessive regulation is the real answer. The numbers for this year are being quoted against the excellent ones for last summer when we had the hottest summer for a long while although removing sugar has presumably had some effect.

Dod

I agree. It's not regulation. It looks like most of the problems are home brewed i.e. poor recipes, issues with branding, perhaps marketing.

I was a bit worried until I read the results yesterday of the effects on Nichols, which is one of the larger holdings in my SIPP. Thankfully Nichols have announced interims this morning and they are OK: https://www.investegate.co.uk/nichols-p ... 00027355F/

All the best, Si

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Re: AG Barr

#237205

Postby JamesMuenchen » July 17th, 2019, 9:49 am

simoan wrote:I agree. It's not regulation. It looks like most of the problems are home brewed i.e. poor recipes ...

The recipes weren't poor until they were changed, a consequence of the sugar tax (Soft Drinks Industry Levy)

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Re: AG Barr

#237209

Postby simoan » July 17th, 2019, 10:01 am

JamesMuenchen wrote:
simoan wrote:I agree. It's not regulation. It looks like most of the problems are home brewed i.e. poor recipes ...

The recipes weren't poor until they were changed, a consequence of the sugar tax (Soft Drinks Industry Levy)

But this has not effected other soft drink makers who seem to have coped with the sugar reduction changes to recipes just fine. I thought it was well documented that the new recipe for Irn Bru was not well received by regular consumers of the product? And what's more yesterday's announcement stated:

This has been exacerbated by some specific brand challenges, particularly in Rockstar energy and Rubicon juice drinks, as well as disappointing spring and early summer weather, most notably in Scotland and the north of England, and compounded further as we approach the half year when the prior year comparative weather was at its peak.

We have taken action to address the specific brand related issues, including the planned launch of three new Rockstar products at the end of the summer, and recipe improvement activity for Rubicon juice drinks, however the benefit of these actions will not be felt until later in the second half of the financial year.

Doesn't appear to be a market wide problem if you bother to read the Nichols announcement which states:
Year to date growth in the total soft drinks market was 4.1% (Nielsen to 15 June 2018) reducing from 5.7% in May (Nielsen to 18 May 2019) as the industry laps last year's record summer weather.

So a change in growth, but still growth... unless you're AG Barr, that is. This looks very much like a company specific problem. BTW I think they have the dates wrong!

All the best, Si

TheMotorcycleBoy
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Re: AG Barr

#237221

Postby TheMotorcycleBoy » July 17th, 2019, 10:47 am

Alas I bought them. Before reading everybody's comments this morning. I originally set a limit order at 624 before market open. This wasn't filled. I bought later on at 641.

Perhaps I'm a mug? The fundamentals are still very good, and IRN-BRU is a very well known brand. They now comprise about 1.66% of my foli.

This stockpicking is hard, perhaps I should move to trusts/funds etc.

Matt

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Re: AG Barr

#237226

Postby Alaric » July 17th, 2019, 11:02 am

Might this story have something to do with it?

https://www.dailymail.co.uk/health/arti ... rinks.html

We've seen with tobacco that once politicians latch on to the potential popularity of bans, they don't stop until sale and consumption is almost illegal. If there are penalties for selling to under 16s, presumably this will increase the demands for ID on anyone under 25 when doing their shopping.

TheMotorcycleBoy
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Re: AG Barr

#237230

Postby TheMotorcycleBoy » July 17th, 2019, 11:13 am

Alaric wrote:Might this story have something to do with it?

https://www.dailymail.co.uk/health/arti ... rinks.html

We've seen with tobacco that once politicians latch on to the potential popularity of bans, they don't stop until sale and consumption is almost illegal. If there are penalties for selling to under 16s, presumably this will increase the demands for ID on anyone under 25 when doing their shopping.

The thing is so many different types of food and drink are unhealthy if they're consumed without moderation.

Perhaps my purchase was misguided. I'd recently brainwashed myself, with a read of "Buffettology" by Mary Buffet.

She said something like "Warren likes to buy a well run business when it's share price has been hit by recent bad news". Hmm....

Better get on with the old day job for a bit..

Matt

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Re: AG Barr

#237240

Postby monabri » July 17th, 2019, 12:12 pm

TheMotorcycleBoy wrote:Alas I bought them. Before reading everybody's comments this morning. I originally set a limit order at 624 before market open. This wasn't filled. I bought later on at 641.

Perhaps I'm a mug? The fundamentals are still very good, and IRN-BRU is a very well known brand. They now comprise about 1.66% of my foli.

This stockpicking is hard, perhaps I should move to trusts/funds etc.

Matt


That makes two of us then! I added a small tranche at 634p (avg). It can sit on the shelf pining for better days. I wouldn't be surprised if it was subject to a takeover bid (the revenge of BVIC?).

p.s. when Boris becomes PM he might even revoke the "sugar tax"!

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Re: AG Barr

#237241

Postby Dod101 » July 17th, 2019, 12:15 pm

I do not think anyone who bought today will need to beat themselves up. This is still a good company and probably only suffering a blip. Hang in there for two or three years and see how they do.

Dod


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