Hooky Street (part IV)
Cushty
I finally have an explanation from VusionGroup that could explain why they earned zero interest on several hundred million dollars of cash over the last 12 months. To cut a long story short, the line they have gone with is that they are incompetent.
Oh, and they blamed this guy a bit too:
First up, here’s what they tried to palm me off with:
Basically, the line here is that cash only really started coming in late in the first half of 2024. And the part that did come in 2023 was quickly invested (just not quick enough to be gone before year end).
That still wouldn’t explain why there was no interest at all. But it’s also not really true. I know this because they already called in the US subsidiary to explain why there’s not much cash at the parent at the end of 2023 (even though they state elsewhere that subsidiaries pool cash up to it).
Now, if that cash really was sitting in the US subsidiary there’s only one way it got there. Prepayments, mostly from Walmart. There was this one in the first half of 2023:
And then another one in the second half:
We know at year end there had to be something close to €130m sat in this US subsidiary, because that’s where the company told me the money is. That means a fair chunk of the first half prepayment from Walmart was still there, and had been for at least 6 months. So the average cash balance in the US across the second half of 2023 can’t have been far off $100m (if there really was €130m odd sat there at year end).
And still no interest.
So I went back and asked, again, for an explanation that actually fitted the facts.
Yesterday, I got this:
Gotcha. They were too busy to transfer the cash to an interest bearing account.
Too busy to do a job that could be done and dusted in an afternoon, that by now would have made them several million dollars interest.
Too busy when:
Too busy to manage their bank financing because they were… talking to banks about financing.
If you believe all that I’ve got a holiday gaff in Poyais that might interest you too:
But maybe I’m being harsh, maybe VusionGroup management really are just that incompetent.
Disclosure: Until I get an explanation for VusionGroup’s cash balance that makes sense to me I am short the company’s shares.
Further disclosure: I am not an investment professional. None of this is advice. Do your own work. I make mistakes.
So all this build up so far to conclude that you want to short a company because they didn't transfer their cash in an interest bearing account for a few months while the company is growing 20-30% top line, expanding margins massively, launching market leading solutions globally with a 50%+ market share and growing?
That is a strong enough argument in your view to short a stock? I wish you best of luck and thank you for your disclose about not being an investment professional.