Woolworths: The Ronin

Chad Slater

Ellerston Capital

We’re not referring to the somewhat forgettable De Niro movie from 1998, “Rōnin” which garnered a Rotten Tomatoes score of 6.3/10. We use the Wikipedia definition: "A rōnin was a samurai with no lord or master during the feudal period of Japan. A samurai became masterless from the death or fall of his master" So after yesterday we have a business with no lord (CEO) and no “Masters”. It is a business adrift with a Chairman trying to make decisions that will placate shareholders in the short term, but we feel the board are arguably damaging the long term interests of those shareholders. Which is an ironic concern coming from someone who is short the stock! Todays blog reflects on the sale and what it means for the stock price and reaches the somewhat counter-intuitive conclusion: they have increased the chances of a lower share price long term. Barring a sustained turnaround in Food and Liquor and rebasing margins nothing changes. Stay short and cover at $18. (VIEW LINK)


Chad Slater
Co Head Global Equities (ex-Asia)
Ellerston Capital

Chad co-founded Morphic Asset Management in 2012. As a stock picker Chad is also a generalist but has strong regional knowledge of Europe and the Americas. He has also been awarded the CFA Charter.

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