Cube Report (20 May 2021) – Games Workshop remains a dream to own

Cube Report (20 May 2021) – Games Workshop remains a dream to own

Afternoon folks,

It’s my first daily report for a while. You’ll be seeing a lot more of me around here now!

For subscribers, I was pleased with this Diary article from yesterday. I’ve been doing a lot of personal trading behind the scenes over the past few weeks, and am now trying to get my thoughts down on paper (so to speak). So this article is my first attempt at updating you on what I’ve been doing.

Anyway, without further ado, let’s look at Games Workshop (GAW) and Trainline (TRN).

Games Workshop

  • Stock data should display here.
Market cap £3.6bn
RNS Dividend and Trading Update
Writer disclosure Long GAW

This is a share I’ve owned since late 2019. I jumped on the bandwagon at around £52/share, putting a small sliver of my portfolio into it.

It’s now a “bagger” for me. I have zero regrets about only buying a small chunk of shares – they seemed expensive at the time, and I’m grateful for the small boost they’ve provided to my portfolio over the past 18 months!

Today there is a 50p dividend declared. The total payouts for the May 2021 financial year is 235p (vs. 145p for the prior year).

And there’s a trading update:

For the year to 30 May 2021, we estimate the Group’s sales to be not less than £350 million (2019/20: £270 million) and the Group’s profit before tax to be not less than £150 million (2019/20: £89 million).

This includes royalties receivable from licensing which are estimated to be approximately £15 million (2019/20: £17 million). As in the prior year, in recognition of our staff’s contribution to these results, we will have paid during the year profit share bonuses amounting in total to £12 million (2019/20: £2 million). These are paid on an equal basis to each member of staff.

A few observations:

  • terrific growth has more than justified the above-average share price multiples.
  • licensing revenues are flat, but the company has been very clear that these are lumpy and unpredictable.
  • the flat bonus paid to each staff member is a nice touch, hinting at a friendly company culture.

As usual, I’m not in a rush to buy any more of these shares. But paradoxically, I’m also very relieved that I own a few, rather than watching it entirely from the sidelines.

It’s an awful feeling to watch a high quality business go from strength to strength, and despite having studied it, watching it rise without owning a stake. I know that feeling very well indeed!

So I’m very happy to stay involved here with a small stake for the foreseeable future (2% of my non-leveraged equity portfolio).


  • Stock data should display here.
Market cap £1.6bn
RNS Publication of Williams-Shapps Plan for UK Rail
Writer disclosure No position.

Trainline shares fell 23% on this news, despite Trainline saying that the William-Shapps plan’s findings and recommendations are “broadly in line with the Company’s expectations“.

The company highlights the following:

Grant Shapps, in his statement to Parliament this morning, said “We’ll welcome independent retailers continuing to compete in the retail ticket market, particularly where they can grow new markets, recognising the value of private sector innovation”

I’ve flicked through the plan, and it’s clear that ticket selling is going to experience significant change.

For example, on page 67 of the plan, there is:

A single website and app will end the current confusing array of train company sites and different standards of service that passengers receive across the network. Great British Railways’ website and app will learn from the best-in-class providers today, including international partners to build a great offer for passengers.

This will bring together the best features of the existing services, including real-time updates on delays and services and simple payment options on the go…

The government’s vision, as set out in the National Bus Strategy for England, is for there to be far closer integration between all forms of public transport. This means that the Great British Railways website and app will increasingly become a portal for all public transport services, showing bus and light rail information and selling integrated tickets across different services to support easy journeys….

Independent retailers will be able to sell rail tickets, including online and in shops, and will work with Great British Railways to introduce innovations in the future.

There should still be room for, but it will have to compete with a government-backed, comprehensive alternative.

It’s bad news, and clearly wasn’t priced in, considering today’s share price reaction.

This is a share I’ve been negative on  since it listed in 2019. The valuation has always looked suspicious.

Consider that in FY February 2020 (pre-Covid), it barely broke even on revenues of £260 million of revenue. And yet the market cap was £2 billion+.

In a post-Covid environment, with less commuting and less in-person shopping, a ten-figure market cap (i.e. £1 billion+) for this looks highly unsustainable to me.

It’s in the top 10 most shorted UK shares, according to discloseable positions. Short interest has been rising:

Personally, I suspect that closing a short at current levels would be premature. Is there anything at all to support the price? Even the balance sheet is unattractive, with net debt at £241 million as of February 2021.



That will do it for today, see you tomorrow!




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