# Reitmans RET.A-T



## philthygeezer (Aug 7, 2011)

Has anyone looked into the fundamentals of this stock? It seems like they are doing very well and have a very good record of profit.


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## daddybigbucks (Jan 30, 2011)

i looked into it about 4 years ago and it seemed like a really good buy and nice dividend yield.

I bought and held those 4 years but sold for about the same last year (kept the dividends) just because, i feel, there is too much competition in that space.

i would assume they would get bought out sooner or later but retail really isnt my bag.


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## philthygeezer (Aug 7, 2011)

Reitmans seems like one of the better names but what's the catch? So Reitmans is making money hand over fist, paying good dividends but doesn't have much growth?

It's difficult to find good retail non-cyclical businesses in Canada. Do you know any others worth buying in the sector?


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## daddybigbucks (Jan 30, 2011)

philthygeezer said:


> Reitmans seems like one of the better names but what's the catch? So Reitmans is making money hand over fist, paying good dividends but doesn't have much growth?
> 
> It's difficult to find good retail non-cyclical businesses in Canada. Do you know any others worth buying in the sector?


if i remember correctly, RET pretty much followed "consumer confidence reports".
It might be a good stock to buy on the lows and sell on the highs if you like watching it, as the risk is low and it pays a dividend.

I do this with WFI, i buy when it get to $20 and i sell when it hits $30. Its a low volume stock so it seems to happen a couple times a year. They always have great earnings and it give a 4% dividend so i dont mind waiting.


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## daddybigbucks (Jan 30, 2011)

RET is down to $6 and the yield is 12%.

Book value seems to be about $xx.

Not sure if there is something going on here or not. But i bought some flyers as the risk/reward is appealing.


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## Canadian (Sep 19, 2013)

I just took a look at this stock and I don't like its technicals or fundamentals. It's in a 3-year downtrend and a price floor hasn't materialized. Its MACD suggests that the downtrend will continue as the downward momentum has been increasing since August. Its revenues and profits have been declining for the past 3 years, as well as sales per share and cash flow per share. It's payout ratio has been well over 100% for the past 2 1/2 years, and in most cases the dividend has exceeded quarterly cash flow. This is being reflected in the the company's balance sheet as their cash has depleted 50% over the past 3 years and they have made minimal investments.

I don't think I would speculate with a stock like this on consumer confidence reports either. I like to play some cyclicals but there isn't evidence of cyclical price patterns. As a consumer, there are so many choices when it comes to retail clothing. Think how many stores one can go to in a mall or downtown when looking for a coat or pair of jeans, etc. Also, stores like this are constantly having deep sales - often times making no money or losing money - in an effort to clear the shelves for new stock. Even at the best of times, margins are very thin. This industry is too competitive and Reitmans currently has no competitive advantage that will create superior profitability. It trades at a very high multiple - as do its publicly traded competitors. It may look more valuable or profitable than some of its competitors, but look further and you'll see how little margins are earned by the bunch.

If you are contemplating buying this stock I would wait for two things to happen:

*1)* A price floor to materialize. Despite the juicy 13+% dividend, it wouldn't be wise to buy this in a downtrend that can continue for who knows how much longer. Its share price lost 70% value over the past 3 years and 50% over the past 1 year alone.

*2)* Its sales and profitability to improve. If things don't improve, the company will run out of cash in early 2015 (this is optimistic because it's assuming its rate of loss doesn't _increase_). The way things are, the dividend will likely be cut - it's not a matter of if, but when.


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## BlackThursday (Apr 25, 2011)

Putting aside the technical analysis silliness..

1. bad quarter for the sector and brutal results for Reitman's

2. little hope for recovery in the face of more US competitors coming in

3. they are in danger of being taken out of the S&P/TSX index which would mean ETFs will need to dispose of their positions ..and they are 10% of float

I personally don't invest in this kind of company: the consumer is too fickle.


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## Canadian (Sep 19, 2013)

I'm not sure I would describe technical analysis as silliness. Using it as a sole basis of investing, maybe. I find it quite useful to use as a secondary indicator supporting fundamental analysis.


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## Sampson (Apr 3, 2009)

Sold out most of my holdings some time ago. Bought in before the crash at around $15-$17, then bought more at $7 during the crash and rode it back to $15.

Posted on a different thread about 2-3 years ago why I didn't like the prospects and all those reasons still apply. Fierce competition, waning growth prospects, inability to recover sales revenues during the 2010 recovery when other retailers were doing so. Great Canadian business story, but not so great investment anymore, IMHO. I will wait for a slight recovery, 10% or so, then sell out.


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## daddybigbucks (Jan 30, 2011)

I looked a little closer at this stock.
My calculated book value is closer to $3.30 but not too bad considering during the high in 2011 the book value was $5.50 and the stock price was $21.

It is puzzling when the dividend hasn't been cut or put on hold for the last year. Nothing worries investors more than 4 quarters of negative earnings.

It would be more prudent to wait and see if you can find the bottom, but without holding any cards you won't get in on the buyouts.


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## Mall Guy (Sep 14, 2011)

daddybigbucks said:


> . . . It is puzzling when the dividend hasn't been cut or put on hold for the last year. Nothing worries investors more than 4 quarters of negative earnings. . .


not that puzzling . . . Jeremy Reitman has three ex wives :tongue-new:


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## doctrine (Sep 30, 2011)

I would definitely not buy, but if you're waiting for an opportunity, I'd wait until the dividend gets cut and then the index changes take effect. Reitman's is still on the TSX Composite index as well as the Dividend Aristocrat's index (go figure - they have 1 increase in the last 5 years, and that was in July 2010). 

CDZ owns 5 million shares, or nearly 8% of the company. It would take 45 days at average volume for CDZ to unload those shares, so that would be a lot of selling pressure. It looks like CDZ has done some under-the-hood rigging of their weighting criteria to ensure it doesn't hurt as much as Atlantic Power Corp did, but it's still going to hurt nevertheless as it's the #5 holding.


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## Canadian (Sep 19, 2013)

daddybigbucks said:


> but without holding any cards you won't get in on the buyouts.


This isn't much of a consolidation (company buyout) industry. Poor performing companies that are acquired are usually those with decent gross margins but severe operational efficiencies. Reitmans has very thin gross profit margins and the industry in which it competes has a high (and increasing) degree of competition. This company isn't exactly poised to be a "turnaround" story. If, by chance, the company were bought out then it would likely be at a discount to book value.


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## Mall Guy (Sep 14, 2011)

. . . no it would be for there leasehold interests in major shopping centres . . . their real estate platform is an entry point for someone. But most likely venture capital takes them out based on cash flow. They are investing heavily in store renovations over the last couple of years . . .


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## Sampson (Apr 3, 2009)

It will be interesting to see what the owners do. I don't recall any "family" businesses this large that have been bought out during a downward slide. Curious to see what strategies they will have going forward and whether the deal with Babies r Us will make any significant impact.


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## Canadian (Sep 19, 2013)

Those leasehold improvements (store renovations) are the only investments they have made in the past couple years, though. Their cash flow statements show those minimal investments, and then a mixture of frequent debt/equity issuances to support the dividend. It is possible that a venture capitalist could be interested in the real estate, but it's still difficult to find value in the risk/reward trade off.


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## daddybigbucks (Jan 30, 2011)

just for the record, i didnt buy RET for a buyout. I was just mentioning that if you arent in the game, you cant get any bonuses that may happen.
I know alot of people that always wait for the bottom price but never seem to buy in cuz they always think it can go a little lower.
I usually buy in small lots on the way down to minimize that.


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## doctrine (Sep 30, 2011)

The dividend news is in, 75% cut from 20 cents down to 5 cents.


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## Canadian (Sep 19, 2013)

@doctrine - you beat me to it! I meant to post this yesterday [http://www.newswire.ca/en/story/1273545/reitmans-canada-limited-announces-its-results-for-the-nine-and-three-months-ended-november-2-2013]

The cut brings its dividend down to a modest 3.5%. Another quarter of lacklustre results too. The dividend cut will be good for the company long term. I still don't see value in this company, though.


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## daddybigbucks (Jan 30, 2011)

nice little bonus today on share price with Fairfax buying in.

http://business.financialpost.com/2013/12/23/reitmans-shares-surge-after-fairfax-buys-stake/


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## lostwords (Feb 21, 2014)

Anyone still holding this?


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## Dom (Nov 29, 2013)

I remember passing by a Reitmans with my girlfriend a couple weeks back asking her what she thought
of the clothes sold in the store. She had mentioned that everything is outdated and RET is now a haven
for oldfolks :hopelessness:


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## moose (Nov 19, 2013)

Did you happen to ask about the other stores they own? ie Smart Set? That's geared for the younger, more conservative crowd I believe... Point is, they are not just Reitmans, although their clothing is geared to the older professional


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## blin10 (Jun 27, 2011)

might be a nice short if markets tank


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## gibor365 (Apr 1, 2011)

Last year I was looking for my wife present and visited Reitmans RET.A-T .... sinse than I don't even follow this stock  

btw, after visiting couple of times Target in Milton , I removed it from my watch list for the same reason  I had feeling that I'm in huge warehouse after working hours


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## gibor365 (Apr 1, 2011)

blin10 said:


> might be a nice short if markets tank


blin10, are you shorting stocks?


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## blin10 (Jun 27, 2011)

gibor said:


> blin10, are you shorting stocks?


sometimes I do, but lately I been staying out of it since you can't fight the trend... it's pretty tempting to short few things at current levels I must say

i got my eyes to short euro banks who are in a bad shape such as IRE, since I think next wave of problems will come from Europe once again, just a matter of time


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## james4beach (Nov 15, 2012)

RET.A has gone bankrupt and is delisted. The shares are worthless.


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## MrBlackhill (Jun 10, 2020)

You are revisiting the threads about stocks that failed, @james4beach ?


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> You are revisiting the threads about stocks that failed, @james4beach ?


I run into these while I update my own proprietary stock database. These are all stocks that I track, and when my software starts giving me alerts (no data available), I go looking into why the data isn't available. That's usually when I discover that a stock is delisted and worthless, or has been taken over.

But this is also an effort to fight the survivorship bias of stock picking. There's a tendency in the stock picking activity to focus on everything that worked out well, and conveniently forget about stocks which do poorly. People tend to cheer and brag about their successes.

Nobody posts at CMF, or any other stock picking forum, listing the various horrible stocks they got into, telling us how much money they lost when the stock went to zero. How they had a whole portfolio of oil and gas stocks, then had huge losses and dumped them all and are now carrying forward a 20K capital loss forever.

The same will happen to stock pickers who join the current bandwagon, say in tech stocks, or whatever bubble sectors we are currently in, unless they have a good portfolio management strategy.

I also think that many people with bad outcomes in stocks abandon the forum (or abandon Youtube, or whatever platform they use). That's a perfect demonstration of survivorship bias. That gives everyone else the impression that stock-picking works out pretty good. It's the effect of conveniently ignoring all the instances where things go badly.

So I think it's helpful to close the loop on the story of a stock, to show the full picture.


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## MrBlackhill (Jun 10, 2020)

It's good to give the full picture and show that some stocks failed. I agree with that.

It may not be against stock-picking though, but it should remind us to have some diversification and not put too much weight into some stocks.

I mean, let's say someone has a stock-picking portfolio of 30 stocks and 2 of them goes bankrupt which were worth 5% of the portfolio before crashing, it's not a big deal if the 28 others (95%) went up +15% on average because that would mean an overall +9% for the whole portfolio.

But if you have 44% in a single stock, say AAPL and it crashes "only" -20%, that'll hurt bad the portfolio. (Wink to WB's BRK)


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## hboy54 (Sep 16, 2016)

Sigh. I have reported how I had 6 go to zero over the years for a total loss of about $100,000 numerous times here and on the other site. James' bias against equities seems to prevent him from being honest here. Highly ironic that the guy biased against equities likes to hunt down the bias for equities.

Here is the list yet again:

Nortel
White Rose Crafts
Gandalf Technologies
Canadian Fracmaster
Aimglobal Technologies
American Eco Corporation

Oh I am also currently getting very hammered in oil and gas, though much less hammered than back in March. Though with reasonably low cost bases, I have hope. Portfolio is down something like 55% from the high point 3 or 4 years ago due to my oil and gas adventures and leverage.

BTE 170,800 shares at cost $2.32, current $0.73, -68%
OVV 36,520 shares at cost $19.11 current $15.60 -18%
PEY 126,100 shares at cost $4.33 current $3.21 -26%


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## james4beach (Nov 15, 2012)

hboy54 said:


> Sigh. I have reported how I had 6 go to zero over the years for a total loss of about $100,000 numerous times here and on the other site. James' bias against equities seems to prevent him from being honest here. Highly ironic that the guy biased against equities likes to hunt down the bias for equities.
> 
> Here is the list yet again:
> 
> ...


hboy I think you are somewhat unique around here for sharing what has not worked out well for you.

And why do you say I have a bias against equities? Some stocks go up, others go down. I'm just a realist; this is a tough game.

The financial industry really wants people to believe in the story of stocks, and wants people to get excited about it. So we live in a world where all the media we're exposed to is strongly biased towards equities. I think a person has to think very critically to counteract that bias. The financial industry also likes to exploit the human tendency to overestimate one's own intelligence and skills... so they work very hard at making us suckers buy (and believe in) stocks.

Day trading gurus, Robinhood, e*trade, and countless brokerages all try to exploit pervasive human weaknesses: greed and overestimating one's intelligence. They constantly rip off retail investors, churning through batches of suckers (each who typically loses their money) to feed their industry. On top of this we have insiders, funds who need people to take the other side of their trades, etc.

With such immense forces of Wall Street working against you, do you not agree that a sensible person should *put guards up, to defend themselves*, and make sure they are not just being made into another sucker? This is why I'm so critical of this stuff.

I know a lot of people who have lost a lot of money picking stocks. I _don't know_ anyone who has made significant money from stock-picking or other advanced activities like options gambling. My sample size isn't very small either ... so I think I am correct about Wall Street generally exploiting, and robbing, naive investors.


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## MrBlackhill (Jun 10, 2020)

I like your pessimism, James.

I guess you'd like the game theory and psychology of games like Split or Steal which is a variant of Prisoner's Dilemma.






Prisoner's dilemma - Wikipedia







en.m.wikipedia.org





Here's someone who mastered the game theory of Golden Balls show (Split or Steal)






Here's why it was the brightest move.




__





Split or Steal: An Analysis Using Game Theory : Networks Course blog for INFO 2040/CS 2850/Econ 2040/SOC 2090







blogs.cornell.edu





This is about game theory, not about the complexity of the stock market, but it's about psychology and strategies.


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## AltaRed (Jun 8, 2009)

It has been well studied over the years that retail investors often under perform the market. It is logical because the aggregate of investors IS the market less fees. Rank amateurs are in the same pool as computer algorithms, institutional and professional investors with enormous resources available, etc. etc. Survivorship bias is alive and well since it IS human behaviour to do so. The basic problem is fees. Investors with advisors/advisers can only meet (or beat) the market after overcoming fees. 

@ James, I think a number of CMF members do report losses and mistakes made from time to time. Those are a number of such CMF members that I hold in high esteem versus the jokers that simply brag about successes. The latter cannot be taken at all seriously.

I have had a few stock picks which were bad choices (whatever was I thinking?) and an entire asset area (rate reset prefs) where my timing and intuition were off the richter scale.I suspect it into the 6 figures over the past 20 years, something I should actually take a look at someday by adding up the capital losses on 20 years of Schedule 3s. Everyone should likely do that from time to time to remain humble.


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