Published on: May 18, 2018

My Lords, Ladies and Gentlemen. You are cordially invited to the marriage of this week’s publication of the most pertinent social conversations and investment news. Welcome to this week’s News, Views and Truths.

Apparently there is a wedding on this weekend; who knew? It would be remiss of me not to mention the imminent tying-of-the-knot of HRH Prince Henry of Wales KCVO and Meghan Markle. Now we know that, pre-marriage, Ms Markle is a commoner. However, did you know that Harry’s legal status is that of a commoner too? No? Well let me give you some facts so that you can amaze folk over the weekend.

In the United Kingdom, the law is based on English common law from where we get the word “Commoner”. The only people in the UK who are not commoners are Peers of the Realm (not their children) and the Sovereign. That leaves everyone else, including princes and princesses, who have not been created peers of the realm. So, yes, Harry is a prince, a royal highness, and yes, a commoner. He’s not a peer of the realm.

Yes, in terms of precedence and rank, Harry, as a grandson of the sovereign, has a higher precedence, than the Duke of Norfolk, the premier duke in the Peerage of England. But in law, the Duke of Norfolk is a peer, not a commoner. Children of peers, including the heirs, are commoners as they bear courtesy titles. Nobility is not a legal status. Harry’s mother, Lady Diana Spencer, was the daughter of an earl. She carried the courtesy title of an earl’s daughter, but she was a commoner in law. Her father was a peer of the realm.

It is expected that Harry will be given a dukedom on his wedding day, most likely Duke of Sussex. At that point the couple will become peers of the realm and therefore no longer be commoners.

Another fact is Ocado’s share price. Dove. Tailed.

If you do not know who Ocado are, they are an online supermarket; essentially Waitrose’s online supermarket. Yesterday, they announced a deal with the US supermarket chain Kroger, revealing that the US firm would take a 5% stake in the company, giving them the rights to use Ocado’s online technology on an exclusive basis in return for “monthly exclusivity and consultancy fees”.

The market liked this. A lot. Ocado’s share price closed up 45% yesterday. However, not everyone benefitted.

Hedge Fund manager Marshall Wace, which made millions from the collapse of Carillion due to a significant short position they held on the stock, also has one of the largest punts on the failure of, you guessed it, Ocado.

With a net short position of 1%, according to regulatory filings, Marshall Wace booked a paper loss of around £15m within minutes of the deal being announced. Some 9.5% of Ocado’s shares have been lent to hedge funds making bets against the firm, according to IHS Markit. This means such funds lost almost £150m yesterday.

And as one of the most shorted stocks in the UK stock market, this deal will be a bitter pill to swallow for the hedge funds who have bet against Ocado because of its perceived high valuation. The question now is whether or not its new valuation, based up the licensing out of its online delivery technology rather than the revenues it’s currently making from food retail, can deliver the expectations. To put this into perspective, Ocado’s share price has now more than tripled in the past 12 months.

Using Goldman Sachs’ profitability estimates, the new Kroger warehouses are worth about £1.82 per share although investors bid up Ocado’s stock by almost £3.50 after the deal announcement, sending the barely-profitable group’s market value to almost £6 billion. Net out debt and its value is about 4 times consensus 2018 sales, a multiple that’s higher than Amazon’s and usually reserved for companies growing at more than 40 percent per year based on conventional analysis.
That’s a big ask. Maybe the hedgies will end up having their day after all…

And to come full circle, this week’s playlist naturally celebrates tomorrow’s big day. I hope everyone has a wonderful weekend and I shall see you all next week.

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