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ASOS/ConvaTec: chairs can make a difference

By Chris Bailey | Tuesday 3 July 2018


Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


On a thin regulatory news day, two board member announcements catch the eye.  I have never written about internet clothing retailer ASOS (ASC) on this website before but i did once own the shares following a tip from a mate who liked the look of a small cap called 'As Seen on Screen'.  I remember feeling rather clever after making a very decent return after selling out at 10 pence...  Ah, the shortcomings of youth! 
 
ASOS has got rather larger and the share price much, much heavier since then as it has ridden the e-tailing boom with aplomb but plenty of challenges lay ahead.  Competition is getting tougher, geographic expansion outside of the UK always adds new complexities and the need to periodically spend large amounts of cash to beef up distribution capabilities needs to be explained to shareholders. And then there is the super punchy share price valuation to justify too. 
 
So today's board update announcement by ASOS is kind of important.  Out goes Brian McBride after six years with lots of good wishes - and mega share price appreciation - and in comes an old mucker of mine: Adam Crozier.  I have loved-up Crozier on these pages before when he was announced as the Chair of Whitbread (WTB) where we continues to preside over - in my view - a remunerative split-up of the group's operations.  As I noted back then: 
 
'Crozier helped make me money during his time at both the Royal Mail and ITV and he has been sitting on the Whitbread board now for about nine months giving him plenty of time to kick the tyres and understand the business. He strikes me as the type of guy who is not afraid to make big decisions'
 
For ASOS this is a very positive announcement. I am not going to get all gooey eyed about the shares before i have a look at the next set of numbers but if you are a holder today, worry a bit less about competition, changes and high valuations.  
 
The other board announcement I liked today was at ConvaTec (CTEC) which i talked positively about here.  I see that big shareholder the Novo Foundation has rotated in one of their top people - the recently retired ex-Chair of the Novo Foundation - to the ConvaTec board. In like with typical Scandi corporate righteousness, I don't think the Novo Foundation - responsible for the birthing of two of the most innovative European pharma/medical sector companies in the form of Novo Nordisk and Novozymes - does jobs for the boys, so for ConvaTec this is the sort of appointment that even money might struggle to buy.  


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