Neither Casino nor its more vocal defending analysts have given us reason to adjust our estimate of Casino’s equity value of approximately €7 per share. On the contrary, since we announced our short thesis on December 17th, five of Casino’s six listed subsidiaries have dropped in value by 8% to 27%. With Rallye’s NAV less than zero at Casino’s current share price, we similarly have not seen a reason to change our estimate of its value.
Casino’s response to our short thesis reminds us of the reaction from Noble Group (NOBL SP) to our April 2015 short thesis. When we shorted Noble it was rated BBB- (like Casino). We criticized Noble for its leverage and aggressive accounting (similar to our criticism of Casino). Noble has since been downgraded by both ratings agencies and its stock has declined by 64%.
To encourage transparency and accuracy we’re publishing a list of 10 questions for the company to answer on the January 14th call. Many of the questions get to the heart of whether there is truly a recovery in Casino’s France retail business. Addressing our questions will go a long way toward allowing investors to determine whether our opinion, that Casino is a highly-levered, poorly performing business being hollowed-out and managed primarily to buy time for the massive debt its controlling shareholder has amassed, is reasonable.