Mobico (LON: MCG) shares are up 6% on the week. MCG shares are moving on what looks like a wave of retail buying. AJ Bell publishes a list of what their retail clients are buying and Mobico is on it at present. This isn’t, therefore, a recommendation that we should all buy in as well. For retail orders are what are known as “uninformed” trade. Sure, our opinion out here is just as valid as that of any hedge fund manager. But the information flow to us is slower and smaller than it is to those fund managers.
One way of thinking of this is that the informed trade - the professionals in the market - gets to information slightly ahead of us and therefore gets finer prices on any specific position. This is true. But it’s also true that thosewith the faster information flow trade much more than we do. They’re in and out of positions faster than we are and therefore paying rather more to the market for the privilege of trading. We, on the other hand, take longer to make a trade but tend to stick with it for longer, lowering our trading costs. The balance can end up as much of a muchness.
Mobico share price from Google Finance
As to what Mobico is it’s the new name for the old National Express business. The management thought it would be more exciting to be known as running a mobility business rather than being associatde with On the Buses. And who knows, they might even be right.”Mobico (MCG) – formerly known as National Express until it changed its name last month – suffered in its first half from the unpleasant combination of the withdrawal of government pandemic support and inflationary headwinds. The shares were marked down by 6 per cent as a 22 per cent increase in operating costs pulled the transport business down to a loss despite chunky passenger number growth and a double-digit revenue boost across all its divisions.” Not that the new sexiness of the name seems to have fed through into the operating performance as yet of course.
Our assumption is simply that retail shareholders are observing the business itself, out on the road - one of the areas in which we have greater knowledge than the fund managers - and thinking that matters are going to improve. They may be right too, time will tell.
