Thomas Cook goes into administration

The rescue talks have failed and Thomas Cook’s now gone into administration, which could cause a major headache for their customers and also mean the loss of 21k jobs.

Apparently some hedge funds will be less upset though -

10.7% of Thomas Cook’s stock was on loan to short sellers when the company collapsed.

Hedge funds set to make millions from Thomas Cook collapse - Yahoo Finance

This probably won’t come as a major surprise to anyone who’s been watching the stock -

Here’s the BBC’s summary of what happened -

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They’ve been struggling for more years than I remember, it was only a matter of time

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I wonder if GI was able to ‘predict’ this? What was the GI score/ranking for Thomas Cook?

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Good question. We never covered it since we didn’t rank companies less than $1bn market cap.

Had we covered it, its quality and momentum might have been low I guess.

We wouldn’t be able to forecast bankruptcy but we would be able to flag it as an “avoid” or something that has enough risks for you to be aware of.

Our new app will go beyond quality, value and momentum and include ESG, volatility and accounting risks etc as other important areas for you to consider.

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Here’s a technical read on some of the ‘creative’ accounting that Thomas Cook apparently used to help ensure that the directors were still awarded their bonuses while causing some of the issues that caused TC to fail -

I thought the narrative was that people were booking online which was why Thomas Cook struggled with its expensive high street shops

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I could be wrong but I get the impression that Hays Travel are most reliant on high street stores as their distribution channel. So if this move makes sense for anyone, it’s probably them. I’m wondering whether stores are viable for the long term though. It feels like there’s a lot of parallels between this and high street banks, who’re rapidly closing their branches.