# VED - Veda Group



## System (24 November 2013)

Veda Group is a data analytics company and the leading provider of credit information and analysis in Australia and New Zealand.

Veda's customers use data intelligence provided by Veda to make decisions on credit risk, verify identity and check employee background, reduce identity theft and fraud, and undertake digital marketing strategies.

http://www.veda.com.au

Veda Group Limited (VED) is expected to list on the ASX on December 5th, 2013.


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## So_Cynical (24 November 2013)

Interested in this stock, i know some people that have paid accounts with Veda, people that are very credit concious and that are happy to pay the 50 odd bucks for yearly membership..Veda notify members by email when any change is made to their credit file, they also provide information on how to build a good credit rating etc etc.

Will watch with interest.


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## ROE (5 December 2013)

This is a keeper I have them ... A stock to hold for a long long time
It's going to be the Credit Corp of credit report world 
The jewel in the new financial regulation come March


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## trainspotter (5 December 2013)

40% increase and stopped at $1.75. PEP will retain a 63.5 per cent stake in the company who has the capacity to control the election of directors and dominate shareholder votes.


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## ROE (5 December 2013)

trainspotter said:


> 40% increase and stopped at $1.75. PEP will retain a 63.5 per cent stake in the company who has the capacity to control the election of directors and dominate shareholder votes.




when someone has majority of their money in the business it can be a bad thing according to analyst  ?

Yes they can dominate the board, they can elect their own directors or whatever, they owned 63% of the business...they have their full body skin in the game this is the best outcome for retail holder. 

Just like they think high volatility stock is considered risky because of High Beta, a risky stock is a stock with bad management, balance sheet and cash flow not high beta.

May as well not buying JIN, FLT, DMP, CCP, REA, CRZ and the rest because management has the most skin in the game  and majority of the stock when management has the most in the game
they perform and boy do they perform exceptionally well compared to the market index...


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## trainspotter (5 December 2013)

I thought I quantified that by saying a 40% increase on debut


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## ROE (5 December 2013)

trainspotter said:


> I thought I quantified that by saying a 40% increase on debut




Sorry I am not aiming at you ...lot of analyst in paper saying 63% owned by management is a bad thing
They obviously havent tally up all the stocks that management has large holding or family owning ...

they outperform the index multiple times


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## Valued (5 December 2013)

Random things that jump out at me skim reading the prospectus (where I could be wrong, I looked at it for only 15 minutes):

In the prospectus under the reasons for the offer being conducted on page 6, one of the reasons is that the offer is being conducted to pay for the offer. It is also repeated again on page 20. On page 20 it only gives two reasons for the IPO. The first is to pay down the debt and the second is to pay for the IPO. Paying for the IPO is not a reason to have an IPO, obviously. 

Note page 21 where dividends will be franked until at least 2016 because the company won't be paying any tax for some time due to 124.1m in losses prior to 2013. They lost money in 2011 and 2012. Interestingly, it looks like they are targeting a 40 - 60% NPAT dividend. They weren't paying any dividends previously to themselves so it looks like it's to please shareholders. It looks like they are expecting a 1.6% dividend yield unfranked based on the IPO of $1.25. 

Assets of 1 billion dollars comprise of approximately 86% goodwill.


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## Valued (6 December 2013)

Valued said:


> Note page 21 where dividends will be franked until at least 2016 .




I meant dividends will be unfranked.


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## ROE (6 December 2013)

This business is ticket clipper and data processing it
Doesn't need large asset based like industrial to generate high return

most of their business is data and customers info database and hence 
Large good will.

This model is superb, high margin, low cost and leverage earning 
A beautiful combo


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## Valued (8 December 2013)

ROE said:


> This business is ticket clipper and data processing it
> Doesn't need large asset based like industrial to generate high return
> 
> most of their business is data and customers info database and hence
> ...




Well it would have been ok if I was able to enter at $1.25 but the price now is too high imo.

Interestingly, Roger Montgomery valued this one at $1.77. I was curious as to how he arrived at that. I decided to use his formula (the Simmons one with his 10% discount) and I didn't get that amount. I suspected he would not be using that formula anyway. It doesn't really work because either there is too much good will which produced a poor RoE and you get a very low valuation or you take it out and there is negative equity and the formula doesn't work. 

I played around with the numbers and I think I figured out how he valued it. I would say it's within a range of $1.70 and $1.85 using the forecasts in the prospectus. At any rate, it's too expensive to buy at $1.92 imo right now. I would have maybe bought in at the IPO price though assuming I could wrap my head around the business etc.


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## Huskar (18 December 2013)

Valued said:


> Random things that jump out at me skim reading the prospectus (where I could be wrong, I looked at it for only 15 minutes):
> 
> In the prospectus under the reasons for the offer being conducted on page 6, one of the reasons is that the offer is being conducted to pay for the offer. It is also repeated again on page 20. On page 20 it only gives two reasons for the IPO. The first is to pay down the debt and the second is to pay for the IPO. Paying for the IPO is not a reason to have an IPO, obviously.
> 
> ...




It's pretty standard to have losses on the books for PE owned companies as they want to pay as little tax as possible and their entities are loaded up with debt. Have a look at Healthscope for example (which although equity is not listed because hybrids are they must still report financials). 

PE also won't pay themselves dividends preferring to cash out in other ways..

High goodwill figure not always bad sign - asset-light business so others have clearly thought tangible book is a poor measure of value of earnings power! Q is whether this is fair current value of earning power


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## Milanese68 (15 February 2014)

ROE said:


> This is a keeper I have them ... A stock to hold for a long long time
> It's going to be the Credit Corp of credit report world
> The jewel in the new financial regulation come March




They say Veda is the perfect storm. Some people say it's going to sky rocket just as XRO did from $2.00 to $41.00 
What are your thoughts on Veda in the next few months considering there could be a crash?


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## ROE (15 February 2014)

Milanese68 said:


> They say Veda is the perfect storm. Some people say it's going to sky rocket just as XRO did from $2.00 to $41.00
> What are your thoughts on Veda in the next few months considering there could be a crash?




I believe this business will do well over a long period of time, what happen next week or next three months I have no idea.

Long term if it deliver increase profit and dividend then the market will price it accordingly, at what price I have no idea.

I don't buy stocks based on some people predicting there may be a crash or a bull market around the corner, I buy business so it can withstand through the cycle of up and down and deliver me adequate return for my capital.

Analyst or expert prediction has little bearing on my decision.


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## ROE (20 February 2014)

look like it launching new products ready for the new reporting regime with Veda score

http://www.veda.com.au/yourcreditandidentity/

if this thing anything like FICO score in the US then people live and die by these score in the US
http://en.wikipedia.org/wiki/Credit_score_in_the_United_States


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## ROE (22 February 2014)

http://www.afr.com/p/personal_finan..._financial_reputation_z1MRJz209ZJuotfentxGeK#


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## liezelB (24 March 2014)

That was interesting. It can help as a provider of credit information and analysis. No one is able to be a sports team owner, generally, without being filthy, stinking prosperous. However, that is not always the case, as some teams actually trade on stock markets and individuals can purchase shares. Some publicly-traded sports teams aren't exactly bad choices, either. If you need money for the bills instead of taking it out of your investments, get a short term loan. I have heard that Veda is a data analytic business. It enjoyed a stellar debut on the Australian Securities Exchange, with shares opening more than 40 per cent above the initial public offering price.


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## ROE (24 March 2014)

Spam


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## So_Cynical (4 June 2014)

In on today's double bottom at $2.10, swapped ALZ for VED, great time to sell meets great time to buy, that's my thinking anyway...really keen on Veda.


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## VSntchr (12 June 2014)

Just having a look through VEDA, noticed that they put their interest expense in with financing cashflows as opposed to operating cash flows...

Is this common among private equity?

I know TLS does this aswell but other than that I don't see it very often.


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## ROE (12 June 2014)

VSntchr said:


> Just having a look through VEDA, noticed that they put their interest expense in with financing cashflows as opposed to operating cash flows...
> 
> Is this common among private equity?
> 
> I know TLS does this aswell but other than that I don't see it very often.




Not many business does that 

My opinion on this is, the business that does this is the one that want to keep on rolling it debt
due to the reliability of the cash flow, they can keep roll on the debt knowing
they have a reoccurring revenue stream that can easily service it.

Just a guess maybe worth a shot to the company CFO asking why they doing it


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## Ves (13 June 2014)

I don't think it has to do with earnings quality when interest charges are shown in the "financing" section of the cash flow statement.

I tried to read the Accounting Standards   (AASB 107, in particular),  but it does not seem to provide a definitive answer for non-financial institutions. It appears to leave it up to the discretion of the entity to best represent the cash flow situation. .  However,  my gut feel, and take it with a grain of salt, is really why they originally borrowed the Funds  (was it for operational purposes or was it for something not related to operations).   The fact that private equity has been involved with this company probably suggests that the debt is on the balance sheet because they were leveraging their own returns, rather than using it for operations, hence it being in the financing section on the cash flow statement.

More interesting to note is the fact that the interest expense on the cash flow statement does not seem to match the P & L in the years that I looked at.   The expense on the P & L always seems much higher.  Are they capitalising interest on their loan?


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## Huskar (15 June 2014)

VSntchr said:


> Just having a look through VEDA, noticed that they put their interest expense in with financing cashflows as opposed to operating cash flows...
> 
> Is this common among private equity?
> 
> I know TLS does this aswell but other than that I don't see it very often.




Under IFRS you can classify interest paid as either operating or financing cash flow (cf US GAAP which only allows you to classify as operating). 

Obvs need to add this back when comparing operating cash flow with other companies or calculating free cash flow to equity.


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## JTLP (17 July 2014)

From a high of $2.50 to coming all the way down to $1.91 today...Veda has really come off the boil. It's in a pretty solid downtrend as well. Credit demand trends show a fall of 3%, driven by slow credit card applications and a sharp fall in personal loans.

You'd think with low interest rates and the government mandating this sort of credit history these guys would be off to a flyer...so what gives?


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## So_Cynical (17 July 2014)

I have been buying Veda based on the fact that i want them, i thought $2.10 looked like holding for a while and entered there with my main portfolio only to see the SP weakness continue, picked up a few on Tuesday at $1.94 for my super fund after selling out of WTF.

Credit reporting and info gathering in general, big data i think its called...i just want exposure at the current price, keen to buy more.


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## McCoy Pauley (18 July 2014)

I haven't done any detailed research into Veda Group at the moment, but my employer uses their services to conduct credit checks on new clients.  They switched to Veda Group primarily because their previous provider had inaccuracies in the information recorded and reported.

In my view, there are probably two key risks for this type of business - (a) misrecording and/or misreporting credit information which would have a detrimental effect on the individuals concerned who then seek to take action against the provider; and (b) government regulation changing the playing field.

On the second point, I read earlier this week a call to extend the credit reporting provisions to small businesses because currently, under Australian law, there is apparently no capacity for the credit/repayment histories of small businesses (unless they are owned/operated by individuals in sole trader or partnership capacity) to be traced.  That would be a positive for Veda Group if it became law, but like MMS, a negative change to the relevant laws could have a powerful impact on Veda Group's bottom line.


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## Faramir (18 July 2014)

I wanted Veda for the last 5 months. There are many reasons why I want Veda but the main ones are listed here by others. Back around March (both 24/3 and 26/3) it reached a high $2.55. Then I watched the SP drop slowly but surely. Today I lost patience and brought them.

900 shares @ $1.8850 3:56pm.

Just beat the stock market close. I did rush back to the office just to buy them. It traded between $1.88-$1.90 today on 709,506 volume (not that much). The strange thing I can't explain that there were more buyers than sellers. The buyers must have been just sitting there, waiting for the sellers to drop their price. Can anyone please explain these screen shots? Was I foolish to make a default selection of "Market Price"? I just wanted the transaction to be over before the close of trading.

The question is am I too impatient? Should I have waited for another day, week, month? I missed a few good opportunities due to my waiting.

It is my fifth set of shares. My second lot under 8 days. (I am supposed to be very inactive - still need to find time to read a few books.)

Final closing price is $1.88, I lost $4.50 i.e. $0.005 per share.


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## robusta (19 July 2014)

Faramir said:


> I wanted Veda for the last 5 months. There are many reasons why I want Veda but the main ones are listed here by others. Back around March (both 24/3 and 26/3) it reached a high $2.55. Then I watched the SP drop slowly but surely. Today I lost patience and brought them.




Funny you say this I've wanted a piece of VED for ages and actually had an order in to buy at $1.91 a few weeks ago but had to cancel to deploy the last of my capital into NVT.

900 shares @ $1.8850 3:56pm.



Faramir said:


> beat the stock market close. I did rush back to the office just to buy them. It traded between $1.88-$1.90 today on 709,506 volume (not that much). The strange thing I can't explain that there were more buyers than sellers. The buyers must have been just sitting there, waiting for the sellers to drop their price. Can anyone please explain these screen shots? Was I foolish to make a default selection of "Market Price"? I just wanted the transaction to be over before the close of trading.
> 
> The question is am I too impatient? Should I have waited for another day, week, month? I missed a few good opportunities due to my waiting.
> 
> ...




This question of patience is one I have been battling with since I started investing. You can drive yourself crazy with trying to pick the best entry point. From here the sp could fall, rise or trend sideways. In the middle of that you have FOMO (fear of missing out). Zoom out to the general market and no one knows where it's going either. The only answer I have for myself is to buy good businesses at reasonable prices (you seem to be doing ok there), hold them through the fluctuations and try to keep some capital in reserve to take advantage of opportunities that will inevitably present themselves in the future. I have often failed on the last point but luckily those dividends and my savings keep on topping up my capital.

Another way to perhaps pick a better entry point may be to average in, say you want VED to be 10% of your investments for example, take an initial position worth 5% then you can always top up if a better price is offered down the track.


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## Faramir (19 July 2014)

Hi robusta

Thank you for your encouragement. I am 50% spent. It took me over 4 months. I could have brought everything left, right and centre - 'species', miners, every bank at their highs at the beginning of this year. BUT I read this forum and took my time. So I do not think I will buy any more of anything until I save more (it's been tough this year) OR a great opportunity arises. The more I look at VEDA, the more I am convince this is a great company. I am definitely concern about identity theft and I guess that is why VEDA can serve these concerns. Identity theft is something I fear about.

If VEDA drops, I will try not to notice. It is the long term I am looking for.


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## So_Cynical (19 July 2014)

robusta said:


> This question of patience is one I have been battling with since I started investing. You can drive yourself crazy with trying to pick the best entry point.




I Simply pick a price point to buy at and under, buy more if it falls more than 15% (after careful evaluation of the information that caused the fall) hold if the price holds or the trend continues or establishes...re-evaluate after 3 months.

Don't stress, you can only buy at the right time by sheer dumb luck...much easier to have a bigger target via buying at under a price point...$2.10 was my VED price point.


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## ROE (27 August 2014)

Nice result, earning exceed prospectus, double dividend payout from what it say in the prospectus ..enough said


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## ROE (27 August 2014)

Faramir said:


> I wanted Veda for the last 5 months. There are many reasons why I want Veda but the main ones are listed here by others. Back around March (both 24/3 and 26/3) it reached a high $2.55. Then I watched the SP drop slowly but surely. Today I lost patience and brought them.
> 
> 900 shares @ $1.8850 3:56pm.




Nice timing in light of the result .... I couldn't get in at IPO so I paid premium at listing because these are the business I understand best and willing to pay the premium for them and over 10-15 years it make little differences


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## goccipgp (27 August 2014)

Would like to see a break above 2.24. Got upgraded to a buy at au stoxline.


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## galumay (27 August 2014)

goccipgp said:


> Would like to see a break above 2.24. Got upgraded to a buy at au stoxline.




Not sure what relevance linking all your posts to a commercial service has? (stoxline). If you look around there is always some commercial service spruiking just about any given share as a sell, hold or buy!

I have had a look at VED, but its very hard to value floats like this, i get an IV of under 60c with its current financials, I think its a better business than that, but how much better is the million dollar question!


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## Faramir (27 August 2014)

One of my great stocks picks (and my fifth one in total). Thank you ROE.


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## ROE (2 September 2014)

https://www.getcreditscore.com.au/


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## So_Cynical (3 September 2014)

Up 14% over the last 6 trading days, 4c dividend to come...so happy i jumped all over this when i did.


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## ROE (8 September 2014)

So_Cynical said:


> Up 14% over the last 6 trading days, 4c dividend to come...so happy i jumped all over this when i did.




went XD today and up nearly 4% in a red ASX..now that is a market DARLING


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## galumay (9 September 2014)

I have never really understood the business model, who actually pays to get their credit details?? 

Obviously it must be more common than I suspect or VED wouldnt make any money! 

I had a look at their website, but I wasnt inspired to brush the cobwebs off my wallet.


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## ROE (9 September 2014)

galumay said:


> I have never really understood the business model, who actually pays to get their credit details??
> 
> Obviously it must be more common than I suspect or VED wouldnt make any money!
> 
> I had a look at their website, but I wasnt inspired to brush the cobwebs off my wallet.




Virtually all business provide credit will use Veda or similar service
Every time you apply for anything to do with credit
Phone contract, credit card, home loan, business loan, car loan
The list goes on and on

The provider will do a credit check on you to see if you are a worthy
Person to give credit to.. Veda has the largest credit database on Australian
So business pay Veda to access these information

Not only that internet make identify thef and various credit fraud easy
Veda has subscription service to protect you from such hazard
They alert u right away as soon as someone use your name to apply for credit
It doesn't have to be stranger it still be you and you get an alert

It doesn't care who apply as long as your name is on it
It alert you and if it wasn't  you, you ring up the instruction and put
A stop to the fraud before it even get off the ground

It is one thing most good financial advisor and accountant recommend you sign up
I use Veda service for a while and that how I know them way before the float

Veda alert is like insurance against identify theft and your financial well being
Hope that helps explain a bit ....
It is a service people use multiple times multiple years and repeatable
One of the most powerful business model -

PS: recent regulation change in March this year on credit reporting
Make it a favourable tail wind for the business to grow earning  rapidly 
Read the whole thread I mentioned it some where


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## galumay (9 September 2014)

ROE said:


> Virtually all business provide credit will use Veda or similar service
> 
> Hope that helps explain a bit ....
> .....




Thanks ROE, i actually was half asleep when I wrote that this morning - up at the crack of dawn to go for a quick fish before work!

I had actually done more research than my comments suggested and on revisiting it I just felt they were a bit overpriced for my liking - having missed out early on.

Didnt catch any decent fish either!!

Nice sunrise tho' http://instagram.com/p/ss6rnhEJlP/


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## ROE (9 September 2014)

galumay said:


> Nice sunrise tho' http://instagram.com/p/ss6rnhEJlP/




Nice, I like fishing, doesn't live close enough to the water to be able to do it often
just the odd weekend away to the coast and summer break


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## robusta (21 October 2014)

Seems like PEP are trying to exit their remaining stake in Veda

http://www.theaustralian.com.au/bus...le-of-veda-stake/story-fnjw8txa-1227097061963

Share price fell 6% today to $6.18 could be worth a look for the patient. I wish I looked harder when ROE first posted on this thread.


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## So_Cynical (21 October 2014)

robusta said:


> Seems like PEP are trying to exit their remaining stake in Veda
> 
> http://www.theaustralian.com.au/bus...le-of-veda-stake/story-fnjw8txa-1227097061963
> 
> Share price fell 6% today to $6.18 could be worth a look for the patient. I wish I looked harder when ROE first posted on this thread.




They issued a denial...i continue to hold positions in my super and main portfolios.


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## Faramir (21 October 2014)

Where is ROE when we need his wisdom?

I do not think this news is important (other than creating a mini dip for someone to buy in.) I didn't top up cos I am holding onto my cash. I regret not buying more when I made my purchase back in July. I just regret not having more savings back then so that I could buy more (mistakes of my youth). I have been playing more attention to my prospects and treating VED as a "set and forget". Maybe I feel guilty for not montioring VED more regularly. When I got my dividend, I was happy.

Why would anyone sell such a massive portion of a great business? No wonder VED issued a denial. Anyone want to add to this?


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## galumay (22 October 2014)

Faramir said:


> Why would anyone sell such a massive portion of a great business? No wonder VED issued a denial. Anyone want to add to this?




On what metrics do you determine that Veda is such a great business? (genuinely interested, I don't see a 'great' business)


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## ROE (22 October 2014)

Faramir said:


> Why would anyone sell such a massive portion of a great business? No wonder VED issued a denial. Anyone want to add to this?




Hello folks, I been absent because I am busy doing properties deal.

I think VED is a superb business with or without PEP holding, It may be better off if PEP exit
Private Equity have a different business model than listed stock, they have different strategy.

their aim is to buy business that they can leverage, cut cost and sell out for profit, their time frame is usually
3-5 years. 

PEP exiting VED just fit their strategy and profile, they use that cash and repeat the process for other business

I wouldn't worry about it, most Private Equity IPO is pretty bad for that reasons but there are diamond in the rough

so you just have to pick and chose ... JB hi-fi was Private Equity IPO as well and it certainly trade hell a lot higher than a few bucks at float.

why VED is a good business, it is an essential service that people use over and over again without them mining or producing anything and because they don't manufacturing anything, scaling up cost them little money and time but bring in bigger profit and margin... 

Having 1000 customers or 100,000 customers cost them little extra money
and the information they collection is available to them in many readily accessible places.

they also has a tail wind with the new credit report system in place since March, as more and more people are aware of the new system and credit fraud, identify theft they will eventually get to know VED and use its service

also plenty of good accountant and advisers doing a lot of free advertising for VED and recommend their clients
to keep an eye on their credit rating, their financial identity and VED is the usual place they recommend them to go to keep this monster in check. 

I personally use VED services as well so when anyone try to steal my identity
and apply for any credit I get alert right away and out a stop to it before it becomes a nightmare and I recommend most people
should, it is a cheap insurance for identify theft and credit fraud under your name.

I hold VED both in my SMSF and personal account and will continue to hold for a long long time.


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## So_Cynical (22 October 2014)

galumay said:


> On what metrics do you determine that Veda is such a great business? (genuinely interested, I don't see a 'great' business)




Average annual revenue growth (i didn't crunch the numbers) looks to be over 12% and thats with big data only just getting going, potential for Veda to be a very big business.
`


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## Faramir (22 October 2014)

Hi Galumay

Thank you for your question.


galumay said:


> On what metrics do you determine that Veda is such a great business?



I used more business fundamentals rather than metrics. Metrics is something I am still in the process of learning. It will take a while. I thought I already mentioned in this thread why I like VED. I admit that I looked at Veda through beginner's eye but I am sure I am right when I see their revenue grow. Their profits are good. I see a growing demand due to fear of identity fraud. There was an article in last Sunday's Sun Herald about how VEDA can charge customers to get their credit rating.
https://www.getcreditscore.com.au/
The above will be a popular website before anyone decides to go for a loan or buy something. If buying on impulse, the retailer will use this site and charge the customer (somehow) for it.
Veda have collected over 20 years of information of customers. Something that is very hard to do if another potential competitor tries to enter into the market.
Institutions will want more information about their customers' credit rating. It is not just the banks (with customers inquiring for loans), it could extend to shops like Harvey Norman, etc when they offer those "Interest Free Loans" to force customers to make impulsive decisions. Yes, there maybe something that I have overlooked but I did watch this company for most of this year and finally got my opportunity in July.

Hi ROE
Thank you for your reply and for expressing what I should have expressed but couldn't due to my inexperience. 


ROE said:


> It may be better off if PEP exit. Private Equity have a different business model than listed stock, they have different strategy. Their aim is to buy business that they can leverage, cut cost and sell out for profit, their time frame is usually 3-5 years.
> 
> Scaling up cost them little money and time but bring in bigger profit and margin.
> 
> Also plenty of good accountant and advisers doing a lot of *free advertising* for VED.




Thank you everyone for your input. Thank you So_Cynical for the chart. Hope I am on the right track when I explain my point of view.


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## herzy (22 October 2014)

Faramir said:


> Thank you for your reply and for expressing what I should have expressed but couldn't due to my inexperience.
> 
> 
> Thank you everyone for your input. Thank you So_Cynical for the chart. Hope I am on the right track when I explain my point of view.




Sounds good to me!


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## TPI (26 October 2014)

So_Cynical said:


> Average annual revenue growth (i didn't crunch the numbers) looks to be over 12% and thats with big data only just getting going, potential for Veda to be a very big business.
> `




Can't argue with a chart like that!

I read on AFR that you can get your credit file for free, but with some forms to fill out and documents to provide etc., so VED are repackaging this into a more easily accessible form and charging a fee for it, sounds good!

Personal anecdote though, I seem to have subscribed both to "my credit file" and "veda access", which provide similar information, and both are set to "auto-renew", but I don't know how to switch either one of these off.

I can't find a phone number to contact Veda and no-one is responding to my emails for the last few days, so they make it sticky and hard to unsubscribe too!

Veda seems to be diversifying into many other products so this seems good as well.

Btw, great post ROE, voice of reason .


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## herzy (26 October 2014)

TPI said:


> I read on AFR that you can get your credit file for free, but with some forms to fill out and documents to provide etc., so VED are repackaging this into a more easily accessible form and charging a fee for it, sounds good!




Providing something in a slightly more convenient form and charging a fee isn't really a rock-solid business plan in my opinion. 



TPI said:


> Personal anecdote though, I seem to have subscribed both to "my credit file" and "veda access", which provide similar information, and both are set to "auto-renew", but I don't know how to switch either one of these off.
> 
> I can't find a phone number to contact Veda and no-one is responding to my emails for the last few days, so they make it sticky and hard to unsubscribe too!




This I also see as a negative rather than a positive - if you're charging for a service to make an otherwise free product more convenient, you should probably at least provide good service. 

That said, it seems to be making profit. Can't argue with that... 

Would somebody like to enlighten me further?


----------



## TPI (26 October 2014)

herzy said:


> Providing something in a slightly more convenient form and charging a fee isn't really a rock-solid business plan in my opinion.
> 
> 
> 
> This I also see as a negative rather than a positive - if you're charging for a service to make an otherwise free product more convenient, you should probably at least provide good service.




You're right, as a holder of VED I'm just hoping someone from customer service responds to my queries as this anecdotal experience is not positive for me, and diversifying into other products that you can't also get for free is preferable (and they do have many other products from what I've read).


----------



## pinkboy (26 October 2014)

herzy said:


> Providing something in a slightly more convenient form and charging a fee isn't really a rock-solid business plan in my opinion.
> 
> 
> 
> ...




Think about it for a minute................

You can get your OWN credit file for free...........but you cant get anyone elses can you?

So there are fees left, right and centre being charged when lenders are looking at potential customers, business are credit checking other businesses for accounts, judgments are being processed on defaulers etc.

Subscribing to your own credit file, besides the occasional alert from a CC provider is generally just there for your own keepsake.

VED is relying on constant churning of credit.  Great in economic times such as low rates and high business activity.  Not neccesarily at the same time, but robust business model, and huge monopoly market.


pinkboy


----------



## galumay (26 October 2014)

I am still trying to like this company! Reading what you guys have posted in response to my doubts helped ease my concerns and I went back and had a detailed run through of the numbers.

The cash flow looks good and my cash flow based valuation came out slightly above current share price, operating margin is obviously great, ROC & ROE not so brilliant, my valuation on earnings came in well below current price - even allowing for the strong growth predicted over the next 2 years - not really surprising because I discount nearly all growth after the first couple of years anyway with my model.

Probably my biggest concern was the interest coverage, at only 2.15 its way below my safety mark of above 4. 

I guess if they can maintain that sort of FCF then the coverage is less of a concern?

I am starting to warm to the idea of taking a position at current prices!


----------



## McLovin (26 October 2014)

galumay said:


> ROC & ROE not so brilliant,




Just remember ROE/ROC is a measure of what happened in the past. In this instance the company apparently bought lots of other companies. Sunken costs should not affect valuation  (NB: that isn't to say they can't help guide valuation!!). That's why a better measure is ROIC with indefinite life intangibles removed, because you are trying to ascertain what the marginal dollar invested will earn, not what the marginal dollar invested 1,2,10 years ago earns.

It's a good example of why the Montgomery formula doesn't work all that well.



galumay said:


> Probably my biggest concern was the interest coverage, at only 2.15 its way below my safety mark of above 4.




They reduced debt from $616m to $267m in the year. There was also a write-off of $12m in capitalised borrowing costs. I expect interest expense will fall substantially in the next period.


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## galumay (27 October 2014)

McLovin said:


> It's a good example of why the Montgomery formula doesn't work all that well.
> 
> They reduced debt from $616m to $267m in the year. There was also a write-off of $12m in capitalised borrowing costs. I expect interest expense will fall substantially in the next period.




Thanks McLovin, it really helps when the knowledgeable help us learners with info like this. I do only have a cursory glance at ROE & ROC, I will look into learning to calculate ROIC to give me a better insight - and now I know to consider the impact on past activity on these numbers.

The point about the interest is a good one too, it shows me that I have to work harder to understand why a metric is what it is, not just make a value judgement on the data.


----------



## hiddencow (27 October 2014)

Requested my free credit file a couple of months ago. It was quite easy to do and arrived by email in a little over a week. They are required by law to provide it for free but I'm sure Veda are hoping people don't realise that.
The credit file was very accurate in terms of credit enquiries but had very little information on the amounts of the amount of credit the enquiries were for and was incomplete on the current credit products I'm holding.
It seems they are reliant on the banks to provide this information which they don't always do.

Also while waiting for my file to arrive, I received a phone call with someone trying to put the hard sell on for their paid services. Had to tell him several times quite sternly that I was only interested in the free report before he would give up. Also read about other people's quite negative experiences with trying to cancel their subscriptions. They don't seem to be scoring many points for positive service but that might be the most profitable way of doing business.


----------



## McLovin (27 October 2014)

galumay said:


> Thanks McLovin, it really helps when the knowledgeable help us learners with info like this. I do only have a cursory glance at ROE & ROC, I will look into learning to calculate ROIC to give me a better insight - and now I know to consider the impact on past activity on these numbers.




Have a look at WES. The purchase of Coles ripped apart their ROE. Of course Coles was a one off and once everyone knew they'd overpaid it was already factored into the price. And did overpaying for Coles really mean that opening a new Bunnings store would have lower returns?

Here's ROE from 2005.

Return on equity (%)	20.1	27.5	22.4	5.4	6.8	6.3	7.6	8.3	8.7	8.7

The rising ROE after swallowing Coles is symptomatic of a much higher incremental ROIC. 



galumay said:


> The point about the interest is a good one too, it shows me that I have to work harder to understand why a metric is what it is, not just make a value judgement on the data.




Easiest way is when you get a number that looks skewiff have a dig around. The answer is usually not that hard to find.


----------



## The Falcon (7 April 2015)

So is VED an Aussie Fair Isaac Corp in the making? I like the business model and I see strong tailwinds here. Added to the watch list


----------



## Faramir (27 August 2015)

Summary of Full Year Results
Veda FY15 Full Year Market Release
http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01655263

Net Profit up 248%
Basic EPS up 191%

I though that I was on a good thing last year. It seems better this year. Despite begin naive or an absolute beginner, somehow I felt that I made a good choice with this stock back in July 2014.

Is this stock ignored by many? Doesn't anyone care about their credit rating?


----------



## robusta (27 August 2015)

Mate I reckon this is a fantastic stock and everyone will care about their credi rating in a few years. Better rating = lower interest rates.
Just sit back and watch eps grow by 10% plus well into the future


----------



## galumay (27 August 2015)

robusta said:


> Mate I reckon this is a fantastic stock and everyone will care about their credi rating in a few years. Better rating = lower interest rates.
> Just sit back and watch eps grow by 10% plus well into the future




Yep, this looks like one i got wrong, never saw the potential that others did and couldnt make a case to invest. Now I can try and learn what I missed and why!

EDIT - Well the market hated those results, down 4% on a day the market was up strongly.


----------



## The Falcon (28 August 2015)

Market response looks a little unfair for mine. Added to full position size today. The story is intact, one for the bottom drawer. Anyone else add?


----------



## galumay (28 August 2015)

The Falcon said:


> Market response looks a little unfair for mine. Added to full position size today. The story is intact, one for the bottom drawer. Anyone else add?




I am not so sure, I know I am a lone voice of dissent, but I still dont see the value here. I went through the exercise of doing a full analysis based on their AR and I still get an IV based on FCF that is below the current price, the equity value to earnings makes it look expensive also. On the postive side their operating margin is very strong and if they can maintain that then perhaps the optimism will be rewarded.

The way I read it is that the current price reflects an expectation of well above normal growth being sustained into the future - and my modelling is more conservative than that with future growth.

So I am still sitting on the sideline, but its a good learning opportunity for my analysis and research!


----------



## Faramir (18 September 2015)

Trading Halt.

Why?

Please don't acquire iSentia now, it will be too expensive. VED denied it recently.


----------



## skyQuake (18 September 2015)

Faramir said:


> Trading Halt.
> 
> Why?
> 
> Please don't acquire iSentia now, it will be too expensive. VED denied it recently.




Afr twitter thinks its a t/o


----------



## McLovin (18 September 2015)

Wrong way round...



> Credit reporting business Veda is in a trading halt pending an announcement.
> 
> Following a sell down from Pacific Equity Partners, the market is speculating the announcement involves an inbound takeover offer for Veda.
> 
> ...




Read more: http://www.afr.com/street-talk/veda-inbound-offer-expected-20150918-gjpk70#ixzz3m3FNUi9v


----------



## skc (18 September 2015)

Faramir said:


> Trading Halt.
> 
> Why?
> 
> Please don't acquire iSentia now, it will be too expensive. VED denied it recently.




Most likely an acquisition but given ISD is not in a halt... it's highly unlikely to be the target. Alternately there'd be something like a contract win / termination. With the reporting only done recently it would be highly unusal for it to be a profit upgrade / downgrade.

They should soon release a "request for trading halt" announcement explaining the reason for the halt.

However, if you believe in the ability of the market "hive mind" to "predict" anything.... recent price action suggests negative news.


----------



## skc (18 September 2015)

skc said:


> However, if you believe in the ability of the market "hive mind" to "predict" anything.... recent price action suggests negative news.




Lol. Hive mind didn't predict a $2.70 indicative offer!


----------



## skyQuake (18 September 2015)

skc said:


> Lol. Hive mind didn't predict a $2.70 indicative offer!




Just an "oral offer"

Prob some punter using a public payphone


----------



## McLovin (18 September 2015)

skyQuake said:


> Just an "oral offer"
> 
> Prob some punter using a public payphone




How can that be taken seriously? They couldn't put it in an email at least? It sounds like they were necking a few schooners at the pub and Equifax CEO lobbed in an offer after he'd had a skinful.


----------



## Ves (18 September 2015)

McLovin said:


> How can that be taken seriously? They couldn't put it in an email at least? It sounds like they were necking a few schooners at the pub and Equifax CEO lobbed in an offer after he'd had a skinful.



Agree. Seems odd that a $12B NYSE-listed company would make an oral takeover offer.


----------



## Faramir (18 September 2015)

$2.70 takeover. I wanted to hold VED long term. Pity I didn't buy more last year.  I got in @ $1.90 (with brokerage). Those who got in on the float: what do you think?

ROE: what are your thoughts?

Thank you to everyone who responded. VED was one of my most stable stock that shone reassurance. Now? How should I feel?


----------



## The Falcon (18 September 2015)

Yep, I too wanted to hold VED very long term. A look at the EFX.US (the wood be acquirer) chart is what businesses like this can do over a few decades. Not many businesses around like this one...hopefully offer is rejected.


----------



## So_Cynical (18 September 2015)

I expect the offer to be rejected, a successful bid would have to start with a 3, i hold substantial positions in my super fund and investment portfolio...yet another T/O stock for me, so soon after iiNet and Amcom.


----------



## ROE (18 September 2015)

Faramir said:


> $2.70 takeover. I wanted to hold VED long term. Pity I didn't buy more last year.  I got in @ $1.90 (with brokerage). Those who got in on the float: what do you think?
> 
> ROE: what are your thoughts?
> 
> Thank you to everyone who responded. VED was one of my most stable stock that shone reassurance. Now? How should I feel?




I wont be selling, I hold both in SMSF and person, opportunistic  bid really, dollar down around 25% since 
VED was trade $2.50 this time last year, so they pretty much got it without paying a premium
it non binding and all the crap, board should just reject out right and stop wasting time on it and spend time on bolt on acquisition like ASIC register

Not many quality business exist on the ASX you want these guys to hang around for many more decades yet, there are plenty of room for this stock to grow from bolt on and organic grow.


----------



## Faramir (18 September 2015)

Thank you ROE. I am opposed to the takeover. I hope that most of the share holders agree.

If I was to play Devils Advocate, I would sell only for a short term profit. If I didn't know the potential of VED, a short term profit would be good enough for me. Since I want to be a long term holder: I would not sell.

For those who are tempted to sell: what would be your reasons? I wonder how we could convince those shareholders to hold on and not be tempted to sell. The only reason I can see to sell is that one may desperately need cash.

What would be the reasons to support the takeover? Are you happy with $2.70 or even $3?? There must plenty of share holders who would be very unhappy.

ROE is correct that we should not waste time on this. Just say NO!

Sorry for using up your time on this topic when we could be discussing better things about VED.


----------



## galumay (19 September 2015)

Faramir said:


> If I was to play Devils Advocate, ...




Well if I was to play devil's advocate, I would say I have never understood the valuation others placed on this company. I have posted politely about it previously, based on my research and calculations its not even worth the $2 something mark it has basically flatlined at for the last 12 months.

I hae wanted to understand the company and find similar unlocked value to others, many that i respect are holders of this company - yet I still dont get it. Had a look again after theor last report and couldnt make the numbers work any better!

Given that they have never been higher than the offer price, and have spent the last 12 months languishing well below it, before being dragged down further with the recent market drop, I reckon i might be very happy with $2.70 if I had bought at $2.30 - and was looking at a recent low of $2.00.

Hopefully for everyones sake i am wrong and the outcome is as good as you all expect! As I said in my last post, I am definitely using this as a learning opportunity - its all too easy to focus on the companies you buy and forget the ones you decided not to, but they may have more to tell you than the ones you bought!


----------



## robusta (21 September 2015)

Well said Mr Gray.

http://www.smh.com.au/business/bank...s-short-for-shareholders-20150921-gjr6d7.html


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## galumay (21 September 2015)

robusta said:


> Well said Mr Gray.




Perhaps, though one couldnt say the same about the Fairfax reporter,

"Veda's shares have risen 8.26 per cent to $2.62 in the past 12 months, compared with the 5.53 per cent losses of the benchmark S&P/ASX200 index. "

That is a very creative representation at best! 

It was actually down 20% in the past 12 months if you exclude the spike on the day the takeover was announced - compared to the 5.53% losses of the benchmark S&P/ASX200 index.


----------



## ROE (21 September 2015)

They buying a monopoly business, any way you look at it, VED is a monopoly business in AUS/NZ with tail wind from the change in reporting law some 18-24 months back, at $2.70 it is not compelling value to give away a monopoly business with many years grow ahead, we could be trading at $2.70 in 2 years time especially if they can get some nice bolt on.

I doubt they can get them at this price, they need to up the price if they are serious.


----------



## ROE (21 September 2015)

Faramir said:


> Thank you ROE. I am opposed to the takeover. I hope that most of the share holders agree.
> 
> If I was to play Devils Advocate, I would sell only for a short term profit. If I didn't know the potential of VED, a short term profit would be good enough for me. Since I want to be a long term holder: I would not sell.
> 
> ...




at the end of the day retail holder dont carry much weight as there are so many of them and far and few in between that hold any large chunk to affect the vote

 its the institution holder they need to convince, at $3 I would sell provided the market stay at this level
as there are some decent stock I wouldn't mind putting this money toward


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## McLovin (22 September 2015)

$2.70 seems a pretty fair price to me. $80m in fcf market cap ~$2.2b. Sure it may be a monopoly, but it's a pretty mature one.


----------



## ROE (22 September 2015)

McLovin said:


> $2.70 seems a pretty fair price to me. $80m in fcf market cap ~$2.2b. Sure it may be a monopoly, but it's a pretty mature one.




when you offer a business that is not under duress and growing, you aren't getting it for fair value
it has to be a knock out blow, like the Japanese did with Toll


----------



## McLovin (22 September 2015)

ROE said:


> when you offer a business that is not under duress and growing, you aren't getting it for fair value
> it has to be a knock out blow, like the Japanese did with Toll




28x earnings is hardly chump change.


----------



## galumay (22 September 2015)

McLovin said:


> 28x earnings is hardly chump change.




I went back again to look through my research and calculations for VED as I continue to try to understand this one.

Based on every metric I look at its overvalued at $2.00 let alone $2.70. The only hint of potential for me is the operating margin at around 35%. 

This company would need sustained and very strong growth to make it look a fair price at the moment, whether I look at eps as a basis for valuation or my 2 methods of calculating free cash flow, I just cant see it until I factor in very optimistic growth.

Still if I had ignored my calculations and bought at around $2.00 when I first analysed it, I would be sitting on a pretty profit! Thats the story I am trying to unwrap from a personal perspective. As i said I believe there are important lessons in the companies we decide not to buy, as well as the ones we do!


----------



## So_Cynical (22 September 2015)

galumay said:


> I went back again to look through my research and calculations for VED as I continue to try to understand this one.




Whats blue sky worth?


----------



## luutzu (22 September 2015)

So_Cynical said:


> Whats blue sky worth?




Priceless 

for the record, I haven't look at Veda so no comments.


----------



## JTLP (5 October 2015)

Formal bid from our friends in the northern hemisphere. 

Any word on the street on the amount?


----------



## ROE (5 October 2015)

http://www.smh.com.au/business/bank...eover-offer-from-equifax-20151004-gk18dq.html


----------



## So_Cynical (6 October 2015)

ROE said:


> http://www.smh.com.au/business/bank...eover-offer-from-equifax-20151004-gk18dq.html




$2.90 - not enough to get my yes vote.


----------



## galumay (6 October 2015)

So_Cynical said:


> $2.90 - not enough to get my yes vote.




Thats an interesting call, I guess blue sky has an infinite value!!?

I suspect it would be very well supported at that price though, at nearly a 50% premium to average price in recent times there would be plenty of takers.


----------



## So_Cynical (6 October 2015)

galumay said:


> Thats an interesting call, I guess blue sky has an infinite value!!?
> 
> I suspect it would be very well supported at that price though, at nearly a 50% premium to average price in recent times there would be plenty of takers.




Ok sure $2.90 would get a fair bit of support but not my support, $3.10 is enough to cover my short term blue sky expectations.


----------



## JTLP (6 October 2015)

$2.825 with support from management. Is this a joke?

Also, are we to receive no dividend now as a result of? Can't help but think we are getting a cooked deal on this one.


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## So_Cynical (6 October 2015)

Exclusivity terms yet no break fee, no dividend, $2.825 is not enough, very surprised that management think it is...board should be sacked.


----------



## galumay (6 October 2015)

So_Cynical said:


> Exclusivity terms yet no break fee, no dividend, $2.825 is not enough, very surprised that management think it is...board should be sacked.




The reality is the bid represents a significant premium to value and is miles above the long term average of the price. Its a premium for what you described as 'blue sky' - potential growth and profit in the future. 

If VED had actually delivered any substantial amount of the blue sky, then I am sure the share price would have reflected that and the takeover offer would have been much higher. 

How much of your opinion about the offer is informed by your emotional attachement to the company and the belief that one day it will be a very profitable business? 

As an outsider I would be happy to be getting a 40% gain if I had bought the shares for around $2, thats a damn good return on capital over a short period of time as against the long term, undefined, blue sky.


----------



## JTLP (6 October 2015)

Galumay - isn't that part of the reason you buy in to something? For the blue sky potential and the future earnings?
If I thought this thing was fully priced I would have jumped out...but like others I could see the high barriers to entry and competitive advantage Veda has/had.

I think Veda is selling shareholders short. All commentary has been around this fact. Not to mention the scrapping the dividend? Pretty soft deal.


----------



## galumay (6 October 2015)

JTLP said:


> Galumay - isn't that part of the reason you buy in to something? For the blue sky potential and the future earnings?
> If I thought this thing was fully priced I would have jumped out...but like others I could see the high barriers to entry and competitive advantage Veda has/had.
> 
> I think Veda is selling shareholders short. All commentary has been around this fact. Not to mention the scrapping the dividend? Pretty soft deal.




For me the distinction is between speculation and investment. The blue sky is the speculative part, potential future earnings if the company becomes profitable and has consistent growth. 

Otherwise the company is valued as the future cash flows discounted to today's dollars - on that basis there isnt much value there, on my calculations, under the $2 it was trading around.

I think what people were speculating on was that there would be very strong growth in those earnings as a result of the legislative changes and Veda's competitive advantage.

My point as an outsider with no emotional attachment is that a 40% return on capital in a short period is not a bad return in the current market. 

I guess now the question is how strong is the conviction about the potential growth in this company amongst the shareholders? If enough are happy with the 40% return then its irrelevant really, whatever the potential growth is will belong to the new owners.


----------



## So_Cynical (7 October 2015)

galumay said:


> How much of your opinion about the offer is informed by your emotional attachement to the company and the belief that one day it will be a very profitable business?
> 
> As an outsider I would be happy to be getting a 40% gain if I had bought the shares for around $2, thats a damn good return on capital over a short period of time as against the long term, undefined, blue sky.




Emotional attachment - you gota be kidding me.

I tend to like stocks that have been very good to me, like the 7 or so stocks i have that have given me 200% - 300%+ gains, VED is far from that, potential (blue sky) VED has lots of...blue sky is a wonderful thing, every 300%+ winner needs it.

Back in the day i loaded up on VED, i don't often load up, dont like the concentrated risk but i understand the need to, a stock comes along and ticks all the boxes, it's a vital part of wealth creation to have enough in a good stock bought cheap.

--------------------------



galumay said:


> For me the distinction is between speculation and investment. The blue sky is the speculative part




Sorry, couldn't just let this go..blue sky is impossible to measure and there is a speculative aspect to it but it is a very real thing, potential is what it is...have a look at XRO and ACX that price action is pretty much all blue sky.


----------



## Klogg (7 October 2015)

So_Cynical said:


> Emotional attachment - you gota be kidding me.
> 
> I tend to like stocks that have been very good to me, like the 7 or so stocks i have that have given me 200% - 300%+ gains, VED is far from that, potential (blue sky) VED has lots of...blue sky is a wonderful thing, every 300%+ winner needs it.




I agree that if you buy right and hold, you can make a lot of money - or quoting one of the best on this forum "buy right, hold tight".
That said, if one does see a 300%+ gain, one starts to wonder if it has exceeded any reasonable valuation; and that 300%+ gain may cause us to create an emotional attachment that blinds us from making this assessment.

I know I've done it before (for companies which I don't intend on holding for a long time).


----------



## galumay (7 October 2015)

So_Cynical said:


> Emotional attachment - you gota be kidding me.




Ok, i was just posing the question because in the lack of further detail, it seemed to be rejecting a profit of 40% purely because you believed the company had the potential, if the blue sky was realised, to be worth more than that.

I wasnt aware you were targetting it as a multibagger!



> Sorry, couldn't just let this go..blue sky is impossible to measure and there is a speculative aspect to it but it is a very real thing, potential is what it is...have a look at XRO and ACX that price action is pretty much all blue sky.




I agree there are many shares with a price that is based purely on blue sky, the tech crash is a salient reminder of the danger of treating blue sky as anything other than specualtive potential! I also agree that if you can get lucky with your picks and a few of them actually realise that blue sky then it can be a massive wealth creator - the down side is of course just as steep!

I think that right through the discussion about VED I have been approaching it from a completely different perspective to you, I saw a number of member's whose views i very much respect, (including yourself), posting positive stuff about VED as an investment. I struggled to see it as an investment grade opportunity and for that reason didnt take a position.

The only way I could see any justification for the price was if there was very strong and sustained growth in earnings and I was unable to be convinced that there was a strong probabiility of that.

From there my interest was to follow through on my decision and try to understand if I got it wrong - and in one sense the takeover offer implies i did get it wrong - i struggled to see value at $2, a large foreign company that knows much more about the business and its realisable potential than me, has valued it at $2.825.

It might not be a multibagger, but i dont like missing out on the opportunity to make 40% on my capital in that time scale!


----------



## skc (7 October 2015)

galumay said:


> From there my interest was to follow through on my decision and try to understand if I got it wrong - and in one sense the takeover offer implies i did get it wrong - i struggled to see value at $2, a large foreign company that knows much more about the business and its realisable potential than me, has valued it at $2.825.




The buyer valued VED at much higher than $2.825. They are offering a price below their own valuation because they need to make a return themselves. Granted that some of those synergies (not quantified in this deal) is not really available to the current holder without a deal.

A 40% return over a short term is certainly very palatable... but that's the historical view.

The correct question is whether one can re-deploy that money and make better returns elsewhere.


----------



## ROE (7 October 2015)

There isn't many quality business on the ASX to put your money into, where you just ignore most of the day  to day noise and dividend comes every year.

Where the share price at isn't much of a concern for me.. it just give me an option to cash out or keep in or buy more

I rather have most of these business stay in the ASX it give me options to buy more, sell out or what ever during my accumulation phase, else our index end up with junk miners, money losing argi business, boom and bust commodity business ... all stuff I don't want any part of it


----------



## Faramir (7 October 2015)

ROE said:


> There isn't many quality business on the ASX to put your money into, where you just ignore most of the day to day noise and dividend comes every year.



Excuse my ignorance as I still very much a beginner.

This a new experience for me. I wanted to buy for the long term. Should I treat this like a forced sale? I brought in around $1.91 and now I am forced to sell the shares to Equifax for $2.825. They can at least pay the brokerage.

So in a few weeks or months, there will be money coming back to me? Money that I rather have in Veda. How am I going to find another quality company? I know nothing about Equifax and it is not like we are going to buy Equifax overseas? Maybe someone will?

I thought good investing is deciding to sell when things suit the investor - regardless of price fluctuations due to buying with a good safety of margin. Not via a forced takeover. If I was smart enough to find another company like Veda, I probably wouldn't whinge but now I have no idea of what to do. There are a few companies on my watchlist but I think Veda is better. Are my thoughts wrong?


----------



## galumay (7 October 2015)

Faramir said:


> There are a few companies on my watchlist but I think Veda is better. Are my thoughts wrong?




Maybe you were just lucky? You will pick up something like a 50% capital gain. Maybe it would have still been around $2 in a couple of years? What makes you think VED was better than the other companies on your watchlist? Were your reasons correct? 

It seems you are off to a wonderful start, you will now have  ½ as much money again to reinvest, if you keep up that performance you will quickly become very wealthy!!


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## luutzu (7 October 2015)

Faramir said:


> Excuse my ignorance as I still very much a beginner.
> 
> This a new experience for me. I wanted to buy for the long term. Should I treat this like a forced sale? I brought in around $1.91 and now I am forced to sell the shares to Equifax for $2.825. They can at least pay the brokerage.
> 
> ...




From memory, if owners of 90% of the shares agree to the takeover, all other shareholders have to sell at whatever price was agreed to. That's the law, might seem unfair but you can't please everyone's idea of fair value.

I'm sure there are plenty of better businesses on the ASX out there than Veda. Its margins point to a somewhat passable business, its returns on capital and equity is nothing to write home about. With last year's earnings of 78M, some idiot is offering something like $2.5 billion for and we're serious about it being underpriced?

They might make that number work if those synergies and market dominance leading to hike in price, that with lowered Aussie... so it might work for them if all turns out as their consultants and presentation assumes. For normal people, I'd take the money and run.

Look at ASX limited itself... profit margin of some 55%, operating margin of 80 something (comsec ratios) and selling at 18.5 times earnings. This little credit check company is being offered 28.8 times earnings and that's cheap?

Sometime we get lucky, sometime we get it right, sometime the market can be wrong, sometime corporate titans can also be wrong on synergies and growth projections too... Just have to have some idea of reasonable value to know who's right and who might be wrong. Or better yet, who's having the cash and who's living the dream.


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## So_Cynical (8 October 2015)

luutzu said:


> I'm sure there are plenty of better businesses on the ASX out there than Veda. Its margins point to a somewhat passable business, its returns on capital and equity is nothing to write home about. With last year's earnings of 78M, some idiot is offering something like $2.5 billion for and we're serious about it being underpriced?
> .




We were talking about 'blue sky' earlier, clearly Equifax can see some otherwise they wouldn't be prepared to pay so much for such a 'passable' business...blue sky is an intangible that not everyone can see.


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## Klogg (8 October 2015)

So_Cynical said:


> We were talking about 'blue sky' earlier, clearly Equifax can see some otherwise they wouldn't be prepared to pay so much for such a 'passable' business...blue sky is an intangible that not everyone can see.




You're assuming that all M&A activity is beneficial to the acquirer - that's far from reality.
Pretty sure 'do something syndrome' plays a role here.


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## skc (8 October 2015)

Klogg said:


> You're assuming that all M&A activity is beneficial to the acquirer - that's far from reality.
> Pretty sure 'do something syndrome' plays a role here.




Yes... that's what the acquirer assumed, but history suggests that most takeovers turn out to value destructive for the acquirer. So selling into any takeover offer will at least give the existing holder a statistical edge. Whether this will be the case with VED remains to be seen (assuming takeover proceeds and that Equifax reports the Australian bussiness going forward).

If I was a holder... I wouldn't be too upset. The price isn't exactly lowball on a number of measures. You are swapping the certainty of cash today against the uncertainty of future growth. And you get a chance to redeploy more cash than you had previously... so even if you were to earn a slightly lower return on the alternate investment you can still potentially come out ahead.


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## McLovin (8 October 2015)

skc said:


> If I was a holder... I wouldn't be too upset. The price isn't exactly lowball on a number of measures. You are swapping the certainty of cash today against the uncertainty of future growth. And you get a chance to redeploy more cash than you had previously... so even if you were to earn a slightly lower return on the alternate investment you can still potentially come out ahead.




I agree. I see a lot of talk about blue sky, and it being a great business, but no one seems to have quantified what this business is worth to justify rejecting the offer. $2.4b for $80m fcf seems like a pretty decent premium, imo. How many saying the offer isn't high enough would be buying at $2.825?


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## Ves (8 October 2015)

McLovin said:


> I agree. I see a lot of talk about blue sky, and it being a great business, but no one seems to have quantified what this business is worth to justify rejecting the offer. $2.4b for $80m fcf seems like a pretty decent premium, imo. How many saying the offer isn't high enough would be buying at $2.825?



Current EBIT is about $120m. 

Net capital invested (I've adjusted for goodwill) is about $175m.

So historical ROIC is say about 70%. Give or take a few %.

At a required return of 15%,  and assuming current earnings are sustainable and representative over the cycle,  my calculations suggest that they'd have to reinvest about $400m in present day dollars back into the business at historical rates of return to justify a $2.4B enterprise value.

That's in excess of tripling their current invested capital.

Obviously there's lots of embedded assumptions within  (you can adjust the forward ROIC or lower the required return blah blah)  but it gives you some picture as to the task ahead.


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## So_Cynical (8 October 2015)

Klogg said:


> You're assuming that all M&A activity is beneficial to the acquirer - that's far from reality.
> Pretty sure 'do something syndrome' plays a role here.




Well aware of the blunders, see my comments on the Slater & Gordon thread  Equifax is a 13 Billion dollar company and they think the current offer is a fair deal...your right in the sense that Equifax wants to grow globally and so in has a choice to either spend money and time to set up here and grind away at market share or buy VED - do something.


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## luutzu (8 October 2015)

So_Cynical said:


> We were talking about 'blue sky' earlier, clearly Equifax can see some otherwise they wouldn't be prepared to pay so much for such a 'passable' business...blue sky is an intangible that not everyone can see.




Intangibles of any value will have already shown itself in the returns and the margin and the market dominance. 

I'm sure the buyer see more value than what they're forking out... they might be right. But as business transaction goes, investor shouldn't really expect to extract all the value out of the deal and left nothing to the other guy.

Say I think VED should be at $3 a share if all the synergies and future potentials are realised. A bit unrealistic for me to be asking for $3 a share now and left nothing but the risks and effort on the buyer. If the buyer is that silly, yea I'd be lucky... but people are generally smarter and know a thing or two about investing and risk too.


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## ROE (9 October 2015)

Faramir said:


> Excuse my ignorance as I still very much a beginner.
> 
> This a new experience for me. I wanted to buy for the long term. Should I treat this like a forced sale? I brought in around $1.91 and now I am forced to sell the shares to Equifax for $2.825. They can at least pay the brokerage.
> 
> ...




Well $2.825 isn't the best deal but it aren't bad either, for someone who want quick profit and short term gain
it is a good return, for someone with longer horizon and don't really need the money it may not be something 
you want to sell but

that the way of the share market for retail investors, we don't hold enough shares to influence M&A
but on the other hand you can be agile, in and out of stock without effecting the price.

so if it get the majority vote you be force to sell your share at 2.825 and you get them all in cash, no script
so you so you don't worry about holding stock in the other mob.

I don't want to sell really but I am not that upset if the deal goes ahead and I get my 60% capital gain plus bagging 2 dividend since, what upset me more is the board is recommending the bid and let them have exclusive access to the 

book, they should leave it open for possible rival bid or at $2.825 have a decent break fees that waste management time if the deal doesn't go ahead... sound like TPG iinet Bid all over again, hope PPT kick some up some noise and maybe get to $2.90


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## McLovin (9 October 2015)

Ves]Obviously there's lots of embedded assumptions within (you can adjust the forward ROIC or lower the required return blah blah) but it gives you some picture as to the task ahead.[/QUOTE]

Yes it does. 15% is a pretty decent hurdle though for most.:) But like you say if you play around with the numbers it's hard to believe they could deploy all that much more capital at those historical ROIC and would probably need to get some growth by acquisition said:


> hope PPT kick some up some noise and maybe get to $2.90




I doubt it...


> "It's a fair price. The Veda board is doing the right thing by shareholders to recommend it," Perpetual head of equities Paul Skamvougeras said.
> Perpetual is Veda's second-largest shareholder with 10.7 per cent.





Read more: http://www.smh.com.au/business/bank...om-equifax-20151005-gk1zay.html#ixzz3o1yczm4b


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## Ves (9 October 2015)

McLovin said:


> Yes it does. 15% is a pretty decent hurdle though for most. But like you say if you play around with the numbers it's hard to believe they could deploy all that much more capital at those historical ROIC and would probably need to get some growth by acquisition, once you add back indefinite life intangibles the growth profile/capital required equation changes quite a bit. I admit I haven't really done much more than rolled a few numbers around in my head and scratched a few things on a pad, but $2.825 looks very fair to me. A good company, but always seemed a bit dear for me.



That being said,   the bull argument isn't without merit.

The expansion of data types that credit reporting agencies can report (see the CCR regime) hasn't hit the top or bottom line of VED yet  (really working off the top of my head here,  but I think it was 2-3 years from really ramping up).

The argument is that VED have already spent most of the capital required to comply with and take advantage of the CCR regime. Incidentally,  this is great in a control situation,  buy the business after all the ground work has been done.   I guess in that context,  it is possible for incremental ROIC to be far higher than historic ROIC,  especially given there isn't much competition in Australia.

If incremental ROIC is double historical ROIC,  then the future investments required are only about 4-5 years current growth capex spend  ($40-50m per annum).  Doesn't look all that expensive if you look at it that way.

That all being said,  I don't know enough about this industry to tell you what incremental ROIC is achievable,   so I'd basically be pissing into the wind trying to come up with a reliable valuation.

This isn't really a blue sky situation IMO.  The future direction of the credit reporting industry in Australia has been known for a few years now,   but like all valuations you still have to come up with ball park return metrics.


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## McLovin (9 October 2015)

Ves said:


> If incremental ROIC is double historical ROIC, then the future investments required are only about 4-5 years current growth capex spend ($40-50m per annum). Doesn't look all that expensive if you look at it that way.




I'd argue that is such an outlier it is basically an impossibility. Especially for a mature business that isn't reinventing the wheel.



Ves said:


> That all being said,  I don't know enough about this industry to tell you what incremental ROIC is achievable,   so I'd basically be pissing into the wind trying to come up with a reliable valuation.




This is where I get stuck too. We don't have full cycle, or even some sort of steady state, to be able to understand how much capital this biz needs, aside from knowing it's capital light. They've talked about a 50%-70% payout ratio (which in itself makes me think acquisitions are far from off the table), but at a ROIC of 70% (or higher) that makes for some pretty heroic growth estimates! Hell, at ROIC of 70% they could just borrow the money rather than use equity. There is lots of growth coming from their marketing segment (albeit from a small base), which I'd hazard doesn't have the same sort of returns as their traditional business lines. I guess what I'm saying is, imo, future ROIC will likely be to the downside not up.


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## skc (12 October 2015)

AFR's take on VED's deal.

http://www.afr.com/business/banking...are-case-where-everybody-wins-20151009-gk5nq3


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## JTLP (15 October 2015)

Price at 2.65. T/O offer at 2.825. That's about a tick over 6.5% difference. 

Market saying there's a bit of a hurdle? Anyone buying in to take advantage?


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## VSntchr (15 October 2015)

JTLP said:


> Price at 2.65. T/O offer at 2.825. That's about a tick over 6.5% difference.
> 
> Market saying there's a bit of a hurdle? Anyone buying in to take advantage?




I have weighed it up, but the trade Risk/Reward is not favourable enough for me at the moment.
Downside if it doesn't succeed is perhaps 40c = -15%
Upside, is as you say, 6.5%.

By my calcs, that says the market gives the takeover a chance of success of 92.5%.
This is also excluding the time value, which is likely 3 months or more?

Alot of hurdles to jump over before this takeover is successful so personally I'd want a bigger discount. 

On the flipside, if you think the chance of a higher bid is not insignificant then the calculations will change again.


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## So_Cynical (8 December 2015)

So_Cynical said:


> (18th-July-2014) I have been buying Veda based on the fact that i want them, i thought *$2.10* looked like holding for a while and entered there with my main portfolio only to see the SP weakness continue, picked up a few on Tuesday at *$1.94* for my super fund.




Sold both positions today for $2.76 ~ trade profit of 30%+ on both parcels, the T/O is pretty much a done deal so figured it was time...and as always i need the $ to cover redeployment into an IPO and other reverse T/O opportunities.


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## System (29 February 2016)

On February 26th, 2016, Veda Group Limited (VED) was removed from the ASX's official list in accordance with Listing Rule 17.11, following implementation of the scheme of arrangement pursuant to which Equifax Inc. acquired all of the issued shares in the Company.


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## Faramir (29 February 2016)

I'm going to miss you VED. Only regret was not to buy a much bigger parcel back in July 2014. I have no idea who can replace you??


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