# MOC - Mortgage Choice



## malachii (19 July 2004)

Have read the Mortgage Choice prospectus and think its a goer.  However prospectus says you have to be either  morgage choice franchisee/employee or stock broker sponsored to get stock in the float.  Any ideas as to where I can go to get an allocation in the float?


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## RichKid (22 July 2004)

*Re: Mortgage Choice Float*

The prospectus normally has a tel no for queries- Try calling some of the phone numbers in the prospectus- they should have a suggestion if anyone does.
Hope this helps.


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## RichKid (22 July 2004)

*Re: Mortgage Choice Float*

Oops! forget to mention: have you tried floattank.com.au I found it useful for reviews but they only review a few floats and I don't think it's as good as it could be but they would have something on mortgage choice. Good luck with it.


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## waytogo (2 January 2006)

*Mortgage Choice*

*Mortgage Choice*  - Go you good thing!  Everyone who piled out when the ANZ and CBA cut commissions a while back, sending the price down to $0.90, will be a bit upset now.  It's $1.55!

MOC is getting stronger all the time as a business, there seems to be no shortage of banks cusing it to access new loan customers and while the housing boom has moderated, it can still be considered fairly healthy.  There has been no crash, and first homebuyers are coming back into the housing market.  MOC needs to pick up its act on franchise growth and diversify its product offerings quicker, though.  The dispute over commission structures (concerning those franchisees who own multiple franchises) needs resolution. 

I am not qualified to offer financial advice. You should seek recommendations through someone who is.


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## michael_selway (2 January 2006)

*Re: Mortgage Choice*



			
				waytogo said:
			
		

> *Mortgage Choice*  - Go you good thing!  Everyone who piled out when the ANZ and CBA cut commissions a while back, sending the price down to $0.90, will be a bit upset now.  It's $1.55!
> 
> MOC is getting stronger all the time as a business, there seems to be no shortage of banks cusing it to access new loan customers and while the housing boom has moderated, it can still be considered fairly healthy.  There has been no crash, and first homebuyers are coming back into the housing market.  MOC needs to pick up its act on franchise growth and diversify its product offerings quicker, though.  The dispute over commission structures (concerning those franchisees who own multiple franchises) needs resolution.
> 
> I am not qualified to offer financial advice. You should seek recommendations through someone who is.




wow this seems to be a nice growth stock atm, low PE and good div!


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## malachii (3 January 2006)

*Re: Mortgage Choice Float*

This is one stock that was going to be a good one from the start!  At the float price ($1.05) it was offering a 9% fully franked div. It gets a trailing commission from any loans it writes therefore if you read the annual reports you can work out at least 55-60% of their earnings for the next 15-20 years - then you have on top of that any organic growth both from writing new loans or selling new franchises.  It has no major machinery or anything to constantly update as the whole business is really worked around a computer spreadsheet that calculates the best loan for you on a laptop provided by the franchisee.

Currently the commission earned from previously written loans covers all expenses so anything new falls straight to the bottom line (and then onto shareholders!!).  It is well positioned if there is any consolidation in the industry and with the new regulation that is coming out it is becoming harder to set up in competition.  And as previously mentioned it still has a fairly high yield and low PE.

I'm normally a trader but to me this stock is a bit of a warren buffett type hold (great co., great management which has a lot of equity in the business, product that doesn't go out of date or require constant reinvestment of profits, good return, low PE etc etc).

Did I say I love this stock!!!

Malachii

WARNING: I bought this stock immediately it floated ($1.05) and then purchased more at 90 cents and then more again as it went back up to $1.02 so I got it at a great price - I'm not saying that you should go out and buy at current price.


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## waytogo (3 January 2006)

*Re: Mortgage Choice*

Mortgage Choice is definitely a rarity.  Financial industry stocks are usually winners, and the company has a great niche market position, competitive strength and brand recognition.

The performance of MOC should turn out to be very stong over the coming year given the stabilisation of the housing market and it scaleable and growing low-cost distribution platform.

I have seen articles saying it's undervalued still, even at today's $1.60 close.
The share is probably valued at around $2.00+ when its various strengths
are more appropriately priced in.

I am not qualified to provide financial advice - please seek your own recommendations.


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## waytogo (4 January 2006)

*Re: Mortgage Choice MOC*

$1.69 close today - looking good for passing $2.00.


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## michael_selway (4 January 2006)

*Re: Mortgage Choice MOC*



			
				waytogo said:
			
		

> $1.69 close today - looking good for passing $2.00.




True but Volume today is only 6500?  Hm seems like the SP of this stock can be easily "played"?


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## malachii (4 January 2006)

*Re: Mortgage Choice MOC*

Your right Michael - this stock would be easy to play with - the volume is quite frequently fairly low.  However if you look at the chart it is has (until recently) not had any real trouble holding around the $1.50.  Dont think it will hold the $1.69 but you never know - there does seem to be a small amount of depth building in the $1.60s.

Like I said in a previous post - I'm a bit of a believer in this stock so anything I say should be taken with a large bucket of salt!

malachii


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## waytogo (8 January 2006)

*Re: Mortgage Choice MOC*

It's definitely true that volume is low, but that's a good thing.  Occasionally there are days when in fact nothing is traded, while there are days when a million shares are traded, at the other end of the spectrum.  In terms of being 'played', this would be quite difficult, because buyers and sellers generally stalk each other for a day or more, before committing.  

If you have a good quality share, why would you want to give it away cheaper?  Companies with less robust brand names, business models technicals and fundamentals do jump around and get played more easily.  Simply buying something which people want to hold onto leads to better price appreciation, and brings low volumes.

The company itself purchases shares for its directors superannuation, which must contribute to volume.

A large portion of the MOC shares are held by the franchisees themselves, so they have an aligned interest in both the business and the share price doing well (the IPO was not offered to the general public, but to franchisees and staff). People who bought in at the IPO price of $1.05 are getting a 9.33% fully franked dividend - why sell?  The p/w, based on the IPO price is just 9.63 - compare these stats to the banks!!!

Most of us don't usually go for shares with such low liquidity, but they have been able to sustain their price and move quickly back up after major setbacks (being the ANZ and CBA cut in commissions, and the initial news about the commission dispute).  For example, the price dropped around 20c when the commission dispute arose, and quickly regained that amount.

As for $1.69, MOC has been there before, just before the whole market got hammered at the start of October just gone.  MOC has a good business story/theme, but its technical aspect and fundamentals stack up too. A rare hat trick!

Please ensure you get independent recommendations - I am not a qualified financial adviser.


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## waytogo (9 January 2006)

*Re: Mortgage Choice MOC*

MOC hit $1.68, minutes after opening.  On three trades so far, 5870 shares have traded at this price.

An interim dividend is approaching, with the shares going exdividend early April.  Their present price will incorporate at least a 3.8c dividend (assuming the same as last time unless it is higher).

Hey - stop pulling my chain!!!  MOC has just hit $1.69 (now a total of five trades on a volume of 14870).  Will a new record high be set today?


I am not a financial adviser - please seek independent recommendations


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## waytogo (9 January 2006)

*Re: Mortgage Choice MOC*

10 Trades, 41370 volume. 15000 of these shares were traded at the new all-time high - 1.70.  MOC has upward traction.


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## malachii (10 January 2006)

*Re: Mortgage Choice MOC*

Good day today - all trades except for 1 at $1.74/5.

malachii


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## waytogo (13 January 2006)

*Re: Mortgage Choice MOC*

MOC hit $1.80 yesterday - new all time high.


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## michael_selway (13 January 2006)

*Re: Mortgage Choice MOC*



			
				waytogo said:
			
		

> MOC hit $1.80 yesterday - new all time high.




Im still a little worried about thw low volume (liquidity) on certain days

But yeah ill just keep an eye on this one


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## michael_selway (18 January 2006)

*Re: Mortgage Choice MOC*



			
				waytogo said:
			
		

> MOC hit $1.80 yesterday - new all time high.




it dropped big time today, any ideas? $1.62


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## ob1kenobi (18 January 2006)

*Re: Mortgage Choice MOC*



			
				michael_selway said:
			
		

> it dropped big time today, any ideas? $1.62




Below is Tuesday's Market analysis from Aspect Huntley. I suspect the data on housing may have had an impact on some property related stocks. It's only a hunch though!



> *ASX Market Report* Local Market Ends HigherTuesday, January 17 - The Australian share market climbed higher Tuesday, despite US markets being closed for the Martin Luther King Jr holiday.
> 
> The All Ordinaries rose 31.4 points (0.66%) to 4,817.3 while the ASX 200 firmed 29.7 points (0.61%) to 4,866.1.
> 
> ...


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## michael_selway (23 February 2006)

Amazing week

its $2 now! was 1.60 2 weeks ago

huge volume today

cant believe it, yeild also good

thx

MS


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## malachii (23 February 2006)

Finished at $2.05 - great report this morning - Interim Div gone from 3.8 cents last year to 5 cents + a 2 cent special div this year!!!

What more could you ask - this has been a great little money spinner for me!

malachii


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## malachii (26 March 2007)

Well - 12 months on and still going strong - I thought this one looked toppy when it hit $2 now we are looking to break $3 - who would have thought.

If you look at the weekly chart all the way back to March 06 it seems to trade in a fairly tight upsloping channel.  And no signs of breaking it yet!

My big concern is CBA seems to be building a serious stake (in excess of 10% now - been building since last October).  Hope they're not thinking of taking it over as it's a great business and I dont really want to sell.

malachii


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## malachii (27 March 2007)

Closed above $3 today ($3.02) - only another 4 cents and we're back into blue sky territory again.

Did I mention I love this stock??!!!

malachii


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## michael_selway (27 March 2007)

malachii said:


> Well - 12 months on and still going strong - I thought this one looked toppy when it hit $2 now we are looking to break $3 - who would have thought.
> 
> If you look at the weekly chart all the way back to March 06 it seems to trade in a fairly tight upsloping channel.  And no signs of breaking it yet!
> 
> ...




If property market crashes, does this company get affected?

thx

MS


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## malachii (27 March 2007)

If the property market crashes will people stop buying houses to live in?  Will people still need mortgages?  Will the people who have mortgages be able to pay their mortgage out over night so it no longer exists?

Of course I'm being a bit sarcastic and I apologise - it's late and I should be in bed.  However there is a degree of truth (my belief anyway) in what I said above.  Companies like MC get paid on the mortgages they have written - you can calculate 50-60% of their income for the next 15-20 years based on the mortgages on their books.  They can actually pay all their expenses with the loans they already have - any extra they write goes straight to the bottom line (ie shareholders).  And if the market crashes sure - some loans will default - but the majority of loans will still be paid because most people still want to live in their house and will do everything they can to make sure that happens.  Why do you think banks are so keen to lend you money for your house.  It is probably the most secure loan they can make.

I remember when interest rates first started going up and their was a big press feeding frenzy on how the property market would crash.  MC went down 30% to something like 75 cents.  A little while later they came out and said that a profits were up on what the expected - the share price went up above where it was and life went on.  Every interest rate rise since MC has dropped 15-25 cents that day and then been back up or higher within a week or so.

Their income is fairly predictable.  Sure they may have a period where their income plateaus for a while (hasn't happened yet!) but over the longer term they will keep tracking upwards while they have such good managers and the other pluses people talk about.  They have expanded away from the east coast (mainly NSW) base which has protected them a bit from the "real estate crash" of Syd.  And they talk about consolidating in Oz and maybe expanding O/S so that may change things a little.  

I'm normally a trader but I'm holding these for the long term - they seem pretty dependable although I bought mine for an average entry price of $1.02 so I'm well and truely in the money (in fact they owe me nothing because I sold a small stake that paid for all of my remaining stake.).  I compare them a little to the banks.  Would you have been happy to have bought any bank 5 years ago and held it till now - even though it has gone up and down - paid dividends - and might be effected by a real estate "crash"??

malachii


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## malachii (2 April 2007)

Broke into blue sky territory today - will be interesting to see what happens over the next while.  Still tracking onwards and upwards.

malachii


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## ROE (18 January 2008)

I bought in Today 
been on my radar for a while and it about the right price and CBA and PPT just increase their stake so the big boys is confirming with me this is a good stock at this price


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## Judd (18 January 2008)

Hope you do well.  By the way when you read the PPT and CBA announcements did you happen to notice on whose behalf they were purchasing?


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## ROE (18 January 2008)

CBA bought for their Colonial Investment arm so I guess some Colonial Funds
and PPT bought for their funds as well... three internal funds they manage I assume.

Doesn't bother me too much, the price I'm willing to pay look right and I may be right, I may be wrong but it nice to see other big players buy as well.


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## kirtdog (24 November 2008)

Whats every1s view on this company?? Why is it so cheap, little debt and with the 'first home buyers grant' won't there be a lot of mortgage advice needed..? Thinking of buying when the price is right..


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## oldblue (24 November 2008)

kirtdog said:


> Whats every1s view on this company?? Why is it so cheap, little debt and with the 'first home buyers grant' won't there be a lot of mortgage advice needed..? Thinking of buying when the price is right..




Rightly or wrongly, the market thinks that the big banks have got the mortgage market pretty much to themselves these days and that the brokers and smaller players will struggle to survive, let alone compete.


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## kirtdog (29 November 2008)

i dont see how australias biggest mortgage broker can go under, im likely buying in question is when..


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## oldblue (29 November 2008)

kirtdog said:


> i dont see how australias biggest mortgage broker can go under, im likely buying in question is when..




Well, if they were to go under it would be for the same reason that Australia's biggest maker of buggy whips, or possibly kerosene table lamps, would have failed - not adapting to a changing market.


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## Seek$ucce$$ (31 December 2008)

Hi all

Does anyone know the COU (Count financial) takeover? what is the latest development?
When the takeover is announced, MOC went to around $1 mark and now trading in the range of 75c
I assume COU is no longer interested but I cannot find any announcements...

Any input is highly appreciated


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## resourceboom (31 December 2008)

I started looking at this company again today, there is a bit of mention of the COU interest in the MOC agm pres. take a geez at that. It looks like COU are not too interested in getting more, and marking their shares to market.

I think i'll avoid this company for time being. This is probably a great chance to buy a decent company at a low price, but I think there are so many other cheap companies I can find more with less risk.


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## Seek$ucce$$ (20 March 2009)

I think this business is fundamentally sound and the fear has been over done...property market (residential only) is not as bad as US and UK...comission has been slashed but it should be reflected in the share price at the moment.

With or without COU takeover...this is a good company with good earnings and stable dividend...if COU takeover, it's a bonus....

Anyone...opinion?


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## malachii (20 March 2009)

My opinion on this company hasn't really changed in 3 years.  It is a sound company with fairly predictable earnings.  They deal in mortgages so a lot (probably 50-60%) of their income is pretty stable over the next 5-10 years.  If property goes up - people need a mortgage.  If property goes down - guess what - people need a mortgage to take advantage.  It is unusual for people to buy a house outright with out getting a mortgage.  Even if you already own a house you are usually up sizing and need a loan.  It is only a small percentage of people who are downsizing (I know - I'm generalizing!!).  

Sure - they may not write as many mortgages this year (as they seem to be saying in their latest report) but they will still write a sizable chunk.  Their earnings are down but still respectable and they will still deliver a decent dividend this year - maybe down 20% or so.  This will still give a total fully franked dividend of around the 10% mark so not too shabby!

Shortly after this company first floated the Reserve Bank increased interest rates and the share price dropped into the 0.70s - kind of like now.  People were worried about the stability of the company.  Within 18 months or so the were up in the $3 range.  Now the Reserve Bank is dropping interest rates and guess what - the market is worried about the stability of the company.  I'm not saying they will be worth $3 in 18 months but in MY opinion I think the company has good long term potential.

It earns good cashflow, doesn't need to spend large amounts of money in developing new technology or updating equipment, it's simple and well managed and upper management holds large slabs of shares.  All good signs to me.

GIANT SELF INTEREST WARNING - I OWN SHARES IN THIS COMPANY - If you look at previous posts by me I state that a large chunk of my holdings in this company are free held.  I have also recently purchased another 25 000+ shares in this company at an average of about 75 cents so I have a pretty big interest in making this company look good - PLEASE DON'T JUST BELIEVE ME - DO YOUR OWN RESEARCH!!!!!


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## ROE (20 March 2009)

Seek$ucce$$ said:


> Hi all
> 
> Does anyone know the COU (Count financial) takeover? what is the latest development?
> When the takeover is announced, MOC went to around $1 mark and now trading in the range of 75c
> ...




Count want to take over at $1.05 .. MOC said no too cheap..then they increase their stake a little bit more
still MOC ignore them and treat them like any other share holders...

to sum up count not going to get it for $1.05 when the founder hold a large chunk of the stock and said no.

so Count either have to sell down their stake or keep them as an investment for their free cash and if it can generate higher return than what count can make then why sell them....

in the mean time count can send all their clients this way while they have a large share holding and share the profit  ...


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## Seek$ucce$$ (23 March 2009)

That's a good point...

COU wanted to takeover because of a good synergy between the two businesses.
Failed to take over but holds a significant shareholdings would entice them to refer clients to MOC...it is for COU's own best interest anyway.

We'll see what's the effect on MOC of the next interest rate cut next month


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## Seek$ucce$$ (9 April 2009)

MOC gets trashed today after the rate cuts....***confused***
rate cuts --> means more business for mortgage brokers right?


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## chiraag (21 August 2009)

Can anyone explain to me why MOC has dropped 5% today after announcing what I thought were some quite good finacial year results - profit up almost 40% 

Going ex dividend on Monday as well for 5.5c per share, which is about 4.6% yield at current prices.


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## oldblue (21 August 2009)

chiraag said:


> Can anyone explain to me why MOC has dropped 5% today after announcing what I thought were some quite good finacial year results - profit up almost 40%
> 
> Going ex dividend on Monday as well for 5.5c per share, which is about 4.6% yield at current prices.




Pricing reactions following profit announcements are all about expectations either being met, exceeded or missed. It seems that the expectation was for a better result, although the general weakness of the market today probably has something to do with it too.


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## ROE (21 August 2009)

chiraag said:


> Can anyone explain to me why MOC has dropped 5% today after announcing what I thought were some quite good finacial year results - profit up almost 40%
> 
> Going ex dividend on Monday as well for 5.5c per share, which is about 4.6% yield at current prices.





are you going to sell this stock if it hasn't dropped 5% 
then why be bother if it dropped 5%. 

If you buy good business, over time it will generate you far greater return
than daily stock price movement

I got lot of stocks that sometimes drop 20%, 30% or 40%
Great good time to buy more  and lock in future return


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## Rainmaker2000 (21 August 2009)

Loved the result and outlook today........Love the MOC business.....love the rich vein of divvies.......they are certainly an extreme example of a resilient, low capitalisation business model

Even so, investing is about looking at detail........the so called 40% earnings lift carried by the Murdoch paper headlines taken into account an actuarial analysis of the 'run rate' on their mortgage book which is apparently better than expected......

Even the company was honest enough to point to a 10% plus drop in cash earnings........like the banks, that's what matters and where MOC wonderful stream of 100% franked divvies are sourced from....

With the housing cycle turning, MOC has done pretty well slightly above system growth........and will be paying a 10%ish yield for some time into future


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## Knobby22 (21 August 2009)

I've got, for me, a very large holding.

I bought a bit lower than the present price and it dropped quite a bit before coming back. The yield alone has paid for the investment.

No debt and they still have Count Financial buying shares. They were the ones who promised to take the company over. I think they have left it too late now but who knows??

btw What happened to your blog Rainmaker?


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## Rainmaker2000 (22 August 2009)

Don't know if Count will ever takeover, as they seem happy now to perhaps have a few product alliances and reap the divvies.....

Count has a much higher PE than MOC and just loves issuing more shares at that higher valuation, some of which has gone into MOC which is a very 'swift' way of boosting EPS using cheap capital........

Don't have time for blog these days as took on more onerous and lucrative day job and commenced Phd...........

Still love the stocks, albeit, there were some pretty heavy losses for a while there.......most have turned around amazingly quickly.......FLT and MOC are two


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## chiraag (11 December 2009)

MOC has taken a bit of a hammering this week, and I haven't seen any news that would provide a reason.

Does anyone else know what's going on?


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## Knobby22 (11 December 2009)

chiraag said:


> MOC has taken a bit of a hammering this week, and I haven't seen any news that would provide a reason.
> 
> Does anyone else know what's going on?




I'm sure its not anything sinister.
Many good stocks have dropped this week. There appears to be no buyers for stocks at present. Volumes have really dropped.


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## Rainmaker2000 (13 December 2009)

I think the market is a bit surprised the interest rate cycle has turned so quickly which may be perceived as a threat to house cycle....

Still, it's a very small part of picture.......interest rates are reflecting our great economy with the shock low unemployment figure coming out the other day........and as we know, employed people tend to be able to get home finance.........

For those students of MOC, you may have noticed that the share of lending among big banks in relation to the minor banks has reverted back to pre GFC levels.........

It was a bit of surprise that happened so quickly and is actually a big aspect of MOC business model and keeping mortgage commissions up.........


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## coffee_snob (6 April 2010)

I thought i sent in a post but it mustn't have worked.

I just invested $3000 into this one. Long term I hope it will perform well. 

Anyone out there still holding


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## malachii (23 August 2010)

This one has been quiet for a while but an interest release this afternoon.  Earnings only down 12.5% instead of the previous release stating 30-35%.  This is an increase in profit by about 9mil.  Should be an interesting end of year result released later this week.

malachii


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## Knobby22 (23 August 2010)

It is very nice to see an upgrade in the right direction.
'
Great company to hold, some capital growth with great dividends. It is becoming less volatile.


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## malachii (24 August 2010)

Kinda excited about the financial results release tomorrow.  With the announcement the other day it could be a corker with any luck.  Not sure if there will be an increase in div but it certainly has to be a possiblility.

malachii


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## Knobby22 (23 February 2011)

Another good set of financial results with a good dividend.

Price has been slowly appreciating and with the fantastic dividend the total return has been good.

I don't expect there will be any traders owning this company, only fundys.


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## snowking (24 February 2011)

market definitely likes the results. Up 3% this morning after a strong close yesterday and with the overall market being down. 
Good to see growth in their loan book as well as information in the presentation highlighting research that suggests people are likely to use brokers in the future as the industry becomes more regulated. 

Long term holder


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## skc (24 August 2011)

Knobby22 said:


> MOC Mortgage Choice - Huge dividend and growth. What more does anyone want!




Hmm. How about some cash flow? Last year operating cash flow of $18.8m against a reported NPAT of $23.4m (80%). This year operating cash flow of $14.3m turned into a reported NPAT of $27.5m (52%). 

Where's the profit come from?



> In addition, assumptions used to value the future trailing commissions were changed to reflect an extension of the current economic environment for the short to medium term. These refinements to the valuation of trailing commissions resulted in a $17.6 million positive adjustment before tax to the Group’s profit and loss for FY 2011.




So the real profit is ~$10m while the rest are future trailing commissions. Kind of like an asset write up I suppose. On that $27.5m profit, EPS is 22.9c. So the market is pricing PE ~6. Or may be people are saying only $10m (8.3c) is real and a slightly generous PE ~15 to capture those potential future cashflows.

Not sure I am confident in taking that to the bank but I am no expert in loan book valuation.


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## Knobby22 (25 August 2011)

skc said:


> Hmm. How about some cash flow? Last year operating cash flow of $18.8m against a reported NPAT of $23.4m (80%). This year operating cash flow of $14.3m turned into a reported NPAT of $27.5m (52%).
> 
> Where's the profit come from?
> 
> ...




OK P/E of 6 and yield of about 10%.
Consistent but a little bit lumpy single digit growth. The growth slowed one year due to the banks changing the commission structure.
MOC are brokers so they get money from their network of franchisees for selling a loan and from trailing commissions. They are also now getting into insurance btw.

The company grows in good times and in bad and does not take the risk of the loans.
If you look at the revaluation of the trail commissions you would have to say they seem to have a natural hedge on the housing market. In boom times they pick up more origination commission but their trail drops as people churn loans faster but in a downturn people hold their property so the trail increases as the length of time they hold the loan increases and the loan length bonuses kick in.

These future trailing commissions are real, not imaginary. There are a lot more companies with much shakier profit projections. If the property market starts churning... they get more money.  If it doesn't the loan book keeps increasing and those commissions keep coming even as the market slows.

I am getting a fat check soon because of the 10% yield. They could increase the yield on present cashflow if they wanted. If you can get this with growth and and no company debt worries, why wouldn't you? In my opinion this company is cheap.


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## skc (25 August 2011)

Knobby22 said:


> OK P/E of 6 and yield of about 10%.
> Consistent but a little bit lumpy single digit growth. The growth slowed one year due to the banks changing the commission structure.
> MOC are brokers so they get money from their network of franchisees for selling a loan and from trailing commissions. They are also now getting into insurance btw.
> 
> ...




I think the churn in loan book is more related to the interest rate environment (I would want to switch when my fixed rate loan is higher than market) as opposed to the rise and fall of the property market. And of course to do with what the competitive landscpe looks like (e.g. everyone offering free exit fees).

MOC isn't that expensive based on their "real" profits alone so if those trailing commission write-ups turned out to be real and sustained then that will be a bonus.

The yield is attractive and pays out of operating profits so appear sustainable as well.


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## skc (13 February 2012)

The market didn't like MOC's announcement today.

The H1 result is down by 25% compared to pcp. They blamed that on a 35% increase in expense, on a higher revenue.

H1 FY10/11 MOC reported profit of $8.785m on $68.5m revenue and $47m operating expenses.

If expense went up 35% it would be $63.5m. Add to that borrowing costs ~$8m from pcp, total expense for H1 FY11/12 is ~$71.5m.

If reported profit is down 25%, the number would be $7m.

Add the downgraded profit to the increased expense, you get revenue ~$78.5m. That's a 14.6% increase from pcp which is definitely much higher than the system growth. 

If this analysis is correct and the increased costs are in fact one-offs, then today's sell off might be an over-reaction.


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## Knobby22 (13 February 2012)

Hmmm
I'm thinking they may have booted the previous figures and left expenses to this half to increase Counts price to CBA. But that wouldn't happen would it? Lousy disclosure in any case.


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## McCoy Pauley (13 February 2012)

I wonder what could cause the jump in expenses.  Having procured my mortgage through MOC (worst decision I made, incidentally), I reckon most expenses would be mostly fixed.

Further, correct me if I'm wrong, but MOC works on a franchise model, which would (IMO) have the effect of pushing the operational expenses onto the franchisees and leaving the head company with the expenses of managing the franchise.

Something doesn't quite add up for me.


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## RandR (21 November 2012)

McCoy Pauley said:


> I wonder what could cause the jump in expenses.  Having procured my mortgage through MOC (worst decision I made, incidentally), I reckon most expenses would be mostly fixed.
> 
> Further, correct me if I'm wrong, but MOC works on a franchise model, which would (IMO) have the effect of pushing the operational expenses onto the franchisees and leaving the head company with the expenses of managing the franchise.
> 
> Something doesn't quite add up for me.




new 'head office' building ? Have they taken up residence in more expensive real estate? mmm

Im actually slightly interested in this company, has had 9 consecutive years of substantial growth in book value with the use of $0 debt. which looks like a great franchise business to me. Reasonably solid cashflow coming in due to the trailing commissions. I just wonder how much of the future mortgage market is going to be sourced by old fashioned brokers. Because it seems like every man and his dog is starting a mortgage broking division. (alot of super funds are doing so to keep their members away from banks)


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## luvbhatnagar (27 October 2015)

Interesting company especially with all the interest rate headwinds and slowdown of the property market.  Seems to be recovering now?


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## Wysiwyg (27 October 2015)

If you had a smelly finger below $1.70 you would be up less than 10% with the possibility of price coming back at your entry. Questions you might consider (or be ignorant of) -

1) is the low in?
2) will the price come back to my entry?
3) if price comes back to my entry do I sell at break even?
4) if price comes back to my entry do I move my initial stop loss tighter?
5) if price comes back to my entry do I hold my nerve and adhere to my initial stop loss?
6) do I sell some now and hold the rest for the possibility of a higher price?
7) do I hold for a higher price because I know I picked the low?
8) do I sell all now and thank my luck stars that I finally made a profit on MOC?


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## malachii (27 October 2015)

I've loved this company long time 

It's an interesting one. I hold it in my "long term" dividend payment account (and have done since just after the float) and I also trade the living daylights out of it. Even in a downturn it's a good, consistent "bouncer" between price levels.

Not sure I'd buy from here. I'd let the price action settle down a little. I did buy (to trade) in the 1.60s and sold in the mid 1.70s. I'm now looking to see if this is a reversal to the upside (which I doubt) or if this is just topping out to track lower again.

malachii


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## malachii (28 October 2015)

Looks like the market likes what's being said at the AGM.

malachii


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## Knobby22 (18 February 2016)

Good result. Some growth. Increased dividend.
Very happy.


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## Knobby22 (25 July 2016)

This has been taking off lately, my second largest holding.
If interest rates keep falling then this is still a no brainer at these prices with a yield still above 7% and as a broker, no risk of bad debts like the banks.


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## galumay (25 July 2016)

Yes Knobby22, I have done quite well from patiently holding MOC, took a while but moving now!


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## Muschu (25 February 2017)

This seems to be travelling OK..... Is it the pick of the mortgage broker stocks in anyone's opinion?


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## galumay (25 February 2017)

I dont know about it being the pick of the mortgage broker stocks - I have never looked to see if there are any others. Its a good business and a cash cow. I worry about the risk with being so stongly correlated to our massive bubble property market, but have stayed invested and enjoyed strong returns. MOC has no debt which gives me some comfort and at current prices its still quite a way below my calculated range of IV.


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## Muschu (26 February 2017)

Thanks galumay.  

Isn't AFG a mortgage broker?  I think I caught the tail end of a TV show last week which was questioning their operations and particularly their incentive system... Might have to do a search for it.


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## Muschu (14 March 2017)

Any thoughts about the 7% fall yesterday?  This was several days after a record announcement, an increased dividend and going XD.  Slight recovery so far today but still seems odd....


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## Knobby22 (14 March 2017)

MOC does it every time.
After dividend it tends to drop double the dividend then muddle along for a few months before rising again usually higher than the previous price. Too much dividend stripping methinks.


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## Muschu (14 March 2017)

Interesting Knobby.  Did not know that and took the opportunity to top up this morning.


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## Knobby22 (14 March 2017)

Muschu said:


> Interesting Knobby.  Did not know that and took the opportunity to top up this morning.



It might still drop a little more. Look at the previous few years. it's quite weird how the price moves.


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## Knobby22 (17 March 2017)

It has turned now. Lookin good.


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## Muschu (30 March 2017)

Knobby22 said:


> It has turned now. Lookin good.




Certainly heading lower today.... But why?


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## Knobby22 (30 March 2017)

Muschu said:


> Certainly heading lower today.... But why?



Wouldn't worry.It's ranging.
You will notice that often when a share rises quickly it drops down again to the previous low, a sort of double bounce effect before rising again. Price could drop a further 3c temporarily. If it drops below that then we should be trying to find out why. If it doesn't get down to 2.22 then that is a bullish sign.


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## galumay (30 March 2017)

Muschu said:


> Certainly heading lower today.... But why?




Unless you are a trader, why would you care? Markets wiggle around every day, its random and unpredictible, best ignored.


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## Muschu (30 March 2017)

galumay said:


> Unless you are a trader, why would you care? Markets wiggle around every day, its random and unpredictable, best ignored.




Because I hold and am thinking of adding, long term.


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## galumay (30 March 2017)

Muschu said:


> Because I hold and am thinking of adding, long term.




I hold too. If I was considering increasing my position I wouldn't be worried about the price volatility. I would be looking at my calculated range of IV and seeing whether MOC was currently trading at a significant discount to my IV range ( it is ). 

Then I would revisit my rationale for investing originally and reflect on how that had played out. I would probably read thru the last couple of reports again to refresh my memory about MOC and finally I would ask myself whether it was the best home I could find for the capital I was looking to allocate.

If all of that holds up then I will buy more at the current price, regardless of volatility in the short term. 

When you look back at MOC aver the last 10 years its a pretty stable record, they havent grown particularly fast, but they havent issued many more shares, they still have no debt and they have a great yield. No doubt the price would suffer in any significant downturn in the housing market - but as 2007 showed, the actual impact on the business was not very significant.

Anyway, thats just a sketch of my process - not suggesting its what you or anyone else should do!


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## Muschu (30 March 2017)

Thank you ... and contemplating...


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## JTLP (30 March 2017)

Few questions from me:
- who are their main competitors? Is it comparator websites like infochoice et al? If so, are people essentially using a broker via laziness or convenience?

- Is it a win/win situation in any environment? Interest rates up = people shuffling their mortgages for a better deal / interest rates down = people happy to hold their product and MOC picks up commissions?

Trying to figure out the right time for this. Yield doesn't hurt.


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## galumay (30 March 2017)

JLTP, not really sure what their competition is, non-aligned brokers and to some extent comparison sites? I used a MOC broker to buy my current IP - before I was a shareholder. I had some specific issues being in a remote location and I felt the broker was very helpful and was able to deal with issues that while I might have been able to resolve, would have added stress and extra expense and time to the deal. 

So I dont think its just about getting the best rates, its about understanding the processes and having relationships across the board - with banks, agents, local governments, conveyancers etc.


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## Knobby22 (31 March 2017)

Well we should try to ignore the daily movements, but that drop didn't last long. Quite bullish in my view.


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## Knobby22 (24 August 2017)

10% increase in profits. A rise of 1c in dividends.
Fantastic result.


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## galumay (24 August 2017)

Yep, steady as she goes.


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## peter2 (5 June 2018)

10 mths later and it's not looking so steady.  
Sold off today as MOC announced they were reviewing their franchisee remuneration structure. 
The chart shows a reversal BO setup.  This one failed to go higher.


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## galumay (5 June 2018)

True Peter! I think the market is very jittery round franchises since the RFG event, also Fairfax did a number on MOC today, a bit like their other stuff, its badly written, factually inaccurate and tapping into the emotions of people who probably should never have been in 'business'.

I had considered selling earlier in the year because I wondered how they would weather a housing downturn, but I was always reminded that they managed to make their way through 2007 continuing to pay a divvy - and the divvy stream has nearly exceeded my capital cost in not too many years so I have kept them. 

I wouldn't have the conviction to average down at this stage, but will sit on the sidelines and watch what develops.


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## luutzu (5 June 2018)

galumay said:


> True Peter! I think the market is very jittery round franchises since the RFG event, also Fairfax did a number on MOC today, a bit like their other stuff, its badly written, factually inaccurate and tapping into the emotions of people who probably should never have been in 'business'.
> 
> I had considered selling earlier in the year because I wondered how they would weather a housing downturn, but I was always reminded that they managed to make their way through 2007 continuing to pay a divvy - and the divvy stream has nearly exceeded my capital cost in not too many years so I have kept them.
> 
> I wouldn't have the conviction to average down at this stage, but will sit on the sidelines and watch what develops.




If about half their franchisees are losing money, not making money, consider suicide (literally)... and all that during what is probably the biggest property/mortgage boom with easy finance in at least a generation... The chances of MC coming out alive after the coming GFC II is pretty much zero, if you ask me.

Don't take it the wrong way, I'm not rubbing it in or intend to offend you in any way. I mean, I've made plenty of bad calls. Just thought I add my 2 cents to a discussion. 

I don't think Australia was affected, much if any, by the last GFC. Definitely not its property market. I remember it took a slight dip, maybe 5% then quickly recovers to the recent property boom.

So mortgage-related businesses would have done very well in AUstralia because of policies following the GFC.

The coming one might not be so well.


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## Knobby22 (21 August 2018)

Well the report is out. I only own half the amount of shares I previously owned as sold at $2.00 on the way down but still own to my chagrin.

I didn't mind the report, dividend still at 9c. Forecast still for a drop of 30% profit under the new share scheme with franchisors, I like the comments made about regulation, hopefully there will be a reasonable result there but still risk from government regulations.
I like the emphasis on growth of franchisees, if this can be successfully done in association with the financial planning advice then this company will look cheap.

So what are the shares worth? I think with the risks at present it is hard to work out but I would have thought at least $1.60 after post dividend, which translates to a yield of close to 9% with the possibility of a bit growth if the new brokers come on board.


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## galumay (21 August 2018)

I think the future potential may be in the financial planning/advice sector of the business, with the spin out of the Banking RC the big four are actively looking to divest themselves of this division within their businesses, its one of the things that interests me about CUP going forward and MOC are well positioned with licenses in place, to franchise/roll up this sector.


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## luutzu (21 August 2018)

galumay said:


> I think the future potential may be in the financial planning/advice sector of the business, with the spin out of the Banking RC the big four are actively looking to divest themselves of this division within their businesses, its one of the things that interests me about CUP going forward and MOC are well positioned with licenses in place, to franchise/roll up this sector.




Yea, it'll do really well if it load up on new businesses and make lots of money. 

People will abandon the banks and AMPs due to dishonest and bad financial advise. So they can't wait to take it from freakin real estate brokers.


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## galumay (21 August 2018)

I have had time to update my spreadsheets and check valuations, obviously the changes to the business and accounting practices make for a very skewed set of results and its a little difficult to unpick, but as usual cash flow tells whats really going on. The absence of debt is another thing that I have always liked about the business. As I have said previously, its basically a free carry for me now, dividend stream has now exceeded my initial capital allocation, in only 5 years. 

I have them trading at just below my range of fair value, and given the situation I am happy to continue to hold, collect when we pass go and see how the financial services division performs over the next few years.


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## greggles (20 May 2019)

Mortgage Choice enjoying a nice 14.47% bounce to 91c today. No doubt because of Labor's defeat in the election, ensuring that their planned changes to negative gearing will never see the light of day.


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## Zaxon (20 May 2019)

Mortgage Choice is in a long term decline though.  Whether they can grow out of that, I think it's too early to assume so.


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## Knobby22 (21 May 2019)

The bounce is more due to the franking credits remaining. The yield is impressive. The future, less so.


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## greggles (21 May 2019)

Zaxon said:


> Mortgage Choice is in a long term decline though.  Whether they can grow out of that, I think it's too early to assume so.




Definitely agree with you on this. I just thought the bounce might present a good short term trading opportunity. It's up another 6% to 96.5c today and I suspect it might get above $1 in the near term.


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## greggles (22 May 2019)

greggles said:


> I suspect it might get above $1 in the near term.




That was quick. 

MOC hit a high of $1.065 today and closed at $1.05. The 12 month downtrend has been broken but there looks to be some serious resistance at $1.20 that it will struggle to get through.


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## notting (22 May 2019)

Get ready to short it.
Numbers were terrible simply on the market weakness thus far.
There was definitely the Shorter terror a also being anticipated but gut tells me this will see 61c


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## Knobby22 (23 May 2019)

notting said:


> Get ready to short it.
> Numbers were terrible simply on the market weakness thus far.
> There was definitely the Shorter terror a also being anticipated but gut tells me this will see 61c




Investors treat it like a bank but it's a broker.

Pluses, dividends worth more, change of interest rates to occur which encourages switching.
Property prices may have stopped falling.

Negatives - interest rates going down which is less likely to encourage switching.
Property Investors back in control which is a negative to first home buyers who use this service.
Continual online competition in market which young investors are savvy enough to use.
Long term lower returns due to new arrangements Mortgage Choice had to make with their franchisee.

I think it is high. 61c would be a buy. So yea, with momentum it could easily happen especially if there is a correction which is starting to look likely with all the trade wars, Brexit and other stuff.


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## frugal.rock (28 September 2020)

aus_trader said:


> OK, had a very busy weekend, but here is my reasoning for buying  Mortgage Choice Limited (MOC). I've been watching it for a while and didn't pull the trigger till Friday because sometimes buying too early is just as costly as buying too late. I have had quite a few stocks that has gone initially against me and once I have exited, it has soared like there is no tomorrow.  So perhaps my initial analysis was good but the timing was awful, and because this is a trading portfolio it's not like I can hope and pray when a position has gone a fair bit against me.
> 
> Anyway, I think MOC is at an inflection point where it may be the right time to buy. It's also got multiple triggers that's got me exited, such as:
> 
> ...




Nice post.
A good day for MOC.


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## over9k (29 September 2020)

Looking good today. You going to sell or ride it out? 

Will be interesting to see what the pullback is.


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## greggles (29 March 2021)

REA Group has entered into a Scheme Implementation Agreement with Mortgage Choice Limited to acquire 100 per cent of the outstanding shares in MOC for $1.95 cash per share. The Mortgage Choice board is unanimously recommending that shareholders accept the offer.

Smart move by REA to fast track their move into mortgage broking given the recent resurgence in residential real estate prices. This deal appears to be a win/win scenario for all involved.


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## System (2 July 2021)

On July 1st, 2021, Mortgage Choice Limited (MOC) was removed from the ASX's Official List in accordance with Listing Rule 17.11, following implementation of the scheme of arrangement between MOC and its shareholders in connection with the acquisition of all the issued capital in MOC by REA Financial Services Holding Co. Pty Ltd, a wholly owned subsidiary of REA Group Ltd (ASX: REA).


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