CDA - Codan Limited

[galumay]

Nothing has ever made me want to sell out of CDA.

Until I see Dodgy Roger is pumping it, probably the highest profile fund manager responsible for the greatest destruction of wealth for his clients over the years. Thats enough to have me wondering what I have missed with CDA & whether its not time to get out!

 

[galumay]

Trading Halt this morning. Acquisition?

 

[mullokintyre]

Put in some low ball bids below 10 bucks.
But I might yet buy in at anything below 10.3
Seems to have gone from overvalued to under valued.
Revenue growth has been good, forecasts also good for next two fin years.
Mick

 

[Garpal Gumnut]

This is a good thread. Thanks all.

As I said above I've been in and out twice. In at high $9 and low $10 and out for a profit of 20% each time. I was kicking myself for not letting it run.

I'm considering again. I believe the changing of the guard is more of a factor than the underlying outlook, although the latter is an unknown. It was nice to see an Australian company fly even though I didn't reap all the gains.

Perhaps more insiders may be approaching retirement which will influence price and supply.

I note some divergence on the RSI since late October.

gg

 

[galumay]

I have a back of the envelope, range of valuation for CDA at $10, so by my calculations its getting back down to fair value. Still, its one of those businesses now that is unlikely to ever be cheap, if it continues to execute well.

 

[mullokintyre]

CDA announced a 4 mill UK acquisition.
Not earth shattering,
Shares still languishing below 10 bucks
will top up if I see some positive action.
Mick

 

[mullokintyre]

Added CDA to my yearly comp entry.
As Sean K said, it has some good swings over extended periods, hope to pick up on the next one.
AS the gold price picks up, hopefully more of the retired baby boomers take up prospecting.
Mick

 

[frugal.rock]

Couldn't be too far off turning up?
Whenever gold goes up, my thoughts turn to Minelab/ Codan.
Hopefully the WA borders open again for detector swinging season and Grey Nomad tourist money.
Not held.

 

[Garpal Gumnut]

Couldn't be too far off turning up?
Whenever gold goes up, my thoughts turn to Minelab/ Codan.
Hopefully the WA borders open again for detector swinging season and Grey Nomad tourist money.
Not held.

View attachment 136195

Funny you should post that.

I checked the CDA chart for the first time last night in some time.

You may be correct. It has new management now that Mr. McGurk is retiring.

gg

 

[galumay]

I reckon its back down to fair value now @frugal.rock. Probably wont do much until the H1 results are released. Even though my cost price is multiples lower, I would start to think about adding at anything less than $8

 

[finicky]

Think Codan is unlikely to ever get cheap? During the CCP Virus Feb/Mar 2020, CDA more than halved from 8.50 to $4. In 2013/14, Chinese counterfeiting and a Codan manager signing into the free wifi of a Beijing hotel room sent the stock from $4 to 50c. Half Yearly report came 18 Feb last year although there was a profit guidance 2 months earlier. No guidance this year.
Weekly chart - the volume is receding in the downtrend, the momentum is flattening, but otherwise no positives yet that I can see. Not calling it at all but if $9 doesn't hold a descent to $7 looks at least possible. I am waiting on a strong weekly signal at the least but probably won't be buying anyway.

Weekly

 

[peter2]

We've all seen prices that have fallen by 50%, fall another 50%. Has anyone noted the reason for the selling?
The daily price chart shows three huge down bars since June. Huge red down bars are like cockroaches, when you seen them you know there's plenty more hiding nearby.

 

[Garpal Gumnut]

We've all seen prices that have fallen by 50%, fall another 50%. Has anyone noted the reason for the selling?
The daily price chart shows three huge down bars since June. Huge red down bars are like cockroaches, when you seen them you know there's plenty more hiding nearby.

CEO retirement takes shine off Codan's golden run - InDaily

indaily.com.au

gg

 

[mullokintyre]

So, I suppose I should forget about the 20222 competition then.
Mick

 

[Garpal Gumnut]

So, I suppose I should forget about the 20222 competition then.
Mick

I don't reckon so.

I'm watching the chart. What goes down often comes back up. CDA has been good to me in the past.

gg

 

[galumay]

Think Codan is unlikely to ever get cheap? During the CCP Virus Feb/Mar 2020, CDA more than halved from 8.50 to $4. In 2013/14, Chinese counterfeiting and a Codan manager signing into the free wifi of a Beijing hotel room sent the stock from $4 to 50c. Half Yearly report came 18 Feb last year although there was a profit guidance 2 months earlier. No guidance this year.
Weekly chart - the volume is receding in the downtrend, the momentum is flattening, but otherwise no positives yet that I can see. Not calling it at all but if $9 doesn't hold a descent to $7 looks at least possible. I am waiting on a strong weekly signal at the least but probably won't be buying anyway.

Weekly
View attachment 136198

A lot of companies got cheap for a week after the Covid crash in Mar 2020, CDA was not alone there, you would have needed to be extremely agile to take advantage of that blip! Yes, it was certainly objectively cheap in 2013 when it went under $1, luckily I was buying then as I could see the value. After price getting so far ahead of value in the last 12 months its not easy to be objective about when it becomes a compelling buy due to discount to value. Its further complicated by the uncertainty of the effects on the business of Covid in the near term.

Unless it falls below $8 I would be reluctant to buy prior to the H1 results, but at that price its certainly looking like reasonable value with a decent margin of safety.

At the end of the day its a much better business than it was when I first bought into it, thats a testament to management execution and good capital allocation. My only regret is I did sell some of my holding to fund other business activity outside investing.

 

[mullokintyre]

Half yearly out.

Codan finished the first half strongly and our profit will be a record first half result. The businesses acquired at the end of last financial year, DTC and Zetron, both exceeded our first half profit expectations. The unaudited sales achieved in the first half of FY22 were $257 million, representing an increase of 32% over the prior corresponding period. The net profit after tax is expected to be around $50 million, an increase of 21%. Despite the global shortages of electronic components and the well-publicised global supply chain disruptions, we were able to successfully maintain supply to our customers and increase our inventory holdings. The conscious decision to invest in increased levels of inventory places the group in a strong position as we enter the second half of FY22. The Board will provide further detailed information regarding the first half FY22 performance of the business and the outlook for the second half FY22 on 17 February 2022.

Should give it a kick along.
Mick

 

[galumay]

Yep, if you didn't buy before today, you have missed this dip I suspect. That is some very strong numbers and impressive integration of the acquisitions already. Hold on to your seats!

 

[finicky]

Codan guiding a 21% increase in H1 profit, told you not to sell your shares yet. Comes on top of an amazing reversal overnight of the U.S indices (lucky)

"Dow stages unprecedented 1,214-point intraday reversal, and all 3 major indexes end higher in tumultuous Monday"

 

[galumay]

We are both going to pay a bit with opportunity cost here @finicky !!

Like you I was waiting for a larger discount to fair value.

Its interesting to think about, its probably a compelling buy for a high conviction holder like me, even up 16% today. Its completely de-risked for the time being, and the IV will have risen considerably with the increased earnings. It just really hard to do because of anchoring bias.