Don't go there else it will turn into another TA vs FA thread ..The eternal war...
Whatever make people money is best course of action
Its an example of why I am a fundamental investor, and why I dont hold GEM!
Sometimes different forms of analysis lead to the same conclusion.
Not intending to start an argument.
Trading halt.
Maybe got out of this one too soon.
I sold out of fear.
Traditionally they have bought centres at 4xEBIT. Now this acquisition is 5.7xEBIT...
I hope the perhaps irrational pricing of their stock by the market is not beginning to influence the price they pay for centres to ensure that the rapid growth and SP appreciation, that the market now expects, continues.
ABC learning's downfall was paying too much for centres and using too much debt.
I could be wrong but this acquisition could be the start of the former occuring for GEM.
this acquisition could be the start of the former occuring for GEM.
.......Any chance for the smaller fry or are they just to be diluted? :arsch:
The market prices GEM's EBIT at ~28x. So the acquisition of ~$40m in EBIT can increase market cap by $800-1B. Takeout the effect of increased shares on issue from the placement ($100m @ $4.60 according to AFR), this share can trade well north of $5 if current pricing multiple prevails.
SKC, just wondering how you calculated the 28x multiple?
The additional centres are looking at contributing ~$35m (FY15 is expected to be $39m based on purchase price), which would put GEM EBIT on at least ~$120m for FY14.
Shares are trading at $4.95 and I am guestimating that there will be about another 35m shares on issue after this latest CR? Which would take the total to 335m shares on issue..providing a market cap of $1658m.
With these figures the forward estimate I calculated (I used forward as earnings seem pretty visible) is ~14x.
It can be revealed that Scott, who was appointed to his position in 2010, was once the owner and director of a private company, Geosine, according to documents lodged with the Australian Securities and Investments Commission. Geosine was under Scott’s control until January 2013, at which point the shares in the company were transferred to a woman called Kimberley Yin.
Less than two months later in March 2013, Geosine was announced as a new substantial holder in G8 with just over 20 million shares that gave it control of 7.4 per cent of the company.
Hutson confirmed to the AFR Weekend that Geosine still owns 20 million shares.
Yin lives at the same Gold Coast address as Scott. According to property records, Yin owns the $3 million Sanctuary Cove house, set on the waterfront in a gated community. The address matches that which Scott lists in ASIC documents as his residential address.
When asked about the nature of Yin and Scott’s relationship, Hutson said: “They know each other, I’m aware of that. I don’t know that it extends any further than that.”
If I was still holding my $3.72 entry I'd contemplate pyramiding at $5.10.
This is a common idea that I dont really understand. Why are people happy to risk open profit but not realized profit? If you were still in the trade youd consider risking the open profit by pyramiding here. But since youve already closed the trade you no longer consider it worth the risk? In my view the risk/reward and probability of the trade have nothing to do with what youve made previously. So why does it affect your decision about it being a decent setup? Shouldnt each pyramid trade be able to stand alone as a setup worth taking? Not having a go, your idea is shared by other successful traders. Just interested in your view. To make this slightly on topic. GEM came up in my scans ages ago and I passed.
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