IFL - Insignia Financial

[notting]

I'd be very cautious about this stock.
The legal actions against it are potentially very large and the CEO finally ran away after a 10 year stint of arrogantly snubbing regulators.

 

[So_Cynical]

Where does this sit with you now? $5.47 and some headwinds, but a comeback on the cards?

Well at some point we will see a comeback or it goes to oblivion, we could revisit 4 something or bounce along a bit, if you like the stock its cheap again.

 

[JTLP]

Well at some point we will see a comeback or it goes to oblivion, we could revisit 4 something or bounce along a bit, if you like the stock its cheap again.

$4 something might be on the cards. Not looking pretty.

 

[sptrawler]

They seem to be trimming down, probably for the fight ahead, IOOF sold off its 70% share of Ord Minnett.
Booked an $83m profit, but the court case, over its superannuation arm, starts on Monday

https://www.smh.com.au/business/mar...al-with-management-group-20190627-p521ye.html

 

[HelloU]

my head said there was meant to be some news on the naughty corner by the end of fiscal? is there a date?

(licence or similar)

 

[notting]

Lawyers for former IOOF managing director Chris Kelaher say the prudential regulator's claims against him are "vague" and "unarticulated".

The Australian Prudential Regulation Authority is seeking orders to disqualify Mr Kelaher from acting as a superannuation trustee.

The regulator alleges he personally committed five breaches of the Superannuation Industry (Supervision) Act.

But in opening submissions filed in the Federal Court, Mr Kelaher's lawyers said APRA was conflating the actions of IOOF with their client.

"Despite the length of APRA’s pleading outline of opening submissions, its case against Mr Kelaher remains vague and unarticulated," they said.

Mr Kelaher, who quit in April, was in court for the first day of hearings on Monday.

IFLIOOF[/paste:font]$5.343.38%
1 year1 day
Jul 18Nov 18Mar 195.007.009.00
View IFL related articles
APRA is also seeking disqualification orders against IOOF chairman George Venardos, chief financial officer David Coulter, company secretary Paul Vine and general counsel Gary Riordan.

APRA also alleges that IOOF broke the law when it sought to fix its mistakes by compensating customers with more than $5 million in funds taken from the members own reserves instead of penalising itself for making the mistake.

Robert Dick SC, acting for APRA, said there was a pattern of law-breaking at IOOF.

He said IOOF's complex structure meant directors and employees had overlapping roles and responsibilities.

While this was not a breach in itself, the "commonalities" gave rise to a heightened risk of conflict.

And despite having many opportunities to do so, the defendants were unable or unwilling to "grapple with" their duties.

'Not a breach in itself' is all the court will hear of all that, so far!

 

[sptrawler]

Reasonable set of numbers from IOOF, considering.
I do tentatively hold.

https://www.asx.com.au/asxpdf/20190725/pdf/446w1x58gx1vjb.pdf

Also the outcome of the APRA court case, against IOOF directors, doesn't seem to be a foregone conclusion.

https://www.afr.com/chanticleer/ioof-claims-apra-shifted-court-goalposts-20190720-p5295c

From the article:
While it is always difficult to speculate on the outcome of such a complex case, it seems clear that APRA’s first big legal case in a generation is no lay down misere.

If APRA was to lose, there will be inevitable questions for Byres about whether APRA was too eager to get legal action going after being criticised so heavily by the royal commission for an apparent lack of toughness.

At rough estimates the legal bills run up by all sides could top $20 million. If the worst happened, and APRA was ordered to pay the respondents’ costs, then Byres' budgetary woes would mount.

 

[sptrawler]

IOOF to give its end of year results on Monday- 26 August.

Also they seem to be actively sorting the APRA licence requirements.
https://www.asx.com.au/asxpdf/20190820/pdf/447ndp1fpl7jd0.pdf

From the article:

APRA licence conditions An independent reviewer engaged by IOOF to review the ongoing status and quality of compliance with the APRA licence conditions identified 145 actionable items within the overarching initiatives which were required to be implemented for the quarter to 30 June 2019. A previous update on progress was provided to the market in April 2019. The independent reviewer has finalised their report for the quarter to 30 June 2019 which notes: • All 145 actionable items required for validation for the quarter to 30 June 2019 have been completed. • The four actionable items relating to the implementation of the Office of the Superannuation Trustee which were outstanding for the quarter ended 31 March 2019, have been completed .

Hopefully this will see them out of the woods.
I do hold IFL.

 

[Faramir]

IOOF has been on my watchlist since it's fall from grace last Dec 2018. I am not sure why I haven't put the time into investigating/studying IFL. Maybe I was dreaming of being a contrarian with IFL. I must admit I don't understand this stock. I really at least try to understand why it got got into trouble in the first place. (Re: Banking Royal Commission might give me a hint or am I way off track????) This company seems too complex for me. (I have poor concentration abilities, I need simple businesses to look at.)

No wonder I sit on the sidelines and just various announcements. Good luck @sptrawler I hope next Monday will be a good day for you.

 

[sptrawler]

IOOF has been on my watchlist since it's fall from grace last Dec 2018. I am not sure why I haven't put the time into investigating/studying IFL. Maybe I was dreaming of being a contrarian with IFL. I must admit I don't understand this stock. I really at least try to understand why it got got into trouble in the first place. (Re: Banking Royal Commission might give me a hint or am I way off track????) This company seems too complex for me. (I have poor concentration abilities, I need simple businesses to look at.)

No wonder I sit on the sidelines and just various announcements. Good luck @sptrawler I hope next Monday will be a good day for you.

Yes Farimir, as with all these investment style companies, there seems to be a lot of smoke and mirrors, I have had them for a long time back when they swallowed Australian Wealth Management.
They expanded and grew very quickly, who knows maybe too quickly. Also they seemed to always be stepping on APRA's toes.
Anyway I'm just hoping they come through this RC fallout, if they do they will climb quickly IMO, if they don't well I've probably done my dough.

As you say Monday will tell a lot, inflows and outflows of funds under management, will show which way sentiment is going.

 

[HelloU]

agree SP that report will be the line in the sand .......... so reluctant to say out loud how divs and stuff seem to come back to the share price in these sorts of situations (rather than a previously held div level that lifts the sp back up - previous like for like was 27cents). Dunno ......

 

[sptrawler]

Well a good set of numbers for IOOF, if you take out the provisioning for dodgy behaviour.
https://www.asx.com.au/asxpdf/20190826/pdf/447trffvb2kvqd.pdf

From the article:
Underlying NPAT up 3.4% to $198m
Statutory profit down 67% after provisioning.
Total funds under management up 18.7% to $149.5 billion.
Fully franked dividend 19cents.
I do hold.

 

[notting]

I'd be very cautious about this stock.
The legal actions against it are potentially very large and the CEO finally ran away after a 10 year stint of arrogantly snubbing regulators.

Was trading at 5.64 when I made the above observation.
Is now at 4.80 with a large cut to it's dividend. The dividend being a reason why many Muppets would still hold it. ( I like Muppets they are basically innocent share holders that often get taken along for unexpected rides!)

The most important announcement amidst it's reporting is this -
It increased it customer compensation costs from guidance of just $10 million in December last year to $235 million today.
Whilst operations have been good in the current low return and wild environment, the operational performance numbers are largely due to banks tossing away their wealth management funds and companies like IFL being able to lap them up at good prices, it's important to note the culture which IOOF claim to be changing whilst offering up guidance like the above!!
Let's face it, it's a wealth manager, guidance is their thing!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

IFl's record on treating the customers is one of the most illegal out of all the transgressions of wealth managers and the banks as found by the RC. However they still managed to perform, unlike AMP.

Those in the know suspect the compensation number could end up in the Billions and how could you trust that it won't when 10 turns into 235 from one reporting season to another. What will the next guidance be you might want to ask!!?

 

[sptrawler]

Was trading at 5.64 when I made the above observation.
Is now at 4.80 with a large cut to it's dividend. The dividend being a reason why many Muppets would still hold it. ( I like Muppets they are basically innocent share holders that often get taken along for unexpected rides!)

I resemble that remark.
I suppose you could call it a poor dividend, but I guess it depends what you compare it to?
A full year dividend of 44.5 cents, pretty close to 10% fully franked, compares pretty well with most others.
Could go pear shaped, but I guess it depends when you bought them and what you paid.

 

[notting]

The risk is actually around 650m in compensation for IOOF . The billions was collectively along with AMP.
They could manage that over time but it could be pretty destructive to dividends for the next 6 or so years and if the markets go hay wire because fund managers stock valuations go absolutely nuts in these climates and the shi7 hasn't even hit the fan yet. Soo much potential volatility. You may be able to pick it up under a dollar in the next 18 months.
There has not been much reputational damage in the ordinary world yet, but the news papers will take care of that when all the fines start mounting up and execs start getting jail sentences (hardly a good marketing look) that could also effect inflows dramatically not to mention outflows à la AMP!!

 

[sptrawler]

The risk is actually around 650m in compensation for IOOF . The billions was collectively along with AMP.
They could manage that over time but it could be pretty destructive to dividends for the next 6 or so years and if the markets go hay wire because fund managers stock valuations go absolutely nuts in these climates and the shi7 hasn't even hit the fan yet. Soo much potential volatility. You may be able to pick it up under a dollar in the next 18 months.
There has not been much reputational damage in the ordinary world yet, but the news papers will take care of that when all the fines start mounting up and execs start getting jail sentences (hardly a good marketing look) that could also effect inflows dramatically not to mention outflows à la AMP!!

That is all very true, but faint heart and all that, it wasn't long ago that BHP were $12, because a dam in South America let go and 19 people were killed.
WBC agreed to a $35m fine to ASIC, but they were taken to court anyway, then WBC was cleared and awarded costs.
Not saying it will end well for IFl, but it isn't a foregone conclusion it will be as you paint it either, that is the nature of the game you never make a killing from a sure thing in the share market. IMO
Without risk, the reward is never very startling, usually mediocre at best.
IOOF have provisioned for over $182m after independent assessment, it all depends on what the courts decide is misconduct, as opposed to poor choice by investors I suppose.
Just my opinion.

 

[sptrawler]

More complete report on IFL performance and situation. I do hold IFL.

https://www.perthnow.com.au/business/markets/ioof-sets-aside-235m-after-advice-review-ng-s-1963559

 

[HelloU]

agree SP that report will be the line in the sand .......... so reluctant to say out loud how divs and stuff seem to come back to the share price in these sorts of situations (rather than a previously held div level that lifts the sp back up - previous like for like was 27cents). Dunno ......

so will say it now out loud ....... (divs and stuff seem to come back to the share price in these sorts of situations) ...... and SP now seems a little too high for now on the historical return/risk scenario at 12cents ..........

anyway, still dunno.

 

[sptrawler]

so will say it now out loud ....... (divs and stuff seem to come back to the share price in these sorts of situations) ...... and SP now seems a little too high for now on the historical return/risk scenario at 12cents ..........

anyway, still dunno.

Oh well another for the bottom draw lol.
I still feel there is a better than even chance that IFL will come through the RC fallout o.k, they are still attracting inflows, which is a lot better than can be said about AMP.

 

[HelloU]

i see the in as well, and the new name to make it work ..... and have 2 thoughts (cos I have no idea).
1. if the money tucked away does get used then $5 will look expensive, and
2. if the money tucked away does not get used then $5 will look cheap.

that is all i have got - and does not help at all.