SEQ - Sequoia Financial Group

[System]

On December 9th, 2015, MDS Financial Group Limited (MWS) changed its name and ASX code to Sequoia Financial Group Limited (SEQ).

http://www.sequoia.com.au

 

[rcm617]

Financial services group that seems to be growing nicely. Market cap of only about $34 million and have recently upgraded their full year forecast to top or slightly higher than their forecast range of $1.7m to $2.5m. Cash and equivalents has also grown from $12m to $16m.
There has been a large seller who seems to have been taken out today in after market trade, so hopefully it will have a bit of a run from here.

 

[rcm617]

Sargon Capital have taken a 12% stake in SEQ, a fairly large initial bite. Earlier this year they acquired Madison Financial Group.

 

[rcm617]

Bit of a shakeout of management over the year and a much better second half result after a poor first half. Despite this dropped after the results announcement. Has improved a bit after announcing a buy back. My pick for the September tipping competition.

 

[Miner]

Could you comment if the director's purchase deemed as an insider /conflict of interest ?
See screen dump and ASX announcement
https://www.asx.com.au/asxpdf/20190902/pdf/4484s8pl7tgs32.pdf
One could argue that Mr Sweeny bought after the result announcement but this increase today is significant. The surname is interesting for me as well .
DNH

 

[rcm617]

Could you comment if the director's purchase deemed as an insider /conflict of interest ?
See screen dump and ASX announcement
https://www.asx.com.au/asxpdf/20190902/pdf/4484s8pl7tgs32.pdf
One could argue that Mr Sweeny bought after the result announcement but this increase today is significant. The surname is interesting for me as well .
DNH
View attachment 97235

I would think since his buying is three days after the announcement of a buy back and nine days after the FY results he would be in the clear unless they have another announcement coming out. He probably just thought it was to cheap after the FY results as I did.

 

[Miner]

I would think since his buying is three days after the announcement of a buy back and nine days after the FY results he would be in the clear unless they have another announcement coming out. He probably just thought it was to cheap after the FY results as I did.

Yeah.
I guess if there an announcement comes soon, then we know

 

[kenny]

I'm unclear what the differentiation is in this business that's growing through acquisition of fellow financial advisory groups. They had a recent cap raise at 33c, have a net cash position of $17M on a $27M mkt cap and burning cash supporting certain business units like the Morrisons practice.

I'm curious. What's the appeal?

 

[rcm617]

I'm unclear what the differentiation is in this business that's growing through acquisition of fellow financial advisory groups. They had a recent cap raise at 33c, have a net cash position of $17M on a $27M mkt cap and burning cash supporting certain business units like the Morrisons practice.

I'm curious. What's the appeal?

Appeal to me is purely as a turn around proposition.
Yes they burnt $2.5m cash in the first half, but were slightly cashflow positive for the FY, so the second half was cashflow positive to the tune of about $2.7m.
According to their presentation they only turned cashflow positive since April, and they are pretty positive about this FY.
Of course they may be overly optimistic in their outlook, however with the $17m cash they are holding it seems cheap to me.

 

[barney]

Yes they burnt $2.5m cash in the first half, but were slightly cashflow positive for the FY, so the second half was cashflow positive to the tune of about $2.7m. According to their presentation they only turned cashflow positive since April, and they are pretty positive about this FY. Of course they may be overly optimistic in their outlook, however with the $17m cash they are holding it seems cheap to me.

So many Stocks and Posts to read I miss 90% of them … Had a 2 minute look at this … first impression, they are turning over a squillion dollars and making a very small percentage of that in profit … So my first thoughts were negative …

Then I noticed … they have paid off debt from $7.4 million to $1.4 million ….Total Shareholder equity is calculated at 26 cents per share (current SP 23 cents) … and they have cash of around $18 million with a market cap of $27 million if Commsec is up to date.

If they are projecting an improvement in business revenue, then it looks undervalued to the naked eye

 

[rcm617]

Just have to deliver on their promises. If they can keep up the positive cashflow of the last three months of FY 19 over the whole of FY20, they would deliver $10m positive cashflow. That would make their market cap very cheap. A lot of assumptions I know, but I thought it worthwhile a punt.

 

[barney]

Nasty drop reversal today. The Volume has been too low to get a true reading on this but given the illiquidity it is a candidate to be pushed around a bit. Todays drop was basically one modest seller wanting out so a quick turn around wont surprise.

 

[kenny]

Is it more interesting with the exit by a parcel of some $16K in value? Makes me wonder if there would be a liquidity issue to transact this stock if such a trade has an impact. For context, total volume today was $19K value or ~100k shares in volume. The last 12 month average is about 76K shares volume.

One uncertainty is the time and ability to integrate the newly acquired businesses and extract value and synergies from them whilst provisioning for issues.

 

[Smurf1976]

Is it more interesting with the exit by a parcel of some $16K in value? Makes me wonder if there would be a liquidity issue to transact this stock if such a trade has an impact.

I think the real issue is that this particular seller was in a hurry.

Whether that's because they needed the cash for personal reasons, to invest in some perceived better opportunity, because they think SEQ is a dud, were a forced seller (deceased estate etc) or are simply inexperienced and didn't comprehend quite what they were doing we'll never know.

If they'd been more patient I expect they could have got a better price.

 

[rcm617]

I think the real issue is that this particular seller was in a hurry.

Whether that's because they needed the cash for personal reasons, to invest in some perceived better opportunity, because they think SEQ is a dud, were a forced seller (deceased estate etc) or are simply inexperienced and didn't comprehend quite what they were doing we'll never know.

If they'd been more patient I expect they could have got a better price.

They announced a buy back which will be starting Tuesday so if he had waited till then he may have got a better price.
Hopefully they don't overpay for the buyback so this retrace may be good for the company in the long run. I'm a long term investor, so more interested in what the price is in a years time.

 

[Smurf1976]

They announced a buy back which will be starting Tuesday so if he had waited till then he may have got a better price.

Depending on the individual, it's possible they were completely unaware of this when they sold.

Not saying that's the case but it's a possibility given that it comes down to the actions of one individual with a transaction that wasn't huge.

 

[rcm617]

Two months on and still no buy back. However last week they announced that their core capital requirement for Morrison Securities has been reduced from $14m to $7.5m. Since then the share price has slowly been rising, with an unusually large turnover on Friday. My pick for December.

 

[rcm617]

Picking this again for the January stock competition and also my top pick for the yearly comp.
From the announcements looks like the persistent seller has been Scott Beeton, the CEO and MD who retired back in February. With his announced sales and sales since that announcement, he would still have about 3 million to sell, so depending on whether he wants to get rid of them all, price may still stay low for a little while. There have been a few large buyers appearing yesterday and today, so could get through the rest fairly quickly.

 

[rcm617]

Looks like another possible overhang developed at the end of last month with major shareholder Sargon going into administration. May not be as bad as it looks as the shares are held in a subsidiary company which are not affected by the administration, however it depressed the shareprice the last couple of days. Hoping results at the end of this month give it a lift.

 

[rcm617]

No interest here in this company, but has doubled in price since the last post here. Trading halt yesterday to announce a trading upgrade this morning with EBITDA estimate for FY21 of $8.5 to $9 million, just short of 100% growth from FY20.