SGH - Slater and Gordon

[galumay]

Any predictions where the SP is heading??
-- looks like down!!
-- reasons ???

My insight tells me the price will either go down, up or stay the same.

Reasons it has fallen probably include but are not limited to, a significant downturn in the market, so its just got dragged down with the general sentitment, some remaining concerns about the long term impact on the business due to the acquisition, and profit takers on the CR.

 

[So_Cynical]

The entitlement to new shares at $6.37 on a 2 for 3 basis was looking attractive 10 days ago!
-- closes today

SGH $6.600 $-0.270 -3.93% @ Mon 20 Apr 2015 11:46 AM Sydney time

I didn't take up the offer or sell down my holding, and now my windfall profit from the retail shortfall bookbuild is disappearing faster than a shonky lawyer with a suitcase full of money.

 

[galumay]

I didn't take up the offer or sell down my holding, and now my windfall profit from the retail shortfall bookbuild is disappearing faster than a shonky lawyer with a suitcase full of money.

GOLD! Maybe we should employ some lawyers to look into these lawyers?

 

[So_Cynical]

Retail book build return for non participant share holders = 1c per share, i feel like a complete idiot turns out the absolute worst strategy for dealing with the rights issue was to do nothing...doing anything else would of got me a significantly better return.

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01618641

 

[galumay]

i feel like a complete idiot

I dont think you should be too hard on yourself! This one was hard to pick, I took up my entitlement and didnt sell any, I am very surprised how much the price has fallen. Not sure that my decision is much better than yours! I could have sold out and done better too.

 

[piggybank]

Don't be too hard on yourselves lads. Most of us here have been down this road at least once. We can all look back with hindsight (except those who died without e.g. car accident) and wish we had done better but it's partly that (the unknown) that makes trading so interesting.

 

[galumay]

Don't be too hard on yourselves lads.

No risk of that, its not like we are losing money, I am still well in front with SGH, its more a case of considering whether a different course of action might have been better, and i always like to think about whether it was a poor decision on my part of something outside my control and understanding.

 

[skc]

Retail book build return for non participant share holders = 1c per share, i feel like a complete idiot turns out the absolute worst strategy for dealing with the rights issue was to do nothing...doing anything else would of got me a significantly better return.

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01618641

IMO it makes sense for a investor to have a CFD account to deal with situations like this (and many others).

You could short your entitlement amount and lock in the profits, then square them off when the news shares are issued.

It's also potentially useful for hedging overall market crash...

 

[skc]

I am more concern about the rest of the stuff. QPP has still not reported FY14 figures (Dec year end). It's saying that, because re-statement will be required, it could be June before the audited accounts are available. SGH is going off internal management accounts and adjusting it to suit its own style... but was it really enough?

As far as I can see, ignoring the adjustments related to NIHL cases, gross profit was adjusted down 18m to 99m (15.4%) while EBITDA was adjusted down 18m to 70m (21%). That is actually quite a high endorsement of the "core" business. Given the alleged management history of QPP, are these adjustments enough?

It's blowing up in their face a bit now.

http://www.afr.com/business/banking...spended-amid-accounting-probe-20150625-ghwyj6

 

[skyQuake]

It's blowing up in their face a bit now.

http://www.afr.com/business/banking...spended-amid-accounting-probe-20150625-ghwyj6

Poor Quindell, first the Gotham City Research report, now an actual probe. Cant a respectable ambulance chaser firm catch a break thesedays?

 

[skc]

Poor Quindell, first the Gotham City Research report, now an actual probe. Cant a respectable ambulance chaser firm catch a break thesedays?

Lol. I think there was quite a few dodgy related party transactions that will be looked at.

SGH has bought a $1B lemon... From $8 high down to $5 today, pretty much exactly $1B in market cap lost.

Great fun trading this today.

 

[notting]

It's blowing up in their face a bit now.

Perhaps they should diversify to become a conglomerate and buy Clydesdale off NAB.

 

[ROE]

"Once in a generation opportunity" comment kept me away

In the stock market corporate take over you cant buy anything at a bargain, at best you pay a fair price, at worse you bought a dud

 

[McLovin]

SGH has bought a $1B lemon...

Bit early to say, isn't it? I think we need to keep things in perspective. SGH has a large presence in the UK and I do find it difficult to imagine that they have had the wool pulled over their eyes.

It seems a bit overdone to me, given the information we have to hand.

I'm not offering an opinion either way, just that the market seems to have made up its mind. And really, we, and SGH, already knew that Quindell had accounting problems.

 

[galumay]

Typical over reaction by the market, happy to accumulate at this sort of discount to value. Happily it never fails to amaze me how people react to news without even reading the detail.

 

[ROE]

Typical over reaction by the market, happy to accumulate at this sort of discount to value. Happily it never fails to amaze me how people react to news without even reading the detail.

From my reading it may not be a typical market reaction but a bunch of smart hedge fund guys short Quindell
long before SGH bought it, they know Quindell books very well and now they targeting SGH

they are not typical punter, they have their own number crunching guys and they came to a diff conclusion to SGH.

Best to wait and see what play out .... another 6 months to a year will tell a clearer picture if SGH bought a dud but then again it may not but you cant really be sure either way.

 

[notting]

Typical over reaction by the market, happy to accumulate at this sort of discount to value. Happily it never fails to amaze me how people react to news without even reading the detail.

Your happilyness will be affirmed if it lives up to the 3 times touted 30% earnings accretive tag given to it by SGH board. As apposed to 30% earnings creative Quindell book cooking.
Looked like a blow off today and was worth a punt.

 

[skc]

Bit early to say, isn't it? I think we need to keep things in perspective. SGH has a large presence in the UK and I do find it difficult to imagine that they have had the wool pulled over their eyes.

It seems a bit overdone to me, given the information we have to hand.

I'm not offering an opinion either way, just that the market seems to have made up its mind. And really, we, and SGH, already knew that Quindell had accounting problems.

No you wouldn't think so... but strange things happen esp when management egos are involved. I also wouldn't discount the possibility of fradulent seller behaviour.

I love how the QPP announcement said "changes to Group's accounting policies are largely of historical interest only". They might as well have said "because SGH was silly enough to buy it from us".

Typical over reaction by the market, happy to accumulate at this sort of discount to value. Happily it never fails to amaze me how people react to news without even reading the detail.

I am unsure anyone has accurate information to assess the value. The only thing you can assert/assume at this stage is the SGH has done the due diligence properly. You couldn't have done the due diligence properly yourself on QPP because all the financial reports in the past are rubbish. The Gotham City report and the Alphaville blog contained some pretty good information on why ALL parts of QPP is questionable, not just the NHIL cases.

Until the findings come out, SGH will be underpressure. SGH's own earnings quality will be under "contagion" suspicion as well. SGH is still a $1.8B company and the hedge funds are so happy that they get a second go at shorting QPP.

I am more concern about the rest of the stuff. QPP has still not reported FY14 figures (Dec year end). It's saying that, because re-statement will be required, it could be June before the audited accounts are available. SGH is going off internal management accounts and adjusting it to suit its own style... but was it really enough?

As far as I can see, ignoring the adjustments related to NIHL cases, gross profit was adjusted down 18m to 99m (15.4%) while EBITDA was adjusted down 18m to 70m (21%). That is actually quite a high endorsement of the "core" business. Given the alleged management history of QPP, are these adjustments enough?

I actually forgot in this analysis, that while SGH didn't pay anything to acquire the NHIL case portfolio, it is still liable to pay the costs involved to squeeze cash out of them. It could be a cash positive or a cash drain, depending on what are actually in those 50,000 cases.

 

[So_Cynical]

I'm inclined to think that the Quindell purchase is a bad deal, unlike all the other acquisitions this one is big enough to really hurt SGH, well hurt the shareholders because they are the ones putting up the bulk of the money, its a risky move simply due to the size.

Its been quite a while since a major Aussie company made a massive blunder buying something foreign so i reckon we are overdue, its like the roll up expansion is more important than the safety of shareholder funds. feels like SGH is taking us to a crap table hoping to win big with our money.

I hate how i know something is fishy yet somehow i manage not to make any money out of it, i have good gut feel yet so often don't act on it...at least i didn't participate in the cap raising..

 

[lemongrass1]

Seems like a storm in a tea cup, much like Sirtex earlier this year.

I bought some shares in SGH today.