Wysiwyg
Everyone wants money
- Joined
- 8 August 2006
- Posts
- 8,428
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- 284
In keeping with integrity, my great quality, I was forced to exit at a loss from SIG this morning. If they don't go, then it's bye bye bro.
Suing your largest customer then not turning up to renew the contract. Woops. 37% smack down as the contract goes elsewhere. Maybe they should sell to kogan and go online.
What are they targeting? I'd be interested to know because they've been such a low margin, wc intensive business for years (a few years back a shareholder could easily have wondered if the business was being run to enrich pharmacists!). I'd be interested if they could start getting paid sooner, 75 days is a bit rich.
API, Clifford Hallum, SIP they all seem to suffer the same problem, they're getting spitroasted ('scuse the French) by their suppliers and their customers.
Very happy I overcame any biases at play and held on when they dropped. I came close to selling as even at sub-80c I was well in profit.
This is my post from 2013. It's interesting to work backwards from today's announcement. Three hundred million dollars in cash released from WC by the loss of this contract and only a $25m-$35m hit to EBIT. Woeful economics in this industry.
On the other hand, $500m mc on a business that will *hopefully* be receiving $300m in cash in the next twelve or so months and be left with a business generating EBIT of ~$45m.
The boss, Mark Hooper, looked surprisingly happy and even a little smug today. Perhaps he knows that EBOS who picked up the contract are going to be destroyed by it! They haven't given guidance only said it's a 1B contract and should make good profits! Hardly encouraging news.
SIG have a fair bit of experience in what can go wrong!!
I really don't want them go give all the money back to shareholders. I hope that do something much smarter.
The boss, Mark Hooper, looked surprisingly happy and even a little smug today.
And the market said "yeah, sure, who are you kidding" and smashed it 40%.Conclusion
Mr Hooper concluded, “The decision on the MC/CW contract creates an important pivot point for Sigma. It may be a step back in our short term financial results, but it improves the risk profile of our earnings and also releases significant capacity to better leverage our infrastructure and resources in areas that can provide long term sustainable growth."
From his statement
And the market said "yeah, sure, who are you kidding" and smashed it 40%.
It would not have been a pleasant task for the likes of chief executive Mark Hooper, chairman Brian Jamieson and well-known directors like Kate Spargo who were buying shares as part of the employee share plan just days before the stock price nearly halved.
The directors collectively acquired about $50,000 worth of shares between June 28 and June 29 at around 80c each with Hooper and Jamieson accounting for the big share purchases.
The stock started the new financial year on Monday July 2 by nearly halving in price to a low of 44c on the news that Chemist Warehouse will be dumping Sigma as a supplier next year in favour of Kiwi group, EBOS.
There's nothing much you can do from this point besides giving other investors some faith in a stock that will need more than a few vitamin pills to rediscover its vigour.
Within days Hooper led the charge, picking up one million shares at 46.5c each.
Jamieson also clocked in for 50,000 shares at 48c. And we don't know if he was trying to send a message about his changed financial circumstances by acquiring the shares via his company Timaru Close Pty Ltd - not Brians Maserati Pty Ltd which was used to acquire the highly prices stock a week earlier.
Mirvac Group director Christine Bartlett also got in on the act, picking up 10,000 shares.
Spargo, and former AFL finance boss Ray Gunston have yet to buy up stock at these bargain prices, but Gunston isn't shy of a challenge - he took on the CEO job at AFL club Essendon as the supplements scandal washed through.
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