Skin in the game

[odds-on]

Long time lurker here. I am starting this thread hoping for some investment inspiration. To cut a long story short, I am looking for companies on the ASX that meet the following criteria:-

1. Small cap.
2. Track record of revenue, cash and profit.
3. Pays dividends
4. The members of the board own a substantial stake in the company. Skin in the game

To date I have found a few companies (COU, DWS, KAM), but I was wondering if anybody had any suggestions at companies worthy of research due to the substantial holding by members of the board. I do not mind if the company is having a bad year or has a lot of debt but if they have never turned a profit I am not interested.

Cheers

Oddson

 

[Tysonboss1]

Long time lurker here. I am starting this thread hoping for some investment inspiration. To cut a long story short, I am looking for companies on the ASX that meet the following criteria:-

1. Small cap.
2. Track record of revenue, cash and profit.
3. Pays dividends
4. The members of the board own a substantial stake in the company. Skin in the game

To date I have found a few companies (COU, DWS, KAM), but I was wondering if anybody had any suggestions at companies worthy of research due to the substantial holding by members of the board. I do not mind if the company is having a bad year or has a lot of debt but if they have never turned a profit I am not interested.

Cheers

Oddson

HNG
AHE - not overly small though

 

[kermit345]

pretty sure HSN fits the bill, and has steadily increased its SP over the last few years in line with increasing EPS.

high percentage of their revenue is recurring so profits are less likely to get hammered or have a surprise drop. the dividend yield is decent and they offer DRP so can easily build a larger position over time.

 

[nomore4s]

You might want to look at some sort of filter in regards to whether the board have actually spent their own money purchasing stock in the company or whether they only have issued stock for taking a position within the company.

I'm pretty sure sometimes when stock is issued as either options or shares there can be clauses limiting the sale of those shares/options for a period of time or even while they work for the company.

You may also want to do a bit of research about whether having stock in the company actually has a positive influence over the direction of the share price. IMO there are other more important factors to consider first but if you can find an edge go for it.

 

[skc]

You may also want to do a bit of research about whether having stock in the company actually has a positive influence over the direction of the share price. IMO there are other more important factors to consider first but if you can find an edge go for it.

There are also arguements why high ownership by manager may also be a negative. Since he's both a manager and shareholder he can manipulate the rewards between management / shareholder depending on the circumstances. Emotional issues may also come into play.

E.g. Announcing a share buyback because he needs to cash in some shares when cash of the company may be better deployed elsewhere.

E.g. Issuing more bonus shares for himself diluting everyone else.

E.g. Falls in love with his own company and fail to take a decision to cut loss making ventures...

 

[odds-on]

HNG
AHE - not overly small though

Thanks. I will have a look at these over the weekend.

pretty sure HSN fits the bill, and has steadily increased its SP over the last few years in line with increasing EPS.

high percentage of their revenue is recurring so profits are less likely to get hammered or have a surprise drop. the dividend yield is decent and they offer DRP so can easily build a larger position over time.

I did a quick 5 minute check on this company. Interesting reading. The founder Ken Hansen owns 92 million shares (59%) and is resigning as chairman. Adam Hansen (son?) is the CEO. This is worth some further research.

You might want to look at some sort of filter in regards to whether the board have actually spent their own money purchasing stock in the company or whether they only have issued stock for taking a position within the company.

I'm pretty sure sometimes when stock is issued as either options or shares there can be clauses limiting the sale of those shares/options for a period of time or even while they work for the company.

You may also want to do a bit of research about whether having stock in the company actually has a positive influence over the direction of the share price. IMO there are other more important factors to consider first but if you can find an edge go for it.

Points taken. There are numerous factors to take into account when purchasing a share of a business but the main ones for me are 1) profitability and 2) do i trust the strangers that run the business. The profitability of a business can easily be assessed by reviewing the previous annual reports and counting the cash. Trusting the strangers that run the business is bit more difficult to read from the company literature, however a large substantial holding in a company indicates to me that it is in the strangers best interest to look after the shareholders due to their personal wealth being tied up in the business.

There are also arguements why high ownership by manager may also be a negative. Since he's both a manager and shareholder he can manipulate the rewards between management / shareholder depending on the circumstances. Emotional issues may also come into play.

E.g. Announcing a share buyback because he needs to cash in some shares when cash of the company may be better deployed elsewhere.

E.g. Issuing more bonus shares for himself diluting everyone else.

E.g. Falls in love with his own company and fail to take a decision to cut loss making ventures...

Points taken.

Thanks for the responses. Cheers odds-on

 

[robusta]

A few in my portfolio and on watchlist:

MCE, VOC, MTU, ONT, FRI, ISS, AJJ, GNG, REH, KNH, SWL and NXT

Hope this helps.

 

[So_Cynical]

Long time lurker here. I am starting this thread hoping for some investment inspiration. To cut a long story short, I am looking for companies on the ASX that meet the following criteria:-

1. Small cap.
2. Track record of revenue, cash and profit.
3. Pays dividends
4. The members of the board own a substantial stake in the company. Skin in the game

To date I have found a few companies (COU, DWS, KAM), but I was wondering if anybody had any suggestions at companies worthy of research due to the substantial holding by members of the board. I do not mind if the company is having a bad year or has a lot of debt but if they have never turned a profit I am not interested.

Cheers

Oddson

There's a heap of em

From memory (cos i love these types of small caps)

LAU - Lindsay
SCC - Scott Corp
GLB - Globe*
CLV - Clover*
IMF - IMF Aust*
PFL - Patties*
SND - Saunders*
AMM - Amcom*

Disclosure i hold shares in stocks with a *

It pretty hard to actually find small and micro caps that don't have directors that are large if not substantial holders.