How about investing in the good ol U S of A?
Use the strong AUD + market madness to purchase shares in some of the US global corporations like McDonalds.
Check out this website for ideas www.gurufocus.com.
TGA - Thorn Group
- Thread starter McCoy Pauley
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How about investing in the good ol U S of A?
Use the strong AUD + market madness to purchase shares in some of the US global corporations like McDonalds.
Check out this website for ideas www.gurufocus.com.
I reckon TGA should merge with CCP both similar market cap
Let CCP expertise run NCML and TGA do their usually rental and finance lease stuff
CCP is the expert in this field with their awesome customs built IT system to maximize collection.
No one can beat CCP in this field unless they can come up with similar system to CCP
which they may not have the know how .... between the two of them they should generate enough
cash flow for RentDriveBuy
Let CCP expertise run NCML and TGA do their usually rental and finance lease stuff
CCP is the expert in this field with their awesome customs built IT system to maximize collection.
No one can beat CCP in this field unless they can come up with similar system to CCP
which they may not have the know how .... between the two of them they should generate enough
cash flow for RentDriveBuy
The government will never do away with the FBT: it would merely embitter a bunch of lowly paid civil servants who the government always needs on its side. In any event, the net revenue gain would be negligible relative to the political cost of doing away with it. MMS is a great stock - it was a 3 bagger for me - but you're right, it's no longer cheap.
Exactly. But look what happened to the share price last time there was a rumour. It's a damn shame I wasn't interested in stocks at that point in time.
skc
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Re: MMS. That wasn't a rumour. It was a tax review and their main business was on the agenda to be reviewed. It turned out OK but that wasn't a given at the time. The share price fell because there were real and significant increase in earning risks. Sometimes punts work out but it doesn't mean you were right to take them. If there's another review in 2 years time and you use the same logic - it could easily come back and bite you.
The best reward/risk was gained by buying after the review was cleared - and you could still get in at a good price with very little risk.
Back to TGA:
I sense the general thought is that, while the quality of earning has somewhat diminished, it is still more than sufficient to justify the relatively low current share price. It may take a few more days yet for the TGA to find the new equilibrium level, particularly given the overall market sentiment. VOC for example took about a week after its results to start flying (and leaving me behind thanks to the 1-week delayed reaction).
I am trying to simplify my life, and one level of complexity that TGA does not have is exchange rates. Obviously, investing in the USA is also a currency play.
Part of my investment strategy is to invest in things I and the SMSF co-trustee understand, which makes Australian firms more obvious candidates. When I lose my marbles, I want the co-trustee to be able to understand the investments, and perhaps keep them running reasonably well with minimal effort. The obvious starting point is to reduce debts that I have incurred to buy shares held personally, and I'll start doing that in July.
With interest rates very low in the USA, share prices relative their earnings are high, and when it comes to dividends, USA investors seem happy without them, whereas I like firms that pay about 50% in dividends. As a retired person living off my shares, I rather get dividends than be regularly selling shares to get cash. Never getting dividends is like a giant Ponzi scheme (Sorry Warren!).
Most Australian dividend-paying stocks also offer franking credits, so a 100% franking at a corporate tax rate of 30% means one can divide the dividend by .7 to get the real value of the dividend (4.9% yield thus becomes 7% yield). At 35% tax, the USA government steals more investors' money than our government.
The best TGA-like stock in the rent-to-buy game in the USA is probably Aaron's, and when I last looked, it had metrics that did not eclipse TGA, and yet it was priced at a PER of about 18 on YE 31/12/2011 EPS. I have just looked again, and today it is on 15.2 PER of 31/12/2011. Its EPS growth for 2012 is very bullish, so forward PERs may not be realised. The expected dividend yield is only 2%. See http://quicktake.morningstar.com/stocknet/secdocuments.aspx?symbol=aan
When I have on rare occasions thought a US-based company should do well on basic themes, rather than actually examining the metrics and the then ruling SPs, my top three picks would have been IBM, Oracle and Caterpillar, and from what I have since read, I probably would have done OK had I had invested on instinct. I used to work in software procurement, so I was aware of the kind of money that Oracle and IBM make at near-zero marginal cost, and I knew that the trouble in which HP was wallowing sufficed to keep a wise investor away.
I have exposure to foreign investors via various Platinum funds, but they are not shooting the lights out, and I have sold at a large loss the funds that performed even worse. Exposure to shares like CSL, QBE and others include an exposure to the USA, plus other economies.
Anyhow, within the thousands of ASX-listed stock, not many compare to TGA as a value investment. That is of course from my perspective, but I doubt there are more than a handful from others' perspective, provided they too are medium-to-long-term investors.
I do not want this thread to drift away from TGA. There is a thread, "Companies like CCV and TGA" that looked at stocks like TGA, CCV, CCP – stocks in the business of providing sub-prime credit. Is there a thread that focuses on on a broader range of good investor-grade ASX-listed stocks, because that is where a useful exchange could take place? I looked at and liked a few of these (CCV and CCP), but I do not want to have all my investments in a common line of business, and yes ROE, a merger of TGA and CCP would be a marriage made in heaven.
I was aware of the Henry tax review. There is always a reason not to buy. You assess the likelihood of a risk occurring and act accordingly. The possibility that the FBT might have been removed only ever arose because of the scope given to Ken Henry to review the entire tax system. There's a measurable distance in investment terms between what is probable and what is merely possible: it's called opportunity.
Seeing that looking for TGA-like performers has allowed us to drift on to MMS, I'll add my bit - more an attempt at humour than words of wisdom.
I like stocks whose business carries social stigma. Adam Smith in his “An Inquiry into the Nature and Causes of the Wealth of Nations ” mentions a few times that odious professions like butchering beasts or hanging criminals rewarded those in it in a way that was disproportionate to the skills and effort required, whereas the genteel professions like being a clergyman were poorly reward relative to the education and effort required. Hounding debtors is obviously not a genteel profession, and hence my interest in TGA, CCV and CCP, plus a few others. Burials and cremations is an off-putting business, and hence I would invest in Invocare (IVC) if its PER were lower. Prostitution would be a non-U theme to consider, except there are no such service mongers listed on the ASX.
However, getting back to MMS. Recent words from Charlie Munger of Berkshire Hathaway made me think of compensation consultants. The words (paraphrased) are “Berkshire Hathaway don’t have a standard formula. They don’t have a big HR department. Every arrangement between executives is different. In past years Warren Buffet has made the comment that prostitution would be a step up for most compensation consultants.”
Compensation consultancy is a wonderful business. All you need is a suit, silver hair, a sage demeanour and the cheek of a whiteman. You approach executives and for an fat fee you promise to deliver a report that suggests a generous, well supported remuneration package for them, which they can put to the board (in effect themselves) with hands as clean as those of Pontius Pilate. By the time one has written a few such reports, one can sausage machine the work using templates well peppered with consultancy-speak – words like “in our considered opinion”, “fair”, “best practice”, “aligned to shareholder interest”, “attract and hold the best executives” et cetera. If you do many at the same time, you can drag out the completion time, and hence make it seem as though the expended time was considerable. Like IVC, I would buy MMS shares if the PER were lower.
Back to TGA - it will take time for analysts to update their published views. I am fairly confident that now that there is a 5-year growth story, short-listing criteria that include five years of growth will now list TGA for consideration. I vaguely remember Howard Coleman saying years ago that Teaminvest would not consider a candidate stock that did not have five years of history (five years of growth requires six years of history). Howard Coleman - mmmmm - he wears a suit, has silver hair, has a sage demeanour and the cheek of a whiteman - he could moonlight as a compensation consultant!
I like stocks whose business carries social stigma. Adam Smith in his “An Inquiry into the Nature and Causes of the Wealth of Nations ” mentions a few times that odious professions like butchering beasts or hanging criminals rewarded those in it in a way that was disproportionate to the skills and effort required, whereas the genteel professions like being a clergyman were poorly reward relative to the education and effort required. Hounding debtors is obviously not a genteel profession, and hence my interest in TGA, CCV and CCP, plus a few others. Burials and cremations is an off-putting business, and hence I would invest in Invocare (IVC) if its PER were lower. Prostitution would be a non-U theme to consider, except there are no such service mongers listed on the ASX.
However, getting back to MMS. Recent words from Charlie Munger of Berkshire Hathaway made me think of compensation consultants. The words (paraphrased) are “Berkshire Hathaway don’t have a standard formula. They don’t have a big HR department. Every arrangement between executives is different. In past years Warren Buffet has made the comment that prostitution would be a step up for most compensation consultants.”
Compensation consultancy is a wonderful business. All you need is a suit, silver hair, a sage demeanour and the cheek of a whiteman. You approach executives and for an fat fee you promise to deliver a report that suggests a generous, well supported remuneration package for them, which they can put to the board (in effect themselves) with hands as clean as those of Pontius Pilate. By the time one has written a few such reports, one can sausage machine the work using templates well peppered with consultancy-speak – words like “in our considered opinion”, “fair”, “best practice”, “aligned to shareholder interest”, “attract and hold the best executives” et cetera. If you do many at the same time, you can drag out the completion time, and hence make it seem as though the expended time was considerable. Like IVC, I would buy MMS shares if the PER were lower.
Back to TGA - it will take time for analysts to update their published views. I am fairly confident that now that there is a 5-year growth story, short-listing criteria that include five years of growth will now list TGA for consideration. I vaguely remember Howard Coleman saying years ago that Teaminvest would not consider a candidate stock that did not have five years of history (five years of growth requires six years of history). Howard Coleman - mmmmm - he wears a suit, has silver hair, has a sage demeanour and the cheek of a whiteman - he could moonlight as a compensation consultant!
Personally, I expect that I will need to extend my holding time of TGA considerably beyond 22 May 2012. I had initially thought that that date would have provided a catalyst for the share price. In the absence of institutional buying, I think now that it could take between 6 months to a year for TGA to reach fair value.
That seems extraordinary when you consider that TGA has just reported an almost 30% rise in NPAT, has a ROE of over 20% and has enjoyed 5 years of solid growth - all within the context of a market that is as fickle as autumn skies.
That seems extraordinary when you consider that TGA has just reported an almost 30% rise in NPAT, has a ROE of over 20% and has enjoyed 5 years of solid growth - all within the context of a market that is as fickle as autumn skies.
tech/a
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You and a few here have considered fair value to be $2.30.
Given that all is now known with regard to TGA.
Why is fair value NOT $1.48?
Thats what the market prices it at.
Why should anyone consider a higher value is warrented.
Given that ALL is now currently known about TGA.
Are you not just sitting in the stock in HOPE?.
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The reasoning behind this is that over the long term, the share price follows the earnings of a company. If a company grows, the SP will grow with it, as does the yield. If the share price didn't move with earnings, you'd have skewed dividends because the SP is not keeping up with earnings (i.e. maintainable yields of 20%)
I'm more than happy for this stock to remain this low for years, given its prospects and financial strength. I'll keep buying till the cows come home...
Find the post in which I estimated TGA's valuation at $2.30.
You just make things up, don't you.
skc
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Tech/A... from memory you own a earth moving business.
What was the last traded price of your business and how does the price chart look?
As Klogg said, ultimately price follows value. Value is the NPV of a future stream of earnings. The future that I envisage or am capable of envisaging doesn't extend much beyond 5 years. Thus, I have a valuation for TGA in year 6 of $5.06. But whether you accept that figure or the method of calculation that I have used to arrive at that figure doesn't really matter. I doubt that you have ever held a stock for 5 months, let alone 5 years. What matters is that I am quite confident that at its present level TGA is undervalued. Thus, at my entry price of $1.48, there is a wide margin of safety built in to the stock.
The reason that you continually refer to the market price of a stock is that you really have no independent value of what you are buying. You are totally dependent on market prices and have no independent way of knowing whether you are buying gold or dross. In fact, you'll buy dross if you believe that there is a bigger fool than you who will pay you more for the dross than you paid for it.
You need to stop pretending that you have conducted any sort of analysis of TGA and have reached a valuation that says that $1.48 is fair value. If we were having this discussion a year ago, you would have parrotted then whatever the market price of TGA was. Stick to commenting on charts and daily price fluctuations. Valuation is for the big boys.
tech/a
No Ordinary Duck
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OK was Pioupiou ---you still hold so obviously think it worth more than current market.
So why are you still holding.
Civil construction --its not listed --- don't see the relevance
With respect, Nutmeg, I don't see the point in trying to envisage the future of a business in 5 years' time, however strong and "permanent" their business model may appear at present. Too much happens, too quickly, these days for that to be a reliable way to invest.
Just IMO, of course.
skc
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Well...
You are able to make a decision to hold your business in the absence of a price chart.
Perhaps others are able to do that as well despite the presence of a price chart?
I have no preference for stocks that carry social stigma - just battered down, dumped, dirt cheap stocks like TGA.
You might have read Peter Lynch's One Up on Wall Street. If not, it's a great investment book and I highly recommend it. Lynch bought stocks in the kinds of industries that you mentioned. If memory serves, they included funeral homes (like IVC) and toxic waste disposal companies (like TOX). Other big winners for Lynch were pizza delivery businesses, motels and discount chain stores like TRS. I read One Up on Wall Street years ago, so when TRS, IVC and DMP first listed I should have jumped on board, since the likelihood of them outperforming was, according to Lynch, high. Moreover, they are business that were and are easy to understand. But it's true, as Buffett says, that one's biggest investment mistakes are typically ones of omission rather than of commission.
TGA is a simple business with recurring revenue and excellent management that is largely immune to economic downturns. For a lot of businesses, a 5 year outlook would need to be based upon too many incalculables and variables. For TGA, a 5 year outlook can be made at an appropriately discounted rate with a fair degree of accuracy by virtue of the nature of the business.
