TGA - Thorn Group

oldblue said:

Yes, we all have " tax and other expenses", don't we?

But seriously, that's the usual reason given for such disclosures. Very rare to see " to settle my gambling debts" or, " to pay my alimony settlement".



In fact, given the size of this particular holding, a million dollars worth probably isn't that significant.

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Im pretty sure it was 500,000 shares, and he owns 3.5m. So its not huge, but not insignificant...

Hmmm... other directors selling today. Doesn't fill me with confidence for the annual report.

Klogg said:

Hmmm... other directors selling today. Doesn't fill me with confidence for the annual report.

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Indeed - came here to post the same thing. the share price is due for a rest anyway, on the weekly its been hitting the upper bollinger band quite regularly in the past couple of months.

tinhat said:

Indeed - came here to post the same thing. the share price is due for a rest anyway, on the weekly its been hitting the upper bollinger band quite regularly in the past couple of months.

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Why does that indicate its due for a rest?
Its only a displaced SMA.
It just tracks the price??

tinhat said:

Indeed - came here to post the same thing.

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It's beyond me why the two directors who sold today would sell such a small amount...

If you're going to the trouble of selling a company in which you are a director, would you really do it for just 25k/50k...?

tech/a said:

Why does that indicate its due for a rest?
Its only a displaced SMA.
It just tracks the price??

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Tech/A I'm not well versed in technical analysis as you know. I have noticed that over the past couple of years the XAO generally retraces after hitting the upper bollinger band in the weekly chart. Maybe that's just more a sign of the sideways market we've been in for the past three years? That was the case up until seven weeks ago anyway.

I suppose I'm looking for mean reversion over time; that is, that at some point the price is going to revert back to the mean. I gather what you are suggesting is that just because the price is moving at two standard deviations above the SMA over a certain period of time, this doesn't provide any clue or signal that the price is about to revert to the average? That is what you are implying and if so I would defer to you knowledge and insight on this given that I have no tech skills, nor have I ever tested any of my observations.

Klogg said:

It's beyond me why the two directors who sold today would sell such a small amount...

If you're going to the trouble of selling a company in which you are a director, would you really do it for just 25k/50k...?

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Some sort of emergency funding possibly.
Personal use maybe.

Tin
Point I'm making is an M/A displaced or not is simply a reflection of the past n bars closing or other price point on a bar. From day to day you cannot determine the long term path that M/A is likely to take.

Klogg said:

It's beyond me why the two directors who sold today would sell such a small amount...

If you're going to the trouble of selling a company in which you are a director, would you really do it for just 25k/50k...?

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The previous Appendix 3Y for Peter Henley might help your speculation a little bit.

Don't get me wrong though - I don't use these events as buying or selling decisions.

Ves said:

The previous Appendix 3Y for Peter Henley might help your speculation a little bit.

Don't get me wrong though - I don't use these events as buying or selling decisions.

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Wow, nice. I didn't even notice that.

I'm not really using it as a selling decision on its own, but should other events transpire and they all point to sell, then you start to wonder.

Thanks Ves.

Klogg said:

It's beyond me why the two directors who sold today would sell such a small amount...

If you're going to the trouble of selling a company in which you are a director, would you really do it for just 25k/50k...?

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Just my view but I am not worried about it, the business is not worth 6.84% less than it was yesterday despite that movement in price. Maybe one director is putting in a new pool and the other wants to buy a boat, who knows. I am happy as long as TGA keeps investing in New products while increasing the dividend.

Ves said:

The previous Appendix 3Y for Peter Henley might help your speculation a little bit.

Don't get me wrong though - I don't use these events as buying or selling decisions.

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He's probably been following this discussion! Still, for me its slightly disconcerting that a director has sold down his holding in his family super fund when you consider that at his buy price of $1.52 the stock is yielding 6.58%, which is 8% after franking credits, net of tax (assuming accumulation phase, 15% tax on income). Foregoing an 8% per annum income stream for a capital gain of 24% (after tax).

He is also a director and shareholder of AP Eagers and I notice he hasn't sold down any of those shares lately.

But anyway, as others have already discussed its most likely neither here nor there.

Other than the usual reason to sell (to put the funds into a better investment) there are other reasons for selling a stock held in a SMSF. I proffer some examples below:

* If the SMSF's rules are that no single investment should exceed X% of the whole, then there is pressure to reduce a holding that exceeds X%. I personally have come under mild pressure from the co-trustee of my SMSF to reduce the SMSF's holding of TGA, but I have ignored the suggestion.

* If I die, my heirs will have to pay 15% capital gains tax (or so I was told by one of them), and hence I am under pressure from the co-trustee (one of the heirs) to sell TGA, and lock the profit in tax free. The SMSF holds 187,875 TGA at an average buy-in price of 83.8 cents. I do not feel frail enough to act immediately on this matter.

* In my case again, I have in recent months reluctantly sold SMSF investments to to raise a third of the price of a unit that I needed to put a roof over my head. I did not sell TGA, but I could have, and would have if they enjoyed a higher SP at the time.

* Marriage dissolution and personal debts force many investors to sell investments that ordinarily they would prefer to hold.

It is a bit disconcerting for three TGA directors to sell at about the same time. If all three sold relatively large percentages of their individual holdings, one could surmise that things are going badly. Selling a small percentage probably suggests that YE 30/03/2013 is not going to be stellar, but we have been told as much by management, so that is not news.

If I were a director and I were possessed of a Machiavellian mind, and I knew things were going very well, then I would be tempted to sell just enough to spook the market to drop the SP, and then I would buy in big time at a healthy margin of safety. Who knows why directors sold? They do not appear to be Machiavellian.

TGA is re-inventing itself in the sense that it is augmenting its original Radio Rentals/Rentlo business with home-grown new lines like Cashfirst, Thorn Equipment Finance and the Rent-Drive-Buy initiative, plus making the best of what it can from the NCML acquisition. There is no certainty that TGA will do as well in these new areas as established players like CCP, SIV, CCV and others are doing, but there is no reason why it should not. I think it will do well, but it will take time, and hence in broad terms I concur with the gist of the Thomson Consensus Estimates – to wit:

- - - - - 2012 - - 2013 - - 2014 - - 2015
EPS - - 19.0 - -- 19.4 - - 19.6 - -- 25.1
DPS -- - 9.5 - -- 10.0 - - 10.3 - -- 12.5

The actual fiscal profits for 2013 and 2014 will probably understate the true health of the business. One has to scratch below the surface to get a feel for how well TGA performs, because it tends to take a conservative accounting approach – expensing whatever it can early, and delaying profit and revenue recognition wherever possible. Expensing also covers asset valuation – the lower the valuation the greater the expensing via depreciation and amortisation.

Anyhow, I am neither buying nor selling, and I hold all the TGA shares that I have ever bought, both within my SMSF and a larger holding within my own-name portfolio. My average buy-in price for the sum of both holdings is $1.215. I should sell on the highs, and buy on the lows, but I am not smart enough to get the selling side right – when I sell shares, the prices seem to rocket upward.

So a couple of directors needed to put a deposit on a new Mercedes sports car ready for delivery to the mistress on Valentines day. I call this a buying opportunity
Have been in & out of this a few times, not as profitably as IRI but still a good roller coaster

Correction - it's still going down (watch for bottom of dip)

I've just watched CEO John Hughes' presentation to the recent ASX roadshow in New York - on another forum.

I may have missed this before but the point that registered most with me was the remark that the new business segments that TGA has entered recently will result in debt to equity eventually reaching the 50% mark. Previous policy has been to restrict this to 10% - currently sits at 14%. Stands to reason of course, as the company expands its money-lending activities - and 50% would hardly be excessive.

oldblue said:

I've just watched CEO John Hughes' presentation to the recent ASX roadshow in New York - on another forum.

I may have missed this before but the point that registered most with me was the remark that the new business segments that TGA has entered recently will result in debt to equity eventually reaching the 50% mark. Previous policy has been to restrict this to 10% - currently sits at 14%. Stands to reason of course, as the company expands its money-lending activities - and 50% would hardly be excessive.

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I believe they mentioned the debt to equity levels in the full-year presentation - reason being that they want to grow Thorn Equipment Finance much faster, (therefore fund it with debt) whereas the Radio Rentals component will remain as is (virtually debt-free).

Given the rates TEF is growing at, the only way to enable that growth is to borrow, as they don't really have the cash aside for it (or raise capital, but I'd much prefer the former).

Nothing new was said by John Hughes. The only item that was new to me is that he is more than being simply aware of Aaron's and Rent-A-Center - the companies swap information. On the matter of using more debt, previous presentations said that this would happen, and implied that the money would come from Westpac.

More debt is a positive, because if TGA wants to expand TEF, doing so without relying on debt would be like running a race with calipers on. Look at SIV's debt/equity ratio - it makes TGA's mooted 50% look modest in the extreme.

Out Too Soon said:

. . . still going down (watch for bottom of dip)

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The dip has done its dip, and SP has moved up, with more folk wanting in than out. I normally focus on TGA as a business (EPS, DPS - boring things like that), because for me its a keeper whose dividends substantially underpin my total income, but the SP is a reasonable side interest, so what do the chartists think?

Also, any comments on sites like:

http://asxiq.com/detail/ASXIQ/thorn-group-limited/ and
http://au.stoxline.com/q_au.php?symbol=tga&c=ax ?

Pioupiou said:

The dip has done its dip, and SP has moved up, with more folk wanting in than out. I normally focus on TGA as a business (EPS, DPS - boring things like that), because for me its a keeper whose dividends substantially underpin my total income, but the SP is a reasonable side interest, so what do the chartists think?

Also, any comments on sites like:

http://asxiq.com/detail/ASXIQ/thorn-group-limited/ and
http://au.stoxline.com/q_au.php?symbol=tga&c=ax ?

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Long term up trend.

Couldn't quite get through all time highs, but has been supported on a dip.

Still setting higher lows in the short term.

In short term resistance.

Your fundamentals seem to back up my opinion that I reckon this will have another crack at all time highs.

Obviously, nothing like the strength in the SIV technicals, but looks ok to me.

chops_a_must said:

Long term up trend.

Couldn't quite get through all time highs, but has been supported on a dip.

Still setting higher lows in the short term.

In short term resistance.

Your fundamentals seem to back up my opinion that I reckon this will have another crack at all time highs.

Obviously, nothing like the strength in the SIV technicals, but looks ok to me.

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Hi chops_a_must - thanks for that. Today seemed to be one of reluctance on both sides, so a lower than average volume was traded, and even that had 40% (110,051 shares out of 272,358) traded via the gnomes who come out to play after 4:00pm. Looking at the buy and sell offers 4 cents either side of $2.06 suggests the SP could easily get to $2.10. Not that $2.10, or even $2.20 would make any difference to me – I am neither selling nor buying.

TGA's year end is only a few days away, so the well-connected already have a fair picture of the results.