Australian paper has an article from its former CEO of dtz division accusing UGL is cooking the book
Hmmm
http://www.theaustralian.com.au/bus...books/story-fn91v9q3-1226828782946#mm-premium
The investment case for this one still has merit I think, But I have lost conviction so am scaling my position right back. The allegations, the staff/director changes, the latest report makes me think watching from the outside may be more prudent.
Management have acknowledged third party interest in DTZ - If they go that course I might miss a quick profit by getting out - but the possibility that I don't get good allocation to DTZ also invalidates my long term reason for staying.
The investment case has more merit now than before based on third party interests, as there is potential to sell DTZ and return this money to shareholders - provided they sell it at something close to your valuation.
However, you could argue you'd rather own the business than receive 'fair value' for it now.
That said, I sold out of the small position I had in UGL based on the accusation of fraud alone. If this were even partially true, any 3rd party interest, along with my valuation of DTZ would be threatened.
Funnily enough this started as a learning exercise on valuation based on DCF, but I'll soon also learn whether or not I reacted correctly to the 'cooking the books' accusation. Erred on the side of caution in this case, simply because I don't know any better...
from Australian article."We will be vigorously defending these, and believe they will be most likely thrown out at summary judgment stage, given there is no evidence around Mr Shibuya's allegations. Given UGL values its integrity and reputation very highly, it is actively examining potential counter-claims against Mr Shibuya and we intend to pursue these vigorously," it said.
Even worse - the door gets slammed in your face and you're presented with a valuation gap that is never filled because management let go of it at a less than ideal price to the private equity sharks circling in the name of "doing a deal."I would argue that strongly. Closing of the discount is just a one off – the market will close the valuation gap anyway over time if the company does well. The importance of the discount being unwound pails into insignificance to the return that can be generated from a good business.
I would argue that strongly. Closing of the discount is just a one off – the market will close the valuation gap anyway over time if the company does well. The importance of the discount being unwound pails into insignificance to the return that can be generated from a good business.
The discount gives you a better return against what the business will eventually do and it gives you some downside protection – but the unwinding of the discount is not a big deal to me – if it comes about by a change of control transaction and means lose of exposure to a good long term business, that can be quite detrimental to long term success even if it comes with a nice short term sugar hit profit.
I probably wouldn’t normally put much weight on former employee allegations though in this case I am a bit unnerved by the timing proximity to Robert Denham’s departure – I had been pondering his leaving since it was announced.
You live and learn - not budging, but willing to admit it hasn't worked out like I thought.
It means I'm not selling.
It means I'm not selling.
craft said:this case I am a bit unnerved by the timing proximity to Robert Denham’s departure – I had been pondering his leaving since it was announced.
I was waiting for cheaper price for a trade but now this so I stay out all together ...
When there is smoke there got to be a little fire some where...
What I meant by "it hasn't worked out as I expected" is that there are a lot of variables / dynamics / management issues etc. that I hadn't considered in enough depth in the first place or have come out of left field since. I'll also elaborate by saying that it turns out that it is a much harder investment to keep track to which I am usually accustomed to favouring.... this wasn't expected either, it feels at times as if it constantly needs to be monitored which isn't ideal psychologically as it's easier to suffer from information overload / constant second guessing. There are many more variables that affect their profitability and the future outcomes of the investment than I initially anticipated. That's something I will definitely learn from having seen it evolve in real time.I figured that - it just seemed contradictory to the rest of the line, trying to get you to flesh out that contradiction. Why you still hold your conviction despite saying that it hasn't worked out as you expected.
Appreciate it now that I understand what you were trying to ask. I've answered that question as best as I can above. To some maybe there is no difference, it's open to interpretation more than anything.Do you still have conviction or are you being stubborn? (maybe there's no difference?)
Ves you know Its only because I respect you that I ask such a blunt question.
"There's never just one cockroach in the kitchen"
Agree this is the time to wait. This should be good entertainment, I was worried I would get bored after FGE. Hopefully we will see some strong downward pressure on the price. Might be a nice short term trade in it.
and it seems increasingly likely they will go down the trade sale/private equity route for the jewel.
I'm wondering if/suspecting ASX listing rule 11.2 will mean any trade sale will have to go to shareholders for a vote.
USB is a substantial shareholder and has been making noises that their number for DTZ is 1.5Billion. Allen Gray and Janus Capital are both there with nearly 10% each and are certainly no fools in this type of investing. So shareholders probably have a big enough block to control management.
Notice Blackrock is also on the register with ~ 7% so you would think they are one of the Private equity bidders.
Lost my investment conviction but after sitting on the outside for a bit to clear the head I went back in on a trading basis - It just didn't want to go on with new lows.
I'm wondering if/suspecting ASX listing rule 11.2 will mean any trade sale will have to go to shareholders for a vote.
I'll probably end up missing out, but I think I'd be happy with the self-discipline. Which probably makes no sense!
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