VED - Veda Group

[galumay]

Well said Mr Gray.

Perhaps, though one couldnt say the same about the Fairfax reporter,

"Veda's shares have risen 8.26 per cent to $2.62 in the past 12 months, compared with the 5.53 per cent losses of the benchmark S&P/ASX200 index. "

That is a very creative representation at best!

It was actually down 20% in the past 12 months if you exclude the spike on the day the takeover was announced - compared to the 5.53% losses of the benchmark S&P/ASX200 index.

 

[ROE]

They buying a monopoly business, any way you look at it, VED is a monopoly business in AUS/NZ with tail wind from the change in reporting law some 18-24 months back, at $2.70 it is not compelling value to give away a monopoly business with many years grow ahead, we could be trading at $2.70 in 2 years time especially if they can get some nice bolt on.

I doubt they can get them at this price, they need to up the price if they are serious.

 

[ROE]

Thank you ROE. I am opposed to the takeover. I hope that most of the share holders agree.

If I was to play Devils Advocate, I would sell only for a short term profit. If I didn't know the potential of VED, a short term profit would be good enough for me. Since I want to be a long term holder: I would not sell.

For those who are tempted to sell: what would be your reasons? I wonder how we could convince those shareholders to hold on and not be tempted to sell. The only reason I can see to sell is that one may desperately need cash.

What would be the reasons to support the takeover? Are you happy with $2.70 or even $3?? There must plenty of share holders who would be very unhappy.

ROE is correct that we should not waste time on this. Just say NO!

Sorry for using up your time on this topic when we could be discussing better things about VED.

at the end of the day retail holder dont carry much weight as there are so many of them and far and few in between that hold any large chunk to affect the vote

its the institution holder they need to convince, at $3 I would sell provided the market stay at this level
as there are some decent stock I wouldn't mind putting this money toward

 

[McLovin]

$2.70 seems a pretty fair price to me. $80m in fcf market cap ~$2.2b. Sure it may be a monopoly, but it's a pretty mature one.

 

[ROE]

$2.70 seems a pretty fair price to me. $80m in fcf market cap ~$2.2b. Sure it may be a monopoly, but it's a pretty mature one.

when you offer a business that is not under duress and growing, you aren't getting it for fair value
it has to be a knock out blow, like the Japanese did with Toll

 

[McLovin]

when you offer a business that is not under duress and growing, you aren't getting it for fair value
it has to be a knock out blow, like the Japanese did with Toll

28x earnings is hardly chump change.

 

[galumay]

28x earnings is hardly chump change.

I went back again to look through my research and calculations for VED as I continue to try to understand this one.

Based on every metric I look at its overvalued at $2.00 let alone $2.70. The only hint of potential for me is the operating margin at around 35%.

This company would need sustained and very strong growth to make it look a fair price at the moment, whether I look at eps as a basis for valuation or my 2 methods of calculating free cash flow, I just cant see it until I factor in very optimistic growth.

Still if I had ignored my calculations and bought at around $2.00 when I first analysed it, I would be sitting on a pretty profit! Thats the story I am trying to unwrap from a personal perspective. As i said I believe there are important lessons in the companies we decide not to buy, as well as the ones we do!

 

[So_Cynical]

I went back again to look through my research and calculations for VED as I continue to try to understand this one.

Whats blue sky worth?

 

[luutzu]

Whats blue sky worth?

Priceless

for the record, I haven't look at Veda so no comments.

 

[JTLP]

Formal bid from our friends in the northern hemisphere.

Any word on the street on the amount?

 

[ROE]

http://www.smh.com.au/business/bank...eover-offer-from-equifax-20151004-gk18dq.html

 

[So_Cynical]

http://www.smh.com.au/business/bank...eover-offer-from-equifax-20151004-gk18dq.html

$2.90 - not enough to get my yes vote.

 

[galumay]

$2.90 - not enough to get my yes vote.

Thats an interesting call, I guess blue sky has an infinite value!!?

I suspect it would be very well supported at that price though, at nearly a 50% premium to average price in recent times there would be plenty of takers.

 

[So_Cynical]

Thats an interesting call, I guess blue sky has an infinite value!!?

I suspect it would be very well supported at that price though, at nearly a 50% premium to average price in recent times there would be plenty of takers.

Ok sure $2.90 would get a fair bit of support but not my support, $3.10 is enough to cover my short term blue sky expectations.

 

[JTLP]

$2.825 with support from management. Is this a joke?

Also, are we to receive no dividend now as a result of? Can't help but think we are getting a cooked deal on this one.

 

[So_Cynical]

Exclusivity terms yet no break fee, no dividend, $2.825 is not enough, very surprised that management think it is...board should be sacked.

 

[galumay]

Exclusivity terms yet no break fee, no dividend, $2.825 is not enough, very surprised that management think it is...board should be sacked.

The reality is the bid represents a significant premium to value and is miles above the long term average of the price. Its a premium for what you described as 'blue sky' - potential growth and profit in the future.

If VED had actually delivered any substantial amount of the blue sky, then I am sure the share price would have reflected that and the takeover offer would have been much higher.

How much of your opinion about the offer is informed by your emotional attachement to the company and the belief that one day it will be a very profitable business?

As an outsider I would be happy to be getting a 40% gain if I had bought the shares for around $2, thats a damn good return on capital over a short period of time as against the long term, undefined, blue sky.

 

[JTLP]

Galumay - isn't that part of the reason you buy in to something? For the blue sky potential and the future earnings?
If I thought this thing was fully priced I would have jumped out...but like others I could see the high barriers to entry and competitive advantage Veda has/had.

I think Veda is selling shareholders short. All commentary has been around this fact. Not to mention the scrapping the dividend? Pretty soft deal.

 

[galumay]

Galumay - isn't that part of the reason you buy in to something? For the blue sky potential and the future earnings?
If I thought this thing was fully priced I would have jumped out...but like others I could see the high barriers to entry and competitive advantage Veda has/had.

I think Veda is selling shareholders short. All commentary has been around this fact. Not to mention the scrapping the dividend? Pretty soft deal.

For me the distinction is between speculation and investment. The blue sky is the speculative part, potential future earnings if the company becomes profitable and has consistent growth.

Otherwise the company is valued as the future cash flows discounted to today's dollars - on that basis there isnt much value there, on my calculations, under the $2 it was trading around.

I think what people were speculating on was that there would be very strong growth in those earnings as a result of the legislative changes and Veda's competitive advantage.

My point as an outsider with no emotional attachment is that a 40% return on capital in a short period is not a bad return in the current market.

I guess now the question is how strong is the conviction about the potential growth in this company amongst the shareholders? If enough are happy with the 40% return then its irrelevant really, whatever the potential growth is will belong to the new owners.

 

[So_Cynical]

How much of your opinion about the offer is informed by your emotional attachement to the company and the belief that one day it will be a very profitable business?

As an outsider I would be happy to be getting a 40% gain if I had bought the shares for around $2, thats a damn good return on capital over a short period of time as against the long term, undefined, blue sky.

Emotional attachment - you gota be kidding me.

I tend to like stocks that have been very good to me, like the 7 or so stocks i have that have given me 200% - 300%+ gains, VED is far from that, potential (blue sky) VED has lots of...blue sky is a wonderful thing, every 300%+ winner needs it.

Back in the day i loaded up on VED, i don't often load up, dont like the concentrated risk but i understand the need to, a stock comes along and ticks all the boxes, it's a vital part of wealth creation to have enough in a good stock bought cheap.

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For me the distinction is between speculation and investment. The blue sky is the speculative part

Sorry, couldn't just let this go..blue sky is impossible to measure and there is a speculative aspect to it but it is a very real thing, potential is what it is...have a look at XRO and ACX that price action is pretty much all blue sky.