my take on afj, page-11

Hi All,

I was a very recent switcher from GEM to AFJ for my DIY fund after riding GEM from $1.30. The decision for my switch was purely for the greater 'alpha' potential of AFJ despite GEMs magnificent performance in the last couple of years. That is, I am looking for outperformance and I think from here AFJ has the far greater leverage on offer.

Some takeaway comments:

1. AFJ has no established dividend history, an important factor that helps me get through market dips when holding for the longer term. I am punting on an early route to dividends from AFJ.

2. AFJ has a good acquisition history and buys its businesses at 4.1 earnings as against GEM 4.0 times earnings. I am assuming that AFJ can buy the same quality, earnings accretive businesses that GEM has been able to find.

3. Business delivery - AFJ is not really tested yet under the full microscope of the ASX? Whereas GEM has managed to achieve great deals that have quickly upscaled the size of their business, thus meeting Mr Market's expectations for high growth.

Overall, still some material risk in AFJ as I see it, but the acquisition model has been proven by GEM and the industry has plenty of room for two big players.

See what the future holds.

Gosouth