IFL Set For A Drop?, page-7

"As I said... I can't understand how IFL makes money so i'd be wrong to buy it. But it might boom soon."

I wonder why you can't understand IFL's business model.

Because presumably you have a superannuation fund (or you've heard of superannuation) and presumably you've come across listed fund managers (PPT, AMP, PTM) and presumably you've come across financial advisors and presumably you have heard people write or talk about the business concept of advantage of scale?


IFL is simply an integrated combination of all of those, with a bit of platform administration annuity fees and low-cost trustee services thrown into the mix.

Oh, it also has about 15 or 20 people who administer "equity research", but they don't really create any content; they just catch it from others - with whom they have contracted to do so - and pass it on to their financial advisor groups and clients.

But this business unit is an absolute pimple on the bum of the beast.

Yet this is where the entire Senate inquiry focused its attentions... all precipitated after some journalist splashed a full page article in one of Australia's leading financial newspapers largely on the basis of a private briefing by some whisteblower who had never worked anywhere else in the company other than in that little administration department with 14 or 19 of his/her colleagues, one of which was evidently not following the letter and the spirit of the rules.

Your and my taxes paid for that inquiry. I may have missed it, but I have not seen any sign of its findings and/or sanctions that will make the world a less heinous place?


As for the stock "boom"-ing, I very much doubt IFL will do anything that remotely resembles "boom"-ing. [*]

Instead, what it is far more likely to do is to continue generating TSR of around 11%-13%pa, made by 6% to 7% capital appreciation, combined with a 5%-6%pa dividend yield along the way.

By the same token, what it certainly won't do is permanently destroy the value of the capital of its shareholders. Which is not something that can be said for the vast majority of the 2,500 other stocks listed on the Australian stock market.