he said he wouldn't be surprised.... far from a confident statement wouldn't you agree.
To be honest I wouldn't be surprised either, but I think it's more likely that the whole purchase isn't written off within 6 months given the extensive due diligence and E&Y involvement initially, but given the share price, it also wouldn't surprise me either. Liquidation would surprise me.
The writedown would be because of uncertainty, not certainty that the UK operations were going to be negative forever, if this was the case SGH would just close the uk operations obviously.
Therefore even if the writedowns occur this does not = poor valuation or purchase. The whole debacle obviously shows that they didn't give themselves enough scope for a difficult 6 months, which has cost shareholders who have sold out a lot of money, and could cost me in terms of higher exposure if a CR is required, but ultimately the true test will be time (August 2016 IMO).
Timing an entry into this sort of gamble was always going to be a huge risk, and we may not have reached the all time lows yet, but give it a week, a month, a year, I'm not sure but I personally think sub 1 dollar will be an opportunity that the sideliners missed 0ut on. This to me is very similar to MQG during the GFC. I bought at $30ish, and watched half the value evaporate, but have recently sold my holding for triple that including dividends. This feels very similar to me.
If the company goes into liquidation then I will stand corrected, but a company with the revenue of SGH and the margins, isn't going to sit with a MC of <300mil forever.
SGH Price at posting:
83.0¢ Sentiment: Hold Disclosure: Held
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