LONG POST BEWARE:
You always provide so much great insight so let me try to pay some back - wont be as good but at least I can paint in the colours for your insight.
There was a period before Garry Crole became CEO and in fact their was a S249D application to out some of the previous leadership. They resigned before the meeting and the meeting never took place. Flowing from that event there has been an overhang of shares selling. Then to add insult to injury Sargon purchased and there was a placement and what they owned so that they had around 19% of the company. Sargon was supposed to be the new kids on the block and a great cornerstone investor. They were anything but and over time it became clear that they could become a problem. They folded and their shares were purchased by a few parties - We were fortunate to acquire some but the bulk ended up with a new substantial holder. These shares changed hands at 19c the current price or a bit higher than the market at that time. This was all the entangled with Onevue and the appointment of receivers to Sargon. In my opinion everyone panicked and yet SEQ had never been directed by Sargon. The reality was that there was a huge share overhang. We all bid for shares but one party got the lions share. They acquired 13 million shares and had others as well. This took place on 19 February 2020. Since then they have sold a number of shares over the period so that they now own just over 7 million shares. In my opinion these share overhangs and the drip of sales has held the share price back. To illustrate we have not increased our holding given that there is this overhang - we have enough to let it ride but wont put more into a share that has some degree of liquidity issues given the sales we have seen.
The balance between buyers and sellers - even to today - has been very delicate and not really related to the performance of the business as I see it.
Then we get to defining what this business is and what components it should have. I have to admit that I wanted them to get out of Stockbroking - sop Morrisons wasn't my favourite component. I have been persuaded otherwise. It is a good component and in fact the returns are good and they cater for a different market to retail broking. The average order is around $100K as I understand it. In addition it has the number 1 exchange traded Option platform.
I think the best presentation to date that gave insight to the future make-up was the one on 18 November 2021.
Link:
https://cdn-api.markitdigital.com/a...access_token=83ff96335c2d45a094df02a206a39ff4
When I first saw this investment it looked much like a Roll-up. I had and have made money in those but they can go wrong and we had done well in PGC but had got out when we felt that it was starting to get into trouble. It looks like it is back on track.
I think ( personal opinion - beware) that Garry is much like the accountants he services - conservative - under promise and over deliver. I don't think he can tell you what of the components he wants he can assemble - there are too many moving parts and too many personalities in this industry. However not being born in Australia and only having lived here for 17 years I was shocked by this wealth industries fee mechanism being commission and not fee for service when I arrived. I watched some of these schemes fall apart - Timbercorp etc. I came across Interprac and Garry Crole at a shareholder AGM in Melbourne and he gave me a frank view on the management of one of my investments. I did further research and found that I was wrong to believe the story and should look even deeper. I did and reduced mu exposure. He was right and I was wrong. I found out more about Interprac and liked the model. It looked more like those overseas. Professional support firms servicing other professional advisors and being able to provide a suite of products and services that enabled other professionals to provide a wider product range to an audience. Interprac was an unlisted but public company and I asked to buy in - I was never able to acquire shares before they merged with SEQ in December 2017. That was when I became interested.
I think the Superannuation , wealth management and wealth compliance industries are in transition. The royal commission pointed out all the flaws. The banks cut and ran. The rules have been changing and in this technology is also transforming it. The need for both customer education and advisor education is there. I think the recent acquisitions are critical to provide some of that. The mix of professional and semi professional staff and entities are all there to provide advisors, direct clients and family offices with the tools and products to supply a changing market. It has around 400 advisors as I understand it. It has always been a bit of a grey area for me as Accountants typically would all offer advice but one would then do the compliance work so is it 400 or are there a lot more all aware of and providing components of the services.
I have always found Garry to be open and prepared to explain the business but as the industry is changing so fast the end game I think is only becoming clearer now.
My summary is:
Probably undervalued because some larger shareholders have always (in my opinion) capped price at key points in time. Plus I think you have to accept that it is illiquid and thus it requires a discount.
My personal favourite is that it wont be fully valued until it pays out more of its income (current pay-out ratio is around 25%) but it is a growth story that the directors and key holders know it's worth more than the share price so they are happy to retain profits to avoid dilution. They have been using the funds to acquire components that fit the business model.
Business has been growing very well and under promising and over delivering.
Conservative management style.
Like Morrisons as it has some unique components and probably a good resource for advisors.
I see today has sold it down to 61c. Really that is just too cheap in my opinion. I would have added but did not see it there.
(20min delay)