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$5.49 vocus group limited

A bid would have to be north of $5.00, page-76

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crazypunter

5,760 Posts.

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30/04/17

18:34

Post #: 24366051
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Originally posted by savvyinvestor ↑

i dont think it is entirely accurate to compare a commodity miner such as fmg to a telco such as voc.

fmg experienced a massive bounce due to completely external factors particularly the chinese govt shutting down large amounts of iron ore and coal manufacturing capacity at the same time as stimulating their economy through massive expansionary infrastructure spending.

this is the nature of commodity investing: wild swings that are difficult to predict and that have little to do with board competence.

i have come to realise that voc may have made the mistakes that bhp made at the peak of the last cycle when they overbought us shale and other assets in the gulf etc at inflated prices.

voc appears to have over extended its m&a at inflated prices and has bought too much too quickly which has turned out to be beyond the capacity of the board to maintain harmony and to achieve the immediate synergies that the market was unrealistically expecting.

this has come at a time when - as other wiser posters than myself have noted - the sector is getting punished due to increased competition and margin compression.

the goodwill is hard to value in a susbcription heavy business such as vocus; it cant be discounted completely as it is really the key to valuation (ala xero or isd) and does add true value, but in the current environment o increasing competition and churn and brand disruption from m&a the goodwill must be discounted somewhat.

i agree that vocus has instrnsic value above the current 2bill mc due to both the infrastructure and the susscriber base, but the technicals on the stock are not reassuring me and the leadership instability + loss of corporate knowledge and technical expertise is a concern.

in my reading and my admittedly limited experience as an investor over just the past few years, industrial stocks such as telco's which experience a massive devaluation rarely recover as quickly as commodity stocks and thus the comparison to fmg is not really a fair comparison.

i would like to re enter vocus evetnually, but i will aim to do so at a later date when i have seen some positive board stability and synergy benefits starting to develop.

on the suggestion of a share buyback, this is generally the luxury afforded to cash rich and low debt companies that have the excess funds to spend as an alternative to or in addition to dividends.

completely removing the dividend would be a blow to share holders and wouldnt be affordable based on the current dividend pool of <100mill. its a good idea, but should be done later in the cycle when free cash flow improves, debt has been paid down and the sp has stabilised. a strategic buyback at this time (perhaps in 9-12mo) would really put a rocket under the share price more than it would right now.

just my humble opinions.

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Savvy- i actually agree with you on this.

you come across as someone who is not phased by the hysteria here on the forum.

ps- i must admit i may have "read" you wrongly.

just because it is not the feel good propaganda that VOC holders suck up to, doesn't mean your views are false .

on the contrary, it is a refreshing insight , almost guru-istic, a bit like me.

all the best-cheers crazypunter

VOC Price at posting: $3.37 Sentiment: Buy Disclosure: Not Held
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