Background - I met Mark Simari in 2012 around the last quarter. They had had a hiccup in the year to 30 June 2012. A director had left and there was an overhang in shares relating to the ex-director. The share was trading around 20c. I met with Mark at the AGM and we then talked a bit more after - I had been introduced to him and the company by a HC poster.
Every share we purchased then we have today and many more.
The unique thing is that we don't really like roll-ups - our experience both as being in retail is that there is one that doesn't work and that impacts and destroys the culture and fabric of the entire business. We started small as an investor here and we lived through the initial work they did on fixing the balance sheet then the initial acquisitions. The acquisition of LR instruments started it off. Then it did hit a bump - the immediate half year was a paltry profit so after placing shares to do the acquisition in late 2013 the half year was actually down on turnover and profits. The punters headed for the exits - I don't think many believed the fact that seasonality was starting to show up in the results. It wasn't a pleasant time they had just placed shares @37c and the share price had gone from 49c in Oct 2013 to 22.5c in June 2014. All those safe hands that had taken shares had offloaded just as easily @ almost any price - you either believed management or you did not. They did deliver they delivered the result forecast but not in even trading patterns.
What happened next was the larger company changing acquisitions and the raising @ 53c and the rest most know.
I had a meeting with Mark Simari in the new warehouse and head office and it was my abiding feeling that he is unique. His skill is in the acquisitions he has a unique blend of nous that can detect whether the acquisition will fit and then his skill is a head office that actually does help the business with practical solutions to business issues. I remember the stock improvements that he outlined to me which meant that the SAP Hana system was really helping the sales force...
I was amazed that they could put this whole group together and be happy that it will all work. I do know of a couple of acquisitions that they have got very close to and walked away.
I am of the opinion that Mark is just stating the truth he is far better at getting the acquisition assessing it and integrating it. I think he has hated the line management role for some time. The challenge is how do these two executives put it together when they have to work together. I sense that no acquisition will be done without the new guy being involved - so we may have to wait for those. It can work because it will give both the time and space to make a unique team but its how it works that will define the future. The fact that Mark worked in teams before I think helps and if you want a laugh ask him about his acting career...
Will it work - They have searched for the right person for a long time and as such I think it should work. From what I can gather the lines are clear - Mark will have a role in acquisitions and will report to the CEO. The CEO will have to manage the day to day line management and keep that moving forward. Largely they are two very different roles. The real issue is the X factor ... Mark was very excited when that happened I met with him shortly after it was announced and he was animated about the possibilities.
I think 2018 will once again redefine this company...
On a lighter note some may have noted the banter about a set of bowls vs a Prada bag. It was in the early days when some of us held DVA ( Diversa) sold to OVH and PGC. The relative winner was which stock got to $1.00 first. Over the past few months the race has become even. OVH @68c ( DVA got 1.2375 OVH) so they have both been going up and down around 84c
This is all my own opinions and insights ...
PGC Price at posting:
83.0¢ Sentiment: None Disclosure: Held
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