Today I had a right royal blue with my shadow, who is always...

Today I had a right royal blue with my shadow, who is always negative. “Why bother with NTD” said Shadow ‘crappy industry where price seems to be the only way to win business. Its debt level is HUGE as a consequence of drunken spending in FY22 and right at the start of a spiralling interest burden. And check how low the ROE is on this biz – pathetic.”

Yep, I knew the Shadow was right, but he wasn’t done with me yet. So in he goes again “and do you think this management team has performed? What about the money wasted on the ERP program? And where are their balls in backing this company? Apart for the Young family who must see something in the crystal ball, none of the directors have made a big punt on this companies future in recent times. No dividends coming here for a few years boyo. Why would you want to be investing?”

Ah! This was my opening to defend myself. ‘You are absolutely right’ I said, ‘the last few years have been lean and yes, the management team must wear the can for much of it, but not all. It hasn’t been the best of macro conditions and the tide must turn. I think buying at 51 cents is a reasonably good punt on the future. Besides the book value is around 86 cents. Throw in the Dunlop deal and Beaurepaires saying goodbye and we have a better playing field into the future. I reckon we can get FY25 revenue to $700m – maybe more - and EBIT to even as high as 4% of revenue and that paves the way for a reasonable future”.

End result: I bought today at 51c and told Shadow not to judge me until FY25 results are out.