The business has already been substantially turned around. Delinquent accounting and FP practices have been ditched, debt effectively eliminated and the transformational Count Financial (CF) acquisition is taking shape. Some bolt on businesses have been added since year end each EPS accretive, but these are small and operating under the Owner-Driver-Partner model.
The stock will go in the direction of Count Financial from here on. It really is a very big undertaking.
Having increased 130% over the last 6 months, the current price fully values the current business. Successful execution of the CF rollout has huge upside, but equally huge risks as the industry grapples with the Hayne RC fallout and massive new compliance head aches for all advisers.
I have altered my sentiment from Buy to hold and for anyone who may care, reducing my holding. The stock has been on a very serious tear for so long, I refuse to let myself submit to being too greedy. My residual holdings remain very significant but I am taking the view that I want out of this market that is increasingly showing sign of reversal in an economy going absolutely nowhere despite interest rates of sub 1%.
The signals are clearly evident that we are in the last stages of a very mature bull market no longer pricing earnings downgrades until after they are announced. Costa Group is one the the latest where people held out too long for too much and got crucified. There are a few more on the boards, destined to go the same way.
CUP is revitalised and has all before it. I am happy to wait and see how management go about their task.
