Finally I do not have personal feelings toward nor believe it is a putrid or unethical company - I just believe it to be a poor performing company over a long period - I think most would agree.
Not only would most agree, but I even agree.
This is a 5 out of 10 business.
But what you are missing, I think, is that it is being priced by the market as though it is a 2.5 out of 10 business.
And if you read the following, you'll see that I am under no illusions about what it is that I own here:
https://hotcopper.com.au/posts/29481089/single
https://hotcopper.com.au/posts/29556389/single
"The business requires acquisitions to grow and doesn't appear long term to be able to maintain or add growth to those purchases."
From those above-posts, you will see that your concerns about a certain amount of operating cash flow being siphoned off for acquisitions are shared... except that I simply view it as stay-in-business capex.
Sorry but if you believe that to be a good result many of us don't and that's why I suspect the institutional investors don't get involved
The reason institutions don't get involved is more to do with the inability to get set in the stock, or to get out, I believe. Why, I am a small time operator and even I struggle like hell to build a decent position.
Besides, taking one's investment cues from what institutional investors are doing is no way to create wealth for oneself, I don't believe, because it has been empirically shown that most institutional investors actually under-perform the broader market over time.
Additionally the market has some misconception that the majority of the revenue from the largest business segment comes from involvement in major projects when in fact if you read the detail of the companies reports (especially the earlier ones) it is obvious the real volumes comes from the CABAC division selling on relatively short term contracts to Electrical Wholesalers.
As long as the industry is on the right side of the demand cycle, whether the upswing in demand manifests itself directly, or through LGD's distributor client base, is something to which I am completely ambivalent.
