I think a lot of the risk from roll ups comes when a company is categorised as a 'roll-up momentum play' by the market, the PE rerates accordingly, and expectations, hubris and the multiple allow a cycle of bigger, more expensive acquisitions facilitated by share price...until the music stops.
On the other hand, with 'value stocks' with organic growth which regularly make small bolt on acquisitions, the market seems to ignore these entirely in valuing the company for future growth. (A fund manager made that point in a recording on mispricing opportunities recently, but I've forgotten who it was; it certainly rings true with my experience)
I definitely see SEQ in the second category. I just wonder how much longer their runway for appropriate, attractively priced bolt on acquisitions is.
Could anybody with more knowledge of the industry in Australia than this Kiwi kindly shed light on this question?
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