Peejay, I am as miffed as everyone else as to what Karl sees in...

Peejay, I am as miffed as everyone else as to what Karl sees in ARQ. His guidance below suggests the large holding happened due to "letting it run" and capital raises (presumably) in the good days. Why CDM capital protection strategy didn't trigger for MLB/ARQ I don't know. To clarify, Karl has a vested interest in ARQ which is definitely better than a board member with no skin in the game. You can see the value of this as future decisions are discussed and made. CDM has a long term investment focus, not day trading and quite possibly CDM still has ARQ because it ticks this box.

I see ARQ largely as an advertising/marketing or modern yellow pages kind of company. Even in a downturn it will continue to earn / function which makes more sense to invest in. ARQ isn't going belly up and now makes a good entry point from both a technical perspective and recent management changes which I believe will be the catalyst for innovative change within ARQ. How ARQ turn it around isnt my job but it is clear this is the focus and I am liking the governance changes as this would appear to be the first correct step.

I wouldn't call ARQ a primary holding in my folio but I think it is worth a look. I should also disclose I am a long term holder of CDM.

GLTAH

From the CDM presentation slides released 10.9.19.

ARQ Group (ASX Code: ARQ) was the largest detractor to fund performance - currently a long investment
▪ Cadence first invested in 2013 pre a capital return and special fully franked dividend.
▪ We added to our position as the stock was trending up through 2 capital placements for acquisitions. We also
participated in ARQ DRP’s as the stock trended up. This resulted in a large stake in the company.
▪ Cadence lets its winners run which leads to concentrated, profitable positions such as ZFX, MLB, MQG, RHG and
RKN.
▪ In the case of ARQ liquidity in the stock did not improve with growth in market cap or entry into the ASX 300 Index.
▪ Over the past year the company delivered two earnings downgrades related to acquisition integration, timing of
Enterprise Services project work, and loss of a key customers in its Small Medium Business division, combined with
cost ‘blow outs’.
▪ We like many other investors were shocked at the speed of these downgrades and the lack of communication with
shareholders. We have been engaging with the Board over an extended period on these issues.
▪ As large shareholders we are supportive of the new chairman and non-executive director appointments. Karl
Siegling was appointed to the Board of ARQ on 16 August 2019.
▪ ARQ operates in a growing segment of the market with ongoing migration and digitization of the economy.
▪ Whilst we are extremely disappointed with ARQ, we believe that as one of the oldest listed companies in its sector,
it can deliver significantly improved earnings and establish itself as a valuable company operating in the sector.