Some random thoughts ...BVS share price weakness ... - guidance...

Some random thoughts ...

BVS share price weakness ...

- guidance for flat but 20:80 weighting. Sellers simply don’t believe this (and I gotta say it’s hard to hold the faith), especially with Covid getting worse in UK and Europe since the guidance was provided.
- Market is expecting a downgrade, with consensus being a 9% fall vs guidance as flat. If the expected downgrade comes it’ll be the size of it that’ll drive the SP (something less than 9% may even give a bounce).
- the SP could bounce very very strongly if BVS report strong revenue in the first 6 weeks of 2021 to support (and stick to) their 20:80 current guidance (that’s a big if tho).
- BVS is of course still overpriced if it is ex-growth, but nobody is calling it that. IMO it’s still a good growth business that’s stalled in Europe with the pandemic so earnings are delayed but not substantially changed ... and at some time should rerate again.
- I like many here got the timing wrong. Bought first tranche above $4, bought most at ~$3.50 ... won’t consider top back up to target weight until after results announcement. Will then consider buy/hold/sell.

James Hay/Nucleus

- this need regulatory approval to go ahead so may not proceed (altho more likely than not IMO).
- James Hay says it will look at Nucleus contracts post acquisition and that’ll take about 3 months ... so seems there’s some wriggle room as to what they may do.
- James Hay note Nucleus has a great reputation for software and processing accuracy (seems strange they’d want to jealousies that - but seems they are) albeit with some wriggle room.
- Moves don’t happen overnight and Bravura would likely get extra revenue for packaging up transfers. CL1 (accounting) lost AMP yet the revenue loss took years to wind down (and many firms left AMP to become direct customers of CL1). PPS lost ANZ Private Wealth and similar the revenue loss was over >12months. So ... revenue loss would be unlikely to even start in FY21, would likely take 12 months from then to wind down ... and BVS may well pickup some of those adviser via switches to their other customers.
- for all these reasons ... there was nothing for BVS to announce except maybe noting what was already in the media.

So IMO James Hay is a minor distraction ... the real short term money is on what revenue BVS will announce the FY to date (including Jan/Feb). The long term is on gaining a foothold in Europe for expansion. The market is expecting a downgrade, if this doesn’t occur and the analysts believe it, short squeeze is on. Wednesday will be interesting (going to be busy too with many companies reporting).

Cheers and GLTAH ... its been a rough year for BVS.