mixed feelings, page-14

Stefanis,

I think that's exactly the point I was making: that, despite the mother of all business conditions in downturns, these guys have maintained the dividend without any imposition whatsoever on the balance sheet.

For me: that's a big statement.


As for the balance sheet, like the financial health of all enteprises, the only thing that matters is capital serviceability (importantly, of both debt AND equity).

Intangibles, especially, in the case of this company, are legacy accounting constructs. The count for nought in the capital servicing capability game.

For accountancy purists, such as university lecturers, the balance sheet might indeed look theoretically challenged, but for capital providers, the only question that needs answering is: will I get my money back plus a capital charge on top?

And there's nothing on WHG's balance sheet that will impair that propsect.

Providing, and this is a big provisio, that the actions that got the balance sheet into this state (i.e, goodwill-heavy) don't recur, i.e., that the current generation board and management don't go on another manic buying spree.

Believe me, they won't. I have had the good fortune of engaging and they all understand the brief perfectly well.

Like-minded institutional investors have made in unequivocally clear to them.

The gig for a WHG exec is quite a cushy one: viz., keep costs down, harvest surplus capital and wait for the cycle to turn.

You are right: I'm looking at little more than a healthy dividend yield, with little capital growth, for the foreseeable future.

But like I said, that's not too bad an outcome I think, given that I think at some stage of my remaining life, demand for WHG's services will rebound...just like precedent teaches us it will. As long as I'm getting paid to wait, I'm happy to do so. I'm a patient little squirrel.


Cam

PS. I have a small exposure to this company, in the context of my overall investment portfolio, so the ratio of Words-Written to Capital Invested is extremely high.

PPS. I think the upcoming interim result is not going to be pretty. I supect I'll ave occasion to increase my exposure to the stock over coming weeks.