mixed feelings, page-8

Interesting discussion.

Cam, I am a little surprised that you feel this balance sheet is in fine fettle, its not what I would call a strong balance sheet by any means....

but I accept your point that you are not buying a balance sheet but a cashflow stream and thats what WHG is now effectively a bond proxy that can pay out a high portion of cash earnings in a dividend as its cost to maintain operating assets (maintenance capex) is so low.

Maybe Lombard is making some structural changes that will install some growth or maybe he is just hoping to achieve some new growth. The jury is out on this for me at this stage. I feel that the business model is not overly strong and doesn't really contain any durable competitive advantages - the fact they spent so much on aquisitions and now have had 3 years where earnings has fallen testifies to this fact imo.

I do believe however that they can keep paying a 7c dividend into perpetuity, so if someone is looking for a yield play it has appeal.

The key thing for me regarding measuring a companies efficency is Return on Incremental Equity. Its the return on my portion of Retained earnings whilst I own the business that is most important not the ROE which has a very historical bias.

WHG isn't retaining any earnings so talking or referring to efficency is really a waste of time which I think is your point.