FIG (ASX) Not the case study that you would welcome

Originally posted by tessastanle ↑

I can appreciate your rationale here.

If Steve @ Forager is tuning in here - to me it’s still a lot more to play out in the coming months, but the trial commission assets could well turn out to resemble RHG (for whose of us who would remember, including Steve who made a life changing fortune at the time).

To me it’s very much about your risk appetite and margin of safety factoring in the unknowns. I can see why some of us have already or are just about ready to jump in at 21c.

One more factor is with regards to insiders - don’t forget Cohen still has 32m shares - doubt he would sell at this price and under current state of play, but there are also the c-level execs possibly looking to offload if this gets worse.

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Margin of safety, let's take a look, the post-acquisition EV of the combined entity (Freedom+St Andrews) at current price of 21 cents is around $55m, that is less than the acquisition price of $65m for St Andrews (which is already a $5m discount to $70m in-force book). In another words, the market has already priced in the fact that Freedom will go to zero.

The sentiment here appears to be selling at all costs regardless of price, someone here even said they will not touch it for 10 cents, @ 10 cents you're looking at combined entity EV of $28 million, of which $20m is debt, so the liquidated value of Freedom plus $70m in-force book of St Andrews is only worth $8 million!?? That's simply ludicrous. Yes there no telling how low price can go but I just don't see how St Andrews can have 90% of its valued wiped out and Freedom 100% value wiped out within next 2 years.

Another way to assess margin of safety is to look at acquisition cost per customer, St Andrews have 147,000 customers, @ $65m price tag that's $442 per customer, the combined Group will have 504,000 customers, that value the Group at $222 million, let's say they lose half the customers effective today, that's still a price tag around $111 million, at current prices its trading about 50% discount.

I'm looking at this company from several angles, the margin of safety appears to be huge in each case, I would love if someone can point out the flaw in my logic.