I just spoke with Investor Relations who have confirmed that the Financial Update will be delivered in January as promised.
My view is the current low share price is due to uncertainty and the current bear market.
Even if the Financial Update has significant writedowns in goodwill and a downgrade in earnings, I can't see this having a big impact on the current share price (that is priced almost for liquidation).
No one has any idea what the Financial Update will say based on the low volumes being currently traded.
Once this uncertainty is removed, it should trigger a re-rating of the share (hopefully positive).
ASIC Review
The ASIC review should be completed shortly as well (although ASIC moves at a glacial pace).
It is unlikely that there will be any adverse findings for a law firm that has been in operation for 80 years and has been listed since 2007 with its own independent auditors.
UK Legal Changes
If there is one constant with law changes is that these move at a more glacial pace than ASIC and are subject to change based on community consultation. By the time any changes do come into effect (likely 18+ months away), S+G would easily be able to make any required structural changes to their business to limit any impact.
Class Action
Unclear whether this has any teeth. Unlikely that any valid claim can be lodged pre-November 2015 (which is when the most significant falls took place) as there were no misleading announcements during this early period. Possibly a claim could be argued for the late November to 17 December announcement period. However, the fall in share price during that period was relatively minimal so would limit the likelihood of a big class action.
Conclusion
Slater and Gordon have been in operation for over 80 years. It is not a large investment bank and does not have exposure to large financial losses due to bad investments. Arguably, it paid too much for Quindell, but does that put the entire company (including Australia) at risk? My view is clearly not.
Difficult to see any further downside from here at these prices.
Happy to sit and wait for the recovery.
Onwards and upwards.
SGH Price at posting:
56.5¢ Sentiment: Buy Disclosure: Held
