Hi Kiril
I have been happy to hold given the holding had little to no downside IMO, and I considered it loosely equivalent to cash at recent shareprices in a total portfolio sense, with a call option on the upside.
My best guess is that they will stay cash flow positive for the next year or so, thus I did not see much downside risk. However, a bit concerned now that they are seeding products with shareholder cash (and not just because it is lazy distribution)...And I certainly hope they have learnt their lessons on leverage. If they leverage the product, well that will be a sell signal for me as the risk profile then changes even more dramatically.
I expect to hold until we see a spike in the sp. Unfortunately, there are only three catalysts that I see for a sp rise at which time I expect to exit:
- takeover
- sacking of current board and new management installed (may then hold)
- change in substantial shareholders, thus market expecting further activity (price spiked last time this occured)
I reduced my exposure to EFG at ~ l2 cents and put into HFA at ~ 6 cents...unbelievable timing, and would have been very happy if I switched the lot!
Re HFA...they have been very quiet for a while, thus looking forward to seeing the financials. Whilst many punters will focus on profits and naively extrapolating via PEs, the key things to look for IMO will be:
- how much debt has been paid down
- how FUM is tracking, and in particular is Lighthouse winning business, and not losing business
- what is happening with margins
- whether they are recovering in the Australian retail market
- how much they have been able to reduce their costs
Anyway, thanks for sharing thoughts on EFG.
Cheers
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