TGA valuation, page-18

I only tick the "Buy" box when I am buying, and I am not buying now because I have no loose funds, and I already hold over 600,000 TGA shares. I am massively over exposed to TGA. Also, as a large holder with a stated objective to trim this holding to about 400,000, I am loath to advise people to buy TGA, because I have a vested interest in the SP rising to offload the 200,000 excess, and that would look like ramping.

If I had very few TGA shares, or none at all, I would buy. And yet it remains a punt, like most stock investments. When I guesstimate what the EPS is going to be, the number I put forward is actually just a mid-point in my mind. The truth is that it is a distribution curve – reality could transpire to be better, or worse. The things that could transpire to be better are:

• Equipment Finance may do better than simply repeat Fy2017's dollar NPAT growth.
• The $4m before tax padding I used may pan out to be much less.
• Consumer Leasing may have a better year, than I have allowed for. This is because the pricing for most of the segments leases have, according to my calculations, come in at below the proposed regulatory caps, and the business where I suspect this was not the case relates to 2-year leases, which is a small percentage of the business.
• Competitors will feel the changes in the consumer leasing sector more acutely that TGA does, so TGA may increase market share.

The negatives are that what I state above is incorrect, and the opposite happens. Further, Peter Forsberg may be hit by a piece of space junk, and Andrew may choke on a chicken bone, before they have established successors capable of stepping into their shoes. Maybe Management takes the easy path, and simply caves in to the Class Action threat, as NAB did on bank charges, and handed over $6.6m to the shake-down gang, whereas ANZ fought and won.

On balance, I think I have loaded the die to have a greater upside than downside. I provided my arithmetic and reasoning to allow folk to develop their own feel for the situation.

In summary, if I had a smaller holding, and funds to invest, I would buy TGA, and wait, irrespective of what happens to the SP in the short-term if no new negative facts emerge. I have a lot of patience, and a high tolerance of pain, which are not traits that every investor shares, and traders definitely do not.