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Krispytech

4,431 Posts.

01/09/16

15:03

Post #: 18860511
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Originally posted by Dr.Who ↑

brily, I had a chat the other day with a few about investing generally. How our mood fear etc. is shaped by the share price. I played a bit of what if.

What if: Slater & Gordon was just listed, in its prospectus it said it would become the largest consumer law firm in Britain and Australia. The company had managed to secure debt funding to see it through the phase one - establishing the networks and funding working capital. The company said this is remarkable achievement for a start-up, access to a high short term funding source therefore equity will have exposure to the established and growing business in years to come.

Year one and two will be negative EPS
Year three swings to profit
Dividend plan is 60% of NPAT enabling ongoing growth of 5% after year three.

You get the picture

Would the mindset of an investor be different? You bet it would, many would want to get in early ready to build a sizeable position before it pays dividends.

My point is: the bad publicity and share price is overwhelming and a very strong influencer. What if it is wrong? This is really just a start up setting the groundwork for a major sustainable business long into the future funded by ultra-cheap debt.

Can you imagine the board thinking that way? I can.

We have some high profile people join the team this year. Ask yourself would they readily join a basket case? Might say yes, they don't care they are getting paid. I think wealthy people care more about their reputation than absolute dollars.

Enjoy Europe.

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Amazing . same though process going through my mind that i bought SGH in IPO. No worries.

SGH Price at posting: 37.0¢ Sentiment: Buy Disclosure: Held
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Today SP, page-294

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