Warning Bells

Hi all,

Apologies for being negative (well realistic) on a first post on a thread. I really really wanted to be positive but after I spent 2 days looking at the company I just could not find anything to be positive about but a heap of landmines.

The award goes to "Investors Mutual Ltd" - for basing an investment decision off trading screens and P/E & dividend ratios based on past performance. Wow that was a bad trade and only almost 30% down.... on a 15+ million position. Tough losing 5 million even if it is not realised yet.

Anyway the company is now really running a P/E at 11+ based on current share price if we go with the company guidance of 19 to 21 mil of earnings... Not 5.69 that might be showing on your broker screen.

Worst the div yield based on historical payout ratio of 55% is likely to result in a full year dividend yield of 5% and not 9% that would be expected if they did the same payout as last fin year...

This company is enormously frustrating due to opaque reporting:

1. The key variable I want to know for a bank of financial insto is their NIM (net interest margin) as they buy stuff then rent it out... it is not reported anywhere.

2. No bad debt discussion nor impairments... just receivables all blowing out to non-current assets..... not sure when they will do that write off....

The buy out of the subsidiary was excessively expensive. These transactions are normally done at 4 to 6x this was done at 10x++. Not sure how that acquisition was in shareholder interests.....

The stock needs another 30% to 40% downward adjustment to share price.

Be careful all of this stock,
Super Ninja