Quindell Portfolio: Trading statement. Just too cheap!
Quindell Portfolio (14p and 6.4% of JIC) has issued a trading statement for the year ended 31st December 2012. It is extremely positive with it saying that results will be above the upper end of market expectations with eps at 1.29p per share. Operating cash flow is ahead of expectations with year end cash at £47m compared to forecasts of £41.5m. Management say the new financial year has started strongly.
The shares have been weak during December and January. Hopefully this statement will stop the rot. On consensus forecasts the shares are now valued at less than 6x 2013 earnings. This seems far too cheap to me.
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2 comments
Hi John,
Have you read this thread on TMF?
http://boards.fool.co.uk/quindell-paulypilot-12709345.aspx?sort=whole#12710269
They do seem cheap on EPS forecasts but surely 6.4% of portfolio seems a bit high weighting for a company with such high risk characteristics? (rapid growth by acquisition, poor cash conversion, excessive placings, management history, alleged poor staff behavior)
Hi Paul,
I last traded in this stock in July when I added to the existing holding, taking the total to just under 3% of the portfolio. I have been happy to run it as I quite like the underlying strategy, although with hindsight I should have let a third of the holding go in November. You make valid points that are clearly shared by others in the market hence the "mistrust" that is reflected in the share price. I would like to see management bed down last years acquisitions and start generating cash. I think at 14/15p the risk is to the upside but take your point about the size of the holding and will look to take some profits in the next few months.
I was never a shareholder in TIG but clearly there are lot of scarred memories. From what I can see the market, still enamoured by "tech" stocks put it on a ludicrous rating from which it could only collapse!