IOOF ifl strategic entry point, page-5

IOOF does look like the classic catching falling knife share price dilemma.

Some people will convince themselves it must be great value now as it is cheaper than it was yesterday and yesterday it was cheaper the day before that.

Others will see it is dropping for a reason with no clear bottom in sight as it was probably way overvalued before and now has bad news to price in.

In my view, there are reasons to place IOOF in the second category. It’s peak price probably made assumptions about sustainability of existing profits plus future growth that were too optimistic. Much of IOOF’s growth has come from from one off acquisition benefits that have an end date.

It also now looks like there will be questions about the survival of its model. More than any other integrated business model in the market given the attitude expressed by their CEO about obligations to clients.