Ann: Half Year Report and Accounts, page-8

"I hope the above points are useful to highlight the "negative" aspects of ONT."

One of THE most useful things for shareholders who, by definition, have positive dispositions to their investee companies, is "negative", or contrarian views (reality checks, if you will).

I wish there was more of it; that way we might avoid making otherwise avoidable investing mistakes. (It has always struck me as being bizarre how many people arc up against it, far preferring to have their views reinforced, but never challenged.)


At any rate, you point about "over-the-top", sharing, caring, custodial, nurturing, paternal style of communication is an interesting one.

While some may find it to be a bit patronising at times, my mind harks back to the sudden cessation of the CDDS in 2012/3, where the CEO's candour and frankness gilded absolutely no lilies. In fact, he was unequivocally cautious and reserved about the period ahead of the company, this sentiment that was later to be borne out quite accurately by reality.

(In hindsight, at the time he was probably talking down the prospects of the industry as much to manage down vendor expectations for dental practices he sought to acquire, as he was trying to ready the owners of the business for the 25% Revenue crunch that lay ahead.)

One thing that has struck me as most unusual is the acute awareness that Dr Holmes, a medical practitioner by training, has of the lingua franca of the investment world.

Often, I find him sounding like Warren Buffet when articulating certain corporate aspects.

He has either read a bit of Buffet or mixes in financial circles or is well-advised by investment practitioner.

For his understanding of shareholder value creation, and its determinants, is not something they teach at dental school!

No matter: the market savvy-ness of Dr Holmes has worked a treat, testimony to a company that has performed exceptionally well over an extended time frame, in what I would not have thought was an industry that naturally led itself to great investment returns in a corporatised setting.


Then there is the issue of key-man risk in the form of Dr Holmes, to which you refer.

This is something to which I suspect many investors will be sensitised. IT is something that has exercised my mind as a shareholder in a very illiquid stock.

For if Darryl got run over by a bus one morning, it would immediately lop a good, I dunno, 6, 7, maybe 8, points off the current eye-popping 21x P/E multiple straight away.

But we can't live our lives worrying about the extraneous prospects of errant drivers behind the wheels of buses meeting up in unsavoury circumstances with mission-critical CEO's not looking left and right before they cross the road.

What we can - and should - contemplate is what happens when Dr Holmes gets tired and/or bored with the whole corporate schtick and wants to do something other than attend with gusto to the never-emptying IN-tray that comes with being the CEO of a publicly listed company

Here my call is that the profit-seeking old Dr Holmes is a smart enough financial cookie that he doesn't hang up his little drills and little mirrors without some exit strategy that preserves - or indeed enhances - the value of the 15 million- odd shares that he owns (and, at the same time, the value of my substantially-less-than-15-million shares).

In other words, as an exit strategy for himself from the business, I think Dr Holmes waits for some drunken sailors to come sailing into port with fistfuls of dollars, one day when market conditions lend themselves to it, and he sells the company to them for a keen enough price.

Until then, I reckon he just keeps doing what he has done for the past 20-years, that is expand practices where demand outstrips supply and buys practices with the requisite modicum of capital discipline.

While I've not met him in person, it still reads to me like he has more than enough fire in his 51-year old belly.