fundamentals anyone following, page-11

Hi Finch.

Whilst both MOC and RHG are listed and operate in the same industry, I do not believe they are fair comparables.

Both those businesses basically are a tied mortgage brokerage/or aggregator as it is termed in the industry. The strength of their model is the golden handcuffs they have with their brokers. A Mortgage Choice broker has all his revenue clipped by mortgage choice, and he can not sell his business/book to a non mortgage choice broker...so he is in a sense a tied agent. Their business is filled with many successful brokers that are disgruntled with MOC, but by the time they realise they could have got a better commision split elsewhere, or that it is them and NOT the brand bringing in the dollars, then it is too late, as if they leave, they leave behind the trailing commission.

MOC makes most of its revenue by clipping the ticket of their brokers....and Rams is a similar model (although it did not start off that way when Kinghorn was still running the business as then they were flogging their own securitised product..which has much higher margins, as was Aussie John and our mate Bouris at Wizard).

The reason I much prefer the FFF model is its much more diversified. They are as much involved in product manufacture as they are distribution...and often this can have much higher margins.

For example, a business we operate in Sydney called LJ Hooker Finance, is able to offer a really really sharp whitle lebelled loan under our own name...called LJ Hooker home loan. This product is provided by FFF under one of their businesses....and instead of letting the big banks take home the margin, it is shared between FFF and Hookers/us.

You might want to look at a business called Homeloans Limited (HOM)which is a mini FFF IMO. I havent really looked into them at all but know they are a competitor...but dont have the same distribution scale FFF have.

Best of luck in your research. Please feel free to share any findings, or ask me further if I can help.

Kiril.