While i like your confidence, you have to ask yourself the following questions first:
1. What is going to happen when they announce in August that they did not make a profit for 2017/18 based on the new accounting rules. (note that the current MD has basically advised the market of this)?
2. What is going to happen when they announce that there will not be a dividend for 2017/18?
3. What is going to happen when they announce that they need to raise more capital (this has to be on the cards as they do not generate enough money from the management funds to seed new funds)?
4. What price are they going to be able raise the funds in mass for point number 3?
I make the argument about capital raising because they have already advised that they have allocated most of the capital they raised recently and they are not going to be making any significant exits to recycle the capital. Ok, yes, Foundation Learning and 1 other is coming to a close, but that won't be enough to seed new funds to maintain the house of cards that is this business model.
The institutions will be pushing back on the fees they charge, especially after the Glaucus report, no more prepaid 5 years management fees, a LOT more scrutiny on valuations, changes to accounting standards so you cannot bank "theoretical profits". When you dig into the financials they have been paying dividends on profits that they NEVER collected and based on the Foundation Learning situation, never will.
Over the last few years they have been literally going... Step 1, charge multiple years management fees upfront (so that we have cash in our bank account), Step 2, write up the asset, Step 3, book a profit (but put it into the aged receivables), Step 4, announce a dividend and then Step 5, raise capital, Step 6, sell the best performing assets so we can manufacture a track record and then repeat from step 1.
On paper everything looks rosy until 5 years later, the aged receivables are getting to big for people to not notice, the under performing assets are starting to wear thin still being on the books and your ability to continue to convince the auditors that these dogs are able to be written up on the books. So the founder decides that the time is right to exit and then a year and a half later..... it all falls down...
August / September this year will be the telling point when they announce the annual report, until then, all you are doing is putting your money into a pokie machine and hoping that things come up Jackpot.
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