What is it we don't know?, page-29

One gets the impression that one or more parties are acquiring TGA shares. At 10:50 today the metrics were 193,292 shares trade, in 50 transactions, for a total of $161,522. That is roughly 3,860 shares per trade for roughly $3,230 per trade – a very high set of averages for TGA.

After a spate of bad news, I recall thinking that the shares were worth about $1.40, and then more bad news hit the fan, so without investing time in a new valuation, I chose a new gut-feel valuation of $1.00. Not much has changed since, so that is the number I still hold in my head. I do not want to own more TGA shares, but I was sorely tempted to buy at 60c as a trade, rather than investment. I did not have the funds, so I did nothing. Anyhow, I feel that the SP will get to my valuation, which is pitched at a rounded number to indicate that I view my target target price with latitude (at least 10% latitude, so 90c suffices).

I have mentioned before that TGA's many initiatives to diversify had failed – namely online retailing (Big Brown Box), the financing of vehicle purchases, unsecured loans (Cash First), and the purchasing of debtors ledgers for collection (the $30m+ NCML acquisition). Now the invoice financing business (the Cash Resources Australia acquisition) has joined the club. TGA has had a commercial leasing business for decades, although restricted to TAB franchisees, so branching out to include other businesses, especially specific groups of franchisees, was really an extension of a well established line of business. In summary then, TGA's past management team failed in all the genuinely new lines of business that they tried, and burnt money in the process of trying to reinvent itself. TGA is now in the same two lines of business that it was in over a decade ago.

Thankfully, the team who oversaw the string of failures has gone. If the new team can repair the damage remains to be seen. The SP may be increasing because it is now clearer that TGA will meet its bank covenants. In addition, the class-action matter may be diminishing as a threat in people's minds. The original scaremongering put out by Maurice Blackburn was 200,000 TGA customers and oof of $50m. How likely is a $50m settlement?