What is it we don't know?, page-34

You could be right in respect to the SP, but I would be disinclined to use metaphors like “though the clouds”. There could be an upward drift in calendar year 2018, with a spurt in November. What I write below refers to the health of the company, rather than its SP. Obviously, if the health of TGA improves, sentiment would improve, and together they will occasion the SP to rise.

In my ten or so years investing in the ASX, I have invested in sectors where some firms thrive, and others fail. In other words, many management teams are poor, and a few are good.

Of the turnarounds that I have experienced, one was NWH. I regarded the management as good initially, and I still rearded it as good. The profitability of NWH waxes and wanes with sector cycles, so I expected that, but the huge non-payment by Samsung in respect to work done in relation to Roy Hill was, IMO, beyond NWH's managements control, and could not reasonably have been anticipated. Anyhow, NWH is recovering well.

Another good turnaround is Coote Industries which was destroyed under the aegis of its founding director. New owners (a company substantially owned by Dale Elphinstone) with a new team have turned the renamed company (now ENG) around.

The significant turnaround story in respect to what I call the Poverty Sector, the sector in which I place TGA, is CCP. Its SP went from about 65c in 2008 to about $23 recently, which is probably fair value. CCP's management changed in 2008 when the company nearly went broke.

I could mention others that never recovered from the failure of earlier managers, but the gist of what I want to mention about TGA is that great damage was done when an earlier management team strayed from TGA's historical business in order to diversify. The goal was laudable – the execution woeful, and made worse by trying to hide the mistakes. Now the issue is, is TGA, like CCP and EGN, going to be turned around by a new management team or not?

If TGA's new CEO is as good as Thomas Beregi of CCP is, then TGA could be a multi-bagger. The first step is to survive in the short term, and in the medium term, improve the health of the company to a point where via well-considered and well-executed initiatives can occur to ensure long-term growth. With CCP, its medium-term recovery provided the basis for it to diversify in the unsecured loan business, and in respect of its core debt-collection business, open up in the USA. CCP has succeed in two lines of business that TGA tried, and failed, which underscores my point – it's not the sector that has failed, it's TGA's former management that failed to execute the long-term reinvention of the company.

The number of ifs in the above, suggest that TGA's recovery is possible, but not certain. On balance, I am bullish.