Why I passed on CTD., page-61

The post from MarsC goes to the heart of the matter - if CTD isn't growing much organically it does not merit a premium rating. More so now as it will be harder to grow EPS through acquisitions after recent events. The weekend press has already suggested that a UK acquisition had to be canned.

I don't know much about CTD but quite a few aspects of the business - aggressive acquisitions, rapid geographical expansion, large intangibles, controversial accounting policies, a "visionary" CEO - are all too familiar and would have been yellow flags on our sanity checklist when I looked at these things professionally.

I don't know much about VGI either but in my experience bear raiders research their targets far more thoroughly than any of the sell-side analysts and they rarely fail to inflict lasting damage - in the dozen or so raids I looked at, the shares have failed to recover their pre-raid levels in all bar a couple of cases where a white knight intervened.

CTD may well be a good business but the VGI FUD is not going away, the PER is not going to recover quickly and I think the risk of further disappointment is real, not least because acquired earnings growth just got a lot harder. And corporate travel spending gets reined in hard when the economy falters - US top 100 spending fell 21% in 2009.