@edgescape . I run a growth portfolio as well as an income portfolio and this stock has piqued my level of interest as a candidate for the latter. In FY2024 EBITDA was $9.1m and CAF paid an annual dividend of 2.75c which equates to a yield of 8.87% (or 12.60% grossed up) based on a 31c share price. FY2025 EBITDA is forecast to be $10m-$10.5m.  

Yes I understand your concern over the declining number of financial advisers but apart from the yield I'm also interested in CAF because there will be a record amount of wealth being transferred from baby boomers to their children/grandchildren and many will probably require financial advice. Also, obtaining financial advice has usually been very expensive which deters many from seeking it because the upfront fees to set up your financial plan (which are the most expensive part of the financial plan) was not tax deductible but my understanding is that a portion of the upfront fee can now be tax deductible where it relates to tax advice.

Furthermore there appears to be consolidation happening in the industry. Count Limited (CUP) took over Diverger (DVR) earlier in the year but had to fend off an interloper in COG Financial Services (COG). Now COG has purchased a 19.99% stake in CAF off Clearview Wealth (CVW) (which is the maximum holding permitted without launching a takeover or SOA except for creep provision).  Presently AMP is number 1 in terms of number of advisers followed by Insignia, Count and CAF at number 4.

This is on my watchlist whilst I undertake more research as I need to determine if this is a yield trap or not. 

@OxyBBear I started a small watch holding while I research CAF. I glad we are pretty much on the same wavelength regarding financial advisers and potential yield trap.

Given that HUB has lots of improvements in the pipeline for their platform, I think it is still too early to say if Iconiq will take off.

However a price of 18 bps for IDPS seems attractive compared to the mainstream products. Looks like they are real keen to get some customers through the door.

@edgescape . Since my last post, Bain Capital has made a conditional proposal at $4.00 per share for the number 2 player Insignia Financial which the board has rejected. I know it is not a sole reason to buy a share but with consolidation in the industry and with CAF trading at a PE of less than 9 times, this might limit any large downside along with the generous yield.

I forgot to add though that one of the problems owning CAF is the lack of liquidity.

I am interested in this sector, but the contingency of substantial payouts from legacy issues is an ever present issue (at least presently). Maybe this issue abates over time.

I know SEQ got caught with a $2m payout a number of years ago - to which they claimed insurance compensation. To my knowledge this has not happenend and they have gone silent on this matter. I think (code for 'I don't know for sure') SEQ may be facing a similar scenario again (Venture Egg). And that's the problem, we don't know where the land mines are...but the Royal Commission would suggest they are there...somewhere...and our court system is hell bent on making the 'bar stewards' pay.

Your issue about illiquidity of CAF is very valid.

As to takeover potential, CAF is an ideal fit, but look at the significant shareholders - Thorney Investments (look at the SXE thread to read about Alex Waistlitz) owns 26% as does COG with 20% - no dice without getting them onside. I'm not sure how these shareholders see their exit strategy.