I’m still here, but not as EGGcited as I was eight months ago :) I haven’t posted any straws on Enero Group (EGG) for months.

This was one of my favourite picks at one stage. However, over the past year there has been some strange things going on with the jewel in the crown - OBMedia. Over recent years it has been growing like a mushroom with metrics to envy. The strength of the OBMedia business was why I built a position in Enero (EGG) in the first place.

Buts what’s the go now? I have no idea. First management tell us that the quality of the revenue from some clients of OBMedia was poorer quality than others, so they were pausing these accounts to improve the quality of the earnings overall. Then we were told they decided to drop those clients altogether preferring to maintain only the clients returning the superior metrics. I don’t understand the logic, I don’t understand how things will improve from here, but we’ve been told they have been improving and will keep improving even as the US technology sector improves. This sounds like “Hope” to me, and we all know hope is not a strategy.

Then there is another strategic review, this time to look at how management can maximise the value of the OBMedia businesses to it’s shareholders. One option to be considered is selling off OBMedia. What the???

To be honest I’m confused, I don’t understand what’s going on with OBMedia, and I’m starting to get a whiff of rotten EGGs. I have a suspicion I’m not alone here given some of questions coming up at the shareholder meetings.

Management keep telling us the market significantly undervalues the business as they use our cash to support the on-market buy back. However, if the shares are so cheap and the outlook is so good why isn’t management buying them up on-market? The last insider buying was by independent non-executive director Ian Rowden in August when he bought 15000 shares @ $1.43 per share, totalling $21,450. To my knowledge CEO Brent Scrimshaw, who’s on a $2 million package, hasn’t bought any shares on market using his own money for a long time, even though he currently holds shares to the value of $774,300 or 0.54% of the business. Part of Brent’s package comes as shares.

I’ve been reducing our holding of Enero at opportune times to limit our exposure in case Humpty has another great fall. Currently faith and hope is my strategy. Let’s see how that plays out!

Disc: Held IRL and SM