Pinned straw:
Hi @silky84 I have no strong opinion on TIP group, but just some high level observations to play devils advocate.
1. “This is a high quality team with a dedicated long term focus and a proven track record of outperforming the market with team invest over many years!”
Where is this proven track record? Their listed history does not suggest this at all. You may be confusing Team Invest, the investment group which is a investment club that invests in listed equities vs Teaminvest Private Group which is this listed entity that seems to be a conglomerate of small and medium private businesses and wealth management. Looking through the private equity holdings, there isn’t anything there that is super exciting, traffic control, trailer manufacture, structural steel fabrication, marketing agency, IT distribution, glass kitchen splashbacks, law firms etc.
2. “Growing revenue and earnings to boot!”
In their first full year after listing their earnings was 7.32cps and FY23 was 3.05cps. Their latest annual report they say their “look through results” they have achieved Revenue CAGR since 2017 of 6% which is ok. ROE and ROC have also just been ok since listing about 8% each.
Other negative points:-
· From my brief look, this is a difficult business to follow the cashflows. And the results half to half are all over the place.
· Daily volumes are so low, it would be hard to buy a substantial stake.
Despite above, it only matters what happens from here. If they continue 6% pa rev growth and can improve earnings with a little more stability, it looks very cheap.
@Silky84 I’m always interested in the stones Strawpeople are turning over in the hunt for possible gems. In this case though I’d have to agree with @Vandelay, and if we took the advice of Mark Moorland or Howard Coleman from the other Teaminvest, they would say your long term returns will eventually be close to the long-term ROE for that businesses. Looking at historical ROE for TIP it seems they got off to a reasonable start for 3 years up until 2021 with ROE improving to over 10%. Since then there performance has been erratic and has deteriorated (see chart).
Source: Commsec
It doesn’t pass my filters as a long term investment with the ROE as my first hurdle. However, if you have reason to believe its performance is about to improve significantly from here, they could be good buying at the current price which is only 0.6 x book value. Personally I prefer to see a track record of ROE consistently over 15% to meet investment grade. Teaminvest insist on a history of 5 years.
Cheers, Rick