This was one of my big calls, and I was quite excited about the potential for Enero Group (EGG) up until the FY23 results. Then something strange happened which I could not understand. OBMedia, the jewel in Enero’s crown, was growing like a mushroom…until it didn’t. It all seemed to unravel at the end of 2H23. One slide in the FY23 report tells it all, it confused analysts on the call, and it put up a huge red flag for me.

In the space of one month OBMedia’s revenue almost halved (on an annual basis). The reasons management gave for this huge drop were:

Huh! This explanation was well above my pay grade, so at that point I decided to start reducing our holdings. Of course another strategic review followed to work out what to do with OBMedia to maximise shareholder value.

The 1H24 report revealed that earnings per share had fallen by 54.3%. Management said they were continuing the strategic review with respect to OBMedia and were considering sale of the business with indicative offers due by the 25 March 2024. Well, the 25 March has come and gone…and so far crickets!

I’m probably a bit impatient and a really great deal is about to be announced for long suffering shareholders. However, I’ve taken the opportunity of a run up in the share price in anticipation of some good news to get out completely. We are very fortunate to come out of this retrieving our cost price plus a few dividends, less brokerage. Now watch for the huge offer for OBMedia! I hope so for the sake of others still holding Enero.

No longer held and relieved