Forum Topics IEL IEL My thesis in pictures

Pinned straw:

Added a month ago

Here is my thesis for IDP Education in pictures. All tongue in cheek of course! :)

If this chart…

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Plus this chart…

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Equal this…

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And if this is what really happens…

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then this could be the result…

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But, there’s always the distinct possibility it could turn out more like this…

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or this…

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You can’t take this stuff too seriously!

Disc: Held and adding

Mujo
a month ago

I've been eyeing IDP too and think it is starting to look like good value. I am interested in getting better at trade execution though.

Having learnt from RMD, as well as others, can observe that the recovery is not usually V shaped. I'm not a chartist or anything like that but there's usually a period of consolidation before recovering. RMD was quite quick, but you still have 2 months to purchase at the lows after the intimal dump. Volumes were also elevated.

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IEL has been a longer sell down as seen below, so there may be a slower recovery too - albeit there is the high short interest which may change this.

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I'm just trying to patient and starting to accumulate but could still be further downside. Should be plenty of time to accumulate when you see a period of consolidation.

Those with multiyear time horizons this doesn't matter but I think every little bit helps and can add quite a bit to long term returns.

18

mikebrisy
a month ago

@Mujo Nice analysis. I don't try to pick the bottom (as I've missed out in the past doing that). My approach is that once a stock I want to build a position in hits my "buy" zone, I just start accumulating in increments over time.

So far, I have accumulated three significant parcels of $IEL at approx, $22, $19 and - yesterday a smaller one at - $16. We may have further to go down, particulatly if FY24 is soft. So I have one or maybe two parcels to go until I have my full allocation, which I'm aiming for about 5-6% in RL. So, I am keeping some power dry.

However, there is a risk there could be a sharp upswing at FY24. This is because despite the headline announcements, we've gone into 2H FY24 with strong momentum on student numbers. For example, in Canada (albeit a soft month in the annual cycle) student visas issued WERE ACTUALLY UP c. 20% in January on January 2023, despite the government annoucing a reduction in student visas for the year of 35% compared with 2024 - alebit the announcement only occuring in late January. I think in Australia we also had a record start to the year.

And to put Canada in context, student visas issued in CY2023 were up over 70% above the pre-pandemic high in 2019 and it was looking like an unsustainable level of growth. Given the surging student numbers, cost of living issues and pressures on rents, housing, healthcare and social services were becoming a big political issue in many communities and there was pressure on the government to act. So I see the change in posture in Canada and - to a lesser extent in Australia - as a short term reaction to political pressures, and not a strategic shift from the education sector as a major contributor to the economy. So, it does give a short term opportunity for a "growth will slow" bear thesis.

Even if Canada delivers a 35% reduction in new student Visa in CY2024, that would still be a level +10% above 2019.

However, there is a chance that if FY24 numbers turn out to be strong, then the Bear thesis might become toast very quickly. That's why I've positioned myself quite aggressively, building 70% of my position while the SP is still falling. The lion's share of the Canada adjustment will likely occur in Q1 FY25 (the peak quarter for student visas in that market), so it will be interesting to see how robust the Bears are in their view when FY24 results come in, as from the commentary I read so far, growth would be a surprise.

If I am wrong (and I might be), then I am going to end up with a weighted cost base of $17-18/share by the time I'm done, which is still well below my lower limit on valuation.

I agree with you that all these fine nuances will be noise when we look back in 2-3 years time, and you make a good point that you may as well try and get the best price to get the best long term returns. Clearly, those who have held off until now, stand to do considerably better than me! Nonetheless, I want to protect against the risk that the bear thesis unwinds very quickly.

To finish, this is a different position to $RMD. The GLP-1 Bear case was always going to play out over years. The market over-reacted at first, and over months it became clear that the sky wasn't falling in for the OSA market, and so we've seen a gradual recovery. But the data on this one has emerged and will continue to emerge slowly over time. A study here for the Bulls, a result there for the Bears etc. That's why I think the SP dynamics we are seeing for $RMD are more gentle. There are three factorss that might continue to be gentle tailwinds -: 1) Continued absence of data of decline of sleep clini presentations / correlation with GLP-1/ adherence to treatment; 2) continuing recovery on gross margins and 3) continued benefits of absence of Phillips in some markets. Provided all three continue on current trends, then I expect to see a progressive improvement in $RMD back to where it was, and then beyond.

25

@Mujo remember the saying picking the bottom is a messy business! my approach is to initially put in maybe a third or half or 60% of target weight, depending on the situation then hopefully add the rest--variable success rate, for everyone that plays ball there's one that I was better off just going full weight straight away. it's a psychological game i guess

15

Mujo
a month ago

Probably right, just trying to avoid buying in on the first large drop when in most cases it often falls a lot further than you think (momentum traders, panic investors, shorts leers). Agree with the averaging in being prudent.

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