RE:Wow .- CEO needs to be punted no they are not going under. would think it is a combination of:
1) possibly about to lose some IAs
2) most importantly, the decision to spend 100% of available cash flow on growth including a fair bit renovation offices and showing no regard for value of their own securities. may well be one of the worst capital allocation decisions i can recollect and shows utter incompetence by management.
ok, so richardsons have given kish a window of perhaps a few years to grow the business. fine but
cost them 1%+ of AUM to recruit IAs
given debt of 110, working capital of 90, prefs o/s of 110 trading at 40% of par vaule and stock at $6.75 what this equates to is:
they could but own prefs at effectively the 65mm mark (40% of 110 plus debt less wc) which are soon to yield 16% when they reset in 2 yrs. that is also 1X ebitda and around 0.16% of existing AUM
or the true adjusted EV of the common is around 180mm (treating prefs at say $15). that is 3X ebitda and 0.5% of current AUM
and yet they devote 100% of cash flow to paying 1%+ to recruit or generate a zero IRR renovating offices
THAT is why stock trades down. grossest misallocation of capital on TSX from guys who are supposed to be managers of capital!!!!