Hi guys, is ABS an attractive stock. What is ur views?? I know the 12 month share target price is $4.40 (as at 2 September). But its reached that price so early. Would this stock run out of steam?? Or is this just the start??
RichKid
7th-October-2004, 10:57 PM
There would have to be profit taking and a slowdown at some stage. Price targets can be tricky as different people put different values and stock prices tend to have a mind of their own.
The synergy from the merger apparently wont come through for a year or two so maybe it's best to wait for weakness. It's one I've got my eye on too but as you suggest it's probably hit full value by now and there's no point buying expensive stocks. But it depends on your investment style- long term this looks good.
It's also one of many stocks that'll do well regardless of the election outcome.
RichKid
10th-October-2004, 11:27 PM
Hi guys, is ABS an attractive stock. What is ur views?? I know the 12 month share target price is $4.40 (as at 2 September). But its reached that price so early. Would this stock run out of steam?? Or is this just the start??
I'm not actively following the stock at the moment but ABS has been involved in some sort of share placement recently- it was oversubscribed from memory. Might be worth a look if you're really keen on it. Articles should be in the FinReview, SMH etc from last week.
Afterglow
22nd-October-2004, 06:04 PM
Hi to all, as I have stated in other threads I am new to this, and am starting to get more and more interested and involved as the weeks go on. There is a hell of a lot to learn.
During yesterdays lul [21-10-04 ]
I bought some shares in ABS at $4.75 and now have a couple of questions.
As settlement has not taken place, Will I be eligible to take advantage of the offer announced today?
And What affect will the offer do to the share price??????
Hi to all, as I have stated in other threads I am new to this, and am starting to get more and more interested and involved as the weeks go on. There is a hell of a lot to learn.
During yesterdays lul [21-10-04 ]
I bought some shares in ABS at $4.75 and now have a couple of questions.
As settlement has not taken place, Will I be eligible to take advantage of the offer announced today?
And What affect will the offer do to the share price??????
I am sure you will be able to take up the share offer as you were a holder at 7:00pm on October 21 which is the deadline according to the announcement.
As for what will happen to the share price it's hard to tell, and especially hard for me because I am not familiar with ABS. Although, often when offers like this are announced the share price will tend to drift down closer to the placement price (in this case $4.00).
Perhaps someone with a more intimate knowledge of ABS can offer an opinion?
Afterglow
24th-October-2004, 04:11 PM
Thanks Joe Blow , I am considering selling tomorrow and taking up the offer.
Long Shot
7th-April-2006, 10:34 AM
Hi, just wondering what people think of ABC Learning...
Surly they are on the receiving end of some bad publicity. However the company’s position in both domestic and global market is strong… Once it’s US arm is fully integrated, there is a lot more room for profit upgrade in the future.
I got some ABC at a bit over 7 dollars,,, do you guys think there may be a reentry point soon?
cheers
twojacks28
11th-April-2006, 06:50 PM
Hi guys, ABC learning centres are at a high price now but considering they have the best man in australia and possibly the world running the centres it is likely to be a great stock in the long term. In the short term it is not worth buying as it isnt a stock that is highly volatile. ABS is also in the best position as they are dominating in Australia and now are expanding around the world.
twojacks28
michael_selway
26th-April-2006, 01:15 PM
Hi guys, ABC learning centres are at a high price now but considering they have the best man in australia and possibly the world running the centres it is likely to be a great stock in the long term. In the short term it is not worth buying as it isnt a stock that is highly volatile. ABS is also in the best position as they are dominating in Australia and now are expanding around the world.
twojacks28
In trading halt, any ideas? thanks
---------------
Date: 11/4/2006
Author: Kelly Burke
Source: The Sydney Morning Herald --- Page: 7
The owner of Australian child care group, ABC Learning, claims that his aim is not profit. Eddy Groves told a New South Wales Council of Social Service conference in Sydney on 10 April 2006 that his $A1.2 billion company was a labour of love. He said that the success of the business was due to its public structure, which provided capital for expansion. Groves added that adequate provision of services for the country was only possible through the for-profit and not-for-profit sectors working together
Date: 3/4/2006
Author: Farah Farouque
Source: The Age --- Page: A1/A6
There have been some complaints in Australia about the service standards at ABC Learning Centres, a child care group. It is taking legal action in the Supreme Court of Victoria and wants to stop Victorian officials asking for details and documents relating to alleged breaches in child care standards. Two cases involving children in Victoria are central to the case. In one case, a mother picked up her child from an ABC Centre, and her son was screaming. He was found to have a broken arm, but the centre staff just said that no-one saw it happen. In another case, a child at an ABC Centre was lost in a lift, but the staff would not discuss it. The legal case will be heard in August 2006. Some believe that there are tensions at ABC between adequate child care and profits
sandik17
26th-April-2006, 01:21 PM
Hi guys, ABC learning centres are at a high price now but considering they have the best man in australia and possibly the world running the centres it is likely to be a great stock in the long term. In the short term it is not worth buying as it isnt a stock that is highly volatile. ABS is also in the best position as they are dominating in Australia and now are expanding around the world.
twojacks28
Dominating in Australia? All I hear is negative things about how they cut costs....not even allowed to buy more toilet paper if they're over budget???
RichKid
26th-April-2006, 01:35 PM
Dominating in Australia? All I hear is negative things about how they cut costs....not even allowed to buy more toilet paper if they're over budget???
There was a critical item on the ABC's 7.30 report a few days ago, about claims of negligence at some Victorian centres, legal action pending I think from memory. Groves was interviewed and said it was just a tiny no of complaints but I think they could be in big trouble if more claims surface, class action in the making??? Parents really resent having to fork out lots of money and then seeing it go towards profits rather than the proper care and supervision of their children. On top of that the industry enjoys taxpayer funded dollars.
michael_selway
26th-April-2006, 01:42 PM
There was a critical item on the ABC's 7.30 report a few days ago, about claims of negligence at some Victorian centres, legal action pending I think from memory. Groves was interviewed and said it was just a tiny no of complaints but I think they could be in big trouble if more claims surface, class action in the making??? Parents really resent having to fork out lots of money and then seeing it go towards profits rather than the proper care and supervision of their children. On top of that the industry enjoys taxpayer funded dollars.
Australian Broadcasting Corporation
TV PROGRAM TRANSCRIPT
Broadcast: 24/04/2006
Parents question quality of care at ABC Learning Centres
Reporter: Natasha Johnson
MAXINE McKEW: Welcome to the program. Among working parents today,the topic of child care is a hot issue. It's cost, its availability and its quality. At the core of the system is a particular duty of care - that children will be looked after in a safe environment and that if something does go wrong, then parents will be informed. But that hasn't been the experience of some users of the world's largest listed childcare company, ABC Learning Centres. These parents have questioned the quality of care and transparency at some centres after incidents which saw a baby becoming dehydrated, a toddler suffering a broken arm and a child being left in a lift. ABC Learning Centres is now a billion dollar business and has enjoyed spectacular growth since listing on the stock exchange five years ago. It now controls one in five childcare centres in Australia. The group defends its practices but is also using its considerable financial clout to take the Victorian Government to court. In effect, it's challenging the Government's right to demand answers about its complaints handling procedures. Natasha johnson reports.
JOANNE GOLDING: When I picked her up from the centre she was very blue, and she was very floppy. It was like she was asleep, and I couldn't wake her up.
EMMA KENWORTHY: I got to the creche and I could hear him screaming from the carpark. Within half an hour of the X-rays, he was in surgery.
KRISTEN RAVEST: My son told me that he was stuck in the lift and that he was going up and down, up and down and "I was too little and I couldn't reach the buttons."
NATASHA JOHNSON: The experience of Elizabeth Golding, Todd Kenworthy and Brock Ravest at two ABC Learning Centres didn't live up to the promise of the slick advertising for the world's biggest publicly-listed child care operator.
ADVERTISEMENT: And you'll find we constantly upgrade our facilities, ensuring a safe and secure environment for your child.
EDDY GROVES, CHIEF EXECUTIVE, ABC LEARNING CENTRES: I won't comment on the individual cases, but I will say this, I really don't think there's things going wrong. We have 40,000 children going through these centres a day. And every day is a new day in child care, so that's 200,000 children a week, or 10 million a year. That's a lot of children and the number of incidents that we have is very, very minor.
NATASHA JOHNSON: Elizabeth Golding, Todd Kenworthy and Brock Ravest attended Learning Centres in East Melbourne and Bendigo, which are currently under investigation by the Victorian Department of Human Services. But ABC is fighting the department with an unprecedented challenge to its right to ask questions and seek documents relevant to complaints.
SHERYL GARBUTT, VICTORIAN COMMUNITY SERVICES MINISTER: This is the first time anyone's ever challenged our regulations. Most centres are very happy to cooperate.
EDDY GROVES: I just believe that ABC is smart enough to understand that there's a whole process of law in place. I think for many years the small independent operators have been stood over in some of these cases. And I know that there's a letter of the law we all have to follow. ABC is expected to follow it, I believe the department is expected to follow it, and that's all I want.
NATASHA JOHNSON: ABC founder Eddy Groves says the litigation is about protecting staff.
EDDY GROVES: We try to provide independent legal advice for those centre staff so they know what their rights are.
NATASHA JOHNSON: Well, why wouldn't they answer the questions?
EDDY GROVES: Because at the end of the day I think people have to know that they don't have to answer questions if they don't want to answer questions.
KRISTEN RAVEST: If they knew that they had nothing to hide they would answer the questions.
NATASHA JOHNSON: It was Kristen Ravest's complaint that triggered and court action. In December 2004, her three-year-old son Brock was left in a lift at this East Melbourne ABC centre and found in the building's carpark by a stranger, who returned him to the centre.
KRISTEN RAVEST: If he'd have got out on ground floor he would have got out onto the road. That man could have taken him away if he was a bad man, so to speak. He could have got run over in the carpark. My son is affected by it now. He still freaks out a bit when we go in a lift and he remembers it.
NATASHA JOHNSON: Kristen Ravest says that she and her husband only found out about the incident when told by their son - not staff.
KRISTEN RAVEST: They definitely have like a big responsibility to report to you everything that has happened to your child. Even if it's good or bad. But obviously if it's something like that, you would hope that you would be finding out about it from them, not from your child.
NATASHA JOHNSON: Lawyer Joanne Golding has made a series of complaints about the East Melbourne ABC. Most seriously, that in November 2004, her daughter Elizabeth - then six-months-old - became dehydrated and was taken to hospital after a day in care.
JOANNE GOLDING: When I collected her that afternoon she was visibly blue. I took her to the children's hospital and when we arrived at the children's hospital they took a look at her, and the nurse and the doctor both confirmed that she was showing the early stages of dehydration.
NATASHA JOHNSON: Baby Elizabeth recovered the next day, but Joanne Golding says ABC didn't call her to tell her the baby was unwell and not feeding properly.
JOANNE GOLDING: I can understand that things can happen, children can get sick, but I think that we had the right to get an explanation and to be told what had happened and what their version of events was. To this day, we still haven't heard from the ABC centre about it.
NATASHA JOHNSON: In February last year, Emma Kenworthy was called by ABC Bendigo because her teo-year-old son Todd wouldn't stop crying. She took him to hospital and it was discovered he had a broken arm.
EMMA KENWORTHY: As soon as they said that he had to go into surgery. When he went into surgery, I was straight on the phone to ABC Learning asking questions of what had happened, that my son was in surgery having his elbow now operated on.
NATASHA JOHNSON: She's been told he tripped in the playground. But Emma Kenworthy says no-one can explain exactly how the accident happened and she's angry no-one realised how seriously injured he was.
EMMA KENWORTHY: All they've said is they've seen him on the ground crying and he had a scarred knee and that's all they thought that had happened. For the state he was screaming, they should have called an ambulance straight away and taken him to Emergency. They had to sedate him at the hospital because he was just in so much pain.
NATASHA JOHNSON: ABC won't discuss the detail of these cases. But Eddy Groves says he's confident correct procedures were followed and he has documents signed by the parents.
EDDY GROVES: If I showed you the documentation with those parents' signatures on it when the accident and incidents had taken place I could do that, but I will not comment on individual cases.
NATASHA JOHNSON: Well why don't you release the documents showing the parents' signatures?
EDDY GROVES: Because at the end of the day that is private, confidential information between that child, that parent.
NATASHA JOHNSON: But if the parents are happy for you to release those documents to us, why don't you?
EDDY GROVES: Because that's private confidential information. We're bound to privacy laws. I will not do that.
NATASHA JOHNSON: But if they give you permission, you're not bound anymore.
EDDY GROVES: I will not do that, Natasha. We're not trying to hide anything. At the end of the day, it is very important to us to protect the information.
NATASHA JOHNSON: Kristen Ravest and Joanne Golding say they did not sign any documents, while Emma Kenworthy released this incident report to us, which records an accident in which her son's knee was injured, but nothing about his broken arm. The East Melbourne centre is currently operating on a limited six-month licence. As well as the probe there and at Bendigo, three other Victorian ABC centres are currently under investigation. One complaint concerns a missing child at the same centre where ABC has previously been fined over a runaway toddler. ABC is currently awaiting the outcome of an appeal against that decision. Eddy Groves believes the department is picking on ABC, a $2.3 billion corporation which now controls 20 per cent of Australian child care centres.
EDDY GROVES: Because of our size they have to prove that they're harder on us than anyone else.
SHERYL GARBUTT: It doesn't matter what company it is, or whether it is a community-based centre. We will investigate all complaints and take the appropriate action. Nobody is on a pedestal and no-one is excluded.
NATASHA JOHNSON: While Eddy Groves believes he's getting a tough time from the Victorian regulator, the not-for-profit community operators believe he should be getting a tougher one, particularly from the Federal Government, considering 46 per cent of ABC's revenue, $230 million a year comes from Commonwealth subsidies to parents.
LYNNE WANNAN, COMMUNITY BASED CHILDREN'S SERVICES: I think there's a fundamental problem when the purpose for delivering your human service to young children is to make profits for shareholders. That is what their prime legal responsibility is. And that means they can't put children first. We need more regulation. We need more quality assurance checks. We need more of those spot checks to make sure things are going well.
EDDY GROVES: In the last four years, ABC has reinvested $100 million into existing centres, centres that would never have had that money spent on them if we hadn't of bought those centres. This is a very, very strong company based on educational goals and I guarantee you the child comes first every time.
NATASHA JOHNSON: Federal Community Services Minister Mal Brough says he's currently tightening the Commonwealth accreditation system and will introduce spot checks, but there's nothing to suggest that private owners require greater scrutiny than the not-for-profit operators.
MAL BROUGH, FEDERAL FAMILIES AND COMMUNITY SERVICES MINISTER: I would not segregate or segment this market and say that any particular part of it has a lower standard or a higher standard. The whole sector - everyone - should have confidence in the entire sector, not by the name that's on the organisation.
NATASHA JOHNSON: ABC's challenge to the Victorian regulations is to be heard in the Supreme Court in August, and either the parents will have their questions answered, or the department will have to find a new way to ask them.
KRISTEN RAVEST: Any little accident, you want to know. You feel bad enough having to put your children in child care because you're working.
EDDY GROVES: We have done great things for this industry and it is very disappointing to me that we just hone in on those few incidents. Now they are regrettable, absolutely regrettable and I wish they didn't happen, but at the end of the day, it is a very small number compared to the number of children that come through our centres every single day.
Thanks for the article Michael, you're way too quick!! :)
twojacks28
26th-April-2006, 07:27 PM
abc has hundreds of centres and considering that each centre has from any where between 30-70 children it is going to be no suprise that there will be problems. Eddy installed a system where the centres have allocated toys for onoe year and they dont get anymore until that date the following year. of course there are going to be complaints but in relation to kids this is nothing.
Julia
26th-April-2006, 10:54 PM
There was a critical item on the ABC's 7.30 report a few days ago, about claims of negligence at some Victorian centres, legal action pending I think from memory. Groves was interviewed and said it was just a tiny no of complaints but I think they could be in big trouble if more claims surface, class action in the making??? Parents really resent having to fork out lots of money and then seeing it go towards profits rather than the proper care and supervision of their children. On top of that the industry enjoys taxpayer funded dollars.
Yes, I saw that interview also and thought Eddie Groves was very defensive and didn't come across as being transparent or with the best interest of his customers(do you call them customers?) at heart.
I've been considering adding ABS to my portfolio but will hold off and see if there are any repercussions to this.
Your points about how parents feel about childcare centres being focused on profit, Rich, are really relevant. I expect the problem for a lot of parents is that they don't have a lot of choice about where to place their children, given ABC's dominance of the market.
$600m for ABC Learning
By Christopher Webb
April 27, 2006
EDDIE Groves' ABC Learning Centres was close last night to raising $600 million for further expansion in the US.
The company yesterday morning asked the stock exchange to halt trading in its shares ahead of its broker Austock doing the rounds of institutional investors.
The company had not by the close of trading announced the results of the book-build or the intended use of the money.
But it is believed it will be used for debt reduction as well as providing Mr Groves with a war chest for more acquisitions of child-care centres in the US.
The book-build is pitched within a $7.10 to $7.60 price range, which compared with a $7.82 last-sale price for the shares.
The tip was that the money would be raised at around the mid-point of the book-build range.
Late last night the share issue was almost done and that was without including any cash from London investors.
Institutional investors have until 10 this morning to respond to the book-build.
The issue adds to ABC Learning Centres' recent cash raisings, which were also done by Austock.
Last December, $260 million was raised through a book-build of 37.2 million shares at $7 apiece.
And in October 2004, $400 million was raised in a capital raising that attracted subscriptions of slightly more than $1 billion.
As well as reducing debt, the latest raising will go towards the acquisition of about $190 million worth of child-care centres in the US, and possibly more.
Last year ABC paid $218 million for the US-based Learning Care Group.
sandik17
8th-May-2006, 01:47 PM
Interesting story on 60 minutes last night....
hmmmm :sly:
visual
8th-May-2006, 02:01 PM
yes,wasnt it!
like how he compared himself to those two women ,who supposedly were in competion with him!wonder who is competion was when he started.
Apart from council run childcare centres at this minute I cant think of anyone else running childcare centres in the fashion that he is doing.Of course you had schools doing it but I`m not sure that there was a big corporation doing what he is doing.
Loved the bit where he didnt want to be held responsable for his staff incompetence,if not him who then?by the same token I suppose he is saying that if he is ever in an accident the other driver would be responsable and not us as taxpayers,through the accident compensation whatever its called.
RichKid
8th-May-2006, 02:01 PM
...... I expect the problem for a lot of parents is that they don't have a lot of choice about where to place their children, given ABC's dominance of the market.
Julia
Spot on Julia, monopolistic power, that's why these types of stocks are hard to beat down. Far too risky for me to buy now, the chart is very messy in places, if this was less volatile I'd be on it but you can never tell when it might just collapse in a heap (or skip higher!).
Stop_the_clock
8th-May-2006, 04:20 PM
But then again... ABC learning centres are somewhat similar to retirement villages like LVL, VLL, PKF, CLF.
They are very much supported by a mix of private and government funds.
Retirees need affordable accomodation in line with government pensions
michael_selway
8th-May-2006, 07:24 PM
Transcript: The kid business
May 7, 2006
Reporter: Peter Overton Producer: Lincoln Howes
PETER OVERTON: Once, it seemed so natural — dad went to work, mum stayed at home with the kids. Now it's not that simple. As often as not, both parents have to work just to pay the mortgage. And with that interest rate rise, things just got that little bit tougher. Tougher still if you're trying to find someone to look after the kids — there aren't enough places and decent care's far too expensive. With high demand, high fees and high government subsidies, child care's become a growth industry. For one man, it's a veritable license to print money. So why are we taxpayers helping to build his billion-dollar empire?
PETER OVERTON: Meet Olivia, she's only five weeks old and she doesn't know it, but she's hot property. Australia's children had become big business — A sure-fire investment, up there with casinos and mining. Kids are commodities in the brave new world of child care.
TEACHER: Let's have a look, Tenesha. Can you show me what it is?
PETER OVERTON: The Government wants women to be in the work force?
SHANNON COLAK: They do but I don't know how I'm supposed to. I have no option. There is no way I can go back to part-time work now.
PETER OVERTON: Olivia's mum, Shannon, wants to go back to work. She has a university degree and knows there are lots of jobs available to her. She lives just half an hour from the centre of Sydney. But as one of 250,000 Australian women trapped by lack of child care.
SHANNON COLAK: It was difficult when I found out I wasn't even allowed to put my name down. The door was shut before I even got to it, basically. I couldn't even go to the centre and see them. They just said, "No, there's no room and you're never going to get a place here."
PETER OVERTON: The Australian child care system has been described as a shambles. It said 175,000 children like Olivia can't get a place and the cost has risen 62 percent in the last four years. Yet, in the midst of this shambles, some people are making a hell of a lot of money. You must be laughing all the way to the bank?
EDDIE GROVES: If you do it well, you will make some money.
PETER OVERTON: Between $250-$350 million. Am I in the ballpark?
EDDIE GROVES: That's what they say.
PETER OVERTON: What does Eddie say?
EDDIE GROVES: It's close.
PETER OVERTON: At just 39, Eddie Groves is the king of corporate child care. From his Brisbane headquarters, he presides over ABC Learning Centres, the biggest publicly listed child care company in the world. This former milkman opened his first centre in 1989 and has turned it into a global empire worth $2.5 billion. Why did you target child care?
EDDIE GROVES: When you look at milk, milk was a need industry. This was another industry that you could do very well. Where early childhood education was pretty much needed everywhere.
PETER OVERTON: So childhood education was like milk, a necessity, a staple in life?
EDDIE GROVES: It was a necessity. That's where it started from, yeah.
PETER OVERTON: Eddie's stats are staggering. Soon he'll own 1000 child-care centres across the country, almost a quarter of the entire private sector and he keeps acquiring more. The market loves him. His share price is rocketing like a dot com dream. But Eddie says the kids come first.
EDDIE GROVES: That is the number-one focus — is the child and the family. Always has been, always will be.
PETER OVERTON: So let me get it straight, you're in it for the love of the children, not for the money?
EDDIE GROVES: I'm actually in it — the number one is the love of the children and to make sure that we provide the right service for the families.
LYNNE WANNAN: They can't be at the centre of his business. His shareholders are at the centre of his business. For him, the children have got to be a product of how he actually generates money to return to shareholders.
PETER OVERTON: How many children are...? Lynne Wannan heads the National Association of Community Based Children Services. She says the rot set in to childcare back in 1991 when the Government opened the way for private enterprise.
LYNNE WANNAN: I don't think it's hard to make money out of child care. You have to scrimp on the service that you provide. I think that's easy to do and I think the corporate companies have realised that you can make money and the Government will guarantee the income and you can make a return to shareholders. But you don't do that by putting children first.
PETER OVERTON: One of the most strident criticisms of you is that children are simply the commodity and the shareholders are your number one priority.
EDDIE GROVES: Absolute insult. No-one has ever heard me put the shareholders first, ever.
PETER OVERTON: So, how do you go when you stand in front of the shareholders and say, "Our number one priority is not you, it's the kids."
EDDIE GROVES: That's exactly what they want to hear. Because they know, they're smart enough to understand that if we look after the children and the families, they will be well taken care of. And that's exactly what's taken place.
PETER OVERTON: Eddie Groves and other corporate players have tapped in to a rich seam of tax-payer funding. The Government pays a subsidy to families for child care and that's passed directly to the centre they choose. As much as 44 percent of ABC's revenue is derived from these Government subsidies. It's profit with a Government guarantee. What it doesn't guarantee is they'll bill child-care centres where they're most needed.
LYNNE WANNAN: In inner urban areas now, land is very expensive. You can't really pay a lot of money for land, put up your building and still make money.
PETER OVERTON: ABC is accused of ensuring profit by targeting only so-called 'nappy valley' areas, where land is cheap and young families plentiful.
EDDIE GROVES: Well, I mean that's just incorrect. We always made a guarantee that we would only build where there's need.
PETER OVERTON: Is this just the company spin you're giving me?
EDDIE GROVES: No, absolutely not.
PETER OVERTON: But it sounds like it.
EDDIE GROVES: It might sound like it, but I live and breathe this every day. Eighteen years I've been doing this. I go into the office and spend more hours at this than I have ever done before. This isn't a company spin. This is a guaranteed. This is what we do. And I am personally involved with every one of those decisions.
PETER OVERTON: For such a high-profile player, Eddie Groves is intensely private. He does have kids of his own, but we weren't allowed to meet them, nor his wife who shares the business. And we weren't permitted to film children inside his ABC centres.
MAN: We've probably picked up about another 20 centres in the last few months.
PETER OVERTON: They call him Fast Eddie because it's the way he does business that has earned ABC such a fearsome reputation. When it comes to competition, Eddie plays hard ball. You're a fierce competitor, aren't you?
EDDIE GROVES: Absolutely.
PETER OVERTON: Anyone encroaches on your turf and you're on to them?
EDDIE GROVES: Um, not necessarily but I definitely am a fierce competitor.
PETER OVERTON: You'll protect your turf.
EDDIE GROVES: I will protect.
TARA ROBERTS: It was Eddie attacking us. It was personal. He didn't like us. We were on the turf.
PETER OVERTON: Early last year, Tara Roberts and her friend Nicole Manning were set to fulfil their dream of opening a child-care centre. Unfortunately for them, they chose a site not too far from one of Eddie Groves'.
TARA ROBERTS: If we open, they said, they may have to close their doors because there is no need for child care in this area.
PETER OVERTON: This is coming from ABC Learning, one of the biggest child care companies in Australia?
TARA ROBERTS: That's correct. A 45-place centre like ourselves might affect their financial viability and they may need to close their doors.
PETER OVERTON: Why did you try to shut them down?
EDDIE GROVES: The question that's posed to us all the time is 'are we building in areas of need?' And we go through a rigorous process. All I'm asking is that same standard applies to everybody else. People object against us, we can object against them.
PETER OVERTON: Tara and Nicole won their battle but they spent so much money fighting, they say it will be 15 years before they start to see a profit out of their centre. Those women put their life savings into it, they wanted to have a centre there.
EDDIE GROVES: Peter, I put my life savings into this too. Every single cent. Every single cent that I earned, ever, went into this company. Still does. You know, I'm passionate about it. So therefore I should be able to compete in the same playing field as everybody else.
michael_selway
8th-May-2006, 07:28 PM
PETER OVERTON: Yeah, but you're a giant.
EDDIE GROVES: Yeah, but I wasn't.
PETER OVERTON: You have power, you have resources, you have money.
EDDIE GROVES: I jumped through every hurdle that everybody else has jumped through and more. So I guarantee you that I'm in exactly the same position as those two women were, at one stage.
PETER OVERTON: Are you scared of speaking out against Eddie Groves now?
TARA ROBERTS: He is scary in only the fact that he has power and that's the only reason that I'm scared of Eddie Groves, is the power.
PETER OVERTON: He's so powerful, Eddie even took on the Victorian Government. He recently tested Victorian law which makes his company legally liable for the children in his care. Children like little Todd Kenworthy.
EMMA KENWORTHY: Pulled up at the crèche and I could hear a child screaming from the doors as I was coming in. And as soon as he seen me, he was just hysterical.
PETER OVERTON: Todd's mum, Emma, was called to ABC Learning Centre in Bendigo on February 15, last year. Not even two at the time, Todd couldn't say what had happened but his arm was obviously hurting.
EMMA KENWORTHY: So I've gone straight to casualty here at the base hospital and as soon as they've taken a look at it they've said it's broken.
PETER OVERTON: But no-one from ABC can tell Emma what happened.
EMMA KENWORTHY: Nobody will answer any questions. Nobody knows nothing. Nothing at all. He tripped over and hurt his knee. That was it. Scratch on his knee.
PETER OVERTON: That was their story?
EMMA KENWORTHY: That was their story.
PETER OVERTON: Last Wednesday, the Victorian Supreme Court ruled that ABC Learning was criminally liable for the children in its care. Eddie Groves had argued that responsibility for mishaps like Todd's should rest not with the company, but with the staff member.
EDDIE GROVES: The danger with this is, Peter, if someone wants to be vindictive for some reason and just does something intentionally to a child, how can the company be held responsible for that? And that's what they're saying is the case. And I just can't understand that. If someone just wanted to walk out of the centre and leave those children, then they want to hold us responsible. I can't cover that off.
PETER OVERTON: No, but as a company you have a responsibility, no matter what, to those parents. That I am entrusting my child to you — no matter what happens, if a staff member walks out or whatever, you are responsible. That's how I would feel as a parent.
EDDIE GROVES: And you're right. At the end of the day, we are absolutely responsible. We take incredible measures to make sure we've covered everything off. Our policies and procedures are second to none. But at the end of the day, some things need to make sure that a staff member is responsible as well as the company.
PETER OVERTON: Liability, competition, profitability, you've really got to stop and remind yourselves, don't you, that we're talking about the care of our children here. But in these days of big mortgages and double incomes, is there something that we're forgetting?
ANN MANN: We've rushed ahead in the debate to questions of access and affordability when we should take a few steps back.
PETER OVERTON: Ann Mann has analysed the latest long-term research on very young children in care. It shows that those who spend long periods in care, under the age of three, show signs of the potent stress hormone, called cortisol, in their saliva.
ANN MANN: Normally, when a child is at home, they will have higher cortisol in the morning and it will decline in the afternoon. Showing that they're relaxed, basically, and not stressed. In child care settings, higher numbers of children show higher cortisol in the afternoon, that is, they're feeling stressed.
PETER OVERTON: After a day of child care?
ANN MANN: Yes.
PETER OVERTON: And she says the effects can be long-term. Aggression, depression and anti-social behaviour later in life. Again, it's the corporate child care giants that are causing most concern.
EDDIE GROVES: Those studies, all they do again is put fear into parents. I mean, every parent feels this anxiety with leaving their child. Whether it be child care or whatever it is. But, the reality is, parents have to work. You need dual incomes. Why do we want to, as a society, continue to put fear into parents and families that they're doing something wrong with their child?
PETER OVERTON: Many parents will be watching Tuesday's Federal Budget with an eye on the child care provisions. But Shannon Colak is resigned to being a stay-at-home mum and any thoughts of having a third child have been put on hold.
SHANNON COLAK: I don't think I could find places for three children anyway. And I don't know if we can afford to support a family of three children on one income. So at the moment we're going to stick with two, I think.
PETER OVERTON: So costs, lack of availability — it's determining the path of your life.
SHANNON COLAK: Unfortunately, it is. And I hate even admitting that. But at this stage it is.
PETER OVERTON: Shannon's story is repeated in suburbs across Australia. It's clear our child care system is far from perfect, but Eddie Groves is sick of copping the blame. You have a bullseye painted on you.
EDDIE GROVES: I do have a bullseye painted on me but I don't understand why.
PETER OVERTON: Do you see it as a personal attack?
EDDIE GROVES: I do, because I know what we talk about every single day. We might have made mistakes along the way — and that happens — but we have never once sat down and said, "We're going to do this," or "We're going to do that." Every single time we make a decision it's in the interests of the child and the family.
PETER OVERTON: Does it really rankle you?
EDDIE GROVES: It really upsets me. It probably shouldn't, but it does.
Thanks Michael, fast Eddie doesn't sound too cuddly to me, but we'll have to make up our own minds, they guy certainly has made it to the big time.
RichKid
13th-May-2006, 11:46 AM
A great article discussing some of the issues surrounding 'the McDonaldisation of child care'. What is it really doing to our kids and society? I like the Swedish model. Some interesting reading for parents and ABS shareholders out there:
Mothers know best:
Home-based care, not institutional care, is the best fit for children and working mothers, comments Angela Shanahan http://www.theaustralian.news.com.au/story/0,20867,19116214-601,00.html
ghotib
7th-June-2006, 04:00 PM
More on ABS from Stephen Mayne and Crikey.com:
5. Eddie Groves sprints from shareholders and The Chaser
By Stephen Mayne, in a jewellery shop with a net cafe in Brisbane's Queen Street Mall
ABC Learning might be the world's biggest childcare company but it hasn't got a clue how to handle public or investor relations if this morning's extraordinary general meeting of shareholders is any guide.
Chairman Sally-Anne Atkinson, the former Lord Mayor of Brisbane, was positively clueless and couldn't even answer basic questions such as how much debt the company will have once the $600 million placement is finalised?
Even worse, Sally was unwilling to defer to someone who did know something when it came to several key questions. For instance, when asked how much boutique investment bank Austock would pocket from handling the $600 million placement she claimed not to know because it hadn't been finalised yet.
When I complained about having Austock chairman Bill Bessemer on the board and the recent allocation of a 4.2% stake in Austock to ABC Learning founder and largest shareholder Eddie Groves, Sally denied there was any conflict of interest and said Eddie and Bill never participated in any discussion about hiring Austock. This was handled by independent director David Ryan who failed to show up this morning due to fog at Sydney Airport.
Right, so when Austock was paid $16 million for corporate advice and the $400 million equity raising when ABC Learning pulled together its great three way merger in 2004, Big Eddie and his old mate Bill had nothing to do with the negotiations. It was an obvious line, but I told the board it was time to "grow up" and stop tolerating such 1980s-style conflicts of interest.
Dressed in a black skivvy and brown jacket, Eddie came across as someone who hated fronting shareholders and treated them just like he treats the company's 12,000 staff – badly. Asked what proportion of staff own stock to align their interests, Eddie would only say that half are eligible but no-one could come up with an answer about staff equity participation. It sounds pretty low, which might partly explain why their staff regularly sledge the company.
When it came to the various resolution on shares, options and cash bonuses for the three executive directors – Eddie, his wife Le Neve and fellow long-term executive director Martin Kemp – I pointed out that they already owned more than $200 million worth of stock and didn't exactly need any more incentive. Why didn't this incentive scheme extend to the next tier of executives or is the $2.5 billion ABC Learning still being run like a three-person private company? We'll take it on board, was the mumbled response.
All today's resolutions were passed easily, so it marks an important milestone in the company's evolution because institutions now clearly control the operation with about 70% of all shares on issue. Therefore, it's about time ABC Learning behaved like an outfit that is there to serve independent shareholders.
Given that Eddie and Le Neve together dumped $32.8 million worth of shares – 13% of their holding – last December in a classic ASX announcement that was released at 3.55pm on a Friday, I asked Eddie to outline his future intentions.
As with every other issue, Eddie was dead keen to avoid answering and his supine chairman more than obliged when she declared she simply wouldn't allow him to answer. When asked the same question, Martin Kemp was prepared to say that he wanted to keep buying shares and did at every opportunity. So why didn't he participate in the placement at $7.30 a share, which is now underwater with the stock at $7.05? Sally, after consulting with the company secretary, claimed that he couldn't under the Corporations Law. That's funny, I asked the same question at the recent Nexus EGM and the chairman said that all directors had bought $5000 worth of shares in a placement.
After the meeting, Eddie did a rapid-fire runner to the exit where he was confronted by Julian Morrow and a crew from The Chaser. This is a man who seemingly doesn't like publicity or accountability – yet he's ultimately responsible for the welfare of more children around the world than anyone else on the planet.
I don't hold ABS and I'm uncomfortable with the whole idea of public companies running childcare. But I am looking forward to The Chaser.
Ghoti
RichKid
7th-June-2006, 04:50 PM
More on ABS from Stephen Mayne and Crikey.com:
I don't hold ABS and I'm uncomfortable with the whole idea of public companies running childcare. But I am looking forward to The Chaser.
Ghoti
That's a great article Ghoti, thanks very much, looking forward to thechaser episode- Friday night isn't it?
dennisll
14th-June-2006, 12:33 PM
ABS intraday low of 6.02 today. Anybody else think this is a great time for a top-up?
The Stevedore
7th-July-2006, 04:57 PM
ABS just announced the purchase of Hutichison Child Care Centres.
Have been watching this stock since last week, & it's a solid performer.
smoothsatin
29th-August-2006, 08:48 PM
Rocky short term ahead for this one i think, missed eps expectations and has had some very low intraday lows the last two days, likely to suffer more short term weakness.
Key upside is off course US acquisitions with low multiples....but if you believe the Us and then AUs economies will come off...what do retrenched mummies and daddies do? look after their kids! especially in US where i suspect gov help for childcare costs is less significant than here, can see it below 6 again shortly, but should rally in next 12 months on the back of further acquisitions.......any thoughts?
eMark
25th-September-2006, 10:24 PM
As of September 25th, this stock is 5.98, with a very recent 12 month low of 5.91. A lot of the above posts do very well identifying the possible reasons for the stocks poor performance of late. Jeez it was mid 7's only a couple of months ago. Not even recent announcemnets help this stock. There does not seem to be any support at all.
Time......
3 veiws of a secret
25th-September-2006, 10:43 PM
As of September 25th, this stock is 5.98, with a very recent 12 month low of 5.91. A lot of the above posts do very well identifying the possible reasons for the stocks poor performance of late. Jeez it was mid 7's only a couple of months ago. Not even recent announcemnets help this stock. There does not seem to be any support at all.
Time......
E Mark .....I would strongly suggest you read this thread carefully.Stand back have a short black with no sugar ,and seriously think would you like Chairman Sally-Anne Atkinson to guide your hard earned dollar ?
Late last year I was comtemplating this share but ghotib's post in June summed it all up for me ,I don't hold this share ...........
Chief Wigam
25th-October-2006, 01:25 AM
Chart looks to be technically sound with nice uptrend.
I got in today at 6.96
Chief Wigam
26th-October-2006, 01:41 AM
Fundamentally , looks good too.
ABN have a price target of $9.80.
bingk6
13th-December-2006, 06:56 PM
Trading Halt today - any ideas :confused:
michael_selway
13th-December-2006, 11:14 PM
Trading Halt today - any ideas :confused:
hopefully not a capital raising!
thx
MS
Chief Wigam
14th-December-2006, 02:09 AM
Rumored to be buying La Petite in the US.
bingk6
14th-December-2006, 08:23 AM
Rumored to be buying La Petite in the US.
Is that good news ????
ekman
14th-December-2006, 09:40 AM
Ann just released.......
IMO they are on a buying spree but haven't proven that their US operns have been a success
getting too big too quickly
Devil_Star
14th-December-2006, 12:13 PM
The market sentiment really confuses me. It seems the market no longer worries about the quick expansion and increasing debt. I just sold 2500 shares and still hold 1500, in case a turnaround at the corner.
michael_selway
14th-December-2006, 11:06 PM
The market sentiment really confuses me. It seems the market no longer worries about the quick expansion and increasing debt. I just sold 2500 shares and still hold 1500, in case a turnaround at the corner.
so you are bearing on abs?
thx
ms
scsl
14th-December-2006, 11:51 PM
so you are bearing on abs?
MS, do mean 'bearish'? (I apologise if I'm mistaken) I think investors should be very bullish on ABS, particularly with the growth that is to come.
Looking back, August and September would've been a great time to buy and accumulate ABS shares - I didn't as I was fully invested. But I have to admit that when I had the chance to in October, I didn't, because I was uncertain as to the progress of previous acquisitions and uncomfortable at the speed at which management was growing the business. :banghead:
CEO Eddy Groves has a considerable amount of his wealth in ABS (having founded it) and I don't think he would've given the go ahead on today's addition of childcare centres to already existing centres in the US and the decision to enter the UK market if he wasn't confident that previous acquisitions were under control.
Yes, growth via acquisitions cost a lot of money, but I think the strength of their balance sheet and management will see ABS benefit in the short and long run from today's announcement.
Devil_Star
14th-December-2006, 11:54 PM
so you are bearing on abs?
thx
ms
Nope, I'm not bearish on abs. I bought the first parcel initially @$7.60 early this year, then average up and down @$7.90, $6.80 and $6.40. I had been watching it down to $5.90 just not long ago. Now the reason I sold down is just for profit taking and risk control (because of the significant volatilty of the stock). Gotta pay down my investment debt to keep my finance healthy, that's it.
UMike
19th-February-2007, 09:55 PM
What a fantastic result.
Why then did the sp get hit so hard. Down 4% despite such a great half year result.
mrWoodo
19th-February-2007, 10:52 PM
What a fantastic result.
Why then did the sp get hit so hard. Down 4% despite such a great half year result.
Yeah my timing was perfect - Bought these on Thu :banghead: thinking they were undervalued. Reading the asx announcement at 9.30 am this morning I was already patting myself on my back :)
I don't know what investors were expecting - 64mil half yr after tax profit is good enough for me :confused:
The potential 'joint approach' between ABS and a third party to Funtastic was more proof that I have no idea how the market works. :confused:
UMike
19th-February-2007, 10:58 PM
Yeah my timing was perfect - Bought these on Thu :banghead: thinking they were undervalued. Reading the asx announcement at 9.30 am this morning I was already patting myself on my back :)
I don't know what investors were expecting - 64mil half yr after tax profit is good enough for me :confused:
The potential 'joint approach' between ABS and a third party to Funtastic was more proof that I have no idea how the market works. :confused:LOL same here.
Been watching it closely.
Might jump in tomorra.
Julia
19th-February-2007, 11:04 PM
The SP has been rising unusually last week, as if the result was already factored in. And then there is often the hope that the actual result will be even better than anticipated. It wasn't. My guess is that this is why the SP took such a beating today.
When it recovers 10c I'm out of this one. Not even a decent dividend to make up for its ailing SP. If we look at a one year chart, the SP has barely advanced from a year ago. Much better opportunities out there.
Julia
reece55
19th-February-2007, 11:05 PM
UMike
The result wasn't actually that good mate.....
EPS growth for the half year was 7%, this stock is touted as a growth stock but is showing EPS growth like that of a bank, slow........ The analysts expect annual EPS of about 38 cents per share and with only 15.6 for the half, they are behind the mark....... That means they need about 22.5 cents for the next half to meet the analyst forecast, and even this will give them a fairly expensive p/e multiple of about 20.
My take - ABS has run out of steam. The business is now extremely leveraged - the acquisitions of late have been solely funded by debt and cash flow is looking weak. Ultimately, I believe that ABC will be a stock for the future, but now is not a good entry point.
Cheers
michael_selway
19th-February-2007, 11:27 PM
UMike
The result wasn't actually that good mate.....
EPS growth for the half year was 7%, this stock is touted as a growth stock but is showing EPS growth like that of a bank, slow........ The analysts expect annual EPS of about 38 cents per share and with only 15.6 for the half, they are behind the mark....... That means they need about 22.5 cents for the next half to meet the analyst forecast, and even this will give them a fairly expensive p/e multiple of about 20.
My take - ABS has run out of steam. The business is now extremely leveraged - the acquisitions of late have been solely funded by debt and cash flow is looking weak. Ultimately, I believe that ABC will be a stock for the future, but now is not a good entry point.
Cheers
Hey check thsi out
Net Tangible Assets 31/12/06 31/12/05 cents cents
Net tangible assets per share (76.5) 24.1
NTA negative?
Also check out falling operating cashflow (payment to suppliers) and also high investment cashflow (childcare licenses capatilised but not expensed?)
http://img99.imageshack.us/img99/4903/abscu3.jpg
thx
MS
--------------------------------------
Also quote from anoterh forum
also a finance grad and though I havent looked closely at the figures , I would assume that a license is an asset and so we debit it on the balance sheet, and thus for this debit there must be a credit on the other side of the equation (Assets=Liabilities+Equity); Ill have a look into it and get back to you.
Investing activities on cash-flow statement as well as financing activities are not whats important for a high growth company! The OPERATING cash flow is whats important and we need to ascertain 'where' the revenue is coming from? Obviously the revenue would come from the monies the centres make (fees etc); Take away operating expenses (day to day) and we get what the operating (day to day) cash flow is.
Investing/financing activities will be negative obviously due to all the debt and capital raisings!
****Im only interested in net cash flow from the daily operations of the centres
the investment licenses become an asset to the company like intangibles or goodwill and hence add to the equity of the company - so in accounting terms we're debiting an asset and hence the equity will get re-valued up by some 'credit' entry.
im going to look into it to see if something like 'license revenue' is increased to increase the equity. If thats the case then i may be able to see w buffets concern, but just remember:
the operating cash flow should be more or less similar to the net profit.
In any case, even if they increase revenue by increasing their child-care license assets, it IS IN FACT unrealised revenue which will be realised once the licences are SOLD in the event of a takeover.
Its similar to revenue derived from re-valuing property assets like a tonne of the property trusts and developers do. Companys like FKP or City Pacific etc re-value their proprty assets and so this increases their revenue BUT they DO pay TAX every time they do this. Once the asset is sold - the property - thats when the REVENUE is MATCHED with the CASH you receive for it.
Likewise I assume, with ABS - Once the childcare license is sold the REVENUE is MATCHED with the CASH received.
revenues and expenses are not to be confused with cash-flow cause revenues/expenses can reflect future cash flows and are matched to cash at bank when that flow occurs. In the meantime like accounts receivable - they are assets of future flows and matched accordlingly when the flow occurs.
But I see some of your point re this sitch
I guess its more commonplace for a proprety developer to eventually sell a property asset when it feels the time is right than it is for a childcare operator to sell some of its licenses???
then again, a company like FKP isnt gonna sell its prime retirement properties that they derive most of their revenues from unless its under takeover
Likewise ABS isnt gonna sell the licenses unless they get taken over
FKP will continue to re-value proprty up and make revenues (that increase the equity) from this. Once they eventually sell the property the 'credit' to revenue will be matched with a 'debit' to cash at bank. In the meantime it remains an 'asset' from which the company can derive a future cash flow from.
Ill look into this further....
In any case just look at operating cash flow and see the net operating revenue figure and see if its high enough for the company to claim that its doing OK to maintain operations and pay divvys.
It may be low now, but when the company matures the cash flow should be good enough to maintain operations and pay a divvy.
Dont forget - like property assests, the 'licenses' will be re-valued up I would suspect over time as well.
Ill get back to you, but property companies also cop their fair share for getting their revenue from re-valuations!
Michael
It seems logical that NTA is negative - the money is tied up in Goodwill and Childcare licenses (all intangibles), all of which don't count under the ASX listing rules as tangible assets......
There are many other companies out there that have a negative NTA - take ALL for example........ Doesn't necessarily mean there are issues, because you can have a high NTA but still have a sh** business.......
But like I say, their balance sheet is running out of steam....... Wouldn't be investing my hard earned here....
Cheers
dhukka
19th-February-2007, 11:49 PM
The analysis on this (http://www.stockval.com.au/case-studies.php) website sums up ABC's business. A once good small business has now become a mediocre large business. New capital pumped into the business has exceeded the growth in earnings which means a declining return on equity and a lower intrinsic value, absolutely no margin of safety here.
michael_selway
19th-February-2007, 11:51 PM
Michael
It seems logical that NTA is negative - the money is tied up in Goodwill and Childcare licenses (all intangibles), all of which don't count under the ASX listing rules as tangible assets......
There are many other companies out there that have a negative NTA - take ALL for example........ Doesn't necessarily mean there are issues, because you can have a high NTA but still have a sh** business.......
But like I say, their balance sheet is running out of steam....... Wouldn't be investing my hard earned here....
Cheers
Hi reece, thats true, what about falling operating cashflow compared to the previous corresponding period (25783 from 44670)?
Another point of veiw from anonymous
Q: So is what you are saying that ABS's aggressive strategy is an attempt to cover up their actual poor performance by using sneaky accounting methods, rather than an attempt to create a market-leading bohemoth that produces superior shareholder returns?
A: YES, THE AGGRESSIVE STRATEGY ALLOWS THE BOGUS PROFIT NUMBERS TO CONTINUE TO FLOW THROUGH. AS SOON AS THEY STOP BUYING THEY CANNOT MANIPULATE THE NUMBERS. FIND ME ANOTHER CHILDCARE OPERATOR THAT CAN MAKE THE SAME PROFIT PER CENTRE. WHY IS MACQUARIE, JP MORGAN PRIVATE EQUITY AND SO MANY OTHERS SELLING OUT TO HIM. CAN HE REALLY DO ANYTHING SO DIFFERENT TO THEM?
Is your analysis based entirely on the assumption that these childcare licences don't exist? If ABS was to be taken over, I'm sure these licences would be included in their assets.
WHAT IS A CHILDCARE LICENCE? YOU CAN'T SELL THEM OR TRADE THEM. IT IS MERELY AN APPROVAL FROM THE GOVERNMENT THAT YOU ARE MEETING THE STANDARDS OF CARE REQUIRED. A MUM & DAD OPERATOR CAN GO AND GET ONE FOR MINIMAL COST SO WHY AM I GOING TO PAY ABC LEARNING TO BUY THEIR LICENSES. ABC LEARNING WILL NOT GET TAKEN OVER BECAUSE AS SOON AS ANYONE LOOKS AT THE BOOKS THEY WILL SEE THE CASHFLOWS DON'T MAKE IT WORTHWHILE. THE PRIVATE EQUITY BINGE IS ALL ABOUT USING THE COMPANIES CASH FLOW TO FUND THE HIGH LEVELS OF DEBT AND SELL IT OFF DOWN THE TRACK. MY CONTENTION IS THAT PRIVATE EQUITY COULD NEVER BUY THIS BECAUSE THEY DON'T HAVE THE CASHFLOW TO SUPPORT THEIR VALUATION.
If we assume that ABS make no acquisitions for the next financial year, wouldn't they still make a nice profit and be cashflow positive?
ASSUMING NO ACQUISITIONS AND NO DEVELOPMENTS I WOULD ASSUME THEY WOULD ONLY MAKE A SMALL PROFIT AND SIMILARLY THE CASHFLOWS WOULD ALSO BE SMALL.
Hi reece, thats true, what about falling operating cashflow compared to the previous corresponding period (25783 from 44670)?
Hi Michael
Yep, as I said, weak cash flow. This could be seasonal between periods (debtors/creditors can put the mix out sometimes), but certainly prima facie it ain't looking good........
For what it's worth, technically I see the end of a wave five that started back in 2003 here - short is the side of the market I am looking for here..... I think we may head back to previous support at around 5.75 and we will see from there........
Watch for the change in substantial holder notifications......
Cheers
annalivia
20th-February-2007, 09:58 PM
The analysis on this (http://www.stockval.com.au/case-studies.php) website sums up ABC's business. A once good small business has now become a mediocre large business. New capital pumped into the business has exceeded the growth in earnings which means a declining return on equity and a lower intrinsic value, absolutely no margin of safety here.
Good to see someone here has some sense.
It would appear a brave call to rate a stock trading at about $8 as worth $3 but that's what Clime Capital thinks of ABC Learning.
With most brokers calling the childcare company between $7 and $8, and after a strong share price rise in recent years, Clime says ABC's share price would have to fall about 65 per cent to be of any interest.
Clime's chief criticism involves ABC's diminishing return on equity from 48 per cent in 2002 to below 11 per cent in 2006, during which time equity raised grew from $10 million a year to $330 million.
"If the return on equity remains at 11 per cent and we adopt a 15 per cent required return, the only sensible price to pay for the business is a discount to the equity in the business," Clime writes, adding its estimate of value is "less than $3".
"If ground level represents value, the share price is hovering somewhere in the stratosphere."
michael_selway
20th-February-2007, 11:32 PM
Good to see someone here has some sense.
It would appear a brave call to rate a stock trading at about $8 as worth $3 but that's what Clime Capital thinks of ABC Learning.
With most brokers calling the childcare company between $7 and $8, and after a strong share price rise in recent years, Clime says ABC's share price would have to fall about 65 per cent to be of any interest.
Clime's chief criticism involves ABC's diminishing return on equity from 48 per cent in 2002 to below 11 per cent in 2006, during which time equity raised grew from $10 million a year to $330 million.
"If the return on equity remains at 11 per cent and we adopt a 15 per cent required return, the only sensible price to pay for the business is a discount to the equity in the business," Clime writes, adding its estimate of value is "less than $3".
"If ground level represents value, the share price is hovering somewhere in the stratosphere."
Hey I remember reading that, yeah good point Clime has imo.
After bouncing off the $6.60 level, it has hit a brick wall at $7.40...
Still a short in my mind, but I do note that both JP Morgan and CBA have increased their stakes...... Still feel we will see the $6.00 barrier......
Cheers
Reece
I hope not.
If it does I'll buy more though. (unless there is a good reason for the fall.)
Portfolio
17th-April-2007, 07:21 PM
Is Climes comment about ROE really valid for this one?
I agree the ROE has decreased short term due to the fact that they have made acquisitions of centres that arent producing the same amount of ROE.
But isnt that a good thing? The lower the ROE on the acquisitions the more the opportunity to extract value and as they are bedded down provide upside in ROE across the group's assets?
ekman
17th-May-2007, 01:27 PM
Soe anyone have an opinion on this one. have there been any reports out lately that you have access to on this stock. I am bleeding :banghead:
UMike
17th-May-2007, 08:30 PM
I wish this stock and CBH wouldn't go up and down at the same time. :mad:
I still feel that ABS will do well longer term.
reece55
17th-May-2007, 08:52 PM
I wish this stock and CBH wouldn't go up and down at the same time. :mad:
I still feel that ABS will do well longer term.
UMIke
If ABS can't perform in this market, the most liquid, cash filled environment possible, then what makes you think it will do well long term??
I have said it before and I will say it again, this is both fundamentally and technical a weak company...
Technically, lower lows and lower highs.....
Fundamentally, the accounting is shonky and they have really poor returns....
It's a no brainer to me. The only thing I would say is that they have insto support, so this will prevent them from dropping too much.
Cheers
tdkx669
17th-May-2007, 09:12 PM
Its part of ABS movement. Its regualr higher top higher bottom. And comsec put valuation for that at around $9.5. Here is chart i attached for your reference. I found ABS got really good management they always outperform market.
jchan86
18th-May-2007, 01:17 AM
I'm very much back into ABS.
Some whispers in the US market and relatively sound to positive results against tough times over there shall prove interesting.
UMike
19th-May-2007, 07:42 AM
UMIke
If ABS can't perform in this market, the most liquid, cash filled environment possible, then what makes you think it will do well long term??
I have said it before and I will say it again, this is both fundamentally and technical a weak company...
Technically, lower lows and lower highs.....
Fundamentally, the accounting is shonky and they have really poor returns....
It's a no brainer to me. The only thing I would say is that they have insto support, so this will prevent them from dropping too much.
CheersIn short the profits are skewed to the last half of 2007 so they are taking some short term pain for longer term gain. I believe the market has over reacted.
There are so many conflicting opinions (Some that I value) about the value of this company that I won't go too far into it.
insto support is a real positive imo.
Mike :D
ekman
22nd-May-2007, 03:40 PM
phew! today's ann is a real relief. bought them at 7.20 thinking the budget should help them but they went down straight after that. someone in the market seems to know when i buy into a company because their sp goes down straight away
Sprinter79
22nd-May-2007, 03:54 PM
I have big moral issues with this company, and having had a closer look at their stafffing policies than most people are able to see, the ways they have achieved their bottom line are not sustainable. They have profited under Workchoices, but the bottom line will suffer under a future Labor Govt.
UMike
22nd-May-2007, 06:00 PM
I have big moral issues with this company, and having had a closer look at their stafffing policies than most people are able to see, the ways they have achieved their bottom line are not sustainable. They have profited under Workchoices, but the bottom line will suffer under a future Labor Govt. All Childcare providers pay their staff very little.
Closed at $7.53.
I wonder if it power on tomorrow or give up some of it's recent gains.
PureCoco
22nd-May-2007, 06:13 PM
I wonder how it will go if they cut the 'baby allowance' in the future?
All Childcare providers pay their staff very little.
I believe that the way you treat your staff flows on to the kids. Just look at the next level up in schools.
UMike
22nd-May-2007, 08:11 PM
I wonder how it will go if they cut the 'baby allowance' in the future? I believe most of their earning are from overseas nowa days :2twocents
I believe that the way you treat your staff flows on to the kids. Just look at the next level up in schools.Having a close connection with childcare centers I reckon some of the loveliest/talented people work in those places.
Pity they earn less than non-skilled production workers in a factory. :(
Sprinter79
22nd-May-2007, 08:49 PM
I believe most of their earning are from overseas nowa days :2twocents
Having a close connection with childcare centers I reckon some of the loveliest/talented people work in those places.
Pity they earn less than non-skilled production workers in a factory. :(
I agree Mike. 70% of their earings are from AU.
Not all childcare centres pay crap, but they all pay as little as they can get away with. You pay peanuts, you get monkeys.
My gripe isn't just with pay rates, but also with the levels of training and information that they give staff. There are plenty of illnesses that kids carry that are potentially very serious/fatal to pregnant mothers and unborn baby. Their duty of care with regards to infectious diseases is found wanting, but it also varies from place to place.
Another area of concern is the way they acquire new facilities. Quite a number are pre-existing facilities and in some cases old houses. Very little money is spent bringing these newly acquired facilities up to the level of purpose built ones. So if you have a choice, send your kid to a purpose built place!!!!!
Bazmate
29th-May-2007, 10:22 AM
Dammitt... I hate surprise share placements... There goes another chunk of value from my holdings..
Trading halt today while they flogg their placement to the big boys.
michael_selway
29th-May-2007, 01:21 PM
Dammitt... I hate surprise share placements... There goes another chunk of value from my holdings..
Trading halt today while they flogg their placement to the big boys.
EPS(c) PE Growth
Year Ending 30-06-07 35.2 20.6 30.4%
Year Ending 30-06-08 45.7 15.8 29.8%
reece55
29th-May-2007, 02:12 PM
Well, it's had another bounce of late after announcing a profit upgrade.....
I still say look at the cash flows - this is a Company writing cheques it cannot pay!!!
And what do you know - in the cookie jar again today I see!! Well, I don't blame them - gotta take your money when the money is there for the taking.... Shareholders are diluted again......
Still a dog in my mind.......
Cheers
dhukka
29th-May-2007, 02:17 PM
This truly is turning into an awful business. They continue to raise capital to fund growth and in the process continue to lower returns on invested capital. Looking to raise up to 1 billion of capital ($600m debt & $400m equity) this time around.
brendan87
29th-May-2007, 08:44 PM
ABS has one of the best non-resource stock EPS growth rates in Australia. My data has it on +60% FY07 and +40% FY08 - so who cares is their equity base increases? Also - the stock is priced to fail. Just look at the fwd PE's. If they pull off their US/UK strategy the stock will be revalued upwards. Just my :2twocents worth :)
UMike
17th-July-2007, 09:23 PM
ABS sp has been performing extremely poor recently until Monday. Up over 7%.
Despite NAB and CBA decreasing their share holdings.
michael_selway
17th-July-2007, 10:24 PM
ABS has one of the best non-resource stock EPS growth rates in Australia. My data has it on +60% FY07 and +40% FY08 - so who cares is their equity base increases? Also - the stock is priced to fail. Just look at the fwd PE's. If they pull off their US/UK strategy the stock will be revalued upwards. Just my :2twocents worth :)
yes but cashflow, there was a danger of itbeing net -ve i think in the last results etc
EPS(c) PE Growth
Year Ending 30-06-07 34.5 19.9 27.8%
Year Ending 30-06-08 44.4 15.4 28.7%
Thanks
MS
dhukka
17th-July-2007, 10:46 PM
ABS has one of the best non-resource stock EPS growth rates in Australia. My data has it on +60% FY07 and +40% FY08 - so who cares is their equity base increases? Also - the stock is priced to fail. Just look at the fwd PE's. If they pull off their US/UK strategy the stock will be revalued upwards. Just my :2twocents worth :)
This would be funny if it wasn't meant to be serious. Put simply the value of a company is the value of it's equity. This equity value is adjusted to take account of future growth and returns to shareholders. A company that has to consistently raise equity to fund growth and which achieves the sub-par returns on that equity such ABS has been doing for some time now is a poor business.
Also PE's are an indicator of price but have nothing to do with value.
Miner
23rd-July-2007, 12:43 AM
Hi
Has any one looked in to the recent purchases by one of the directors on a large volume. Not once but few times.
Does he know something which market does not?
Or was it just to raise market expectation or ramping so that some quick money can be made.
I bought some and it went up in a couple of days. I am thinking to hold and then to loose, or to sell and then repent .
Any advise please?
Regards
Miner
brendan87
28th-July-2007, 10:41 AM
This would be funny if it wasn't meant to be serious. Put simply the value of a company is the value of it's equity. This equity value is adjusted to take account of future growth and returns to shareholders. A company that has to consistently raise equity to fund growth and which achieves the sub-par returns on that equity such ABS has been doing for some time now is a poor business.
Also PE's are an indicator of price but have nothing to do with value.
Dhukka, the “market” value of a company is the (market) value of its equity. This is calculated by multiplying the share price by the number of shares on issue – so the share price, ceteris parabis, measures ‘value’ as perceived by the market at any arbitrary point in time. But is subject to market failures such that one can argue there is an intrinsic or true value of a company’s equity, which, as you said, takes account of future growth and returns to shareholders. Growth in EPS is important because EPS = earnings/no. of shares on issue. So it in fact fully compensates for more shares on issue. The most recent equity raising was only about 12% of equity. So after the full year perhaps we could reconvene to look at ABS diluted EPS.
For a company such as ABS, in a fragmented market with high capital expenditure requirements – it needs to fund growth somehow. Debt or Equity? That’s not a question I purport to answer here – but I.M.O. a leveraged balance sheet is a sign of a company that is leveraging its opportunities. In the life-cycle of a business, ABS is still quite young – at the stage where its capital outlays are high, it is raising debt/equity and operating CF’s have not come through strongly yet.
Now also take into consideration the ABS model – buy the franchise, refurb. the centres, drive down vacancy rates (increase efficiency) then reduce overhead through synergy – don’t pass the cost savings to customers = betters CF’s a margins. This doesn’t happen overnight in any business. I can’t think of any strategy involving rapid and significant expansion into new markets not involving large initial outlays funded by either debt or equity – and no shareholders expecting ambitious growth in earnings without a higher s-t debt burden or EPS dilution. Nor are growth-through-acquisition strategies expected to yield high CF’s in its early stages. Perhaps our difference of opinion is due to differing investment time-frames. I.M.O. if you wait for ABS to become a mature business (achieving high ROE, high operating CF’s, lower debt etc), you won’t be paying under $7 a share. Simple.
Bazmate
11th-October-2007, 08:04 PM
Anyone know what happened to ABS at the end of trade today??
It looks like the share price built up all day, but then the gap in the buys and sells now is $6.60 and $6.80... I don't understand..
Baz
Rainmaker2000
12th-October-2007, 03:35 PM
Just on ABC guys....terrific growth story.....at the rate they are expanding and the shares they are issuing.......how long do people think this above average growth can last? Personally, I think there will be one bad half result coming soon when acquisition risk comes home to roost.......just on the quality of the childcare if that matters.....my girlfriend is a group leader and has worked at many ABCs over the years.....for what it matters, she can confirm that they are the absolute worst, worst place to care for your childs needs.......so own the stock but not the childcare place....leave that for the white trash with the govt. subsidy....
TheAbyss
12th-October-2007, 05:40 PM
Growth wont stop for a while yet.
They are now in USA, UK and NZ. Room for growth in those areas yet.
They are also capable of expanding their horizons into other areas outside childcare - Aged care, education etc.
When E Groves retires the growth might stop then.
Regarding the quality of the centres my view is they have grown very fast and the logistics took a while to catch up to the growth so there have been issues which will improve over time. if you look at how they have evolved they are improving all the time. They now have their own training colleges for staff etc.
I might end up with a job in marketing at ABC if i keep going so i will stop now.
Rainmaker2000
12th-October-2007, 07:18 PM
Funny thing, they pioneered the 'one sandwish' lunch instead of 3 in a community centre for the kiddies.......but maybe as you say, here in QLD they have to at least keep some standards since they are now so big that they have so much to lose from bad publicity.........at the same time, all these Eddie Wannabe centres are springing up around Brisbane own by fridge repairmen and the like and in aspiring to cut costs like Eddie, they serve up even lower standards......it is very much a funny 'industry'........for me, the low hanging fruit has definely been picked and I'm more inclined look for the next growth story.....not that ABC has filled its pond yet
hector
12th-November-2007, 03:00 PM
Growth wont stop for a while yet.
They are now in USA, UK and NZ. Room for growth in those areas yet.
They are also capable of expanding their horizons into other areas outside childcare - Aged care, education etc.
When E Groves retires the growth might stop then.
Regarding the quality of the centres my view is they have grown very fast and the logistics took a while to catch up to the growth so there have been issues which will improve over time. if you look at how they have evolved they are improving all the time. They now have their own training colleges for staff etc.
I might end up with a job in marketing at ABC if i keep going so i will stop now.
Not sure if there is a change in government policy driving this plummet in SP, or just a retreat to value SP. Whatever, I'm short ABS until this trend reverses.
michael_selway
12th-November-2007, 07:15 PM
Not sure if there is a change in government policy driving this plummet in SP, or just a retreat to value SP. Whatever, I'm short ABS until this trend reverses.
Hi maybe if labour wins, it will affect their earnings?
Not sure if there is a change in government policy driving this plummet in SP, or just a retreat to value SP. Whatever, I'm short ABS until this trend reverses.I am also a holder and have no idea what is driving this recent downtrend.
Theres some fire around where this smoke is I fear.
hector
13th-November-2007, 11:29 AM
I am also a holder and have no idea what is driving this recent downtrend.
Theres some fire around where this smoke is I fear.
Well it's jumped up again. My short stop loss triggered and I'm out. If ABS opens higher tomorrow I might be tempted go long.
I have no idea why a stock like ABS plummets every day for a week (slight exaggeration) and then stages a huge comeback in one morning. It will be interesting to see if ABS builds higher tomorrow, or if it has merely paused and will resume its fall.
Good luck to all,
hector
TheAbyss
13th-November-2007, 11:42 AM
Two things to consider.
1. Eddie Groves stated that his acquisition program will be reduced for the rest of the financial year so growth will slow for a little while.
Currently they have 1084 centres in Australia and 1015 in US which is a year ahead of their 2006 annual report target so a breather can't hurt.
2. Debt - My guess is that the sell off is due to risk management. ABC do have a lot of debt which isnt a bad thing in itself however the funds provided by UBS are suffering due to the Sub prime contagion effect in my opinion. UBS are a provider to ABC of funding. See excerpt below of an article in The Australian recently for some insight.
Sharing it around
SAME deal at home. Although Wesfarmers has been bouncing nicely as it brings home the Coles deal, there is $8 billion in debt yet to be syndicated. The three trading banks that own this debt are looking to syndicate to another five or six, which in turn will sub theirs out to another 10 or so.
Elsewhere, UBS is said to be struggling to offload its MFS debt, ABC Learning and Terry Peabody's TPI still have big lumps of debt to refinance (although with a window open till next year) and Macquarie has a rash of deals to refinance, including MacMedia's Taiwan broadcasting asset.
Incidentally, if you were wondering why MFS seems to have gone quiet on the hyped sale of Stella resorts, there has apparently been a lukewarm reception from the private equity players who have run the numbers. So watch for an a flurry of good news about how Stella is going like the clappers, followed by word of a float.
Just as the investment banks need to recycle capital (deal velocity is the buzzword) the financial engineers need to recycle companies or face the irksome spectre of having to run them and fund them.
Rainmaker2000
23rd-November-2007, 08:12 AM
Ok guys, who's up for some ABC........I've always watched this growth story from afar but I just love a plunging share price especially from a profit downgrade which did not look that material at all........currency and funtastic shares.....that's my kind of profit downgrade........I'm doing a bit of research and hope that the general down beat market will further rip the heart out of the share price.......there's nothing I like more than a growth story at a discount just after they tapped major investors for equity at much higher prices....
Does anyone follow ABC enough to know if the reasons for the downgrade is probably lies and it more relates to its US acquisitions, cause the share price certainly has showed no love at all
UMike
24th-November-2007, 07:53 AM
Ok guys, who's up for some ABC........I've always watched this growth story from afar but I just love a plunging share price especially from a profit downgrade which did not look that material at all........currency and funtastic shares.....that's my kind of profit downgrade........I'm doing a bit of research and hope that the general down beat market will further rip the heart out of the share price.......there's nothing I like more than a growth story at a discount just after they tapped major investors for equity at much higher prices....
Does anyone follow ABC enough to know if the reasons for the downgrade is probably lies and it more relates to its US acquisitions, cause the share price certainly has showed no love at all To many disappointments over a protracted period of time has caused this Share to lose sustained buying enthusiasm.
tronic72
24th-November-2007, 11:11 AM
Ok guys, who's up for some ABC........I've always watched this growth story from afar but I just love a plunging share price especially from a profit downgrade which did not look that material at all........currency and funtastic shares.....that's my kind of profit downgrade........I'm doing a bit of research and hope that the general down beat market will further rip the heart out of the share price.......there's nothing I like more than a growth story at a discount just after they tapped major investors for equity at much higher prices....
Does anyone follow ABC enough to know if the reasons for the downgrade is probably lies and it more relates to its US acquisitions, cause the share price certainly has showed no love at all
Bad, bad timing. As one poster suggested, ABC could be hit hard if Labour wins the election. The people that work at these centres are on the low side of the the income scale and could be one of the first to cry poor.
Put it this way, Rudd won't have any incentive NOT to raise their pays and there won't be anyone to stop it happening with wall to wall labour.
IMHO, ABC will be much less attractive and a higher risk under a labour government. We are already seeing large amounts of large scale work being postponed in WA pending the federal election.
My 2c
oremo
3rd-January-2008, 08:52 PM
Hi,
I'm just a dumb cluck father whose daughter owns a childcare centre in Sydney.
I thought the whole ABS concept was sound so I bought $12K of shares in ABS that are now valued at $9k. I know you seasoned veterans will laugh but the hammering hurts. Any kind soul out there willing to give me some geniune advice on what to do.
If you feel like giving this beginner a dose of "serves you right" that's ok because I deserve it.
Happy new year
Rainmaker2000
3rd-January-2008, 09:13 PM
Mate Oremo, don't beat yourself up.......we've all had the stock market touch us up for 25% or more and that's on well functioning, profitable businesses........not that long ago, I had a stock which shall remain nameless which I bought at $2.20 and watched it go down to 80cents, bought some more and saw it taken over at $1.75...it was profitable all along.........there's no advice here but we can chat...
The point is less about what the market says or does but whether the stock or company has performed to your benchmarks.........ABS may have had a bit of bad news and there may be some bad news to come but in perspective.....My understanding is that ABC will make money this year......My understanding is that they will make more money this year than last year......my understanding although I don't follow it 'like an owner', is that ABC won't make as much money as they originally planned for.....at current valuation (P/E), each ABC share commands a pretty reasonable chunk of earnings...something like a forward PE of 12ish...the question for each investor to answer is how much will they earn next year and year after and what are the risks
If you need more solice, take it from the Singaporean institutional investor which I can't really remember but I think took 12% of the company at round $8 a share.....they think its a growth story and worth it.......
hyperterminal
3rd-January-2008, 09:22 PM
Hi,
I'm just a dumb cluck father whose daughter owns a childcare centre in Sydney.
I thought the whole ABS concept was sound so I bought $12K of shares in ABS that are now valued at $9k. I know you seasoned veterans will laugh but the hammering hurts. Any kind soul out there willing to give me some geniune advice on what to do.
If you feel like giving this beginner a dose of "serves you right" that's ok because I deserve it.
Happy new year
Im sure no one would take pleasure in the growing hole in your pocket :banghead: to what you should do in a second but firstly to ABS itself...
Over the last two years there has been numerous somewhat questionable company practices which raise concern, less than transparent accounting practices complicate earnings projections and add to mistrust in the market. Other Revenue this year will be increased by GBP20m (A$50m) due to a 'discount on acquisition' following the recent Leapfrog UK purchase. This is a large sum compared to the original GBP31m purchase price. ABS is also not as transparent as it might be in relation to related-party transactions with Queensland Maintenance Services (QMS), which is run by Eddy Groves' brother-in-law. QMS carried out $75m in maintenance and development work in FY06 but the value of work in FY07 is not disclosed because this is not required under new IFRS accounting standards. What to think of such party transactions?????? particularly if press reports are accurate, that the work was not put to tender, an overriding concern is the likelihood that further equity will be issued to fund US acquisitions, thereby diluting existing shareholders. Also levels of debt are rising to fund aggresive growth targets, In todays tight credit markets it remains to be seen whether such agressive growth is the right strategy for ABS :2twocents
IMHO, I would get out even with somewhat favourable goverment childcare policies, I think ABS will continue to destroy shareholder value...
Cut your losses, deversify across different sectors and dont put all your eggs in one basket next time....:) good luck and I hope your next trading experience is better then your first
hyper
oremo
3rd-January-2008, 09:25 PM
Rainmaker thank you.
Kind of you to give me some solace
I will (here's my first attempt at market jargon)...go long...and hold.
Take care and catch you soon. Oremo
dhukka
3rd-January-2008, 09:30 PM
Hi,
I'm just a dumb cluck father whose daughter owns a childcare centre in Sydney.
I thought the whole ABS concept was sound so I bought $12K of shares in ABS that are now valued at $9k. I know you seasoned veterans will laugh but the hammering hurts. Any kind soul out there willing to give me some geniune advice on what to do.
If you feel like giving this beginner a dose of "serves you right" that's ok because I deserve it.
Happy new year
Oremo,
We all make mistakes so don't beat yourself up about it. It would be interesting to hear why you thought an investment in ABS was sound. As stated on the first page of this thread ABS management have well and truly run this business into the ground. A once very profitable small business has become a large business generating mediocre returns on capital.
ABS keeps raising extra capital and debt to fund growth and continue to produce incrementally worse returns on that capital. You should take your medicine and move on unless you have good reason to believe the company can significantly raise their ROE. Forget P/E's, they are of no use in estimating the value of a business.
Rainmaker2000
3rd-January-2008, 09:39 PM
Hyperterminal, you raise some interesting issues.......as you can see from previous posts....I considered this stock but its mainly the frequent equity raisings and high level of debt that turned me away...Also figuring in my decision is my chronic distrust and dislike of Eddie and his way of business...I may consider at lower price points however.....hehehe
Bottom line: do your research, don't just trust a broker or someone els's viewpoint........ABS could still be an outstanding performer, but it is certainly not the most conservative stock on the market.........imagine all the people who bought Centro thinking it was just a boring property trust.....ABC is not just a boring owner and operator of childcare centres......for example, I don't know if there are any hard assets on their balance sheet and I do know they run off something like a franchise model
Real1ty
3rd-January-2008, 09:57 PM
Firstly.
I used trade ABS a lot and made really good money doing so.
It was quite volatile and made it reasonably easy to trade with a fair degree of confidence.
I got lazy, and got caught with the stock just prior to the profit downgrade.
What i think needs to be addressed so far that hasn't is the following.
The A$ is what has hurt earnings, not lack of numbers or high costs etc etc.
While they did downgrade eps, they have still forecast growth of 15%.
They have also restructured their debt facility for a 3 year period.
They have also hedged a lot more of their earnings 90% of 2008 and 79% of 2009, so this should smooth earnings.
They also have a lot of Funtastic shares, that are on their books at $1.85 but are now trading around .60c odd.
I notice they have purchased more though, so are trying to either average down their unit cost, or possibly are considering a takeover.
Eddie Groves is a continual on market buyer of his stock.
Do you believe in the story long term or not?
How important is that $3,000.00 loss to you?
How much would it hurt if that became $7,000.00?
Are you prepared to take the risk to see your share price slip further this year, as that is the likelyhood, for the chance IF they come out the other end you MAY end up making a profit.
Will the capital loss actually help you elsewhere?
It's all about risk vs reward and ABS are a high risk stock presently.
It's very hard for us to answer your question but i will hold as i believe in ABS.
Good luck oremo
hyperterminal
3rd-January-2008, 09:58 PM
Hyperterminal, you raise some interesting issues.......as you can see from previous posts....I considered this stock but its mainly the frequent equity raisings and high level of debt that turned me away...Also figuring in my decision is my chronic distrust and dislike of Eddie and his way of business...I may consider at lower price points however.....hehehe
Bottom line: do your research, don't just trust a broker or someone els's viewpoint........ABS could still be an outstanding performer, but it is certainly not the most conservative stock on the market.........imagine all the people who bought Centro thinking it was just a boring property trust.....ABC is not just a boring owner and operator of childcare centres......for example, I don't know if there are any hard assets on their balance sheet and I do know they run off something like a franchise model
haha - yeah everyone has there price rainmaker even if its headed by slippery eddie =) Yes, debt levels are a concern (rainmaker I think the centro analogy fits ) growth, traditionally when soley offering one market service should bring synergies in adminstration, logistics, third party strategic partners etc etc.... therefore further aquisitions should bring increased ROI.... this is something I fail to see as of yet.... and questions Im sure the shareholders would like answers from the board about...
oremo
3rd-January-2008, 10:55 PM
Hyperterminal
Open thanks for the sound advice. Different from Rainmaker but also valid. I guess it's a personal decision. I don't feel comfortable with the stock. It makes me sad to log on and see the price constantly see-sawing and trending down.
Made my mind up...I'm getting ou.
Cheers
Oremo
Miner
5th-January-2008, 02:07 AM
Hyperterminal
Open thanks for the sound advice. Different from Rainmaker but also valid. I guess it's a personal decision. I don't feel comfortable with the stock. It makes me sad to log on and see the price constantly see-sawing and trending down.
Made my mind up...I'm getting ou.
Cheers
Oremo
Dear Oremo
I am not well qualified to advise you on ABS as I saw already there have been good postings at your request by others.
What prompted me to post this is at one instance you have said that you would be holding ABS for long and last posting you said "made my mind and I am getting out". Is your mind following the same volatility as ABS. My candid :2twocents advise will be please DYOR. Please also consider if you want to put your hard earned investment on Eddie who has reportedly done a favour to his brother in law by awarding a cleaning contract. When the CEO is not transparent and there is a suggestion to be having party related transaction then I would keep myself away and will not join the club. Personally I have had ABS and even after reading Bell Potter recommendation and other brokers ABS as a buy - I sold it off to cut my losses. I am happy as the share price has gone down by about $1 since I sold at a marginal loss.
I have the intention to attach two pdf reports (could not do so as each of them 600 kb and there is a limit of 480 kb) from BPS published in Nov 07 just to help you to read some data. However DYOR again and just DO NOT FOLLOW what Bell Potter said. Often they have turned out to be inconsistent as per my observation.
I would try to post separately.
Good luck
Regards
Miner
5th-January-2008, 02:11 AM
SORRY TRIED TO ATTACH SEPARATELY BUT THE FORUM HAS LIMITATION ON SIZE.
Hello Joe - can you please suggest how to get around it ? It is a pdf downloaded document so I can not truncate it and only 680 kb.
Regards
:mad:
TheAbyss
5th-January-2008, 12:08 PM
SORRY TRIED TO ATTACH SEPARATELY BUT THE FORUM HAS LIMITATION ON SIZE.
Hello Joe - can you please suggest how to get around it ? It is a pdf downloaded document so I can not truncate it and only 680 kb.
Regards
:mad:
If you use one of the compression programs you can specify volume sizes(convert the pdf to 2 x files at the ASF max capicity).
Winzip or Winrar will do the job
nikki
5th-January-2008, 02:52 PM
Oremo,
if you decide to sell make sure you know why and not because you are fearful of the SP going below 4.5 or whatever.
i have done exactly what you are considering - with ABC in fact (when it was trading above 7 and would keep falling just below it) - and i sold out without understanding any fundamentals of share investing/trading. this was a mistake because i did the same with another stock the other day and lost money yet again! so i went from 10K to 7K to 5K because i did not learn from my mistakes.
i realised - after selling the other day - that i was buying the stock as an investor and selling them at a loss because i was behaving like a trader by watching it and analysing its day to day movements.
hope my mistakes help you in some way with your choice. :banghead:
Rainmaker2000
5th-January-2008, 09:52 PM
The point you make Nikki is exceptional and shows how 90% of people think they are investors and yet the average ASX stock is held for less than 10 months on average....in reality, 90% of people are traders...I find it tough to comprehend.........the purchase of stock is a purchase of part of a business........people usually don't buy real property on impulse or buy a small business without due diligence and yet people buy and sell stocks without such preparation.......stock prices do not always go up but then they are not always a good barometer of business progress either......
oremo
8th-January-2008, 02:52 AM
Hi guys
Appreciate the feedback.
Saw ABS go down 3 cents, 5 cents and 23 cents yesterday respectively. Glad to say I sold out and missed out on the above losses.
Fells like a win only I still lost. Where do I go from here? keep the cash in the trading account and try to pick up a bargain or tranfer out and put it in the Savings Bank? I'm serious. What do I do?
Thanks in advance
Oremo:confused:
Rainmaker2000
8th-January-2008, 08:08 AM
Even in this overvalued market, there are bargains to be had out there.....far more than say 2 years ago for me....maybe read a few classic books like 'One up on Wall Street' and you'll be ready to pounce.............unfortunately, I don't see much benefit in savings accounts....they don't pay franked dividends, they pay the opposite with no prospect for capital gain........having said that, if rates hit 12%, then I'm into bonds or a savings account........basically, the way our tax system works, I'd be made to have savings accounts...hehehe
ROE
8th-January-2008, 09:34 AM
I personally wouldn't touch this stock at this price dont know why someone would pay $7-$8 for this stock a while ago.
Two column of this guys financial statement is enough to keep me well away.
1. 92% debt level
2. low ROE/ROC and declining.
as US head into recession more people are out of work :) ..they wont send their kids to childcare :D
oremo
8th-January-2008, 09:50 AM
Hi Roe
Gotta contradict you. With domestic debt levels so high more moms are going to get into the workforce to help with debt. Necessitate childcare which is becoming increasingly Govt. subsidised.
Govt pays their fees every time..on time
:2twocents
TheAbyss
8th-January-2008, 10:49 AM
As i understand it there is some concern that ABS are bidding for another 50 centres in the UK which adds fuel to the fire regarding debt (50 centres to go with the 130 they already have).
You have to ask how they are getting more funding in the current credit climate unless their books are an acceptable credit risk to the lenders. If they can get the funds then that would have to be a positive, dependent on the conditions of course.
CBA also sold down last week which would have caused more downside to the SP.
I am not ignoring the issues also stated by others in this thread however i am willing to stay on board though it is an easier decison when you are free carrying then if you bought in on a higher price.
My opinion is that when we look at ABS in a few years time they will be in good shape so long as EG is still at the helm. The guy has moral fibre and add to that his passion and drive, the future of ABS is solid. Sure he is out for himself first but that is a positive as if he wins the share holders win as he will not let anyone down intentionally.
ROE
8th-January-2008, 03:40 PM
Hi Roe
Gotta contradict you. With domestic debt levels so high more moms are going to get into the workforce to help with debt. Necessitate childcare which is becoming increasingly Govt. subsidised.
Govt pays their fees every time..on time
:2twocents
Not all ABS earning comes from Aus .. the US play a big part, how can people sending their kids to childcare if they don't have a job :D .. citigroup about to down size 5-10% of work force...
and their debt level is scary in these environment.....if it's a good business you dont need that much debt...bad business tend to get into bigger and bigger debt and lower and lower ROE
If you have kids, it cheaper for a mother with 2-3 kids not to work and live off the system than working in Australia.
dhukka
8th-January-2008, 04:22 PM
I personally wouldn't touch this stock at this price dont know why someone would pay $7-$8 for this stock a while ago.
Two column of this guys financial statement is enough to keep me well away.
1. 92% debt level
2. low ROE/ROC and declining.
All you really need to know isn't it. Definitely one to stay away from unless they can turn their returns on capital around and reduce their debt
tronic72
10th-January-2008, 01:48 PM
I disagree. Not with you reasoning but your view it's a stock to keep away from.
The way I've just looked at it (got in at .455 which is a yearly low). Due to the whole sub prime issue, more and more families will be forced to take second jobs or for both partners to be working. The bottom line for this is more kids in Childcare and ABCs income is virtually guaranteed due to it's close ties with governments. Sure they have high debt but also have high income.
We'll see.
:2twocents
ROE
11th-January-2008, 05:14 PM
I disagree. Not with you reasoning but your view it's a stock to keep away from.
The way I've just looked at it (got in at .455 which is a yearly low). Due to the whole sub prime issue, more and more families will be forced to take second jobs or for both partners to be working. The bottom line for this is more kids in Childcare and ABCs income is virtually guaranteed due to it's close ties with governments. Sure they have high debt but also have high income.
We'll see.
:2twocents
Agree, different people have different view on stocks and that what make the market ticks.
for me I have a few simple rules that filter out what I want to buy.
I usually don't break the rules and breaking the rules usually makes me lose capital :-) which happen here and there because I'm human. :mad:
one of the rule is High Debt company. In my opinion high debt business are bad business model in the first place. You use leverage to get earning
so the fundamental of high profit margin and high return on equity is not there so when debt dry up what will happen to your earning? no one really know and that unknown keep me away. I do have exceptions however but again it's something I use when I decided to run my ruler on a stock.
Rainmaker2000
12th-January-2008, 12:44 AM
I guess ABS is getting a little more scary than I thought it might.......that is a high debt ratio, there is substantial acquisition risk remaining and no doubt some non-cash write downs on intellectual property coming in the future.......does anyone know the stock well enough to know how much real property (real assets) is on the balance sheet......as in, are all the child care centres in a separate property trust?
mrgroundwork
23rd-February-2008, 10:07 PM
anyone still watching/holding? never thought it would go sub 4...
i think im going to get back in... might be some short term pain, but to me this has been punished too hard...
i heard a theory that hedge funds are aggresively short selling the stock, as eddie groves has large positions on margin... idea being that if they can get the price to tumble (which it has), force him to sell when he gets margin called, price will tumble further, then they can load up on the cheap... interesting theory...
josjes
24th-February-2008, 12:22 AM
Lazard Asset Management apparently has a lot of faith on this company, increasing its position and has been filing substantial holder notice from $7 down to $4.
LAM recognized the value of Flight Centre and sticked with it even when its share was in down trend from $16 to $9, and when Graham Turner along with the private equity tried to pick up the company on cheapo for $17, it defeated the scheme of arrangement for the $1.6 billion private equity bid for Flight Centre. Flight Centre has since hit $32 and now is sitting around $26.
I am sticking with ABC for now by following LAM's action, until proven otherwise of their substantial holding notice.
reece55
24th-February-2008, 02:09 AM
UMIke
If ABS can't perform in this market, the most liquid, cash filled environment possible, then what makes you think it will do well long term??
I have said it before and I will say it again, this is both fundamentally and technical a weak company...
Technically, lower lows and lower highs.....
Fundamentally, the accounting is shonky and they have really poor returns....
It's a no brainer to me. The only thing I would say is that they have insto support, so this will prevent them from dropping too much.
Cheers
Wow, can't believe where this stock has gone since I posted this message.... Even I thought it would find support at $4, and I have been a big bear on this stock for ages.....
I think we were at about $7 bucks when I said this...... This stock is a pure example of when the going gets tough, those with poor fundamental records and positions will be hammered....
I say to anyone who says the following:
* But Lazard keep increasing their holding;
* It pays a nice dividend;
* But childcare is recession proof; and
* But look how low the price is -
LOOK AT THE CHART....... The answer is already there, even if you don't believe Dhukka and myself when we say the funnymentals are knackered.... Picking bottoms is a poor mans game and ABC Learning Centres is in the mother of all downtrends... You might get a bounce, but this stock has a lot of repair work to do before we get back to $7.00......
Cheers
Rainmaker2000
24th-February-2008, 09:50 AM
Surely Eddie is not picking shares up on margin surely......I wonder who would be offering lvr on ABS to Eddie.........since its already got the hefty gearing ratio and add another 40%-60% lvr to that for margin....I find this very difficult to believe a lender would be that silly.......since I doubt Eddie has a diversified portfolio, it would be just a house of cards.....very similar to my unsuccessful tilts at stock investment in the game RailRoad tycoon....but I digress
mrgroundwork
25th-February-2008, 11:17 AM
rainmaker - it is not out of the realms of possibility that eddie wanted to diversify away from just ABS, decided he would use his equity in those shares to buy something else... i dare say heaps of lenders would have been happy to arrange this kind of facility last year...
reece - i would like to hear more about the poor fundamentals..
Junior
25th-February-2008, 12:19 PM
Wow, can't believe where this stock has gone since I posted this message.... Even I thought it would find support at $4, and I have been a big bear on this stock for ages.....
I think we were at about $7 bucks when I said this...... This stock is a pure example of when the going gets tough, those with poor fundamental records and positions will be hammered....
I say to anyone who says the following:
* But Lazard keep increasing their holding;
* It pays a nice dividend;
* But childcare is recession proof; and
* But look how low the price is -
LOOK AT THE CHART....... The answer is already there, even if you don't believe Dhukka and myself when we say the funnymentals are knackered.... Picking bottoms is a poor mans game and ABC Learning Centres is in the mother of all downtrends... You might get a bounce, but this stock has a lot of repair work to do before we get back to $7.00......
Cheers
What about long term fundamentals? Might be a decent value stock to file away in the SMSF for 10 years.
ROE
25th-February-2008, 12:41 PM
Lazard Asset Management apparently has a lot of faith on this company, increasing its position and has been filing substantial holder notice from $7 down to $4.
LAM recognized the value of Flight Centre and sticked with it even when its share was in down trend from $16 to $9, and when Graham Turner along with the private equity tried to pick up the company on cheapo for $17, it defeated the scheme of arrangement for the $1.6 billion private equity bid for Flight Centre. Flight Centre has since hit $32 and now is sitting around $26.
I am sticking with ABC for now by following LAM's action, until proven otherwise of their substantial holding notice.
FLT is a far better business than this dog and I did buy FLT at $10 or so ..for a start it doesn't have much debt. Two it cost very little for FLT (a few computers and a few staffs) to set up a shop and immediately get a high ROE.. the more shop they open and have customers walk through the door the more cash they make...that why u see FLT in every street corner.
How much does it cost ABS to open a child care centre? and looking at their ROE I said this is a dog business .. I haven't seen anything business that has such a low ROE.
Uncle Warren famous word
"Time is the friend of the wonderful business. It's the enemy of the lousy business. If you're in a lousy business for a long time, you're going to get a lousy result, even if you buy it cheap. If you're in a wonderful business for a long time, even if you pay a little too much going in, you're going to get a wonderful result if you stay in a long time"
and my take if you buy a wonderful business for cheap you going to get extra-ordinary return like FLT :-)
reece55
25th-February-2008, 05:54 PM
What about long term fundamentals? Might be a decent value stock to file away in the SMSF for 10 years.
All depends on your time frame, but then again, why would you waste the capital when you can stick it else where? Looks like they overpaid for their expansion in the US at the wrong time and now they are heavy with a whole pile of debt to service their intangibles. I personally don't put ABS in the value stock pile, at the moment I would say it is appropriately priced.
The half results were lodged right at the close - never a good sign!!! Have a look through, not exactly a good result. Divy maintained at 8 cents, but EPS down 51% and high finance costs associated with expansion.... I will have a better look tonight and explore...
Cheers
grace
25th-February-2008, 07:32 PM
We used to own a Child Care Centre. Sold out for personal reasons.
Eddie would turn up at our child care conferences with such arrogance and sware all the way through his presentations. I disliked the man from that point on.
One thing, if ABC does go broke, there are going to be some well discounted child care centres come onto the market. It will be like the Centro debacle. I might be able to buy one back at half the normal price!
Rainmaker2000
25th-February-2008, 07:35 PM
I broadly concur with the points above, especially like Warren B quote..........I'm not totally convinced ABS is a business with poor economics......I just think that those in charge of the company have no idea about shareholder value.....there is no attempt at all to fund growth with cashflows for example.......it just looks like empire building
Its all just one big debt/equity fest.....ABS should own a stock broking house....for example, there is $6.4 million of costs just for a share purchase plan....that would buy a certain ailing stock broker I know...
Juries still out.....lots of one offs and wasted past shareholder money on 'one-offs'........I don't know how one is meant to understand a business whose EPS is down 50% in a half and then we are told, "Don't worry, its just the change of seasons"
It's pretty much just Reverand Eddie and the former Lord Mayor of Brisbane telling everybody to keep the faith, you'll get your 15% EPS........there's no certainty that won't happen but I do know that's one ugly income statement and one uglier balance sheet.....with all that leverage, they would do well just to predict whether ABS will make a profit or loss
reece55
26th-February-2008, 10:06 AM
And what do you know, down she goes......
ABS opens at 2.05 today, looks like the market just doesn't believe the fantasy that they will be able to maintain 15% EPS growth after a killer half year....
People have to change their mentality at the moment, or your going to lose a lot of money... This is a bear market and stocks with high debt and poor fundamentals will be hit....
My condolences for anyone who is left holding this crappy piece of paper, but it's not like I didn't warn everyone... again and again and again....
Cheers
dhukka
26th-February-2008, 10:29 AM
And what do you know, down she goes......
ABS opens at 2.05 today, looks like the market just doesn't believe the fantasy that they will be able to maintain 15% EPS growth after a killer half year....
People have to change their mentality at the moment, or your going to lose a lot of money... This is a bear market and stocks with high debt and poor fundamentals will be hit....
My condolences for anyone who is left holding this crappy piece of paper, but it's not like I didn't warn everyone... again and again and again....
Cheers
Yep, if you bought this, you got what you paid for, a crappy business producing crappy returns, currently $1.35, ouch !
Junior
26th-February-2008, 10:32 AM
What about long term fundamentals? Might be a decent value stock to file away in the SMSF for 10 years.
Dang. I retract my earlier statement, could be the next AFG....I wonder if any of the debt facilities have a condition relating to market cap.
YOUNG_TRADER
26th-February-2008, 10:37 AM
Jumping Jimminey Batman looks like there's some real trouble over here,
I heard a rumour it had something to do with hedge fund manipulation and stop losses, including the MD who had a very large geared postion in the company who is being stopped out today
Heard the same thing on AFG
Seems really dodgey to me :eek7:
UMike
26th-February-2008, 11:23 AM
Whats with the Trading halt.
It's been trading for an hour and on the rise before the halt.
It's not like a reverse speeding fine or anything. :confused:
3 veiws of a secret
26th-February-2008, 12:27 PM
Interesting as soon as purchase a few the share shot upfrom $1.29 to $1,45 in seconds somebody has faith in this share ,but I agree very speculative trading going on today ...I'm in with the wolves till I make a few quid !
josjes
26th-February-2008, 12:42 PM
Interesting as soon as purchase a few the share shot upfrom $1.29 to $1,45 in seconds somebody has faith in this share ,but I agree very speculative trading going on today ...I'm in with the wolves till I make a few quid !
Singapore Temasek Holdings has 12% of ABC back when the shares was $7.20 in June.
Just a speculation, they may still have faith with the underlying business.
Bolivia
26th-February-2008, 12:46 PM
Value was obviusly not there at circa $4.00 - but has the stock been oversold here?
They have confirmed no covenants on their debt relating to market cap.
They must be hugely relieved to have refinanced. What does everyone see as the main problem ABS faces? Sure they paid too much for the assets in the USA but are these concerns already factored in to this sell off. This sort of fall seems very much margin related.
Probably another day of margin selling to go. Mr Groves might be included in that.
Brave to go in today IMHO.
3 veiws of a secret
26th-February-2008, 12:53 PM
Brave to go in today IMHO.
True if your looking at term.......in my case I go in and out like Flynn....unlike Groves. :)
Miner
26th-February-2008, 03:18 PM
ABC Learning moves to calm investors
Posted 46 minutes ago
26 FEBRUARY 08 (EXTRACTED FROM ABC NEWS POSTED IN ABC WEBSITE) 1.16 PM WST
Childcare operator ABC Learning Centres is trying to allay investor fears after a share plunge today.
Today its shares opened at a six-year low, and have lost as much as 70 per cent.
The company released half-year profits yesterday that were well below expectations, but there was no major movement in the stock.
Today the company's shares are changing hands at a frenetic pace as brokers buy and sell for around $1.90 at about 1:30pm AEDT, which is a 50 per cent fall on this morning's opening price.
Over 100 million shares in the company have changed hands so far on the Australian Stock Exchange and some analysts are questioning the future viability of the business.
ABC Learning has issued a statement to the stock exchange in response to market speculation, saying the company is trading profitably.
josjes
26th-February-2008, 03:23 PM
As at 03:19 pm today:
951 buyers for 7,227,870 units 343 sellers for 2,035,031 units at $2.12 now.
I think it is starting to find bottom. Strong support at $2 and above.
What a scary ride, was $1.15 low this morning. I nearly lose my cool today, and just a second away from hitting the selling button, but that emergency ASX announcement save my day.
ROE
26th-February-2008, 04:22 PM
Big drop in profit and no market update leading to the announcement?
Surely they know something as big as 50% drop in the profit.
Real1ty
26th-February-2008, 04:28 PM
The company released half-year profits yesterday that were well below expectations, but there was no major movement in the stock.
LOL, I would say there is a very good reason behind the shares having no major movement yesterday.
They released the results after the market close.....
3 veiws of a secret
26th-February-2008, 05:03 PM
What a brilliant day today ,for those who speculated from early trading to close ......I bagged my profit and it looks like Turkey, Syria , Northern Iraq ,or perhaps Bulgaria might be on the holiday horizon at the end of the year!
Those holding good luck..... I'm outta here!
grace
26th-February-2008, 08:54 PM
Story on ABC 7.30 report which I missed but my husband said it all looked doom and gloom for them. Not online yet.
benwex
26th-February-2008, 09:41 PM
I watched the show and must disagree...
If anything it was a shot at the private sector operating in the child care industry. This is a pet topic that has been dogging ABS and the rapid shift in the industry as consequence of the governments lack of commitment and resources..
The comments from some lady invertiewed, who is head of some child care association is in no real position to comment on the viability of ABS business model or debt levels.
The analyst had a more intelligent view but still failed to inpress...
A beat up if you ask my opinion and the price drop today was a classic margin call sell.
Time will tell but I think their is going to be some strong support for the stock at $2.00
Eddy Groves is a very smart and cluey guy (Ex Mckinsey) and the rumours of hedge fund shorting it to wash out the large margins on ABS has merit..
will see.
benwex
3 veiws of a secret
26th-February-2008, 09:58 PM
I just wonder if this was a corporate raid that forced the hand for Groves (into selling ?) ....sort of Warren Buffet wager on the sterling pound that made him a 'billion dollar baby'.
If so ...it was a masterstroke play.....any other companies in the same position that might be targeted must be as nervous as Groves. "Are you Ready Eddy"
korrupt_1
26th-February-2008, 10:09 PM
There are allegations and rumours that some fund managers have been conspiring together to push weaken stocks to ridiculously low prices so they can get them at dirt cheap prices...
I cant find the source,.. but it's posted around here in one of the other threads.
Perhaps ABS was another victim - that got carried away?
grace
26th-February-2008, 10:25 PM
Leverage on Leverage, don't you just love it. Just how much actual personal and company debt exists on those assets (not that ABS is alone in that one, just a sign of the times).
But then, they have plenty of US property that will hold up when being valued!
roland
26th-February-2008, 10:25 PM
There are allegations and rumours that some fund managers have been conspiring together to push weaken stocks to ridiculously low prices so they can get them at dirt cheap prices...
I cant find the source,.. but it's posted around here in one of the other threads.
Perhaps ABS was another victim - that got carried away?
Interesting comment ... I can't help but feeling that there are a group, or groups of investors that are on the hunt for companies that can be negatively linked to the credit crunch in order to push them over the edge on some bad sentiment or negative news.
In our current nervous market environment any hint of credit problems can cause a huge avalanche of selling, driving the SP well below what it is worth.
Now if you were in a position to do this and profit from this, wouldn't you do it?
michael_selway
26th-February-2008, 10:55 PM
Hey check thsi out
Net Tangible Assets 31/12/06 31/12/05 cents cents
Net tangible assets per share (76.5) 24.1
NTA negative?
Also check out falling operating cashflow (payment to suppliers) and also high investment cashflow (childcare licenses capatilised but not expensed?)
Date: 26/2/2008
Author: Fiona Tyndall
Source: The Australian Financial Review --- Page: 17
ABC Learning Centres CEO, Eddie Groves, has dismissed rumours he had to divestshares in the Australian child care group because of margin calls. The marketspeculated Groves faced margin calls when ABC shares were trading at between$A3.50 and $A4. Groves said he has not sold any stock and only faced margincalls at a much higher level than speculated by the market. ABC shares fell$A0.03 to a year-low of $A3.74 on 25 February 2008. The company reported a 42%fall in net profit to $A37.1m for the first half of 2007-08, associated with theimpact of the summer holiday period in the US, but has maintained its forecastof earnings per share growth of 15% for the full year. US earnings will besignificantly higher in the second half
Date: 26/2/2008
Author: Vanda Carson
Source: The Sydney Morning Herald --- Page: 19
The profit of Australian child care centre group, ABC Learning Centres, has beenaffected by its US expansion. The company has posted a net profit of $A37.1million for the six months to 31 December 2007, a fall of 42 per cent. It blamedthe drop on the "seasonality" of its US earnings, but also had one-offcharges of $A63 million. The US expansion was attributed with the 62 per centrise in profit in 2006-07
Back
Date: 26/2/2008
Author: Fiona Tyndall
Source: The Australian Financial Review --- Page: 17
ABC Learning Centres has reaffirmed its full-year forecast of 15% growth inearnings per share despite a significant decline in interim profit. TheAustralian child care group has reported a 42% fall in net profit to $A37.1m forthe first half of 2007-08, with the summer holiday period in the US a majorfactor. Group revenue increased 65% to $A1.1bn in the half, with US earningsexpected to be significantly higher in the second half. Shares in ABC closed$A0.03 lower at $A3.74 on 25 February 2008
annalivia
26th-February-2008, 11:26 PM
I am not quite ready to completely forgive Roger Montgomery for CCP. However he definitely helped me stay clear of this dog(ABS):banghead: a long time ago.
I always had it in the back of my mind to short this stock but whatever...
The following was sent to Stockval subscribers today.
Today both Eddie Groves’ worst nightmare, and Roger Montgomery’s 4-year prediction, became a reality. The result? ABC Learning Centres’ share price dropped over 60% this morning to $1.40, down from $8.00 in 2006.
As many of you would know, Roger has consistently questioned the impact of ABC’s capital raisings over the past four years on the company's profitability.
In 2006 the declining profitability saw StockVal place a $3.00 valuation on ABC Learning Centres despite its share price trading at around $8.00. The insanity of such a different valuation to the market and other analysts was not lost on journalists at The Sydney Morning Herald, who on April 14, 2006, wrote;
"It would appear a brave call to rate a stock trading at about $8 as worth $3 but that’s what Clime Capital thinks of ABC Learning.
"With most brokers calling the childcare company between $7 and $8, and after a strong share price rise in recent years, Clime says ABC's share price would have to fall about 65 per cent to be of any interest.
"Clime's chief criticism involves ABC's diminishing return on equity from 48 per cent in 2002 to below 11 per cent in 2006, during which time equity raised grew from $10 million a year to $330 million.
"If the return on equity remains at 11 per cent and we adopt a 15 per cent required return, the only sensible price to pay for the business is a discount to the equity in the business," Clime writes, adding its estimate of value is "less than $3".
"If ground level represents value, the share price is hovering somewhere in the stratosphere."
Roger is a firm believer in using StockVal to analyse the entire business and all of its cash flows both in and out. Such a method is not popular amongst private and professional investors, but over long periods of time, should produce results.
dhukka
26th-February-2008, 11:35 PM
I am not quite ready to completely forgive Roger Montgomery for CCP. However he definitely helped me stay clear of this dog(ABS):banghead: a long time ago.
I always had it in the back of my mind to short this stock but whatever...
The following was sent to Stockval subscribers today.
Today both Eddie Groves’ worst nightmare, and Roger Montgomery’s 4-year prediction, became a reality. The result? ABC Learning Centres’ share price dropped over 60% this morning to $1.40, down from $8.00 in 2006.
As many of you would know, Roger has consistently questioned the impact of ABC’s capital raisings over the past four years on the company's profitability.
In 2006 the declining profitability saw StockVal place a $3.00 valuation on ABC Learning Centres despite its share price trading at around $8.00. The insanity of such a different valuation to the market and other analysts was not lost on journalists at The Sydney Morning Herald, who on April 14, 2006, wrote;
"It would appear a brave call to rate a stock trading at about $8 as worth $3 but that’s what Clime Capital thinks of ABC Learning.
"With most brokers calling the childcare company between $7 and $8, and after a strong share price rise in recent years, Clime says ABC's share price would have to fall about 65 per cent to be of any interest.
"Clime's chief criticism involves ABC's diminishing return on equity from 48 per cent in 2002 to below 11 per cent in 2006, during which time equity raised grew from $10 million a year to $330 million.
"If the return on equity remains at 11 per cent and we adopt a 15 per cent required return, the only sensible price to pay for the business is a discount to the equity in the business," Clime writes, adding its estimate of value is "less than $3".
"If ground level represents value, the share price is hovering somewhere in the stratosphere."
Roger is a firm believer in using StockVal to analyse the entire business and all of its cash flows both in and out. Such a method is not popular amongst private and professional investors, but over long periods of time, should produce results.
I don't know about you anna but I thought this email (I received it too) was a bit over the top. It seems to me Clime was desperate to prove themselves after the CCP debacle. I replied to the mail and asked whether Roger was going to talk about CCP on the show as well. I don't expect to get an answer. I respect Clime's analysis of ABS but it just sounded like a bit of chest beating to me.
reece55
26th-February-2008, 11:46 PM
I don't know about you anna but I thought this email (I received it too) was a bit over the top. It seems to me Clime was desperate to prove themselves after the CCP debacle. I replied to the mail and asked whether Roger was going to talk about CCP on the show as well. I don't expect to get an answer. I respect Clime's analysis of ABS but it just sounded like a bit of chest beating to me.
I agree with you dhukka - if he was that confident, why didn't CAM have a short position in the entity - I mean, looking backwards now, it was the trade of the century. It's easy to say what could have been, but harder to say what has come to pass IMO......
Back on ABS - At the open of $2.00, I would have thought this sell if is now over done, low and behold it went all the way back to 1.15. Just looked like margin calls being hit to me, more than anything else. The bar for today is positive, with a large hammer indicating buying support. If you look at CNP and Rams, they didn't have anywhere near the same positive closes when they announced the terrible news. Note that doesn't mean I would buy in yet because fund managers obviously won't want to have a slice of the equity pie for some time to come, but at the end of the day if ABS is still complying with it's debt covenants and has sufficient cash flow to support the debt, then it's probably going to get through the crunch. You may be waiting a very very very long time to get any growth though, the market is always once bitten twice shy....
Cheers
Rainmaker2000
26th-February-2008, 11:59 PM
All this talk of hedge funds and fund managers conspiring to lower the prices of ABS seems a bit far fetched to me.....Why would anyone go to the trouble and risk to pick up a stock which is looking more and more unlike investment grade anyway...this is all just good media at the moment.
No doubt the stock may have been oversold at $1.15 but why is it unreasonable for the market to undervalue this thing in the current climate, especially since Eddie is refusing to tell about a margin call and the market guidance of this highly leveraged story has been well, a little vague
I'm still getting over the prospect of margin loaning a company with already 100% debt to equity.....and I thought I was a thrill seeker......
dhukka
27th-February-2008, 12:14 AM
All this talk of hedge funds and fund managers conspiring to lower the prices of ABS seems a bit far fetched to me.....Why would anyone go to the trouble and risk to pick up a stock which is looking more and more unlike investment grade anyway...this is all just good media at the moment.
No doubt the stock may have been oversold at $1.15 but why is it unreasonable for the market to undervalue this thing in the current climate, especially since Eddie is refusing to tell about a margin call and the market guidance of this highly leveraged story has been well, a little vague
I'm still getting over the prospect of margin loaning a company with already 100% debt to equity.....and I thought I was a thrill seeker......
Exactly, this stock is being re-rated where it should be, I wouldn't say sub $2 is cheap as the company continues to go from bad to worse.
ABS is actually a perfect case study in how to take a perfectly good small business and run it into the ground by turning it into a large debt ridden low return business. Someone mentioned earlier that Eddy Groves is a very smart guy. Whatever his smarts are, they don't appear to business related.
hangseng
27th-February-2008, 12:16 AM
I watched the show and must disagree...
If anything it was a shot at the private sector operating in the child care industry. This is a pet topic that has been dogging ABS and the rapid shift in the industry as consequence of the governments lack of commitment and resources..
The comments from some lady invertiewed, who is head of some child care association is in no real position to comment on the viability of ABS business model or debt levels.
The analyst had a more intelligent view but still failed to inpress...
A beat up if you ask my opinion and the price drop today was a classic margin call sell.
Time will tell but I think their is going to be some strong support for the stock at $2.00
Eddy Groves is a very smart and cluey guy (Ex Mckinsey) and the rumours of hedge fund shorting it to wash out the large margins on ABS has merit..
will see.
benwex
The "analyst" Roger Montgomery is one of the best and is worthy of listening to.
When others were saying to buy ABS at over $6, he was saying stay away and has done for some time. In case you haven't noticed ABS has trended down since December 14 2006 high of $8.62 and has been in steep decline since Sep2007.
He is definately worthy of taking up some of my time and gives sound investment advice.
Gekko
27th-February-2008, 01:10 AM
There are allegations and rumours that some fund managers have been conspiring together to push weaken stocks to ridiculously low prices so they can get them at dirt cheap prices...
I cant find the source,.. but it's posted around here in one of the other threads.
Perhaps ABS was another victim - that got carried away?
I would love to know how these hedge funds knew the directors/founders were levered up on margin loans. From what been spoken, many os funds colluded to short sell and drag down AFG and ABS knowing that founders would have margin calls if falls were large enough. But how did they know they were leveraged up?
Miner
27th-February-2008, 01:20 AM
I don't know about you anna but I thought this email (I received it too) was a bit over the top. It seems to me Clime was desperate to prove themselves after the CCP debacle. I replied to the mail and asked whether Roger was going to talk about CCP on the show as well. I don't expect to get an answer. I respect Clime's analysis of ABS but it just sounded like a bit of chest beating to me.
Thanks for the post.
It is nice to see Montgomory's prediction. Why one has to wait 2 years for a catastrophe. Stock market commentary on ANZ by stock val was done at $28. What does Roger's team say about that prediction for ANZ. Wait for 5 years and then say WE SAID IT.
It is a bad sign for many investors to see the share price dived down like that. It is just not the directors but also the accountants should be hung until their brain matter comes more fertilised not to deceive public.
ROE
27th-February-2008, 08:24 AM
Thanks for the post.
It is nice to see Montgomory's prediction. Why one has to wait 2 years for a catastrophe. Stock market commentary on ANZ by stock val was done at $28. What does Roger's team say about that prediction for ANZ. Wait for 5 years and then say WE SAID IT.
It is a bad sign for many investors to see the share price dived down like that. It is just not the directors but also the accountants should be hung until their brain matter comes more fertilised not to deceive public.
The true of the fact is no one can predict stock price. You can only buy based on sensible figures... ABS figures is there I can see it doesn't take a genius to work out this is a dog stock.
You don't need to pay someone thousands of dollars to show you some fancy software where all it does is look at EPS growth rate, ROE/ROC rate, Sale figures and a bit of DCF. You can do this is about 5 minutes to see if a stock is worth buying.
All the so call expert they get as much correct pick as any person who can understand the balance sheet. Sometimes you get it right, sometimes you get
wrong
annalivia
27th-February-2008, 08:30 AM
I don't know about you anna but I thought this email (I received it too) was a bit over the top. It seems to me Clime was desperate to prove themselves after the CCP debacle. I replied to the mail and asked whether Roger was going to talk about CCP on the show as well. I don't expect to get an answer. I respect Clime's analysis of ABS but it just sounded like a bit of chest beating to me.
I agree. A little humility after CCP wouldn't have gone astray. However I still think Stockval is a great tool and that Roger Montgomery is worth listening to. I don't have the time to do any decent valuations on companies so this is the best way for me to get some sort of an idea on intrinsic valuations. I think Clime will become a little more diversified after CCP and pay more attention to profit downgrades.
Real1ty
27th-February-2008, 09:21 AM
Exactly, this stock is being re-rated where it should be, I wouldn't say sub $2 is cheap as the company continues to go from bad to worse.
ABS is actually a perfect case study in how to take a perfectly good small business and run it into the ground by turning it into a large debt ridden low return business. Someone mentioned earlier that Eddy Groves is a very smart guy. Whatever his smarts are, they don't appear to business related.
Exactly, this stock is being re-rated where it should be, I wouldn't say sub $2 is cheap as the company continues to go from bad to worse.
Traders will probably play with this stock for awhile yet so it's short term price might remain quite volatile.
ABS is actually a perfect case study in how to take a perfectly good small business and run it into the ground by turning it into a large debt ridden low return business. Someone mentioned earlier that Eddy Groves is a very smart guy. Whatever his smarts are, they don't appear to business related.
Couldn't agree more and there is no doubt Eddie is a really smart guy, as who else could have taken such a promising company and destroyed Shareholder value to such and extent that you could receive a higher return from having your money in a high interest bank account with one of the big 4 banks, he's a genius :cool:
Prospector
27th-February-2008, 09:27 AM
In case you haven't noticed ABS has trended down since December 14 2006 high of $8.62 and has been in steep decline since Sep2007.
That surprised me too Hangseng - I had thought about ABS for a while without doing the research so hadnt really proceeded further - too many other dramas. Yesterday I checked the graphs and the story was all there for people to see. As this is the first thing I do before I actually buy, I would have seen this before committing, but after letting MFS do the same thing to me (and look where that is now) thank god I didnt get into it.
What impact will this have on the operation of all the ABC child care facilities? That will have a huge impact on a lot of young families?
TheAbyss
27th-February-2008, 09:34 AM
And what of the 1 in 4 children who go to an ABC Learning centre every week if ABC tumble? Govt would be pretty keen to see ABC stay operational in my view.
Not a holder, just posing a question.
Prospector
27th-February-2008, 09:45 AM
And what of the 1 in 4 children who go to an ABC Learning centre every week if ABC tumble? Govt would be pretty keen to see ABC stay operational in my view.
Not a holder, just posing a question.
They couldnt do anything to prop it up though - could they? :eek: Probably not worrying too many Government workers, don't they have their own child care arrangements? It is quite a big story I think and not just the share price either!
Aussie2Aussie
27th-February-2008, 10:05 AM
"Eddy Groves is a very smart and cluey guy (Ex Mckinsey) and the rumours of hedge fund shorting it to wash out the large margins on ABS has merit.."
Maybe smart, but he always reminds me of Carl Williams.
benwex
27th-February-2008, 10:22 AM
This feels like an eternity...
Notice recieved at 9.59, how long before the ASX need to make public???
What drama, as good as any episode of underbelly I have seen.
Miner
27th-February-2008, 10:25 AM
Something very strange.
In Commsec people wanted to sell at 85 cents.
Some one placed an order for 10 million shares at $2.14.
Trading halt without any announcement.
GOK (GOd only knows)
TheAbyss
27th-February-2008, 10:28 AM
Trading halt till friday. Interests in parts of the business, or we don't want to play anymore. Time out while we come up with something.
benwex
27th-February-2008, 10:29 AM
Well there you go...
Trading Halt while they evaluate asset sales or some sort of re structuring the business???
Why dont they just let the inevitable happen and let the market do what the market does, determine the value of a companies....
Lets see what the company can pull out of the fire now..
benwex
nioka
27th-February-2008, 10:30 AM
Why blame Groves for the share price. He didn't set the price,the market set the price and maybe he is right when he says the hedge funds are manipulating the price. It is always easy to look back and see the future but he built a business using credit which at the time was a sound thing to do. I never bought in because I thought the price was too high. I dislike hedge funds, they are parasites manipulating the market for nonproductive gains.
benwex
27th-February-2008, 10:45 AM
Two of the companies directors sold their bundle of shares and got smashed!!!
So lets see Eddy score card....
ROE
27th-February-2008, 10:50 AM
Something dodge going.. did anyone watch Lateline business last night?
Eddie seem very irritated.
He sound so much like Enron chief ..when people start dumping/shorting Enron stocks...he beef it up and said at this price it's a bargain and it's the short seller that drive the stocks down.
I'm not saying ABS is going under but this is how I see things.
If a decent company get hammer I don't know something like WOW, JB Hi-fi, DJS, AMP their chief would come out and cope it and quietly go on their way making more money for their share holders knowing their company is in good shape.
if something like MFS, Alco and ABS get the quack they blame it's short sellers and all sort of excuses why the share price is doing badly.
Hello!!! how about came out and said we F**K up we leverage too much, we are sorry, we should be sack :) let get back to the business of making money for share holders instead of blaming others for their bad judgment.
Amen
nioka
27th-February-2008, 10:52 AM
Two of the companies directors sold their bundle of shares and got smashed!!!
So lets see Eddy score card....
Maybe they had margin calls and had no choice. There was something on the news that Eddy probably had a margin call. Investing with money belonging to someone else has a very high risk as I'm sure many ASFers have found out recently.
Prospector
27th-February-2008, 10:58 AM
Maybe they had margin calls and had no choice. There was something on the news that Eddy probably had a margin call. Investing with money belonging to someone else has a very high risk as I'm sure many ASFers have found out recently.
Which is why I have said before, Directors of Companies should not have margin calls that impact on the shares of the companies they are directors of. First MFS, now this.
ROE
27th-February-2008, 11:12 AM
Good no sympathy, greed got to them.
Thinking they can make quick bucks leverage up.
Leverage works both ways not a one way street to riches.
1 way go to the moon the other way straight to hell :D
I do feel for mum and dad investors that got burned ... maybe they can now take conform the directors got burned too and go back to the core fundamental. and in the future stay away from these stocks.
nioka
27th-February-2008, 11:24 AM
Which is why I have said before, Directors of Companies should not have margin calls that impact on the shares of the companies they are directors of. First MFS, now this.
I definitely agree with you there. They put all the other shareholders at risk. Margin calls on directors shares should be outlawed. I gave it as a REASON for the dramatic fall not as an EXCUSE for the directors. However they acted within the rules as did the hedge funds. The rules are wrong.
Prospector
27th-February-2008, 11:39 AM
I definitely agree with you there. They put all the other shareholders at risk. Margin calls on directors shares should be outlawed. I gave it as a REASON for the dramatic fall not as an EXCUSE for the directors. However they acted within the rules as did the hedge funds. The rules are wrong.
Sorry Nioka, wasn't having a go at you about that, but yes, the rules are just so wrong and as you say, they put everyone else's shares at risk because of their greed. They are Directors of a Public Company - blind freddy can see this is a huge gap in the law that not only allows exploitation, but opens up huge vulnerabilities to the hapless investor. In one day, both MFS and ABS crashed, absolutely and with no warning. Fed by margin calls from the Directors. But the financial media never even seem to question that this is an issue. We aren't cleverer than them are we :(
ouch
27th-February-2008, 11:50 AM
HOW is the 2 million share sale on 22/2/08 @ 3.75 by the director legal? --- One might say it was a margin call, we'll never know. However how can a director be allowed to sell shares 3 days before a profit announcement? - Regardless of the mechanisms used to sell the shares its in the prohibited trading period. My worry is that these "margin loan" excuses are just that and the dodgy directors who are already taking too much in salaries will use them to sell shares during prohibited periods........ Can't wait for TWIGGY to catch onto them.... that'll make the FMG tradin gmore lively. (Not that twiggy ever releases negative FMG news anyway.)
ouch
27th-February-2008, 11:52 AM
Good no sympathy, greed got to them.
Thinking they can make quick bucks leverage up.
Leverage works both ways not a one way street to riches.
1 way go to the moon the other way straight to hell :D
I do feel for mum and dad investors that got burned ... maybe they can now take conform the directors got burned too and go back to the core fundamental. and in the future stay away from these stocks.
And how do you propose to know which stocks have directors that have done this?? By the time you find out its too late. They should be prohibited imo.
Miner
27th-February-2008, 12:26 PM
"Eddy Groves is a very smart and cluey guy (Ex Mckinsey) and the rumours of hedge fund shorting it to wash out the large margins on ABS has merit.."
Maybe smart, but he always reminds me of Carl Williams.
Good point.
However not every Harvard graduate turned out to be a successful businessperson and conversly not every successful businessman has a degree and not even ever stepped into Harvard campus. Mckinsey is a great company but the turnover from the company is also very high considering many of the smart people like Eddy goes to market to ruin others.
Bill Gates, Alan Bond, Buffet, Kerry Packer, James Packer, Kerry stokes, Andrew Forest - no one even thought to join Mckinsey in their life time.
So good example but Eddy will be a black spot of McKinsey exits and soon follow the crooks in jail. He will get away only because Australian justice system is very lenient on white collar crime unlike US justice system.
I am wondering what Keith Nelson in his Directors Trading and Insider newsletter will refer to the high vol purchase by Eddy and few others
YOUNG_TRADER
27th-February-2008, 02:07 PM
Jumping Jimminey Batman looks like there's some real trouble over here,
I heard a rumour it had something to do with hedge fund manipulation and stop losses, including the MD who had a very large geared postion in the company who is being stopped out today
Heard the same thing on AFG
Seems really dodgey to me :eek7:
Looks like I heard right,
Amazing, I can't believe this is allowed, its so unfair to the founders, so so unfair, they build an empire and get screwed by ****ing hedge funds,
Well was a good trade for anyone who bought at the lows yesterday
TWO ABC Learning directors have been forced to dump millions of dollars worth of shares in the company, before the stock was suspended from trade on the ASX this morning.
In two announcements to the market this morning, ABC director David Ryan revealed he had sold his entire stake of 249,000 shares.
Board member Martin Kemp offloaded a whopping 7.64 million shares, leaving him with 2.76 million of the company's stock.
Mr Ryan sold 249,101 shares yesterday at $1.89, netting a total of $472,046.
Mr Kemp has sold $16.8 million worth since Friday, offloading 2 million at $3.75 per share on February 22 and 5.6 million yesterday at $1.66 per share.
In a response to an ASX query regarding the company’s share price volatility yesterday, ABC Learning said its directors might be required to sell their holdings because of margin calls.
Nicks
27th-February-2008, 02:16 PM
hmmmm whats up with a director offloading 2,000,000 shares on 22 Feb at $3.75. Could he have had foresight into this?
TheAbyss
27th-February-2008, 02:25 PM
hmmmm whats up with a director offloading 2,000,000 shares on 22 Feb at $3.75. Could he have had foresight into this?
You have probably seen this however it is an interesting read regarding directors of ABC and share holdings.
Thanks for that article. Damn shocking. I think he deliberately only offloaded 2,000,000 (I say only in comparison to his total holdings) so it didnt look so blatantly obvious. But I think it has anyway. I guess he figured it was still worth it as it would be enough to keep him above water.
I think as soon as directors sell shares it should be available to the market immediately.
DionM
27th-February-2008, 03:05 PM
What kind of a margin call requires you to offload ALL your holdings?
Sounds suspicious to me - an excuse for bailing out.
TheAbyss
27th-February-2008, 04:08 PM
Nicks
Bear in mind that a lot of companies pay salaries and bonuses via stocks and options particualrly at senior management level.
Put yourself in a directors situation. Paid millions in salary and bonuses via company stock and watching its value freefall. There goes the family holiday this year or sell now and lock in the bonus as cash in the bank? Call it lock in your salary if you will.
The temptation to sell before the fall must have been strong for Mr Kemp who has been with ABC a long time and is very highly regarded. Lets see what the end result is and i for one truly hope ABC are around to learn from their error which was a lack of transparency when their business model came into question. What the cloak of secrecy is hiding we will read about in the coming few weeks i guess.
Watch for a US private equity firm buying the US assets and sending ABC home to the antipodeans.
ROE
27th-February-2008, 04:49 PM
What kind of a margin call requires you to offload ALL your holdings?
Sounds suspicious to me - an excuse for bailing out.
The kind of margin you know the company is in trouble so better get a few millions than a few hundred K :D due to insider knowledge.
government should change laws so insider trading becomes a criminal and lock these guys ups with the real criminal..so they get a bit of loves from the sisters :D
As far as I'm concern insider trading is not different from robbing mum and dad hard earn cash and retirement funds.
Nicks
27th-February-2008, 04:50 PM
Nicks
Bear in mind that a lot of companies pay salaries and bonuses via stocks and options particualrly at senior management level.
Put yourself in a directors situation. Paid millions in salary and bonuses via company stock and watching its value freefall. There goes the family holiday this year or sell now and lock in the bonus as cash in the bank? Call it lock in your salary if you will.
The temptation to sell before the fall must have been strong for Mr Kemp who has been with ABC a long time and is very highly regarded. Lets see what the end result is and i for one truly hope ABC are around to learn from their error which was a lack of transparency when their business model came into question. What the cloak of secrecy is hiding we will read about in the coming few weeks i guess.
Watch for a US private equity firm buying the US assets and sending ABC home to the antipodeans.
Fri 22nd Feb - Mr Kemp CEO of Australian Ops and ABC Director sells 2,000,000 shares
Sat 23rd Feb - Market Closed, Weekend
Sun 24th Feb - Market Closed, Weekend
Mon 25th Feb - ABC releases Half yearly report
Tues 26th Feb - ABC Shares Tank!
Sorry - this doesnt look like he casually decided to sell some of his bonus at some random time!
You talk as though his submission to the temptation is ok? whilst other not so wealthy investors whom are not privy to the same things he is were not afforded the same privallege.
Also, regarding your US Private Equity firm comment - this is already occuring, as I also read that today! (it seems as though the buyer of 10,000,000 shares is a US Private Equity co).
ps. not holding ABS and never have, just find this extrordinary and very interesting.
Nicks
27th-February-2008, 05:01 PM
2,000,000 shares is $7.5 Million Dollars! What kind of a director sells that kind of stash the day before the Half Yearly reports which were not good!!??! Bet that kept him out of a Margin Call, unlike some of the Mum and Dad investors.
I agree with ROE and his comments regarding insider trading.
Prospector
27th-February-2008, 05:03 PM
ps. not holding ABS and never have, just find this extrordinary and very interesting.
Having been badly burnt with a similar (too similar actually) story of MFS, and considered buying ABS a few months ago, I too am looking back and asking - "how can this happen" - again, and then, "who might be next" :eek:
Nicks
27th-February-2008, 05:11 PM
Ditto, Centro for me.
Ive been reading some bad press on Babcock and Brown today, in fact its been all over the media and in the BNB thread. Perhaps they are next?
TheRage
27th-February-2008, 05:19 PM
Fri 22nd Feb - Mr Kemp CEO of Australian Ops and ABC Director sells 2,000,000 shares
Sat 23rd Feb - Market Closed, Weekend
Sun 24th Feb - Market Closed, Weekend
Mon 25th Feb - ABC releases Half yearly report
Tues 26th Feb - ABC Shares Tank!
Sorry - this doesnt look like he casually decided to sell some of his bonus at some random time!
I completely agree with what you are saying. Directors and company execs should be made to disclose their trading activities within 1/2hr of doing so. Or better still they should be made to disclose their sale prior to doing it with their stated reason. For instance I am selling 2 million shares to buy a new home. This would at least give the ordinary punter some idea that something might be going on. I don't own ABS but I would be super pissed that they come out saying earnings are down 50% but will be up 15% in total for the year due to trading conditions. That doesn't wash. How were the trading conditions over the last period so much better. Surely childcare is not like a retail business where at Christmas time everyone is buying. I am assuming people use it all year round.
Prospector
27th-February-2008, 05:20 PM
Bet that kept him out of a Margin Call, unlike some of the Mum and Dad investors.
Hopefully the mums and dads didnt get into margin lending, but that is an interesting point you make. They say he sold because of margin calls, but was that in anticipation or an actual call. Big difference, as you say! Has to be insider trading doesn't it? The market wasn't generally crashing on the day he sold, so why the hurry THAT day - oh yeah, announcement the next business day!
TheRage
27th-February-2008, 05:49 PM
Executives on margin were sold out around $1.80. Share price on Friday was around $4. Pretty big loss for those called.
Birdster
27th-February-2008, 06:34 PM
What I present in this post is only "food for thought". I have no intention of getting into some argument of speculation;
1. What will this do for the price of buying/selling a Child Care Centre?
Market prices for buying CCC's have gone high since ABS bought every one they could get thier hands on. (cannot find figures to show atm)
2. Will this force a shift in price for child care? As almost anyone with children will know, CC assistance is subsidised by the govt. in many facets. Will they step in and ???
3. CC workers are underpaid! (You can dispute me if you like) The livehood of some of these workers could be at risk if this causes centres to close to avoid the company disolving. Yes, you might say that "someone" will buy the centre and save the single centre, but refer back to "1".
I'm sure other factors come into play, just wanted to see what others have to say about the impact of the SP drop besides $$$.
Birdster
Prospector
27th-February-2008, 06:37 PM
Executives on margin were sold out around $1.80. Share price on Friday was around $4. Pretty big loss for those called.
Not for this smart cookie:
Board member Martin Kemp offloaded a whopping 7.64 million shares, leaving him with 2.76 million of the company's stock.
Mr Kemp has sold $16.8 million worth since Friday, offloading 2 million at $3.75 per share on February 22
I'm sure other factors come into play, just wanted to see what others have to say about the impact of the SP drop besides $$$.
I think maybe an assumption, but few people here have children in child care and as this is a share forum, repercussions for actual child care issues is most likely unknown.
Birdster
27th-February-2008, 06:52 PM
I think maybe an assumption, but few people here have children in child care and as this is a share forum, repercussions for actual child care issues is most likely unknown.
What your asumption maybe, it does not elude the fact that it does affect the SP of the equity in question.
Investing or backing in any company involves more than trends on price. CCC trends have risen due to increased govt support. It's a fact. If you are going to put hard earned money (or someone else's) into a company, you should know the trend other than the price. I do believe you were "thinking" of investing in ABS somewhere stated in this thread. Don't you think know more than the price is substanstial if not in retrospect of what has happened, but for possible future investment?
Prospector
27th-February-2008, 07:02 PM
What your asumption maybe, it does not elude the fact that it does affect the SP of the equity in question.
I do believe you were "thinking" of investing in ABS somewhere stated in this thread. Don't you think know more than the price is substanstial if not in retrospect of what has happened, but for possible future investment?
I use technical indicators, or trends, to determine whether to buy or sell (hence my post 160 addressed to HangSeng where I talk about the charts) so I dont need to know as much about traditional yields/pe's etc, knowledge of business systems, salaries and wages etc. You went into detail about salaries etc - most people here wouldnt even think about such issues before investing.
The only thing affecting the SP is how well the business runs generally - macro versus micro if you wish. Hence my comment that people here wouldnt know if child care workers were underpaid, or what the likely ramifications are for individual child care centres. But I also know this is an assumption so I am happy to be proven wrong.
derty
27th-February-2008, 07:29 PM
The margins in child care are incredibly tight, even with the child care benefit and low wages paid (at our centre the hourly rate ranges from $17-$24 depending on qualifications and length of tenure) the utilisation rates need to be greater than 90-95% to make ends meet.
I am the treasurer for our local community based not-for-profit child care centre and we have a revenue of about $1.1M per annum and aim to be in the black by about $20k each year and that is with a $1 peppercorn lease. ABS bought out 2 of the existing centres in town and have just finished building a brand new centre that would have cost close to, if not more than, $1M. I guess their aim was to produce a glut of places, drive down utilisation rates and run centres at a loss until others went out of business. I know we have been very close to shutting the doors on a couple of occasions even without the new centre being open.
Even with the advantages economies of scale ABS has, it is going to be hard for them to service their debt from the profits generated from their centres. They will at least have to address some of their marginal centres, and who knows what sort of deal they are going to get for the fire-sale of their US assets?
mark_au
27th-February-2008, 07:45 PM
Geeze not having a good year
first ccp imploded and now abs.. getting really sick of scheming, lying and/or incompetent CEO's...
shoulda just sold out and put my money in the back in december...
Miner
27th-February-2008, 07:46 PM
A bunch of thugs in ABC Learning.
I wonder this organisation is looking after our kids giving child care. Probably they will sell drugs to the kids to fetch money. The incompetent ASIC to take any action. Incompetent ASX to publish the directors selling report after the trading halt with no purpose to the poor investors.
People who lost money are being called greedy. Who is not in this category. We all are when look for bargain. All speculative stocks are gambling so is lotto buy.
Here is the ABC News report
Groves, wife sold 19 million ABC shares
By business editor Peter Ryan and Tanya Nolan
Posted 3 hours 36 minutes ago (27 February 08 5.44 pm WST)
Updated 1 hour 35 minutes ago
Yesterday Mr Groves refused to comment on whether he was under pressure to sell his shares. (AAP: Dave Hunt)
Video: Groves reassures ABC Learning investors (ABC News) Audio: ABC Learning suspends trading (The World Today) Audio: Business editor Peter Ryan discusses ABC Learning (The World Today) It has emerged that the founder of the childcare provider ABC Learning Centres, Eddy Groves, sold shares in the company during yesterday's share price plunge.
Mr Groves and his wife Le Neve sold 19 million of their shares yesterday.
After intense pressure over the past 24 hours, Mr Groves revealed this afternoon that he sold more than 8 million shares yesterday at $1.85 per share.
According to statements issued to the sharemarket this morning, non-executive director David Ryan sold his entire holding of more than 249,000 shares at $1.89 a share yesterday.
It has also been disclosed that the company's chief executive of operations, Martin Kemp, sold 7.6 million shares or 70 per cent of his stake in ABC Learning.
Mr Kemp's selling began last Friday, and concluded yesterday when ABC Learning shares plunged as much as 70 per cent.
Mr Kemp off-loaded his stake for between $3.73 and $1.66 per share.
The statements did not disclose the reason for the selling amid speculation that some directors had been hit with margin calls because of ABC Learning's debt exposure.
ABC Learning shares closed yesterday at $2.14 after plunging to $1.15 down or by around 70 per cent.
The disclosure from Mr Groves was in response to a "please explain" query from the Australian Securities Exchange in relation to yesterday's heavy falls.
The market regulator has confirmed it is investigating trading in ABC Learning shares as a "live supervisory matter."
The Federal Government is also keeping a watch on ABC Learning.
Families Minister Jenny Macklin says childcare places should be maintained and working parents must be protected from the company's troubles.
"We have a very, very tight labour market and if [parents] can't find the childcare we're not going to be able to address the participation issues that are so critical to the economy," she said.
"So we are aware of it, we're obviously talking about it internally."
Yesterday, Mr Groves refused to comment on whether he was under pressure to sell his shares apart from confirming that he was required to announce any buying or selling of stock within 48 hours.
In other developments today, ABC Learning disclosed it had received expressions of interest in part of its business and expected discussions could take longer than two trading days.
The company, which has 2,300 childcare centres around the world, requested and received a two-day trading halt while the talks were underway.
The company's shares were yesterday dumped by investors after announcing a sharp fall in profit after the close of trade on Monday.
Concerned childcare sector
Meanwhile, Child Care NSW which represents private childcare operators says even if the worst case scenario eventuates, there will be nothing for parents to worry about.
Executive officer Bruce Manefield, has told ABC Radio's The World Today families should not worry that centres will close.
"In the very hypothetical situation that for some reason or other ABC got into some substantial trouble, and I say that's highly hypothetical, in most instances like that if you look at other general cases most companies continue to trade under the directorship of a receiver," he said.
Mr Manefield says talk of a shortage of child care places in Australia is overstated, particularly in Sydney where he says there are plenty of providers who cannot fill spots in their centres, especially for three to five-year-olds.
He says there should be no change to the 40 per cent of public funding going to ABC Learning Centres, because it is given to parents through the Child Care Benefit and Tax Rebate.
But the not-for-profit childcare sector is warning that a crisis awaits the industry if Australia's biggest childcare operator struggles.
Lynne Wannan, the convener of the National Association of Community Child Care Centres - which represents 1,100 not-for-profit centres - says there is no money to be made in childcare provision.
"When you have to conform with the quality requirements in Australia, our regulations, they're fairly strict and there really isn't a lot of money left over to make millions of dollars or to repay billions of loans which they have," she said.
Ms Wannan says if the centres were to shut their doors, there would be an immediate crisis.
"That would be a monumental crisis," she said.
"We already have hundreds and hundreds of families who can't access a quality children's service. We do have waiting lists in lots and lots of places and if we lost that quantity of our service system, it would be just a disaster for the Australian economy."
Birdster
27th-February-2008, 07:49 PM
I use technical indicators, or trends, to determine whether to buy or sell (hence my post 160 addressed to HangSeng where I talk about the charts) so I dont need to know as much about traditional yields/pe's etc, knowledge of business systems, salaries and wages etc. You went into detail about salaries etc - most people here wouldnt even think about such issues before investing.
The only thing affecting the SP is how well the business runs generally - macro versus micro if you wish. Hence my comment that people here wouldnt know if child care workers were underpaid, or what the likely ramifications are for individual child care centres. But I also know this is an assumption so I am happy to be proven wrong.
Macro/micro, indicators, knowledge of a company or rubbing the Buddah doll-- everyone has their own way to ascertain what is going to go up or down. If it works for you, that's great.
To ignore news in the industry of wage issues in child care as well as the issues of cost to families just bamboozles me. It's a vital part of this sector's advancement. Every year, CCC ownwers and parent's take note of how the govt. is going to address subsidised CC fees. If you are looking to invest in CCCs these are valid entities that will affect the over performance.
You don't believe so, Prospector, that is fine. What ever works for you. I'm only bringing interest in of the other things that can/will effect the price.
reece55
27th-February-2008, 08:31 PM
A bunch of thugs in ABC Learning.
I wonder this organisation is looking after our kids giving child care. Probably they will sell drugs to the kids to fetch money. The incompetent ASIC to take any action. Incompetent ASX to publish the directors selling report after teh trading halt with no purpose to the poor investors.
People who lost money are being called greedy. Who is not in this category. We all are when look for bargain. All speculative stocks are gambling so is lotto buy.
Miner
I agree with your comments and I'm sorry if you lost some money to this sucker, but lets get the facts clear......
The ASX does not publish the change in directors interest notice, the Company lodges the announcement. The ASX were not incompetent in this situation, in fact quite the opposite, they were very aggressive in getting detail by issuing a price query. In addition, under ASX listing rules, the directors actually have 5 business days to lodge the change in directors interest. Therefore, the ASX did not have a responsibility to enforce ABC Learning directors to lodge the notices.
In relation to the directors who sold as a consequence of margin calls, this is the way the cookie crumbles, if the takeover is indeed valid they have lost a lot of money due to their own leverage. My personal thought is that we will rapidly see amendments to disclosure to directors interest notice to incorporate if the director has secured their shares as collateral for any purpose. As for the Mr Kemp who disgustingly sold prior to the announcement of the results and who was clearly in contravention of insider trading law, you can bet that ABC have been served a notice from ASIC for a please explain.... believe me, I have seen them issue please explains for much less...... I hope he gets what he deserves.....
Cheers
ghostworld
27th-February-2008, 08:46 PM
Is it possible that the director sold prior to the release of the result due to a margin call?
Just being a devil's advocate here. It seems like such a stupid move by the director to sell prior to the release of the company's result.
M34N
27th-February-2008, 09:11 PM
Is it possible that the director sold prior to the release of the result due to a margin call?
Just being a devil's advocate here. It seems like such a stupid move by the director to sell prior to the release of the company's result.
Stupid, or wise?
I definitely don't think it's ethical for director's to sell out before results like this. Sets a bad precedent for other companies and not good for investor confidence.
ghostworld
27th-February-2008, 09:16 PM
I would say stupid only because there are rules against it. Can't remember what the fines are for what is essentially 'insider trading'. Includes jail time I believe.
weird
27th-February-2008, 09:19 PM
Major aussies indexes, even past mid last year were in an uptrend for the entire year of 2007, ABS was in a downtrend the entire period ... even the most basic relative strength to an index, would suggest this stock was not a buy using the "trend is your friend" method.
Too many stocks, with similar downtrend patterns, have exhibited such drops, in the last 5+ (and more) years, forget the current reasons, just look at the chart of the stock, it usually tells you what is happening ...
Incredible drop on this stock, margin (or whatever reasons) was perhaps at play, but I have found this being a common problem for many traders, not trading with enough capital so overexposing themselves, and getting hurt.
Basic principles - don't over-expose to one tradeable (I remember reading a Margin Lending article where they mentioned through study on customer accounts, those holding 8 or more stocks were less likely to have a margin call). If one is exposed to a particular tradeable, keep it in check with your overall trading account.
A 50% drop on one stock in a situation like this, when holding 10 stocks, is hopefully closer to a 5% drop to your entire account.
Have enough capital, cut your losses early, and spread the risks to avoid single melt downs to an overall account.
benwex
27th-February-2008, 09:58 PM
There are few articles circulating that predict when the trading halt is lifted "traders" will short the crap out of ABS in the hope fo flush out the rest of the directors shares...
One thing is for sure, I was very surprised how quickly management have gone to the safetly of a trading halt and communicated to the market they are looking at asset sales or maybe a buy out by potential suitors..
Take CNP case in point, they have been dragging their feet for weeks with little clear guide to the market about their future other than trying to refinance there short term maturing debt.
Yesterday's tanking from the margin calls by directors may be an oversell to say the least....RSI of 18!
So I ask the forum a simple question, with public knowledge known today, is ABS a buy or sell??????
benwex
ghostworld
27th-February-2008, 10:13 PM
I would guess 'sell' due to the recent bearish sentiments and/or alledged short selling activities by hedge funds.
However, 10 million shares owned by the founder was alledgedly sold to Bain Capital. Price is unknown.
I would expect an increase in SP if a white knight comes along and offers to buyout the company. This is probably not likely to occur within the next few days.
Miner
27th-February-2008, 10:42 PM
I would guess 'sell' due to the recent bearish sentiments and/or alledged short selling activities by hedge funds.
However, 10 million shares owned by the founder was alledgedly sold to Bain Capital. Price is unknown.
I would expect an increase in SP if a white knight comes along and offers to buyout the company. This is probably not likely to occur within the next few days.
Dear Ghostworld
Congratulations !
If I have some disposable ABS or MON shares I woudl have been gifted you off to say thank you ;)
Like Keith Nelson and many good experts you said in both ways. Starting the post with SELL and then said you would expect an increase in SP with a great IF.
Mate, do not blame you. But some one placed to buy $10 M ABS shares at $2.14 at the preopening session on the day of trading halt. At the same time people placed to sell ABS at 85 cents. Commsec site I am referring to.
I do not think any one honestly knows it is buy or sell for ABS. Many pundits will surface in few days once the market retracts itself . BUT now GOK - God only Knows.
Sorry could not dare to predict boldly but if the share price goes lower than $2 then I would be buying it. Since I do not have it so can not SELL any thing :D
mrgroundwork
27th-February-2008, 10:45 PM
Basic principles - don't over-expose to one tradeable (I remember reading a Margin Lending article where they mentioned through study on customer accounts, those holding 8 or more stocks were less likely to have a margin call). If one is exposed to a particular tradeable, keep it in check with your overall trading account.
A 50% drop on one stock in a situation like this, when holding 10 stocks, is hopefully closer to a 5% drop to your entire account.
Have enough capital, cut your losses early, and spread the risks to avoid single melt downs to an overall account.
that is the old diversification argument... you hold 10+ stocks, you are not going to make the same returns when things go in your favour...
benwex
27th-February-2008, 10:49 PM
Sorry could not dare to predict boldly but if the share price goes lower than $2 then I would be buying it. Since I do not have it so can not SELL any thing :D[/QUOTE]
Well you can.............
There are many CFD providers who would be happy for you to sell shares that you dont own (yet)
I think the way the market is today with short selling so accessable to retail investors makes me realise how unlevel the playing field has/was in the past.
When ABS is back on the boards it will be gripping viewing thats for sure and I will be trying to get some play.
benwex
Nicks
28th-February-2008, 07:15 AM
Is it possible that the director sold prior to the release of the result due to a margin call?
Just being a devil's advocate here. It seems like such a stupid move by the director to sell prior to the release of the company's result.
Hi all, I think this sums it up well:
Even is it was to releive a Margin Call or an anticipated one, why should investors in this company suffer from the poor mismanagement of personal finances by a Director?
It is incompetent by the Directors to let their own personal finances affect the Company, and this is exactly what has happened (and to the detriment of shareholders - class action?).
Its as simple as that, management's personal finances (gearing) has had a negative impact on the Company's viability and finances (and share price).
Consider this scenario - Jo Bloggs investor is facing a Margin Call last Friday. He has lots of shares to chose from in which he can sell, inlcluding ABS. However he does not have an insider position or connection with ABS, and unaware of factors and info due to be released to market the next business day. He weighs up all th info and option available to him and decides to sell off XYZ. How does this put him on equal footing with Mr Kemp as an investor and shareholder of ABS?
In any case, even if it was to get out of a Margin Call, buy a new Mercedes or Pay Off a Bookie for a bad Horse Bet, the reason is irrelevant.... it does not make it right or legal, especially in Mr Kemp's case. Its still abuse of position.
Prospector
28th-February-2008, 08:30 AM
Hi all, I think this sums it up well:
Even is it was to releive a Margin Call or an anticipated one, why should investors in this company suffer from the poor mismanagement of personal finances by a Director?In any case, even if it was to get out of a Margin Call, buy a new Mercedes or Pay Off a Bookie for a bad Horse Bet, the reason is irrelevant.... it does not make it right or legal, especially in Mr Kemp's case. Its still abuse of position.
Absolutely, Directors shares should never be exposed to margin calls, EVER! How on earth ASX or ASIC continue to allow this to happen beggars belief. But there is not even any comment about this in the media? :banghead: And in this case, the day before a poor announcement? How can that even come close to being legal! Double whammy!
mark_au
28th-February-2008, 10:34 AM
Absolutely, Directors shares should never be exposed to margin calls, EVER! How on earth ASX or ASIC continue to allow this to happen beggars belief. But there is not even any comment about this in the media? :banghead: And in this case, the day before a poor announcement? How can that even come close to being legal! Double whammy!
It would appear that the playing field, is truly stacked against the average investor... if you dont have the inside knowledge your screwed.... very very unfair... im furious at these guys for their incompetence with MY money
Nicks
28th-February-2008, 10:43 AM
So, NAB has the aquired the power to dispose of 26,000,000 shares. Yikes.
Protecting their loans no doubt to cover themselves. This could get dumped very quickly.
investorelse
28th-February-2008, 10:00 PM
First post....Prompted by this thread alone.
Some of the posts above should be removed as electonic pollution. and make me question being here.
The back page of the Fin review 27th is about the only removed print about this I have read the public domain."Communication"
I don't think Eddie and his wife are cying into the Millions they have safely put away in protected financial structures. Good on them.
All the non investors boasting about how they are not affected because they were too clever...STOP POSTING GLOATS NO ONE CARES!
The market is responsible for this thats it.
After the event the questions arise about disclosure... but they were nowhere before the event?..This is the markets issue alone, the market values the stock. (Ok the regulators as well)
I do however agree that SOME with the power have not been playiing fair.
but they can and will
The trend means this is no real surprise.
Yes I am down (slightly) but have others I own that frustrate me much more.
My gains far out way this anyway...(Gloat!)
I own this stock and am Married to a valuable ABC employee.
I am still happy to be with both.
Rainmaker2000
28th-February-2008, 10:29 PM
Mate, good to see your first post and encourage you to do more........
I could not be in more disagreement with you as many other serious investors on this site...
For one, my partner is also a professional child 'technician' who sometimes works at ABC's and I can assure you she dislikes the ABC experience just as much as those who owned ABC at $7...
I can assure you Eddie and Mrs Eddie would have seen a severe loss of wealth and if I measure Eddie accurately, this would have hurt big time......You lose a lot when you gear a stock that falls like ABC did....he could have almost lost everything
Not sure how one could say 'its just the market's fault' this one.....ABC should not have been trading.......as many posted before the event on this forum, rumours were circling which should have been disclosed as they were subsequently shown as truth......could there be any more clear lack of disclosure
Whether you're up or down personally, this is an unfortunate story about management who showed little regard to the principles of enhancing shareholder value...and now there's a fire sale of assets, whereas two days ago management said they were 'firing on all cylinders'....
investorelse
28th-February-2008, 11:28 PM
" my partner is also a ...."
What a Technician was in childcare?.. Yes have some working for her at times....But the team is a mix of these and fulltime Qualified staff.
"I can assure you Eddie and Mrs Eddie would have seen a severe loss...
Please re read my post RE: "Structure"
"Not sure how one could say 'its just the market's fault..."
I do not class posts on this site as disclosure or legal Questioning of the company or ASX, just some people in the "Market" being the market.
"this is an unfortunate story about ..."
Please re reread my post RE: "Trend"
Sorry, Reading todays fin now... moved on.
Rainmaker2000
28th-February-2008, 11:43 PM
Since you have obviously 'moved on' to read today's fin review..hehe... maybe you should log on to tomorrow's fin review on their website......the story about possible probe into insider trading and associated lack of disclosure may be of interest....
Mate, seriously, I'm not having a go....I just would not want the ABS event smoothed over.......this is everything about share investing that turns many people off.....ABS should have been a reliable, stable, growing, quality provider of child care with conservative financing......instead its a house of cards based on a business model that gives kiddies 1 sandwich instead of 3 for lunch
Miner
29th-February-2008, 12:05 AM
In short
Todays Huntley Newsletter has recommended ABS as SELL. ONly two days ago they said it as HOLD.
What is an irony - SELL when the trading is closed.
Probably tomorrow Friday when the trading is resumed the share price will follow CNP's trend and price will start probably from 90 cents just to go down wards.
Directors are at default but should this be a buying opportunity at 50 cents?
Don't know.
:confused:
investorelse
29th-February-2008, 12:30 AM
Funstastic and the property business must go. These flashy accessories are (were) only good in a positive market.
The Amazing Aussie dollar will continue to hurt ABS returns as well as the US economy trend.
4 @ Comsec have this at a stong buy still even with the forcast lower.
Question: Why does ABS have (seemingly) no trouble securing huge credit?
Miner
29th-February-2008, 12:44 AM
More bad days :mad:
After trading halt now suspended from quotation.
It seems to be there is some Singaporian Chinese hands to buy up.
Poor Lazard - what science was applied on purchase ? You would think this million dollar paid investment bankers would have some brain. All white collared thugs.
What great Keith Nelson and his great curve, Directors are buying will tell us?
Enjoy the attachments
josjes
29th-February-2008, 12:47 AM
Singapore Temasek has filed an increase of holding from 12% to around 14.6%. They bought at last close of trading on Tuesday 8 mill shares @ 2.14 , so I reckon there will be strong support at that level.
Plus, just came out tonight, share will be in suspension further, pending release of accouncemet of indication of interest on part of its business.
benwex
29th-February-2008, 08:27 AM
In short
Todays Huntley Newsletter has recommended ABS as SELL. ONly two days ago they said it as HOLD.
What is an irony - SELL when the trading is closed.
Probably tomorrow Friday when the trading is resumed the share price will follow CNP's trend and price will start probably from 90 cents just to go down wards.
Directors are at default but should this be a buying opportunity at 50 cents?
Don't know.
:confused:
I disagree totally with your prediction...
I feel there will be strong support for ABS and the low of 1.15 on tuesday was due to climactic selling on the part of margin calls by directors and a few other "poor" sods...
The fact that you have Temasek and Lazards increasing their holdings, I believe ABS is in play (carve up or buy out) and a victim of directors greed more than the businesses debt position...
These two holders are pretty good guys to have backing up the business IMO..
This is not a CNP and will not be a lamb to the slaughter.
benwex
Prospector
29th-February-2008, 09:04 AM
This is the markets issue alone, the market values the stock.
You are joshing aren't you? Since when is it market forces when multiple Directors sell milllions of their shares, one of them just prior to a poor announcement, allowing the market to determine the prices?
Nice about being married to an ABC employer, and being happy about that, but what has that to do with the current discussion.
And for what it's worth, no-one here is gloating, people here have been burnt with either this, or other dealings by Directors, in other companies and have every right to discuss the legalties/moralities of what is happening here! :2twocents I don't see gloat anywhere, quite the opposite.
Question: Why does ABS have (seemingly) no trouble securing huge credit?
Did you mean 'did' or 'does'.
However, if Temasek are buying further into this, it may well worth putting ABS on the watch list.
ROE
29th-February-2008, 09:19 AM
Just remember big funds has often get in and out in a time frame of a week if they discover something that they didn't like. So they buy first ask question later.
So from 1.15 to 2.14 because they are getting in...the question is what if they decided to cut their loss and get out? :D How low can the price go when there are so much shares around and no one is buying?
TheAbyss
29th-February-2008, 09:58 AM
On the human side, ABC have some of the best people i have been involved with in my professional career. The staff of ABC are very good at their jobs and deserve some support in a time of chaos. On the whole, the entire ABC team are highly cappable professional people who enjoy their jobs and are very good at them. Eddy recruited a lot of people along the way who left very good positions to get on board with a visionary and do not deserve what is happening to them.
I for one sincerely hope that ABC get out the other side of this in one piece. Sure Senior management allowed Eddie to get ahead of himself and place ABC's future at risk and he needed to be reigned in which has certainly happened no matter where this ends up.
I think Eddie got carried away with wanting to be biggest boy on the block and just kept wanting to be bigger and bigger and eventually bloated himself on debt to the point of implosion (a nice mental image actually). Well now the sharks are circling and taking chunks out of him as well. Lets hope he learns from it and manages to to keep a very good company afloat.
Best result for ABC would be for the US and UK centres to be divested for enough funds too pay off what was borrowed to buy them (which could be difficult so a few other assets will probably have to go). ABC's business model for Australia is more than viable in its own right if they can keep it.
Perhaps if Temasek and Lazard get a board member or two they can reign in the growth and stick to the core business and remain profitable without trying to expand into markets they dont understand or take risks to stroke egos without full consideration of the inherent risks involved.
Nicks
29th-February-2008, 10:16 AM
After the event the questions arise about disclosure... but they were nowhere before the event
Ummmmmm, well the market would have asked questions if they had had a chance. Mr Kemp Offloaded a big stash Friday, report released Mon, all other directors forced to offload Tues.
I think there are SERIOUS questions about disclosure with ABS.
Disclosure questions will often result after the event. It's normal - thats what disclosure and insider trading is always aboout - stuff that happens before an event, or using knowledge before and event.
Mr Peaman
29th-February-2008, 10:43 AM
My opinion - 3 positives so far pushing up the price and only 1 pushing down - There is still one variable that can go either way...
* T+3ers - They need to cover their loans so they will be fake buying in my opinion to push up the share price.
* Management buying their shares back - Maybe
* Temasek and others will be buying al lease at $2.14 so that sets a floor
*Hedged funds are going to be the only ones pushing the share price down at this stage. And with the scrutiny thats around at the moment about this on this very highlightd and public Company I doubt that they will be shorting anyone!
Unknown Variable is the interest in the companies Assets - Probably selling off the American Assets - If this is the case than i am of the opiniuon that this will be positive for the share price as at the moment Americans are un sure of what they are doing - this also decreases the level of debt!
IMHO i believe the share price will rise on open - And if the sale ends up being positive for the company than around $4 sounds about right to me!!!
ROE
29th-February-2008, 03:25 PM
Most of their purchase are fund on debt and buy at a premium price.
If they force to sale, they get much less value in return but own the same amount of debt..so debt is bigger than equity.
with US going into a recession, childcare facility will be in less demand so they have to drop a fair bit
for people to take on the risk.
so assume they let go of US arm they will still carry a big chunk of debt so
it be a long while before this business is making decent returns.
I think at $2 it's not that cheap but then again I wouldn't get into a business with such a crab ROE :)
dhukka
29th-February-2008, 03:39 PM
Most of their purchase are fund on debt and buy at a premium price.
If they force to sale, they get much less value in return but own the same amount of debt..so debt is bigger than equity.
with US going into a recession, childcare facility will be in less demand so they have to drop a fair bit
for people to take on the risk.
so assume they let go of US arm they will still carry a big chunk of debt so
it be a long while before this business is making decent returns.
I think at $2 it's not that cheap but then again I wouldn't get into a business with such a crab ROE :)
Didn't you just buy into CCP which now has a very crap ROE of about 12% forecast for FY08. That is, if you believe their latest downgrade?
josjes
29th-February-2008, 04:01 PM
Just remember big funds has often get in and out in a time frame of a week if they discover something that they didn't like. So they buy first ask question later.
So from 1.15 to 2.14 because they are getting in...the question is what if they decided to cut their lost and get out :D ? how low can the price go when there are so much shares around and no one is buying?
Someone just take a big stake in CCP. I cant read the damn form with hand writing, can someone with better eyes read it?
Obviously someone sees value in this.
For CCP, Some obscure fundie increases stake, it's obviously hidden value.
For ABC, Some well known respected value manager (Lazard) and Foreigner (Temasek) with stash of billion dollars cash increase stake, it's only short term trading.
'Beauty is the eye of the beholder' :)
ROE
29th-February-2008, 04:05 PM
Didn't you just buy into CCP which now has a very crap ROE of about 12% forecast for FY08. That is, if you believe their latest downgrade?
Wrong... historical CCP beat ABS by a country mile and even at 12% which is average that's a far cry from 5-8% which is below standard.
ROE
29th-February-2008, 04:16 PM
For CCP, Some obscure fundie increases stake, it's obviously hidden value.
For ABC, Some well known respected value manager (Lazard) and Foreigner (Temasek) with stash of billion dollars cash increase stake, it's only short term trading.
'Beauty is the eye of the beholder' :)
Most funds like Lazard don't get into stock below certain market cap.. ie small cap companies except for boutique funds where they have more flexibility on what stocks they buy into.
They obviously want to make money out of stocks they invest but You cant always assume just because a fund buy into a stock it going to make great return.
Many times they get it right and there are time they got it wrong too.
If you can pick winners all the time you can be a billionaire pretty quick.
Even Warren Buffet make bad investments.
dhukka
29th-February-2008, 04:36 PM
Wrong... historical CCP beat ABS by a country mile and even at 12% which is average thats a far cry from 5-8 % which is below standard.
Historically yes the ROE is very good, however given recent events I wouldn't be using historical ROE's to value this company. 12% is average? I'd say it's on the low side.
ROE
29th-February-2008, 05:37 PM
Historically yes the ROE is very good, however given recent events I wouldn't be using historical ROE's to value this company. 12% is average? I'd say it's on the low side.
I dont want to get into tick for tat argument but if you google search for American and Australian companies average ROE you find it will falls between 10-15% .... 15% start to come into the high range and most people will be happy to get ROE of 15% of course you get exceptional company where it exceed it with 20,30 and even 40-50% ROE but as a whole it's around low 10.
Other people who came across various research paper on ROE can comments on this.
Peace :)
investorelse
29th-February-2008, 09:24 PM
Stakeholders: mutlibank syndicate funding, government, and lots of interesting new majors, I like it!
"Whats it got to do with the discussion?"...Just a dose of reality in a thread in a fantasy.
Time to get back to the core this business, Thats where it's going...
not in careers123 and the rest.
lets play!
dhukka
29th-February-2008, 09:52 PM
Stakeholders: mutlibank syndicate funding, government, and lots of interesting new majors, I like it!
"Whats it got to do with the discussion?"...Just a dose of reality in a thread in a fantasy.
Time to get back to the core this business, Thats where it's going...
not in careers123 and the rest.
lets play!
Clearly you haven't "moved on" yet. I assume your latest piece of garbled nonsense above is supposed to say; "Just a dose of reality in a thread of fantasy."?
The only fantasy here is the mindset of any ABC shareholder who thought this company was a good investment. The writing has been on the wall for years and now the chickens have come home to roost.
Rather than vent your bitterness here, have a look in the mirror and take responsibility for your own actions.
seden33
1st-March-2008, 05:02 AM
Shat more could u ask for , this is the perfect scenario for abc I feel sorry for ed and wife they got touched up . imagine if they were making massive profits off hard working familys struggling with interest rate rises and so on , or is that all your worried about . screwing down the average family
robert toms
1st-March-2008, 06:51 AM
I think that my religious upbringing has clouded my view on shares like this one.
I see it as not quite right to make money from child care,nursing homes etc.
Perhaps I am not modern enough!
Rainmaker2000
1st-March-2008, 09:11 AM
I don't think one needs just a religious viewpoint to have a dim view of mass childcare........some of the stories I hear and the science conducted on kids who have intensive exposure to child care centres......well, child care has a dollar value and then there is the rest of it...what is the price of mental illness imposed in the most impressionable years.......we will see the dollar value of that in future years...It's a lot simpler just focusing on good stocks.............
blinkau
1st-March-2008, 10:28 AM
Does anyone know when the shares are likely to be out of suspension for trading again??
I wish I could of taken my profit on the day except for damn staff trading rules!
Prospector
1st-March-2008, 10:50 AM
Stakeholders: mutlibank syndicate funding, government, and lots of interesting new majors, I like it!
lets play!
I think you may have trouble convincing the masses on that:
ABC shareholders are threatening to sue re non-disclosure
ROE
1st-March-2008, 11:39 AM
This business is a good business they just have crazy people running the show.
and that why it turn into a high debt, high leverage such business that could be brought down to its knee.
With all the problems going on I don't know how they can continue to run the show efficiently in the short term (next 12 months). There be lot of investigation into share trading.. Share holder could sue for non-disclosure etc.
I like this business because there isnt many business around where demand exceed supply, well resource is the other beast :-) but with the current management and low ROE I think I sit on the side line and watch it unfold till such time it proven otherwise.
investorelse
1st-March-2008, 05:27 PM
It is a fantastic business and as necessary as water and power.
Even more than ever in an economy with the highest employment rate ever.
Hope this garbled message is clear enough for you Dhuy?
dhukka
1st-March-2008, 05:48 PM
It is a fantastic business and as necessary as water and power.
Even more than ever in an economy with the highest employment rate ever.
Hope this garbled message is clear enough for you Dhuy?
It's absolutely clear, just misguided. As stated by me and others on this thread, ABS was a good small business. Unfortunately the meglomaniac at the helm, in his bid to take over the global childcare industry, has run this good small business into the ground by encumbering it will huge amounts of debt, asking investors to stump up increasingly more capital and then producing ever decreasing returns.
What needs to happen, is for this company to halt it's expansion program, sell off some assets, pay down some debt, and extract better returns from the existing business. However Groves seems intent on growth at any cost. In the latest financial report he plans to continue to open 150 new centres a year. That means , he will have his hand out for more debt and more capital.... and around we go again.
investorelse
1st-March-2008, 06:30 PM
I think you may have trouble convincing the masses on that:
ABC shareholders are threatening to sue re non-disclosure
THANKS PROSPECTOR for some actual feedback!
I agree there is an issue to be resolved.
Looking at your links it seems like laywers selfishly only looking for some revenue.
The communication from ABS management to customers has been fantastic,
they are very poor communicators to the other stakeholders, Staff and shareholders I totaly agree.
Dhuy, you say something? Found any more videos on utube to post about???
Prospector
2nd-March-2008, 10:06 AM
Yes, I do agree with you Investorelse that the only people to make any money out of a shareholder class action will be the lawyers.
People here agree that the ABC learning centres, in Australia, provided an excellent (in most cases) and necessary service to the parents and children. But, as is often the case, the Directors forgot about their key mission - providing that excellent service - and went above and beyond their realms of expertise by seeking out massive debt, and I agree, Dhuka, take over the world in childcare! Or just maybe, their mission was not about childcare at all, but making a global commodity. Their model simply did not work once world factors, in this case, the debt crisis in the US which then moved elsewhere. Their model of debt/expansion worked in Australia but was catastrophic when global issues (as opposed to local Australian issues) came into play. They simply did not know enough about global risks.
And somewhere, someone just has to be accountable for that. And the threat of class action is all that the luckless shareholders have to press that issue. And that is when we get back to lawyers. Who will always get paid first.
They did get one thing right as you say, they communicated to their fee paying customers. But that is probably more the responsibility of each individual child care centre, some of whom got it very right, and others probably got it very wrong due to the different skills in each centre coming into play. But the rest is corporate responsibility, and these people (Board and Directors) obviously got it very very wrong, and that is misleading the market. Big no no in my books.
grace
2nd-March-2008, 01:02 PM
Just be very careful with holding onto this one everyone.
We did own a child care centre for 5 years until recently. The future success of this company is reliant on the families staying, and low unemployment (apart from reducing debt). Parents will not want to be at a child care centre if they think it is a sinking ship. This weeks media attention would put doubt IN EVERY PARENTS MIND!
They may start investigating alternative arrangements IF THEY CAN. I know there sometimes is no choice in the cities, and parents can not just give 2 weeks notice and find another place, particularly in the birth to 2 yrs age group. There are a lot of centres in QLD with space in 2 - 5 yrs, and this is the most lucrative area when full. The babies don't really make any money because of the staff ratios involved. If ABC start losing their 2 - 5 yrs, watch out!
I am only speaking on a general basis.
I believe ABC have had a good run, because in most instances, families will take whatever is available because choice is limited. The media attention ABC has received would be enough to put any family in the mindset of "are we at the best place for our child/ren?". Believe me, they will start doubting the care their child receives and start investigating alternatives! Any little slip up will be seen with more negativity than usual.
