Morning Report Thursday 3 December 2015
Yesterday the ASX200 saw yet another landmine explode when cleaning company Spotless (SPO) crashed 40% in one day after horrifying the market with an ugly profit warning - see chart 1.
SPO was floated by private equity firm Pacific Equity Partners back in May 2014 at $1.60 after installing new management and apparently turning around its fortunes. It should be noted that SPO has traded above its IPO price until yesterday and is now showing a 17% loss for the ‘day one’ investors and much more for recent buyers - still better than BHP and Woolworths for the year.
It feels like a different day but the same story after seeing Dick Smith (DSH) shares plunge on Monday after poor trading results led to the company slashing inventory valuations. In November 2012 private equity company Anchorage bought DSH from Woolworths for $94m, at its IPO in December 2013 it was floated at a price of $2.20 indicting a valuation at an amazing $520m, all in just over a year!
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