This week saw the private equity consortium lower their bid for the leasing & salary packaging business Smart Group (SIQ) a stock we bought with a 4% weighting early in 2020 for $6.98 plus we’ve banked 73c in dividend & franking income. MM thought the bid would be successful given the level of cooperation between the parties early on however that was proven wrong as the consortium reduced their bid price from $10.35 to $9.25 and the SIQ board rightly walked away. The stock is now trading back at $8.08 as investors question whether or not something is amiss. We don’t know what prompted the change in bid price, SIQ reconfirmed earnings guidance however many funds simply sell when a bidder walks. We see value in SIQ and it’s a stock that fits nicely in this income portfolio paying us a projected yield of 5.75% fully franked, with the added comfort that a 3rd party sees value ~15% higher.
MM is holding SIQ
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