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Steadfast (SDF) $5.96 & Johns Lyng Group (JLG) $3.45

Four Corners aired an expose into the murky world of strata management overnight that highlighted the conflicts throughout the industry, with strata managers conflicted with developers (who would allocate their next management agreement), insurers who are paying kickbacks to strata managers for the sale of insurance products and then finally, preferred building and maintenance contractors that have cross-shareholdings and a range of conflicts, none of which seemed to be disclosed to underlying owners. There is a review of all this going on, and we’d expect some significant changes to flow as a result.

  • Steadfast (SDF) was the primary company targeted, and the CEO came across very poorly. They are in a trading halt and will respond, though they claim they have done nothing wrong. Johns Lyng Group (JLG) was also named in the report, and they do have cross-shareholdings that could come under the microscope.

We don’t own Steadfast (SDF) and given the review underway has now just been given a shot in the arm by the ABC, we would not be in this stock for now. We have a small 3% weighting in JLG in the Emerging Companies Portfolio, which has been under pressure. While they are at the periphery of these claims, it is still a short-term negative, with pressure on SDF not good for JLG.  We had flagged the potential to increase this weighting, however, for now, we will sit and observe.

SDF
MM has no interest in SDF & sitting tight in JLG for now
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Steadfast Group Ltd (SDF)
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