An Australian World-Beater
Infomedia (ASX:IFM) is small and not very liquid. Stockbrokers dislike illiquidity, so it doesn’t receive a lot of analyst coverage, and many people may not have heard of it.
At the same time, IFM is a genuine Australian success story on the world stage. Its software products and services are used by car dealerships around the world to help them manage their parts and service operations. Once won, customers tend to stay with IFM, which means its revenue stream is of good quality.
Following an extended period of managerial neglect and gradual decline, IFM has more recently been reinvigorated, and in the first half of financial year 2014, it showed solid revenue growth in every geographic region it operates in. A suite of updated products is apparently being well received by its target markets, and the management team is optimistic about the pipeline of opportunities ahead of it. This is a nice counterpoint to the demise of the Australian car manufacturing industry.
Having set the business back on a steady course, co-founder Richard Graham sold a large number of shares last year, and has stepped down from the chairman role after 27 years. Following the sell-down, there is scope for improved liquidity in IFM shares in the future, and given the quality of its business, IFM may start to receive more attention.
The Montgomery Fund owns shares in IFM.
Tim joined Montgomery in July 2012 and is a senior member of the investment team. Prior to this, Tim was an Executive Director in the corporate advisory division of Gresham Partners, where he worked for 17 years. Tim focuses on quant investing and market-neutral strategies.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
david klumpp
:
Another Australian software and services company that is a world leader is IRI (Integrated Research). Would appreciate your assessment of that company.
Roger Montgomery
:
We’ve owned it in the past in The Montgomery Fund. They’re interesting but have to assess the channel risks in a competitive market. Could you share your thoughts on how you assess them to be a “world leader”? We don’t have a view, on that score, so would be delighted to hear your thoughts.