iSelect(ed something else)
Back in June, June 13 to be precise, our very own Russell Muldoon wrote about the IPO of iSelect. It was being touted as the “hottest float of the year” by some but we weren’t interested.
With the shares issued at $1.85 Rusty concluded: “Living on an island with 23 million people means fast growth can quickly taper once saturation is reached. That point is reached faster if you only address a portion of the market and are unable to secure the remainder.
Others might be happy with the service and convenience that iSelect.com.au provides. But we just can’t shake the fact that it might be ultimately flagging on its core promise – delivering a complete comparison tool.
The pricing of the float combined with our concerns about the growth prospects and the fact that large incumbent shareholders appear to be selling sizeable, if not entire, stakes in the business (they wouldn’t be if the growth opportunity was still there), renders iSelect.com.au an even less compelling opportunity for us.
According to all reports the IPO is “hot” so there may be a “stag” on listing, but when conditions are hot people get burnt and then they have to pay the gap on their health insurance. We’ll stay in the safety of cash on this one.”
If you ever needed any more evidence that the free insights here at the blog are worth making a daily habit of visiting, or telling your friends about if you feel so inclined, you have got it: today iSelect’s share price hovers 45 cents lower than the issue price and they’ve declined by 26 per cent at the recent low of $1.36.
As an aside, I’d be delighted to find out from anyone in media whether we can compare how many iSelect ads appeared in the press and media prior to the float and how many are appearing now – on a daily or weekly basis… I reckon there are a lot less now.
And if you are wondering, Skaffold’s current estimated intrinsic value is just 65 cents. Of course there’s no suggestion it will trade at 65 cents but neither are we suggesting there might be any value in the current share price.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
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.
Roger Montgomery
:
Glad we i-selected something else!
lakun agrawal
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Data sourced from media industry reports: iselect spent an average of $1.3m on advertising in the months from Jan – May 2013. In the month of June 2013 it spent $3.3m. And back down to $1.2m in July.. no surprise there, lots of money spent to spruik itself before a float
Roger Montgomery
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Thanks Lakun