Vocation Education: A tough lesson
Vocation Limited (ASX: VET), the troubled vocational education provider, has entered into voluntary administration.
In what has become a popular blog topic, we have consistently questioned the sustainability of the vocational education industry. When one funder defines a market, as the Government does in this instance, it is unlikely that market participants will be allowed to sustain excess returns. It was on these grounds that we declined to participate in the float in 2013.
Vocation’s market capitalisation peaked at $700 million in September 2014, during a time when it chose to raise additional debt and equity to fund an aggressive acquisition strategy while the regulator reviewed its funding arrangements. Vocation was subsequently found to have engaged in inappropriate practices, and with its funding in doubt, so too was the viability of its business.
Vocation subsequently drifted in and out of suspension as it dealt with class actions challenging its continuous disclosure obligations while attempting, unsuccessfully, to restructure its operations.
Ben MacNevin is an Analyst with Montgomery Investment Management. To invest with Montgomery domestically and globally, find out more.
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.
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Jai
:
Looks like it would have been a rewarding short opportunity for an Australian Long/Short fund. Will there be such a fund any time soon ?
Roger Montgomery
:
Hi Jai,
Its not being contemplated in the immediate future. The Montaka Global Access fund is a truly global fund so it can short Australian companies too, and it has indeed previously established positions in companies like Slater & Gordon