Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

Thematic (Sector/Industry)

<p>Data released by the Australian Bureau of Statistics today showed that new motor vehicle registrations fell sharply in the month of October by 3.6%, representing the largest monthly decline since December 2011.  But this follows a 5.9% rise in September, the largest monthly gain since December 2011.</p><p>Looking through the elevated volatility of the series of recent months, the trend remains robust.  New motor vehicle registrations are 4.2% higher than a year ago and remain close to a record high…</p>

Data released by the Australian Bureau of Statistics today showed that new motor vehicle registrations fell sharply in the month of October by 3.6%, representing the largest monthly decline since December 2011.  But this follows a 5.9% rise in September, the largest monthly gain since December 2011.Looking through the elevated volatility of the series of recent months, the trend remains robust.  New motor vehicle registrations are 4.2% higher than a year ago and remain close to a record high…

Australian New Motor Vehicle Registrations Pull Back in October, but the Trend Remains Robust

<ul><li>This post provides an update of Evidente&rsquo;s currency model.&nbsp; Under-valuation of the A$/US$ has now reached an extreme, while the Big Mac index also points to deep A$/US$ under-valuation.&nbsp; ASX listed US$ earners have performed poorly despite the renewed deprecation of the A$ over the past six months.&nbsp;</li><li>I also assess the investment case against Brambles, which generates around half of its revenue in North America.&nbsp; The company will be undergoing a capex hump at a time when its marginal return on capital has been deteriorating to the point of recently turning negative.&nbsp;</li><li>I examine its remuneration scheme and conclude that the fact that the board, ESG advisory firms and institutional investors endorse complex and opaque Long Term Incentive plans of this kind, suggests that the bloated corporate governance industry has a long way to go to achieving adequate alignment of interests between senior executives and shareholders.</li></ul>

This post provides an update of Evidente&rsquo;s currency model.&nbsp; Under-valuation of the A$/US$ has now reached an extreme, while the Big Mac index also points to deep A$/US$ under-valuation.&nbsp; ASX listed US$ earners have performed poorly despite the renewed deprecation of the A$ over the past six months.&nbsp;I also assess the investment case against Brambles, which generates around half of its revenue in North America.&nbsp; The company will be undergoing a capex hump at a time when its marginal return on capital has been deteriorating to the point of recently turning negative.&nbsp;I examine its remuneration scheme and conclude that the fact that the board, ESG advisory firms and institutional investors endorse complex and opaque Long Term Incentive plans of this kind, suggests that the bloated corporate governance industry has a long way to go to achieving adequate alignment of interests between senior executives and shareholders.

A$ buy signal strengthens | Investment case against Brambles

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Over the Wire Holdings Ltd / Event-Driven

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<p>There have been numerous take-private transactions for listed-Aussie IT service companies in recent years, some of which have been discussed on Smartkarma. These include...</p>
<ul>
<li>the November 2015 <a href="https://www.asx.com.au/asxpdf/20151125/pdf/4338cczfxtqgs3.pdf" target="_blank" rel="noopener">Scheme</a> for <a href="https://www.smartkarma.com/entities/uxc-ltd" target="_blank" data-smartkarma-citation="entities:965:1" rel="noopener">UXC Ltd (UXC AU)</a>;</li>
<li>the September 2016 <a href="https://www.asx.com.au/asxpdf/20161102/pdf/43clwcp6rxzv35.pdf" target="_blank" rel="noopener">Scheme</a> for <a href="https://www.smartkarma.com/entities/asg-group-ltd" target="_blank" data-smartkarma-citation="entities:7590:1" rel="noopener">ASG Group Ltd (ASZ AU)</a>;</li>
<li>the October 2019 <a href="https://www.asx.com.au/asxpdf/20191218/pdf/44cpl5rwnq34zq.pdf" target="_blank" rel="noopener">Scheme</a> for <a href="https://www.smartkarma.com/entities/csg-ltd" target="_blank" data-smartkarma-citation="entities:12317:1" rel="noopener">CSG Ltd (CSV AU)</a>;</li>
<li>the <a href="https://www.asx.com.au/asxpdf/20201030/pdf/44pcdfqrs4wzm0.pdf" target="_blank" rel="noopener">September 2020</a> Scheme for <a href="https://www.smartkarma.com/entities/dws-ltd" target="_blank" data-smartkarma-citation="entities:10622:1" rel="noopener">DWS Ltd (DWS AU)</a>, discussed by <a href="https://www.smartkarma.com/profiles/janaghan-jeyakumar-cfa" target="_blank" data-smartkarma-citation="accounts:3173" rel="noopener">Janaghan Jeyakumar</a> in <a href="https://skr.ma/kJomK" target="_blank" rel="noopener"> <em>HCL-DWS(DWS AU): Cash Deal Trading Wide</em></a>;</li>
<li>the September 2020 <a href="https://www.asx.com.au/asxpdf/20201030/pdf/44pc22zh1mh1f4.pdf" target="_blank" rel="noopener">Scheme</a> for <a href="https://www.smartkarma.com/entities/citadel-group-ltd-the" target="_blank" data-smartkarma-citation="entities:14087:1" rel="noopener">Citadel Group (CGL AU)</a>, discussed in <em><a href="https://skr.ma/i6V5x" target="_blank" rel="noopener">Citadel Group: Private Equity Partners' Offer</a></em>;</li>
<li>Capgemini's November 2020 <a href="https://assets-global.website-files.com/5eb3a33204ebab1ecd0b72c9/60176e3f9a311b7f4cb909f6_Scheme%20Booklet%20-%20RXP%20Group%20ASX.pdf" target="_blank" rel="noopener">Scheme</a> for <a href="https://www.smartkarma.com/entities/rxp-services-ltd" target="_blank" data-smartkarma-citation="entities:15047:1" rel="noopener">RXP Services (RXP AU)</a>, and its follow up Scheme in July this year for <a href="https://www.smartkarma.com/entities/empired-ltd" target="_blank" data-smartkarma-citation="entities:9406:1" rel="noopener">Empired Ltd (EPD AU)</a> (<em><a href="https://skr.ma/YWsn3" target="_blank" rel="noopener">Empired (EPD AU): Capgemini's Full Offer</a></em>)); and</li>
<li>Norway's Crayon Group Holdings' July 2021 <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02418756-3A575319?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">Scheme</a> for <a href="https://www.smartkarma.com/entities/rhipe-ltd" target="_blank" data-smartkarma-citation="entities:19128:1" rel="noopener">rhipe Ltd (RHP AU)</a> - see <em><a href="https://skr.ma/9ysNF" target="_blank" rel="noopener">Rhipe (RHP AU): Done Deal As Scheme Booklet Dispatched</a></em>.    </li>
</ul>
<div class="content-highlight">
<p>When <a href="https://www.smartkarma.com/entities/bulletproof-group-ltd" target="_blank" data-smartkarma-citation="entities:3324:1" rel="noopener">Bulletproof (BPF AU)</a>, an IT play, was taken private in 2018, the independent expert cited <a href="https://www.asx.com.au/asxpdf/20180410/pdf/43t32h54tfrk38.pdf" target="_blank" rel="noopener">10 peers</a> (page 28). Five of those peers have been taken private.</p>
<p>Now we have a proposal for the sixth. </p>
</div>
<p><a href="https://www.smartkarma.com/entities/aussie-broadband-pty-ltd" target="_blank" data-smartkarma-citation="entities:30812:1" rel="noopener">Aussie Broadband Pty Ltd (ABB AU)</a> has <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02439848-2A1332945?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">offered</a> to acquire Brisbane-based telecommunications and IT solutions provider <a href="https://www.smartkarma.com/entities/over-the-wire-holdings-ltd" target="_blank" data-smartkarma-citation="entities:30653:1" rel="noopener">Over the Wire Holdings Ltd (OTW AU)</a> by way of a Scheme at $5.75/share.</p>
<p>This is an unsolicited and non-binding proposal. Via a process deed filed on 16 October, OTW said it has granted Aussie Broadband to undertake due diligence and negotiate transaction documentation. That process period ends on the 30 November.</p>
<p>More below the fold.</p>
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There have been numerous take-private transactions for listed-Aussie IT service companies in recent years, some of which have been discussed on Smartkarma. These include...

the November 2015 Scheme for UXC Ltd (UXC AU);
the September 2016 Scheme for ASG Group Ltd (ASZ AU);
the October 2019 Scheme for CSG Ltd (CSV AU);
the September 2020 Scheme for DWS Ltd (DWS AU), discussed by Janaghan Jeyakumar in  HCL-DWS(DWS AU): Cash Deal Trading Wide;
the September 2020 Scheme for Citadel Group (CGL AU), discussed in Citadel Group: Private Equity Partners' Offer;
Capgemini's November 2020 Scheme for RXP Services (RXP AU), and its follow up Scheme in July this year for Empired Ltd (EPD AU) (Empired (EPD AU): Capgemini's Full Offer)); and
Norway's Crayon Group Holdings' July 2021 Scheme for rhipe Ltd (RHP AU) - see Rhipe (RHP AU): Done Deal As Scheme Booklet Dispatched.    


When Bulletproof (BPF AU), an IT play, was taken private in 2018, the independent expert cited 10 peers (page 28). Five of those peers have been taken private.
Now we have a proposal for the sixth. 

Aussie Broadband Pty Ltd (ABB AU) has offered to acquire Brisbane-based telecommunications and IT solutions provider Over the Wire Holdings Ltd (OTW AU) by way of a Scheme at $5.75/share.
This is an unsolicited and non-binding proposal. Via a process deed filed on 16 October, OTW said it has granted Aussie Broadband to undertake due diligence and negotiate transaction documentation. That process period ends on the 30 November.
More below the fold.










Over The Wire (OTW AU): The Latest Aussie IT Play

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<p>Back on the 19 July, systems integrator <a href="https://www.smartkarma.com/entities/empired-ltd" target="_blank" data-smartkarma-citation="entities:9406:1" rel="noopener">Empired Ltd (EPD AU)</a> entered into a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02396546-6A1041326?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">Scheme</a> with <a href="https://www.smartkarma.com/entities/capgemini-se" target="_blank" data-smartkarma-citation="entities:28633:1" rel="noopener">Capgemini SE (CGEMY US)</a> at a price of A$1.35/share, a 64.6% premium to last close, and an all-time high. The Offer had the unanimous backing of Empired's board. CEO Russell Baskerville, with 5.8% of Empired's outstanding shares, intended to vote in favour of the Scheme.</p>
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<p>The Scheme Booklet is now <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02425467-6A1051843?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">out</a>. The Scheme Meeting will take place on the 25 October, with expected implementation on the 16 November. The Independent Expert concluded that the Scheme is fair and reasonable.</p>
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<p>This looks done. </p>
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<p>More below the fold.</p>
</div>


Back on the 19 July, systems integrator Empired Ltd (EPD AU) entered into a Scheme with Capgemini SE (CGEMY US) at a price of A$1.35/share, a 64.6% premium to last close, and an all-time high. The Offer had the unanimous backing of Empired's board. CEO Russell Baskerville, with 5.8% of Empired's outstanding shares, intended to vote in favour of the Scheme.


The Scheme Booklet is now out. The Scheme Meeting will take place on the 25 October, with expected implementation on the 16 November. The Independent Expert concluded that the Scheme is fair and reasonable.


This looks done. 


More below the fold.


Empired (EPD AU): Scheme Booklet Out. Meeting On The 25 October

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<p>Systems integrator <a href="https://www.smartkarma.com/entities/empired-ltd" target="_blank" data-smartkarma-citation="entities:9406:1" rel="noopener">Empired Ltd (EPD AU)</a> has entered into a <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02396546-6A1041326?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">Scheme</a> with <a href="https://www.smartkarma.com/entities/capgemini-se" target="_blank" data-smartkarma-citation="entities:28633:1" rel="noopener">Capgemini SE (CGEMY US)</a> at a price of A$1.35/share, a 64.6% premium to last close, and an all-time high.</p>
<p>The Offer has the unanimous backing of Empired's board. In addition, CEO Russell Baskerville with 5.8% of Empired's outstanding shares intends to vote in favour of the Scheme.</p>
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<p>In addition to shareholder approval, the Offer is subject to OIO approval. The Offer is <em>not</em> subject to due dili or financing.</p>
<p>This looks done. </p>
</div>
<div>
<p>More below the fold.</p>
</div>


Systems integrator Empired Ltd (EPD AU) has entered into a Scheme with Capgemini SE (CGEMY US) at a price of A$1.35/share, a 64.6% premium to last close, and an all-time high.
The Offer has the unanimous backing of Empired's board. In addition, CEO Russell Baskerville with 5.8% of Empired's outstanding shares intends to vote in favour of the Scheme.


In addition to shareholder approval, the Offer is subject to OIO approval. The Offer is not subject to due dili or financing.
This looks done. 


More below the fold.


Australia

The Citadel Group Limited develops and delivers systems, services, and managed solutions to the government and private sector. The Company focuses on people and advisory, knowledge management, integration and technology, and education and training. The Citadel Group helps organizations maximize value through leadership and risk management, acquisition and sustainment, and other services.

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Citadel Group (CGL AU)

Australian New Motor Vehicle Registrations Pull Back in October, but the Trend Remains Robust

Data released by the Australian Bureau of Statistics today showed that new motor vehicle registrations fell sharply in the month of October by...

Sam Ferraro

A$ buy signal strengthens | Investment case against Brambles

This post provides an update of Evidente’s currency model. Under-valuation of the A$/US$ has now reached an extreme, while the Big Mac index also...

Sam Ferraro

Over The Wire (OTW AU): The Latest Aussie IT Play

Given DD has been afforded, $5.75/share is probably approaching full value Currently trading at a gross spread of 4.5%. That looks a tad tight,...

David Blennerhassett

Empired (EPD AU): Scheme Booklet Out. Meeting On The 25 October

Trading relatively tight at a 1.5%/11.3% gross/annualised spread. That's reasonable, but this is not a super liquid arb situation.

David Blennerhassett

Empired (EPD AU): Capgemini's Full Offer

This is a done deal and trading at a 3.4%/11% gross/annualised spread. Not bad, but this is not a terribly liquid arb situation.

David Blennerhassett

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