What does everyone think of SPO (Spotless Group)? What does Spotless do? Facility maintenance (which is just a euphemism for cleaning and grounds maintenance) Catering/food service (operating overpriced cafeterias) Linens (industrial laundry for hospitals, prisons etc.) Its not a very exciting or glamorous business, but its turning a steady profit with customers tied down in long contracts, and is frankly getting too cheap to completely ignore. In January 2016, the price plunged from $2.15 to $1.22 (today's closing). After testing lows under 90c its now rebound to ~$1.30 yesterday, closed ~$1.20 today. Combing over all recent balance/asset/cashflow statements and not finding the reason why, other than an underwhelming profit guidance. Recent acquisition of laundry assets also complicating the issue. Anybody here want to share their $0.02 about this stock?
Don't know much about them, they lost the Argyle Diamonds contract earlier this year. Added to my watchlist.
http://www.fool.com.au/2016/02/23/i...arted-for-spotless-group-holdings-ltd-shares/ More articles on google search - spotless group motley fool
Note all those "long term" contracts have clauses allowing either party to discontinue services with 30 days notice based on such things as "non performance." Non Performance in cleaning is hard to dispute as one persons idea of clean is not always anothers. That alone means any contract can be cancelled rather easily with no penalty. Lose a few of these contracts and you can imagine the potential. EG - Google Swan Cleaning Services. 2500 employees, had contracts like Myers nationwide, lost it and a few others in a short time frame and went busto.
Might have had something to do with this: http://www.smh.com.au/business/spot...contract-to-obrien-group-20160110-gm2re9.html Recently re-listed by private equity (like Dick Smith was), I'd be looking very carefully at the amount of debt they have been lumbered with
Pick up a small parcel at $1.21 near closing time on Friday. Closed around the $1.26 mark today (Tuesday). Thanks for the insight. I've tried to account for that business risk. I take comfort in ~40% of the revenue is from Federal/State government agencies and Defense installations, not the type of institutions which make any decision quickly or known for being tight with cost controls on auxiliary expenses. I can't shake the feeling I've being 'rain-made' (google Rainmaking). Especially when its a private equity spin off. I've not known private equity to re-list companies which are profitable for them. I'm willing to accept the risk if there is another acquisition buyer waiting in the wing. Disclosure: I'm holding a small long position on this listed stock. Do your own research. Your mileage may vary. Caveat Emptor.
The more I read into SPO, the less attractive it looked. In fact, I would even go as far as saying... Got out at $1.257 on Friday 13th, taxable profit after brokerage costs was a joke but sure beats taking a loss. Edit: SPO now trading ~$1.17.
