September 20, 2019

Enero Group (ASX:EGG) is an advertising agency that was re-birthed from the ashes of Photon Group about a decade ago. Under new chairman John Porter and the new management team led by Matthew Melhuish, the company has undergone a significant transformation in terms of both its earnings profile and balance sheet. The stock has experienced a substantial share market re-rating. The group has diversified geographically via acquisition, and is now operating in Australia, the U.K. and the U.S. It has also diversified its business model to now offer a completely integrated communications and advertising proposition. We expect to see further acquisitions fuelling earnings growth and continued share price re-rating, albeit not without some cyclical risk around its market segment.

One of the main reasons we specialise in small cap is the lack of market efficiency. Enero Group Ltd (ASX:EGG) is a perfect case in point. The company reported its full year results for the period ending June 30 2019. I...

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