March 19, 2018

Companies make mistakes. It often accompanies major change within an organisation, often involving management replacement or perhaps a new strategy to deflect from the maturation of a key business. What is for certain is that change is an important investment catalyst.

We saw a couple of examples this week of companies which have corrected errors – one we are happy to own and one where the jury is still out.

Silver Chef Limited (ASX:SIV)

Glennon Capital made great returns investing in Silver Chef a couple of years ago.  The company made its name from the financing of ovens, fridges and other equipment for the Australian hospitality sector – restaurants, cafes, clubs and hotels. It found a good niche and dominated that market.

Then it moved into construction equipment finance, at around the same time the founding CEO gave up his day-to-day duties, handing over to a new team. Two investment red flags.

Sure enough construction financing has proven a vastly different (and poor) experience...

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