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Wipeout for Rip Curl

They say timing is everything — whether you are trying to catch the perfect wave or sell your business, timing certainly plays its part. The founders of surf brand Rip Curl, Brian Singer and Doug Warbrick, know how to navigate a big swell but it appears they haven’t been so lucky with navigating the sale of their company, with recent reports suggest that plans to sell Torquay-based Rip Curl have been shelved.

The poor performance of major competitor Billabong (ASX: BBG) would certainly not have helped the sale process at Rip Curl. Questions surrounding the growth potential of the board sports sector would no doubt have been asked of Rip Curl management and most likely led to a wide gap between Singer and Warbick’s asking price compared with potential buyers’ valuations.

There is certainly still money to be made in the world of brands and fashion. Amancio Ortega, the founder of fashion giant Zara, was this week elevated to third place on the Forbes rich list. Oroton Group (ASX: ORL), continues to be a high margin and growing business despite the disappointing loss of the Australian Ralph Lauren license and high-end fashion designer Lisa Ho must see an opportunity, as she is rumoured to be looking to list her company.

The failure of Rip Curl to complete a sale may have been more sport- or company-specific than anything else. Given the rise in the stock market, it’s possible we are on the cusp of an upturn in corporate activity. Macquarie Group’s (ASX: MQG) share price has already run hard, perhaps factoring in the uptick in corporate merger and acquisition (M&A) activity, however there may still be pockets of value amongst some of the smaller listed financial services companies including stockbrokers Wilson HTM (ASX: WIG) and Bell Financial Group (ASX: BFG), who will benefit from an uptick in trading volumes and also any resurgence in M&A business.

Foolish takeaway

The share prices of many companies have increased substantially in the last year, making value harder to find. However a number of smaller companies that are less followed still offer value and opportunity.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Tim McArthur owns shares in Bell Financial Group, Billabong, Macquarie Group, and Wilson HTM.

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