What: Ardent Leisure Group (ASX: AAD) shares have tumbled since the unexpected announcement of a change in Chief Executive Officer (CEO). This news came just days after the company failed to please investors with a set of interim results which showed a 3.8% decline in "core" earnings and a 9.7% drop in "core" earnings per share.
So what: Mr Greg Shaw was previously the long-serving CEO who oversaw many years of expansion and growth for Ardent. His shock resignation took investors by surprise and certainly added to investor uncertainty, coming so soon after the entertainment group – which owns assets ranging from theme parks and entertainment centres to health clubs – reported lacklustre results.
The two events combined have resulted in a significant sell-off in the stock. At one point, the shares were down a full 50% at $1.75 from a 52-week high which was set in October 2014 of $3.49. The stock has now stabilised a little to be trading at $2.24 currently, however this is still below the level the stock was trading at before the announced retirement of Mr. Shaw.
Now what: The tumbling share price has created an opportunity for shareholders who believe there is a discrepancy between Ardent's share price and the stock's fair value. Two high profile fund managers who would appear to believe in a discrepancy are Bennelong Funds Management and JCP Investment Partners. Both have recently provided substantial shareholder notices to the ASX, with Bennelong now holding a 5.3% stake and JCP a 5.1% stake.
Having the courage of your convictions to back your analysis and buy shares in a company in the face of others selling is not an easy mind-set for most investors to conquer, however, this attribute is an essential element for successful investors to master.
