Here's why these major investors are betting big on Yellow Brick Road Holdings Ltd

Recent full year results only confirm expectations of a good year for Yellow Brick Road Holdings Ltd (ASX:YBR) shareholders in 2015.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Since its annual report was released at the end of August, there has been a lot of activity by major investors in non-bank lender Yellow Brick Road Holdings Ltd (ASX: YBR).

I'm not surprised since results of this quality are extremely hard to beat; in fact, the closest recent competitor is probably Yellow Brick Road's own half-yearly report back in March.

The latest movements from major investors include:

Mark Bouris (chairman) – acquired 6 million shares (total voting power of 18.4%).

Nine Entertainment Co Holdings Ltd (ASX: NEC) – acquired ~17 million shares (total 17.8%).

Apollo Global Management LLC (NYSE: APO) – acquired ~17 million shares (total 17.8%).

Macquarie Group Ltd (ASX: MQG) – acquired ~23 million shares (total 18.35%).

Acorn Capital Limited – initial substantial holder, acquired ~16 million shares (total 6%).

As readers can see, just these five investors hold nearly 80% of the company between them.

Fortunately at least three of the above – Mr Bouris, Macquarie and Nine Entertainment, have their own business interests that are linked in some way to Yellow Brick Road's success, making their vested interests just that much more important.

Such strong institutional ownership is likely to see the share base tightly held, and investors may have a few more opportunities to pick up a bargain if low liquidity constrains the share price.

Although with that said, Yellow Brick Road continues to look like a bargain regardless of where day-to-day market fluctuations take it.

Up only 12.4% for the past 52 weeks, the modest price rise belies the strength in underlying earnings that should see this micro-cap deliver its maiden profit in 2015.

With total revenue rising 27% and huge growth in mortgage, life insurance and funds under management/advice, Yellow Brick Road has a powerful business model that its ever increasing number of branches can leverage over the coming years.

In fact, it also has a lot in common with The Motley Fool's Top Stock recommendation for 2014-2015.

Both are financial companies with sound business models, major plans for rapid expansion, and both are experiencing considerable growth in their respective industries.

The Motley Fool's recommendation isn't growing quite as fast as Yellow Brick Road, mostly because it is larger in size and that sort of growth becomes exponentially harder to achieve over time.

However its growth figures still hover around a very respectable 15% p.a. after five consecutive years of similar performance; and it pays a great dividend to boot.

Trading on an undemanding valuation, there's something for everyone in The Motley Fool's latest recommendation – that's why I own it – and I recommend all interested investors check out our free report.

To access it, simply click on the link below and enter your email address – it takes less than 30 seconds – and we'll send it to you, completely FREE!

Motley Fool contributor Sean O'Neill owns shares in Yellow Brick Road.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »