There's something of the bargain hunter in everyone. A few investors I know wryly admit to spending half an hour watching a company's share price, just to save $3 on their buy order. Some will drive across town to save 4 cents a litre on a 70-litre tank at a supermarket petrol station.
So perhaps it's natural that shares that have fallen heavily can appear more interesting to shareholders. Here are 3 that have been pummelled over the past 12 months:
To add some spice to the possible opportunity, each of the above companies is being heavily bet against by short-sellers, who aim to profit from (and cause) share price falls.
iSentia Group Ltd (ASX: ISD) shares plunged after the acquisition of King Content turned out to be a monetary black hole. This media monitoring company has also come under scrutiny from short-sellers, while fund managers and stock pickers that were 'long' the company (i.e., they were hoping shares would rise) have so far been burned. With the recent departure of several executives, new management could bring some changes to the business.
Now priced at around 11 times earnings and offering a 5% dividend, iSentia could be cheap enough to be worth a closer look, although there is a lot of good commentary about the company out there that should be read first.
Quintis Ltd (ASX: QIN), formerly TFS Corp, is a sandalwood plantation owner and pharmaceutical product (from said sandalwood) developer. The company has a unique business model, but what is really capturing the market's attention is a devastating report from a short-seller, Glaucus Research, who asserts that the company is a giant Ponzi-like scheme whose true value is $0.00 per share.
Quintis has released a report refuting those claims, and I have not investigated further beyond reading Glaucus' report and Quintis' response. Quintis could theoretically be an opportunity, but with the recent resignation of the Managing Director, and without a lot of research aiming to validate or refute either party's claims, I would not touch it.
Bellamy's Australia Ltd (ASX: BAL) is the well-known infant formula company that blossomed on the back of the 'China boom'. The company was caught out however, by less than expected demand, which resulted in a huge inventory build-up due to take-or-pay supply arrangements. This issue forced a change of executives and a change of relationships with its supplier. Now Bellamy's has a weak balance sheet and, disconcertingly, recently announced it would likely not achieve registration of its baby formula products by the 2018 deadline.
Bellamy's does not appear to have the financial strength to see off its current challenges unaided, and I am not a buyer of its shares today.
