The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
I posted a couple of weeks ago here that my main concern is the management. There are some C-level folks at CAB that don't have much of an idea of how to run a effective organisation and they are not good at hiring talented, experienced people either.
I just want to stress that even with that risk, I consider CAB to be cheap and an excellent investment. This issue is not new and CAB has been a money printing machine for decades. With high quality talent, the company could become the paypal/stripe/what not of international payments. It would dominate payments to developing and emerging economies and from there chip in the market share of institutions that do transfers between developed economies.
I don't think there will be a buy back any time soon and it's not a bad thing. One of the reasons CAB went public was to get money to invest in the company (those licenses are *not* cheap). I used to laugh when Asartara mentioned that any fintech could start doing the same as CAB. Banking and other type of financial licenses usually take 1-3+ years to be granted and are expensive. Usually a company needs to hire a small army of consultants / advisors, hire new experienced employees to oversee the new regulations, change internal systems and processes, set up reporting, controls, reconcilliation, etc.
CAB also will need to invest money into hiring new blood from the financial industry, for a long time it used golden cuffs to hold on employees (their HR is abysmal. Some of their employees are in control of part of the organisation that are way above their ability and without any kind of mentoring.
In short, I don't believe we'll see the SP go up through buy backs but from growth, and there's a lot of growth to do!
For me CAB is a easy buy, but there are many risks. I read the IPO documents a few months ago and I think they covered all of the risks there.
For me, the 2 biggest risks of CAB by far are that they operate in developing economies and the goverments usually take wild measures to "protect" their economies when then do something silly (like printing money like mad people and expect their currencies won't suffer). At the same time, this is what differentiates CAB from many other banks and financial institutions which don't have the expertise to deal in those regions.
Any wild big change in a currency could also be problematic to CAB in the short term, but might become a huge revenue machine in the medium and long term.
The second, and this is the scary one for me, is the management. Some of the choices of the board and how the management in general didn't do anything public after the big drop of October are questionable. Someone has posted before a list of the C-level executives and the companies where they've been and I can tell from personal experience, as I've met some of them a few years ago, that some of them have no clue of what they are doing. On the other side some of them have a very clear mind of how to run the company, how to make it grow and how to keep growing the brand in a very reputable way.
I'm quite glad that the CEO has been removed, he is known as a bluffer and he showed that in CAB. The board still needs to let of a few more C-level people and hire competent managers with tangible experience of the industry or area they manage.
Unfortunately that's the CEO that is going out... the board gave him ~£20 million in shares at the IPO level... The board really failed there.
I have trust the new CEO will do a much better job.
And as a celebratory performance, let's remember some distinguished members (guess who they are).
Member1: The SP of this should be 20p! Any fintech company can open branches all across the world and do the same thing CAB does with a snap of their fingers.
Member2: Oh the bad news today! When this will stop? I doubt this company will survive tomorrow.
Correct me if I'm wrong, but if it goes private wouldn't that put a stop at the plans of becoming a clearing house in the US?
I also don't think it can be taken over unless someone offers well above £3 (probably ~ £5). The current valuation is joke and Helios won't accept anything that will undervalue the company.
This is excellent, excellent news in my eyes. I've heard that Bhairav was a bit of a bluffer at Finablr.
It's a pity he was given a silly amount of shares, this was a gross mistake of the board to award him ~2% of the company. The company would have been much better by keeping Albert Maasland.
There's very little liquidity. The short sellers were the ones giving liquidity to the share but they might be quiet now.
For example, the SP just dropped ~10p (9%) when a volume of ~105k shares were traded. I think everyone, includig myself, is keeping their shares as we have a beilieve that the SP will increase. Personally I think the SP will correct itself in the 120-180 band in the next months and from there will start growing/falling with the performance of the company.
I find it odd that he1 raised cash without an announcement that the well is ok for exploitation. The only reason I can think of the new cash is to move to the next well as this one is not good.
Happy to hear other opinions!