Q: Morning 5i,
How serious do you think this DRI.UN management fiasco is? Do you foresee a long time in the penalty box for the name (it fell drastically today and has a lot to make up to get back) or do you think there will be a reasonably quick recovery?
(I've got a fair amount tied up in DRI.UN and got quite a shock when I looked at my accounts this morning, so I'm in need of a level headed take on the situation.)
Thanks,
Peter
How serious do you think this DRI.UN management fiasco is? Do you foresee a long time in the penalty box for the name (it fell drastically today and has a lot to make up to get back) or do you think there will be a reasonably quick recovery?
(I've got a fair amount tied up in DRI.UN and got quite a shock when I looked at my accounts this morning, so I'm in need of a level headed take on the situation.)
Thanks,
Peter
5i Research Answer:
The disclosed amount ($7.5M) is not going to be too damaging. But there could be other issues, and the 'reputational' damage is certainly serious. Then we have the uncertainty of a new CEO. One broker has already downgraded the stock. The stock price has taken a hit, which is likely more on uncertainty than actual financial impact. Still, it is a newly (three year) small public entity, and with small caps already struggling we would expect a long time in the penalty box here. If the damages are 'only' $7.5M and nothing else is discovered it should be able to recover over time, however. We would not expect the dividend to be impacted.