Small Cap Favourites: Pepper Group Limited
Pepper is a stock we’ve been watching closely, we wrote about it back in June when the stock price was sitting at around the $2.20 mark (read the note here). Since then, the stock has bounced nicely back towards the $3 per share market as of the time of writing. A recent announcement from the company caught our eye last week.
In the note, Pepper says that it divested around $400m of loans from its balance sheet to a separate buyer. The announcement explains that Pepper will continue with these types of divestments. They make sense, interest rates are low and there are many buyers chasing yield. By the same token, Pepper gets to recapitalise its balance sheet and appease any market concerns around the credit quality of its book.
The full announcement can be found on the company’s site or under ASX announcements, dated 19 August 2016.
It’s a smart move and one that we think may continue to help Pepper as it seeks to highlight the value of its entire business. There are a lot of interesting parts to this business, it’s in the right space to grow through scale. More divestments will help articulate this to a crowded market place.
We continue to watch it closely and will update if the stock rises above $3 per share.
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Chief Market Analyst
Peter Esho is a member of Invast’s Investment Committee and Chief Market Analyst at Invast Financial Services in Australia. The Invast’s Investment Committee constructs professionally constructed global thematic portfolios of Direct Market Access (DMA) CFDs over highly liquid global shares and ETFs through its new PortfolioInvestor platform. Since 1960, the Invast Group has grown to become one of the largest and most successful global brokerage firms, offering state-of-the-art trading technology and unparalleled service catering to all levels of traders.
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