Here's to great timing, in the worst sense.
Just hours after posting here about ArmorGroup International (ARG/LN or AMGPF/OTC) still being a bargain, the shares got hammered in London after the company announced its chief executive was leaving and warned that profits would be hit by the fallout from an incident involving the American security group Blackwater in which Iraqi civilians were killed.
The Financial Times has the details:
ArmorGroup hopes to appoint a successor within two weeks. In the meantime, Christopher Beese, who has been with the group since 1988, will act as senior executive director.
“He did his best in a volatile market,” Mr Beese said of Mr Seaton’s performance as chief executive. Iraq accounts for some 41 per cent of the company’s revenue, although that has fallen from 52 per cent last year. The US government, by far the largest client, accounts for some 80 per cent of that Iraq revenue.The shares closed down 20¼p at 29½p, even as the company sought to reassure investors that the contract problems were a “blip”.
Some blip. Well, there are some good things still going for ArmorGroup -- as you can read from The Rogue Analyst in the UK (a fellow traveler in the shares).
ArmorGroup came within inches of doubling in price (in USD terms) some months back. If it had doubled, I'd have sold half my position -- a typical practice of mine -- because the company would then become a free ride. Though that didn't happen here, this is a good reminder to me of the wisdom of that course of action.
The company is definitely cheap. And it looks like it will stay that way for quite some time. I'll stay patient as long as the balance sheet stays strong.
Are you worried about the reference to an acquisition? Could dilute the balance sheet?
Posted by: Ian | November 28, 2007 at 08:18 AM
1.5p final div still likely? I haven't found their dividend history; has mgmt ever cut or suspended a div?
Posted by: Steve Austin | November 28, 2007 at 10:29 AM
Ian: Depending on how an acquisition is done, it could be dilutive, which I'd not be for. They've done some in the past that weren't.
Steve: The company only went public in late 2004, and hasn't previously cut or suspended the dividend.
Posted by: John | November 29, 2007 at 12:40 AM
Would USMO be a really good bet right now? Its pretty cheap as well, and it's profit doesn't depend on a uncertain war.
Posted by: shane | November 29, 2007 at 02:03 AM
shane: For now, I'm holding both ArmorGroup and USMO. And underwater with both.
Posted by: John | November 29, 2007 at 11:36 PM