Why the market has it wrong on Cabcharge
Changing information, changing management, and aggressively sold-off shares; these are three things that can lead to major misconceptions in share prices, explains Marcus Burns from Spheria Asset Management. He identifies Cabcharge as an example. The introduction of Uber in Australia almost perfectly coincided with regulation reducing fees from 10% to 5%. “People have gone ‘ok, earnings are going down. It must be due to Uber coming to Australia and smashing up Cabcharge.’ In reality, most of the earnings hit has come from the regulation change, which has halved the earnings.” A large part of the earnings and valuation is in a joint venture called CVC, worth around $200m. “Very few people are aware that Cabcharge owns half of a bus business, which they could very easily sell or dispose of at some stage.” In the video below, he explains how he gains conviction in ideas.