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Duff & Phelps Corporation Class Message Board

  • odormotor odormotor Jul 12, 2010 11:45 AM Flag

    Stop with all the nonsense analysis. DUF is oversold and you all know it.

    Stop with all the nonsense analysis. DUF is oversold and you all know it.


    Just keep on blabbing away!

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    • What conclusion can be drawn from a growth stock company that acts like pretends to be a value stock?

      Not sure besides being caution investing anymore of my capital into its stock.

      What concerns me more is the following statement issued with its press release:


      "While other businesses, such as Portfolio Valuation, have experienced lower growth in recent quarters, we believe that meaningful opportunities exist to develop new offerings and further penetrate existing markets for these types of services."

      "Given the strength of our balance sheet, we have been more active with respect to capital deployment to grow our business and enhance shareholder returns," commented Jacob Silverman, chief financial officer. "This was evident in our acquisition of Cole & Partners in June as well as the increase in our quarterly dividend and implementation of our stock repurchase program."

      So ... the best idea to deploy its capital is to repurchase its stock?

      Hmmmm .... and the Cole acquisition added 20 FTEs tops to the payroll and they sit in Canada (not quite a growth economy).

      Sadly, Duff is a valuation advisory business above anything else it does and that core practice is facing tough market condition yet the Board only changed a service leader from its only growth service line.

      Go figure why it would deploy its capital to buy stock at $13 and now it sits at $10.

    • Also, in the quarter they both issued shares and bought back shares. They bought back common shares at $13.77/sh. and then issued some more to buy the Canadian...don't know they share price but I would be willing to bet it was a fair bit lower than $13.77/sh.

      So, what conclusion can you draw when a company, whose job it is to value other companies, in a single quarter, manages to buy it's own stock high and probably sell it low. And why are they both issuing shares and buying back shares in the same quarter in the first place?

    • Listening to the earnings call today confirmed my instinct ... this is a firm with a broken compass and no map.

      CHALLENGES

      The largest engagement is ending (Lehman Brothers)

      Core services are commoditizing e.g., valuation

      The U.S. economy still struggles

      OPPORTUNITIES

      Ability to hire top talent at a lower cost

      Launch new services (no working capital business???) given the cash surplus

      Expand globally

      Oh, managed their costs (e.g., turned off the lights at night)


      2Q ACTIONS

      Bought a small legal dispute advisory firm located in Canada to expand their (hmmm ... Canada is a growth market now?)

      Changed senior management team BUT installed other legacy senior leaders

      Repurchased its stock while sitting on $80M in cash or its equivalent


      RESULT

      Lower revenues compared to the prior period (1Q) and a YoY in the strongest earning Q

      Evidence (call played it down) that top performing professionals are leaving for other opportunities after the bonus decisions made

      OUTLOOK

      3Q lines up like 2Q and DUF or its employees become acquisition targets


      Take a look at this firm on a graph compared to its peers - it had promise but underperforms as it has core services under threat to be commoditized.

      Good luck

    • Let me see ... since late April:

      Removed its president Gerry Creagh, who had spent over 20 years at Duff and its predecessor companies.

      Reshuffled its senior management ranks including the departure of Michael Athanason, who ran a financial advisory group, among other leaders.

      Trimmed its professional ranks (a few MDs here and there over the months) to include eliminating a few new business areas e.g., small tax practice group left in April.

      Closed (or closing) down of the Lehman Brothers' liquidation engagement

      A scan of LinkedIn activity reveals departures of some sales executives in 1Q

      OH ..... and FTI (which is full throttle on reorganization assignments) announces it might disappoint the Street for 2Q

      BUT DUFF is going to beat the Street in 2Q?

      Despite the reshuffling and lack of earlier earning announcements, Duff's earnings call this week will be interesting.

    • True enough. I'll sit all year on this one waiting for it to come around. Only a matter of time. In the meantime, I earn a fat 11% yield on my investment without consideration of any growth that might occur. The only assumption is that management doesn't burn the cash as soon as they get it.

 

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