Jedhir, your numbers are a little off. The 33 million shares was the diluted quarterly weighted average for purposes of determining diluted EPS. The dilutive effects of in-the-money options looks to be adding about 0.3 million shares. Consistent with that, on the cover page of the 10-Q it states "As of May 6, 2016 the number of shares of common stock outstanding was 32,760,226." So looks like maybe they have purchased about 160,000 shares in the past 2 weeks.
I didn't quite explain that correctly (pre-coffee here). The March-2015 acquisition was really tiny ($1 million consideration per 10-k) whereas there were 3 acquisitions in Q4 2014 one of which was large. So on a relative basis this quarter is a pretty clean look at the organic profile deapite there being one tiny deal. Same point stands.
I thought the quarter looked pretty solid. Ebix closed its most recent acquisition in mid-March 2015, so this quarter we are getting a pretty clean look at the year-over-year results on an organic basis. 14% constant-currency top line growth (11% actual) is pretty solid for a company accused of not having any "organic" growth by a tightly wound short interest. Seems like a good basis to assume the short interest will continue to unwind.
Aaron was the head of IR I think. Makes a little bit more sense why there wasn't any PR for about 6 weeks there. I think the timeline lines up roughly based on some quick internet research. Always sad to hear of someone's passing.
There is a follow-up article put out in the past day or so by InsuranceandRisk about Ebix and Premium Funding in Australia that has some new info. Article is called: "BROKERS QUICK TO SNAP UP PREMIUM FUNDING’S LATEST DISRUPTIVE OFFERING."
The new info that caught my attention was that the partnership should generate at least $7 million (AUD) of incremental revenue for Ebix over the first 5 years, and that is just what is reimbursed by Premium Funding so could be a lot more.
Another point the article makes is about how the new product could save a busy broker (or a team) 52-days of man-hours per year (25,000 hours) in regained productivity through their integrated premium funding quotes.
The partnership is bringing a bunch of new brokers onto Ebix's WinBeat system, which is already dominant in Australia and already had over 500 brokers using it there, but now should see an additional 150+ brokers joining the platform. They have already had 75 new brokers sign up since the product was launched recently.
The new software has been developed over the last 18 months through an exclusive partnership with Ebix.
Sentiment: Strong Buy
Good find. Looks like some new technology developed for the Australian market in a partnership between Ebix and a company called Premium Funding.
Someone on twitter is saying that Craig-Hallum raised their PT on Ebix to $63. I don't see confirmation of the that from any news sources yet but I do see on the CH website that their latest Ebix report is dated as of today, so the info is probably accurate.
Sentiment: Strong Buy
In light of the PPL contract becoming official this week, I thought it was interesting to go back and look at Ebix's acquisition of Qatarlyst in 2013. See EBIX PR dated 4/7/2013. Here is one snippet:
"Robin added, “We are looking forward to working with all the key constituents in London, towards ensuring a market-wide use of this trading exchange through all means including the possibility of a broad based industry driven initiative like Placing Platform Limited.”
So Ebix bought a struggling, unprofitable Qatarlyst for $5.0 million in 2013 and used its technology platform to integrate in to its services and expertise in order to create a much more comprehensive and competitive offering to the marketplace and to PPL. Presumably Ebix would not have won the PPL deal without Qatarlyst, and vice versa, Qatarlyst would not have won without Ebix. This is pretty much the definition of synergy and strategic acquisitions. Ebix was able to buy something for $5 million to capture at least $75 million of revenue (and maybe approx. $40 million of pretax profits), not to mention other applications of the technology to other markets in the future.
The short sellers would have you believe that all of Ebix's acquisitions are a "roll-up" to disguise a lack of growth. A roll-up is considered putting together a bunch of similar small businesses to get some expense synergy from the management/administrative level with little revenue synergy. Basically synergy through scale. Investors don't like roll-ups because they obfuscate the numbers and are often poorly executed or just a dumb premise.
Here, with Qatarlyst, Ebix did the opposite. They bought a technology for a small amount of money and turned it into something much bigger and much more valuable, of critical strategy importance to the core business of Ebix in London, one of its most important markets.
But the shorts don't want you to know about that because it doesn't fit with their stale, misguided rhetoric.
Sentiment: Strong Buy
There may still be some disorderly neighborhood children playing near Stuart's lawn that require eviction ; )
1) Previous 5 year earnings growth is 5.87% annualized
I assume you are taking GAAP EPS for this. I'm not sure this is the best approach without adjusting for, at a minimum, the earnout contingency reductions that flow through the P&L, and a reassignment of the expensing of uncertain tax liabilities and the IRS settlement (together something on the order of $20 million from the 2013 to 2015 period back into the 2008 to 2012 period, where they belong. I'm usually not a big proponent of non-GAAP adjustments but in this case I think they are fair and reasonable in order to get an accurate portrayal of the company's operations. There are probably other non-GAAP adjustments that could be considered too, like some of the extraordinary legal costs in the past few years.
I also like to look at operating cashflows like many others here. Same adjustment applies, that $20 million was paid to the IRS in 2015 and understates the true operating results. On a pro rata basis a lot of that probably had to do with 2011 when the effective tax rate was much lower and the earnings much higher.
More importantly, forward looking, 2016 should by all expectations show significant growth from 2015 on just about all measures. So, yeah, there's that juicy little deal called PPL that has firmly entrenched EBIX into the largest reinsurance market in the world.
RR used to be accused of being too promotional years ago in the time leading up to the first Copperfield and big class action. I certainly understand the value of PR and shareholder engagement, but it's important for any company to find the sweet spot between investor transparency and self-promotion.
It also costs money to put out a press release through a newswire service. (A few hundred dollars? More?) I'm sure there are many shareholders that prefer and respect RR's miserly attitude. Beyond the cost, I am happy not to have management need to spend time crafting, drafting and reviewing incidental PRs when RR could spent his time better elsewhere.
As a broader strategy, I would rather see RR get on the road and present at some investor conferences to interface directly with some new institutional shareholders and the analyst community. To me that is time better spent than on weekly PRs.
The ADAM release is no longer available on the EBIX site so maybe they are fixing the typo. From looking at the cache of the article, looks like pretty minor news. Personally I don't need to see an official corporate PR for a small award for a single sub-product (Health Capsules) which is a small part of another product (SmartEngage) which is a small part of one segment (ADAM). It's just not material enough.
Another update blurb today from Insurance Insider:
"The London Market Group has announced that its Placing Platform Limited (PPL) system has begun market acceptance testing.
The initial test of the technology will see around 100 market practitioners put the platform that will allow brokers and underwriters to transact business electronically through its paces.
The group said the launch of the initial trial phase followed the successful completion of internal testing, which began on 22 February.
David Ledger, chairman of the PPL board said: "We committed to the..."
Interesting to see, as always. It's reported based on settlement date of 2/29, so end of trading on 2/24.
Jay, I think for most of the shorts it was not a matter of liking it at $30 but liking it as a short at $15. Some of these guys are massively underwater (possibly -200% or more), at what point do they crack?
Of course no one knows what kind of gross turnover there has been within the net short position, but if I recall I think a lot of the net position rebuilt from mid-2013 to early 2014 in the wake of the Goldman deal busting, and with Gotham in hot pursuit. All these guys shorting between $10-$17 per share or a little higher were banking on Gotham's gospel that a significant regulatory hammer would crush the company, a $100m+ IRS liability cascading into a multi-jurisdictional tax investigation, organic shrinkage and Robin's head on platter. They got none of it and have been stuck in the trade in the trade or covered for a loss since.
The shorts definitely have stamina here, but at what point do they look at the short interest falling from 16m shares in 2014 to 9m shares today and realize that everyone else is flocking to the exits?
While I'm sure there are some newer shorts who recently got in at 30 in the past year and are liking it more at 40, my opinion is that they are a pretty small minority of the currently outstanding short interest.