You don’t need me to tell you that these are very tough times to be an accountant.
According to a recent David Lichtenstein interview, they’re still tough times in the real estate business, but we may be close to the peak of the trough, to mix metaphors, and there are some good contrarian and deep value shrewd buying opportunities around.
Maybe the first in really are the first out, and if real estate starts to do well again, accountancy will follow suit?
Who really knows? But even some of the biggest and the best accountancy firms are really struggling to survive out there.
So are we just about at the bottom of the black accountancy hole right now when it comes to investing? And are any of the listed accountancy or related area firms good contrarian investments at this moment in time?
I would say that there are some good buying opportunities, but you have to be prepared to take a high risk-reward gamble.
For example, RSM Tenon’s share price has been absolutely trashed this year and the firm has recently warned on profits, saying it isn’t in breach of its banking covenants – which though good news on the surface level, can also intimate that such is a possibility in the future.
The warning had investors spooked and the shares – which were already on their knees – dipped further again. The same is true of Begbies Traynor. Now at 25p, Begbies stands at a healthy discount to its net asset value and in the last full year, made a pre-tax profit from continuing operations of £5.2m, yet is currently valued at around just £25m.
Begbies’ shares suffered when fellow accountancy firm Vantis went into administration earlier in the year.
It could be a case of the fittest surviving and prospering but it takes a brave investor to try and discern the wheat from the chaff. Be careful.