PI and so NAH is here to stay whatever the dent which might be caused by changes to curtail minor injury claim litigation. The renewed TV advertising campaign is part of the plan, I wonder how it is going.
Surely scaredycat investor anticipation of any bad news has been way overdone, with p/e under 5 and yield from this free cash flowing business approaching 15%, I have added another slice at 130p.
I'm tempted to add a few at these levels. As you say PI won't suddenly go away, but the market is pricing in the worry that management may not be able to profit under the new regulations. Speaking of which, doesn't this all happen in October 2018 anyway? So revenues this year and most of next could be good. That, combined with the board usually paying out a high and established (is it one third fraction??) of profits as dividend, this year could well see a whacking dividend. Maybe??
Not a pretty industry to invest in, but a high-margin one. NAH looks like a bargain under 200p.
The business seems to be well managed with a sharp eye on costs and is clearly alert to risks to its performance. The market over-reacted to management's cautious view of changes which might curtail short-term cash flow, and has ignored the opportunities which litigation co-financing on fewer high value cases might bring in the longer term. Personal Injury management is here to stay, whether or not we do away with whiplash and raise the threshold for self-litigation in small claims courts.
So I have taken a small slice to start with at 145p this week.
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