Tracking Aspen’s troubles
Yes, there were signs of a dramatic fall in share price — but there is still hope, writes Nigel Dunn
In the past 12 months there’s been a fall from grace of several investment favourites, none more spectacular than Steinhoff International. It’s difficult to focus on Steinhoff as credible numbers are still outstanding. Suffice to say, the root cause of Steinhoff’s problem lay in habitually overpaying for assets — many of them of questionable quality. It may be more practical to focus on pharmaceutical giant Aspen, where the price has almost halved in little more than a month. Were there warning signs? If so, what were they, and why did investors miss them? Legendary US investor Warren Buffett has noted: "Investment is most intelligent when it is most businesslike." This quote is interesting in the context of developments at Aspen, as many investors view the stock market as an end in itself. They want to make money quickly — which means price is more important than the economics of owning the business you are invested in. By placing price ahead of economics, investors have not only e...
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