Truly: not since AMP sold off its insurance arm have we seen an investor backlash as savage as this one. And iSelect’s public critics own a fair bit more of its register!When the deal was announced a month ago, K Capital analysttore strips off management in the earnings call, noting that after years of disappointment iSelect looked to finally be turning a corner.
“Worst of all, ISU is actually giving away scrip to pay for the deal, further diluting any remaining tangible value that today shareholders own.” A 15 per cent daily fall in the share price, Kingston continued, “pretty much tells you all you need to know”. Subsequent reaction has been no more generous. Two weeks later, 6.6 per cent holder Forager Funds Management told unitholders in its Australian shares fund that the iSelect sell-off was “perfectly understandable”, with the $26.6 million investment going on a four-year-old business with only $5 million a year in revenue.“The price being paid is alarmingly high. The rationale – that it is needed because iSelect’s own technology is not up to scratch – is equally alarming.
IHA, for what it’s worth, is also the owner of iSelect competitor Compare The Market, and had its foray into iSelect investigated by the competition regulator last year . When IHA started buying in May 2018, iSelect was selling at over 50¢. At today’s 20¢, it’s a fair way underwater. And with iSelect’s share price hitting a record low last week, so is everyone else.After eight years on the board, he made his third personal investment in the company this month, putting down $44,539.