[SharePad] Small-Cap Highlight Report: NCC Acquire US

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22 September 2023
By Maynard Paton

“As a substitute of shopping for again shares or elevating dividends, worthwhile corporations usually choose to blow the cash on silly acquisitions. The devoted diworsifier seeks out merchandise that’s (1) overpriced, and (2) utterly past his or her realm of understanding. This ensures that losses can be maximised.”

Market legend Peter Lynch by no means appreciated nice corporations that ‘diworsified’ into much less interesting sectors within the quest for development.

His e book One Up On Wall Street recounted what number of well-known US shares blew large cash on silly acquisitions to make sure losses have been maximised throughout the Nineteen Eighties.

Diworsification sadly stays a well-liked administration technique, and UK small-caps haven’t been immune from bold boardrooms endeavor low-quality acquisitions and making an attempt to show Mr Lynch flawed.

NCC is a first-rate instance. The IT group was as soon as dominated by a terrific subsidiary, however plenty of acquisitions created a sequence of mishaps and the shares at the moment are again to the place they have been twelve years in the past:

Let’s take a better look.

Read my full NCC article for SharePad >>

Maynard Paton