A new broom sweeps clean Verimark & Austro

Jan. 26, 2012 - PRLog -- When assessing a potential company, an investor would look at the management of the company. Great management looks into the future and anticipates what customers want and then create products that will meet those wants. They see a future that other CEOs cannot see and they position their companies accordingly, building shareholder value along the way.

Over the past two years, retail company Verimark has twice replaced their financial director. First, Mr Jeremy Thomas joined the board in October 2009 but resigned in February 2011 and Mr Siegfried Preller was appointed as the interim financial director until such time as a suitable replacement could be found. The group seems cheap at current levels trading on a historic PE ratio of 5.4 times and offers an attractive dividend yield of 8.8%. However, due to the group's volatile earnings we would only recommend the share to speculative investors at this stage.

Austro is a supplier of quality woodworking machinery, tooling and accessories. It too has seen some management changes with Mr Richard Moss resigning from the board, as well as the managing director of the Group's Wood Division in December 2010.  Mr Charles Jacobs was then appointed as an executive director to the Austro board and chief executive officer (CEO) of the Wood Division in February 2011. Austro holds definite speculative appeal trading on a 32% discount to its NTAV but due to its poor profitability and subdued short term prospects, we would only recommend it to speculative investors. The share is not very tradeable as volumes are very low. The share price is also trading below its 200-day moving average and the long-term trend remains bearish.

Over time, companies whose managers excel, create valuation gaps over their competition. That certainly justifies for investors to go the extra mile and look out for those companies that are led by top-notch management teams, particularly those that are not yet widely known and appreciated such as Austro.

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