Macquarie Group and the profit downgrade
After having a closer look to this company’s management style and to its financial data, I understand that these shares are coming at a very reasonable price.
The ‘techs’ shows that the price have braked a support from its $35.5 in July earlier this year. In fact, there is still some ’room’ for another drop, however I am considering today’s closing price ($34.04) as a long-term buy (ps.: please note that this is not a recommendation to buy the security).
This is the result of a sequel of stumbles that Macquarie Group had and foremost for its profit downgrade publication. It was a sharp downgrade and caused a significant distress as speculators and other ‘players’ started to short-sell the stock, leading to a much further decline.
Analysts and shareholders are not used to see concerns as such in regards to Macquarie Group, as they have been publishing astonishing profits while many others were whining at the apex of the ‘credit crisis’.
Indeed they are a solid group and do represent a fair slice of the financial companies in the Australian market. They are a very diversified institution with interest in satellites communication, infrastructure, airports and aircrafts leasing businesses, investment banking, etc.
Macquarie Group’s share price is currently on a 52-week-low. Being optimistic, I would rather buy at a ‘discount’ then when the stock is performing better than the average. The stock reached $80 in November 2007 and $57.40 in October 2009.
Despite all the price action I think this is a similar case to QBE Insurance. They have a proven track of success but the media and the shareholders have had a high expectation in the short-term when this company has a potential for the long-term time frame. It is quality and diversification.
Macquarie Group FPO is certainly not for those who are ‘timing the market’. This stock is for those who want returns with ’time in the market’.
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