This should be read in conjunction with our disclaimer.
Its not often when a chief executive steps down after 17 years that revenue growth is the highlighted feature. Unfortunately, investors care more about profits and there Charles Taylor Consulting has been much less successful. In this report we examine the performance over the last six years and find it to be rather disappointing. The core businesses of managing mutuals and loss adjusting have had slow growth, with revenues doing better than profits in both. In the meantime expansion into run-off insurance seems to have destroyed significant shareholder value through overpriced acquisitions.
We also examine the pricing conundrum – is Charles Taylor as cheap as it first seems? We think yes, but it is definitely justified and it is not clear what will change it in the near future. On the dividend we provide a more ambiguous answer. The new rate may be sustainable, but if by ‘flexibility’ the company means ‘ability to make more acquisitions’ we think shareholders may be better off with overdistributions!
For the full report click BM Research on Charles Taylor Apr 11.