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Risky investment
istock_brianajackson_aw3

“A wonderful investment opportunity”

by
5th Feb 2018
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I don’t know about you, but whenever I hear the words in the title I go cold. However, on occasion, I have been known to take a punt and, just at the moment, I need some serious advice from readers.

In the summer of 2016, some silver-tongued salesmen persuaded me that I should invest a significant amount in the shares of a sure-fire winner. This was backed by the government and the promises about exponential future growth were too good to be true.

Along with unbelievable numbers of other investors, I plumped for this never-to-be-repeated chance to get rich beyond my wildest dreams, but I’m now beginning to get cold feet.

The original plan was to take a very mature business, effectively close down all of its existing operations, relaunch the brand selling the same products to the existing market on different terms but also expand across the globe. According to the sales team, not only would we get better deals from our current customers but reap riches from the Chinese, the sub-continentals and best of all, the Americans.

In this way, a sleepy little local operation would suddenly explode into something to compete with Amazon, Google and even some (admittedly second-rate) countries.

I want to be honest with you and admit that having bet not just my shirt but my whole wardrobe on this investment, I’m now getting a bit jumpy.

The original plan was to ditch the old business and launch the new one in March 2019. Already, the directors have pushed this back a couple of years without giving any very solid explanations other than uncertainty about the viability of the new business if they stick to the original timetable.

In addition, a boardroom battle is going on or, to be more exact, several of them. Originally, the board comprised two factions but this didn’t seem to matter, since the weaker one backed down and agreed to support the project put forward by its fellows.

However, the strong faction is now also involved in outright internecine warfare, with the threat that the CEO will be ditched at some point in the very near future. To make matters worse, she seems to spend a lot of time with her eye off the ball, getting involved in relatively minor domestic issues and heading off around the world instead of addressing the only problem that really matters head-on.

It doesn’t help that most of the senior board members seem to have very little confidence in the lady’s ability to run the company, while she is constantly tinkering with the composition of the hands-on management team.

All of this was a headache. However, the board recently asked for projections about profitability and turnover after the major upheaval. Not only has the director charged with managing the change refused to provide these figures but he has suggested very strongly that the numbers generated by his own team are only provisional, while a faction believes that the bean counters are trying to sabotage the company. Bearing in mind the significance of the change and its relative imminence, allowing for the delay that has already been announced, this all seems unbelievable.

I can’t wait to see what the accountants have to say in connection with next year’s audit. I have severe doubts about whether they can seriously claim that this business is any more of a viable going concern than Carillion.

In the meantime, if any readers have suggestions about whether I should trust the powers that be and buy more shares, sell the lot or merely stick my head in the sand, they will be gratefully received.

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