DPH – follow the money

I was thinking about my holding in DPH (Dechra Pharma) this morning, and by a stroke of coincidence Alan Oscroft mention it on Motley Fool as “5 Opportunities For the Week Ahead” (http://is.gd/Gp06x5). Finals are expected Tuesday. Actually, I like Alan’s writing style. He manages to express a good overview in just a few paragraphs. Brevity continues to elude me. But I digress …

Earlier this year DPH had a rights issue in order to takeover Eurovet Animal Health. I sold my right on, partly because it was in an ISA so it was difficult to get the cash in, but mostly because I suspected management hubris. I see, however, that directors participated heavily in the issue. Three directors stomped up £810k between them. I think this is a good point for next time – it’s OK to have an opinion, but you must be prepared to re-assess your decision-making in light of management action. It pays to be circumspect, of course – management could be playing games. It’s happened before. I don’t think that’s the case here, though.

DPH closed at 495.72p -1.84% yesterday. DPH currently trades on a PER of 13.7, and has traded at over 18 in the past. It has exhibited strong growth over a decade, growing earnings at a rate of about 14% pa. I’m not expecting any spanners to be thrown into the works when DPH reports, and I anticipate ongoing growth in the company. Shares have underperformed the market YTD, but I think it offers a good long-term growth opportunity.


About mcturra2000

Computer programmer living in Scotland.
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