Two stocks I’d never buy: FRP and IPF

FRP (Fairpoint) “is a provider of consumer professional services, including debt solutions and legal services”. IPF (International Personal Finance) “are engaged in the provision of small sum, primarily home collected, short-term unsecured loans in emerging markets”.

After being burnt by CPP (CPP Group), and seen HSV (Homeserve) take a walloping, I have a simple rule: never invest in consumer semi-frauds. If I feel that a company engages in bottom-feeding activities, then there is severe danger of being caught out when you least expect it.

FRP passes the Stockopedia Winning Growth & Income screen. The screen has shown excellent returns and low volatility, so I am using it to choose candidates for my portfolio. FRP also has a StockRank of 96. I am still not buying in, though.

FRP is down 6.9% today. There does not seem to be any particular reason, other than the fact that shares in general are being caned today. On 27 November they did issue an RNS (http://is.gd/rI27uo) stating: “The Government’s outline proposals, which remain subject to consultation, seek to restrict the ability for sufferers of minor whiplash injuries to claim compensation. … the proposed changes will have no impact on the Board’s expectations of Group performance for the year to 31 December 2015 or for the year to 31 December 2016”.

As Paul Scott noted recently (http://is.gd/MQDcxl), the fact that the implementation timetable is April 2017 means that although the group won’t be affected in 2016, the statement is in itself relatively meaningless . We don’t know what or if anything will happen yet, but you never know. This is government we’re talking about, after all.

The RNS continues: “The notion of extending the small claims limit has been a topic of debate for some time and following the acquisition of Colemans LLP … the Group has an operational capability designed specifically in anticipation of such changes. As such the Group is well positioned to take advantage of these market changes.”

Well, OK, I guess. They may well be right in their abilities to take advantage of the market changes, but let’s face, as far I’m concerned they’ve just come out and admitted that they’re a bunch of dead-plankton gobblers.

Wheeliedealer wrote a bullish blog post (http://is.gd/EIvYFi) on FRP at the end of November. He’s a far better investor than me, so you should probably ignore everything I just wrote. Your co-operation in this matter would be appreciated.

In the meantime, most of my shares will probably go down.

Laters.

FRP 161p
IPF 360p
ASX 3439

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About mcturra2000

Computer programmer living in Scotland.
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