Quote Originally Posted by DarkHorse View Post
I'll bite - can you share what it was about ACF that affected your slumber?
Well I had a capital requirement that the size of my ACF nicely fit, so a superficial thought.

I've really enjoyed my shareholding in ACF. Bought roughly at 43-44c initially, enjoyed a number of dividends which had DRP.

I didn't take an overly scientific approach...I could have sold other shares, but the way I view it is at this spot price would I be more likely to invest in it right now...some of my more cyclical shares are impacted by cyclical forces and at the bottom half of the cycle - maybe not at the exact bottom but at least below the average of the cycle. So for those affected stocks I'm less likely to want to sell them. ACF has ridden a wave up, and I struggle pinpoint how much of that is due to its very capable management team and execution of their growth plans vs an underlying boon in construction. I have no doubt much of the growth is because its a great management team and they are sensibly executing. But with scaffolding, much depends on the utilisation rate of the kit. If utilisation goes from low to high it dramatically expands earnings and % margins. We've seen that at ACF - earnings, % margins, returns on funds capital employed, have really expanded these last 2 years.

But I've always been mindful the inverse could happen if there was a lull in activity. The sort of construction projects ACF participates in have been at high levels but I struggle with how to sort of determine how maintainable is that. IE when I purchased, was underlying activity at cyclical lows and its just rebounded to average levels, or are current levels now well above the average of the cycle? I don't know the answer to that and is one thing that always weighed over my head.

Finally I started reading about the number of mines that are being shut with gusto in Australia it gave me some pause for thought. I know mining is more around the edges type stuff for Acrow but they do participate in it.

I don't have any particular concerns around ACF or where it's trading or heading. Indeed I think its a marvelous company and has some legs. I just think my decision to sell was a confluence of the above factors.