Morgans’ love affair with Corporate Travel Management continues

MORGANS continues to have the blow torch applied for its bullish coverage of Corporate Travel Management, the subject of a brutal short-selling attack by VGI Partners last year.

Corporate Travel Management managing director Jamie Pherous. Picture Annette Dew

SKIN IN THE GAME

MORGANS continues to have the blow torch applied for its bullish coverage of Corporate Travel Management (CTM), the subject of a brutal short-selling attack by VGI Partners last year. Morgans remains upbeat about CTM despite VGI raising a number of “red flags” about its book keeping and other matters. After a recent investor conference with CTM chief executive Jamie Pherous, analyst Belinda Moore retained her “add” recommendation on the stock and noted “it’s highly personalised service and compelling technology.” Moore certainly has skin in the game in relation to CTM, owning 31,884 Corporate Travel shares in her own name and another 681 in her superannuation account with Equity Trustees. That is a nest egg worth almost $800,000. While Morgans does allow analysts to own stock in companies they cover as long as it is disclosed, the sheer size of Moore’s stake has raised eye-brows. City Beat is not suggesting any wrong doing by Moore and Morgans points out there are a number of instances where she has had the stock on hold rather than a buy recommendation.

We hear the majority of the shares were purchased at CTM’s IPO issue price of $1 and that she has participated in subsequent rights issues in the years since. But around 80 per cent of her stock was purchased more than five years ago. With CTM closing on Monday at $24.49, she has certainly done better than those who bought in at its peak of $33.45 last September.

WATCH AND WAIT

IT’S taken more than three years, but our good friends at Morgans appear to be back in the corporate watchdog’s good books.

Readers will recall that way back in November 2015, ASIC imposed licence conditions on the local brokerage house after concerns were raised about serious breaches relating to its supervision and monitoring of representatives.

ASIC was concerned about Morgan’s internal controls for the handling of confidential market-sensitive information such as restrictions on staff trading, information barriers and managing conflicts of interest. Last Friday, those conditions were finally lifted after ASIC accepted an independent compliance consultant’s report that Morgans had implemented adequate new measures. Morgans executive chairman Brian Sheahan said ASIC’s decision reflected “the significant effort we have taken to ensure we continue to meet the increasingly high standards expected by clients and regulators.” Fair enough.

FRUIT AND VEGE

WITH all the noise around Corporate Travel Management at present, it would be no surprise if your average Morgans broker wanted to hide under the desk and take a break from talking to clients for a while. No such luck for the advisers who put around 200 clients into the public offer component of a $38.4 million capital raising to fund warehouse expansion at Brisbane Markets last year. They will soon be having to do the ring around to sweet talk clients to write out a cheque for the second instalment – due 15 April 2009 – on shares that were issued at $3.20 but with only half paid upfront in September. With Brisbane Markets unlisted and trading by appointment at the best of times, it wouldn’t be a stock you’d want to be exiting in a hurry if financial markets take a turn for the worse.

AT THE TROUGH

IT must be tough in the bean counting trade these days. Your diarist was kindy invited by our friends at the Brisbane Convention and Exhibition Centre to the premiere of the Queensland Ballet’s production of Dangerous Liaisons on Friday night. The evening began with a wonderful selection of canapes in the Grey St foyer of the centre but half way through the munchies, a bunch of uninvited suits leaving after a big finance industry conference rocked up and starting filling their plates. Like a flock of hungry seagulls around a couple of discarded chips, the group had to be shooed after their antics were spotted. An accounting industry veteran explained they may have “been stock take sampling as part of the audit process.”