ThinkSmart pressured by fund selldown

ThinkSmart’s (TSM) share price is under pressure as an institutional shareholder is selling its holdings in the company to raise capital for an unrelated transaction.

Industry sources tell Eureka Report than Alceon is liquidating its stake after doubling its money in the consumer financing solutions company even as ThinkSmart today announced that it will start paying dividends in 2014 – a year ahead of when most were expecting the company to.

Alceon’s sell down of its holdings forced the stock to slump to a four-month low today when it shed 2.5 cents to 31 cents, but the investment company is about done with the selling. Alceon is founded by former Babcock & Brown executive Trevor Loewensohn and counts Phil Green as a member of its core team.  

The exit of Alceon comes at a time when ThinkSmart's turnaround strategy is paying off with the company reaffirming its $2 million net profit guidance for the year ending December 2013 and predicting an even better 2015.

The guidance is in line with consensus expectations and represents a share rebound from 2012's loss of $1.4 million. Management is also confident in its future and is promising to declare a dividend in the new financial year, which is one year ahead of expectations.

The last time ThinkSmart paid a dividend was in early 2011 before it had to take a big earnings hit from a change in the way it funds its consumer financing products.

ThinkSmart is also installing a new chief executive with its current head, Ned Montarello, stepping aside to become the chairman for the group. The new CEO appointment, Keith Jones, shows that ThinkSmart believes its future is more heavily tied in its UK expansion.

While ThinkSmart offers interest free financing of electronics at outlets like JB Hi-Fi in Australia, it also has similar partnerships with major UK retailers, such as Dixons.

Jones has 30 years of retail experience in Europe and has held senior positions at Dixons, Kingfisher and PC World Stores.

We have a favourable view on ThinkSmart, even though the stock has fallen 11.3% since we wrote about it. ThinkSmart is part of the Uncapped 100.