Investing lessons from a fallen angel

Recently I asked our junior analyst Matthew Wu to investigate global traffic camera operator Redflex.In February 2011 Macquarie Group and Carlyle Group made a takeover offer for Redflex at $2.70 per share. The reasons they did so are obvious: the company has limited competition; a high proportion of recurring revenue; strong cash generation; and red light infringers aren’t likely to change their driving behaviour until we’re all driving DeLorean time machines.But they’ll be thanking their lucky stars that shareholders knocked them back, after the company revealed that an arrangement – whereby payments of up to $2m may have been made to...

Recently I asked our junior analyst Matthew Wu to investigate global traffic camera operator Redflex.

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