I previously wrote about Challenger Ltd., an Australian annuities / lifeco that Apollo bought ~20% of last year. At that point in time the shares were trading for $5.72AUD with Apollo’s blended purchase price coming in at ~$6.00AUD.
It has a decently managed franchise in place with a credible plan to boost return on equity to the ~mid-teens level and pays out a nice share of earnings to shareholders. But as I wrote before, it’s more interesting when the company’s valuation is underpinned by a potential Apollo bid at or slightly above book value ($5.70AUD at prior update).
Yesterday Challenger reported a Q3-22 (Aussie fiscal year) update (they only do 2 real updates annually outside the US), and the stock shot up ~10% before settling down a bit lower. The major update was guidance that indicated profit will land at the high end of its prior guidance range.
While it’s price is out of range for my tastes at present, it’s always good hygiene to keep companies on a list that one may buy if the opportunity presents itself, and Challenger is on that list to dig deeper on if pricing changes.
Disclosure: We do not own shares in CGF.AX, this is not investment advice. Do your own work.