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Thursday, 7 Feb 2019
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BUY HOLD SELL - GEM

G8 is a polarising stock… some love it, some hate it. Truth be told your writer, Chris Conway, has traditionally not been a fan of this stock. As a general rule, I do not like roll-ups. They typically lack the innovation and organic growth I like to see in a business. Furthermore, much of the scale opportunities that are afforded typical roll-ups aren’t afforded to GEM. Why? Because of government regulation which dictates how many staff members are required to look after a specific amount of children. Occupancy rates have also been soft in recent times and GEM has had to pay ever-higher multiples in order to continue acquiring childcare centres and grow the business.

All that being said, things change and I will now approach this stock with an open mind and objectively

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