Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

BROKER NETWORK (AIM:BNH)– a classic case of where boring is best and where it’s best to ignore short term price dips that arise for no apparent reason

Broker Network, the general insurance brokers and insurance network provider and a company I visited in Harrogate back on Wednesday 2nd March 2005 (share price 114p, market cap c£16m) has received a takeover approach this week .

Following my initial review the shares fell as low as 85p in October 2005 causing me to question the wisdom of that early enthusiasm. However, the fundamental story remained very strong, the valuation looked fair (it hasn’t looked quite so attractive of late!) and management delivered the goods time after time.

It seems to present an excellent example of how it is best to ignore short term share price falls that have arisen for no apparent fundamental reason, other than short term traders running for cover, and concentrate on the key fundamentals. Management, notably Chief Exec Grant Ellis, have done a great job building the network and mopping up some quality general insurance brokers along the way. It’s also a business in the sort of sector (insurance broking isn’t something to get the pulse racing!) that most high growth investors would avoid like the plague – 400% in two and a half years doesn’t sound too bad!

Following the news the shares have risen a further 8% to 512p with some now talking it up as high as 575p. I was beginning to get concerned that the price was starting to look a bit rich but clearly others are thinking differently.

Broker Network has been a popular stock with many of the IHT planning portfolios so keep on eye out for some very happy mature citizens this weekend!


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