Aeon Investment Management is not invested in Steinhoff International and has no investments of Steinhoff in the Active Equity Funds, over its 10-year history. The counter has been an internal investment committee debate many times. There were a few reasons for not having comfort in the stock.
Weak cash flow conversion. Unexplained continuous low tax rate and the sustainable low tax rate. Uncertainty in share dilution due to the use of convertible bonds and a number of share issues for acquisitions. Lack of transparency in organic growth metrics (continuous mergers and acquisitions). Lack of transparency by management by not allowing public questions at investor presentations and general lack of respect towards the investment community. Sporadic negative legal challenges news events by an affiliated German individual.
Governance trust was the biggest driver in not holding Steinhoff International on behalf of our clients. Aeon Investment Management continues to exclude Steinhoff International holdings in its portfolio.