TRADE ALERT: Bioquell update
17th October 2019 |
Action to take: sell Bioquell
Ecolab acquired Bioquell earlier this year. The company’s all-cash offer was accepted by the board so shareholders were cashed out on the completion of the deal. It has now been moved to a closed position and the profit on the initial investment will be recorded as 33.41% profit.
I apologise for the tardiness of this advice. I have been in two minds about initiating a position in Ecolab. My procrastination is a failure and I should have made the decision earlier about whether to transfer the proceeds from the Bioquell investment in Ecolab.
I initially highlighted Ecolab as a high growth, internationally oriented company that dominates it niche when I wrote about companies I regard as global corporate autonomies in my book, Crowd Money, back in 2012. Since then the share has multiplied.
My initial temptation was to just buy it, but the share price was rallying strongly and I did not feel it was the right time. Over the last few weeks it has pulled back but the valuation is looking historically expensive. It has not had a P/E this high since 1999 and that gives me some pause.
I want any share I recommend to at least have the potential to multiply in value. I now conclude this is not the time for Ecolab to be able to fulfil that kind of promise. Therefore, I am not recommending you buy the share.
There is the additional challenge that Ecolab is a behemoth and Bioquell represents a negligible part of its business. Ecolab excels at doing the jobs most people would rather not, such as waste management, cleaning up messes and purifying dirty water. It’s definitely a growth business but it is just too expensive to recommend today.
All the best,
Eoin Treacy
Investment Director, Frontier Tech Investor
