Since the start of today’s trading session, Investors have been bullish on Corporate Travel Management. The upside movement was such that the share price of corporate travel specialist, CTD, recorded a leap of 3.901% to close at $21.840 on 12 November 2018.
The positive market sentiments seem to be driven by the recent insiders buying under which Directors of CTM purchased 127,000 shares of the company, putting forward their confidence in the operations and financial model of Corporate Travel.
As per the Director’s interest notices released by the company, the Corporate Travel Management’s CEO Jamie Pherous and independent non-executive director Robert J Natter have raised their shareholding through on-market trade.
CEO Jamie Pherous has bought 115,000 shares for $2,430,927.50, that takes his total holding to 20,600,000 as on 9 November 2018. And a week back to this change, Director Robert J Natter acquired 12,000 more shares of CTD in addition to 107,200 shares already held. Mr. Natter made this on-market purchase at $269,883.92.
This insiders’ purchase has demolished the speculation made by the hedge fund VGI partners. The recently released VGI’s reports have recommended investors to take short position on the shares of Corporate Travel Management as the fund speculates a substantial decline in CTM’s share price.
But these reports have been firmly refuted by the company on constructive grounds supported by an independent assessment undertaken by the professional services company Ernst & Young. After extensive review and analysis of VGI reports, the specialist auditor and advisor in travel sector Ernst & Young confirmed that the reports published by VGI are superficial. The company stated that claims made by VGI are not true, rather at the core of VGI’s conclusions is a fundamental misunderstanding of the corporate travel sector and the CTM business model.
In respect to certain major issues raised by VGI, Ernst & Young has provided the preliminary observation broadly addressing the three main issues of impairment testing of CTM’s North American business, CTM’s cash and interest income, and Corporate travel sector accounting disclosures for cash Flow and working capital. Further, the company explained that its business model is to grow revenue through a combination of organic growth by winning and retaining customers, acquisitions to expand its global footprint, and investments in technology development to enhance customer service and increase operating efficiency and margins.
Today, the stock of Corporate Travel Management Limited (ASX: CTD) last traded at $21.840 while its PE multiple was 29.030 x and market capitalization was $2.28 billion as on 12 November 2018. But, in the past one year CTD has seen a performance change of -7.24%.
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