Slater & Gordon: Share Price Back from the Dead?

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Slater & Gordon Ltd [ASX:SGH] climbed as high as 33.9% this morning, to 15 cents per share. The stock has since receded back to 13.7 cents. The price rise added more than $10 million to SGH’s market cap.

But, even with their most recent climb, the stock is still down almost 40%.

What happened to the Slater & Gordon share price?

This morning, SGH advised that the Australian Securities and Investment Commission (ASIC) had concluded their investigation into the company. ASIC had been investigating the accuracy of SGH’s financial records and accounts.

ASIC specifically investigated SGH’s reported accounts from 1 December 2014 to 29 September 2015. The commission wanted to know if those accounts were deliberately falsified or manipulated.

But, as SGH announced today, ASIC had no reason to believe the law firm had done anything illegal.

Should you buy SGH share now?

SGH was a favourite stock among bargain buyers. When the stock continuously dropped throughout 2015, investors saying that ‘it couldn’t go any lower’ bought in. But they soon found out that the stock could, in fact, go lower. From its high of $7.85 in April 2015, the stock is down 98.21%.

Can’t it go any lower from here?

I’d encourage you to look at the company’s financials — and the competence of management — rather than focusing on how far the stock price has dropped.

Regards,

Härje Ronngard,

Junior Analyst, Money Morning

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