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Deep Value Investing: Finding bargain shares with big potential by Jeroen Bos

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CHAPTER 3. SPRING GROUP

Bought at: 22p (December 2008)

Sold at: 62p (October 2009)

RECRUITMENT COMPANIES ARE often ideal deep value candidates. They invariably have strong balance sheets and are highly operationally geared; profitability tends to bounce back on higher sales and better utilisation levels. On the other hand, when entering periods of contraction their share prices tend to be very vulnerable and can quickly fall to lower levels.

This was the case with Spring Group in 2008.

COMPANY BACKGROUND

When I first came across Spring Group in 2007 it was particularly strong at recruiting IT staff in the financial services sector – especially for banks. Profitability had fluctuated over previous years and the company had grown to some extent ...

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