torsdag 26 februari 2015

Vardia Insurance Cooking The Books?

Vardia Insurance were expected to announce their Q4 today, but instead they gave the market the message that the financials for Q4 will be announced tomorrow. On the top of this they also halted the trading in the stock until the release of the results.

Vardia's comment today were this:
The postponement is due to new information received from the Company's auditor regarding accounting principles. Vardia has after consultation with Oslo Børs decided to suspend the trading of the stock until the results are published.

In addition to the comment  Aleksander Nordahl IR-responsible at Vardia stated during the day that this were the case, with the vague explanation:
We have received new information from the accountants and has in discussions with Oslo stock exchange suspended the trading in the stock.

So what could all this mean? It's at least not positive for The reputation thats for sure. Experience say me that is use to be bad when stocks getting halted due to accounting troubles, but who knows (still hasn't forgot the cold shower from Tesco). 
I have actually been speculating the whole day on what a valid reason could be for the postponement and the halted trading and came up with these four options which I see are the most likely ones:


  • Formalia. Could be some sort of error in the way of presenting the numbers which led to no signature from the accounting firm which validates it. Things that speaks for this is that the message came as a lightning from the sky and that they only postponed it one day. I am still concluding that this is the dream scenario and consider this the most unlikely one.

  • Tax issues. Speaking for it; have been on the wall before. Still doesn't see this scenario is very likely either, one day postponing is way to less for a tax problem. Worst case scenario there will be a new issue of the stock.

  • Assets. The assets are not what they should be. Could be due to different things, most likely some issue regarding the acquisitions Vardia made in the past. Worst case scenario huge new issue which fails and bankruptcy. 
  • Income/Costs/Reserves. Miscalculus in some way of the cost of goods sold, revenues or that the reservations for the Insurance business has been to low. Worst case scenario here will be a new issue of the stock. This option is the most likely from my point of view.

On the other hand we still have the sales (which should be correct) and the GWP which is backing up the case.
Whatever happens tomorrow the stock will most likely open down and that could open opportunities for more purchases. Tomorrow will be an interesting day!

Remember that this is only speculations and hopefully transparent facts will be announced tomorrow.

Best regards,
Eighth Wonder Investing



Full disclosure: I am heavily invested in Vardia Insurance Group with 3200 shares.




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