Armor Group International: No Easy Money Coming From Iraq

by: John Bethel posted on: August 28, 2007 | about stocks: AMGPF.PK

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Like Comcast (CMCSA), ArmorGroup International (AMGPF.PK) is up since being purchased but has come down a bit from its highs.

This article from the Washington Post mentions ArmorGroup in its reporting on British security firms in Iraq. The piece does well in explaining why the Brits are good at handling security in foreign lands, and points out something I've always liked about ArmorGroup: the company is getting business from clients in "extractive" industries (and I think could be -- could be -- a play on any long term commodities boom).

The reporter's first two sentences -- "In the 1990s, there was the dot-com boom. Now, there's the Iraq bubble." -- is dated. The bubble for security firms in Iraq was in 2004. That's when ArmorGroup listed in London and the shares took off. When Iraq didn't pan out to be the easy money the anti-mercenary crowd claimed (and still claim it is) the stock crashed.

I bought ArmorGroup stock because it had a strong balance sheet, and its shares traded just under net tangible asset value. Investors sure didn't see easy money coming from Iraq then (and we shouldn't now).

Like any article on security firms in Iraq, you'll read about Tim Spicer of Aegis (a competitor of ArmorGroup). Spicer's autobiography, An Unorthodox Soldier, is mentioned. The book was written in 1999 and in some ways is dated. After all, it's written before the September 11 terrorist attacks and before Spicer launched Aegis. But in the end of the book he proves to be [IMHO] somewhat prescient about future events.