Regular readers of my blog will remember that some time ago
I sold the remainder of my holding in Indigovision to bank an overall profit of
750%. You can read the previous posts which detailed my reasoning, but in
summary their trading statements indicated that growth and margins were faltering,
and I predicted that the share price would fall back below £2 which it subsequently
did.
However, I also wrote that I would keep the company on my
monitor and that it was vulnerable to an opportunistic bid approach.
Late afternoon on Friday 25 Nov 2011, Indigovision suddenly released
one of the most bullish trading statements I’d ever seen from this company.
Knowing the company well, and the implications that an improvement in margins,
and a reduction in operating costs would have on the bottom line, I bought shares
for around £2.70.
I had no idea about the drama that was to subsequently unfold,
but the opportunistic bid did appear from the most unlikely source i.e. the now
ousted Chief Executive, and although the final bid (rumoured to be around £4)
was rejected, the company appears to have regained momentum.
Final results released on Thursday (27/9/12) are encouraging
with a resumption of double digit growth in the second half which has carried
over into the current trading year. Most pleasingly they have hiked the
dividend by 33% year on year, and proposed a special dividend of 70p per share.
Fantastic. I always interpret these moves as a positive sign. They don’t need
the cash to fuel growth, and investors get the opportunity to reinvest or spend
their money however they like.
For those investors who know this company well, the
implications for operating profits from double digit top line growth are
exciting, and I’ll be holding tightly for the foreseeable future.
If growth doesn’t retain its current momentum then don’t be
surprised to see Vellacott return with another offer. Overall, the balance of
probabilities is favourable for further share price rises, and meanwhile I’ll
gratefully accept the dividend and special dividend payments.
Finally, over the past year or so, I have been accumulating
shares in other small/micro-cap companies whilst there is still a sale on. More to follow
in later blogs.
