Well we've reached the end of December, and still no word on Disney's intentions. The question is, will they try and pursue a further appeal against paying Celador $324m ($60m is Avesco's share).
Disney have managed to drag this out for several years, but it's difficult to see how they could possibly get this overturned now. Even if they launch a further appeal, is it likely that another court and/or panel of judges will overturn the decision of the original judge and jury and now the ninth court of appeals? It doesn't seem likely to me.
Come on Disney, it's time to pay up.
If Disney do capitulate then Avesco is a doubler in 2013. Avesco have aleady announced that results will be ahead of market expectations, which in itself would more than justify the current share price. If Disney pay up then it's worth a further £1.40ish per share to AVS shareholders. As I've mentioned many times before Avesco is a growing, profitable and cash generative company. I'd expect the share price to move above £3. We'll see.
Talking of doublers in 2013, I notice that there is a thread on the ADVFN bulletin board for suggestions of shares that may increase 100% during 2013. I could nominate Avesco of course, but instead I am going for ANGLE.
Amongst my share purchases this year, I've made two very speculative additions to my portfolio. One I've already mentioned in a previous blog - Avanti Communications and now Angle.
Angle was a red hot stock earlier this year. Great excitement surrounded its Parsortix product when the company released several news stories to the market about its success in capturing circulating tumour cells (CTCs) in various forms of spiked and patient blood. The share price shot up above 90p at one stage as investors speculated about the possible returns from a product that could be launched to a research market worth £250m per annum and the later launch of a clinical product to a market estimated to be worth £6 billion per annum.
Angle also had two other products of note - Geometrics (Computer graphics) and Novocellus (IVF) both of which had/have the potential to generate significant revenues and profits.
So why has the share price capitulated to its current 27p?
Well one reason appears to be that Novocellus has effectively been shelved for the forseeable future, and secondly (possibly) that a Parsortix device was scheduled to be delivered to the research market a month or so earlier than it has been.
Stocks, such as Angle, are in my experience highly volatile and the share price is highly sensitive (more than most) to perceived good and bad news. Hardly surprising since this type of stock is impossible to value on fundamentals. It has a reasonable balance sheet, but burns cash and won't make profits for some time yet.
So why I have bought stock. Quite frankly I've taken a punt.
My only justification is that with a Parsortix device now with their research partners, if successful then it's potential is massive. Without being too dismissive, my impression was that Geometrics and Novocellus were very much secondary to their investment in Parsortix, and the original rise in the share price all centred around this product.
Clearly Angle isn't for widows and orphans since if it all goes pear-shaped with the Parsortix device then (imo) Geometrics by itself won't prop up the share price. However, success with Parsortix will see a multi-bagger.
One other caveat is that Angle will undoubtedly have to raise more cash at some point (unless they make a Geometrics trade sale which they mentioned in the final results - although I have no idea how much that would raise?), but hopefully any placing will be above the current share price of 27p.
Anyway, Angle is my speculative doubler for 2013 and if the Parsortix device does what they hope it can do, it will be a feel good factor from so many perspectives.
A very belated Merry Christmas and a Happy New Year.
Saturday 29 December 2012
Saturday 8 December 2012
Appeal falls on deaf ears....
Great news from Avesco this week. Firstly they announced that results would come in ahead of market expectations for the year ending September 2012, and secondly the ninth court of appeals rejected Disney's appeal against Celador and upheld the verdict and payout. This amounts to over £1.40 per share to Avesco shareholders.
Disney do have the right to a further appeal, but the payout now looks almost certain in my view. Where would Disney go from here, and what would they hope to achieve? They lost the jury trial and were originally denied an appeal by the presiding judge. They took their case to the ninth court who have acted quickly in rejecting Disney's appeal. Both appeals were rejected unequivocally. Interestingly the ninth court of appeals indicated that they would reach their decision within 12 months but came back within 2 months. That clearly suggests the decision was relatively easy and in effect can't leave Disney with much hope, if any.
Avesco's shares shot up on the news to above £2 but have since pulled back a little. I expect them to go far higher. Broker forecasts were for EPS in the mid teens, and Avesco have beaten market expectations. Let's assume EPS of around 17p. That puts the shares on a modest rating of around 11 times earnings for a rapidly growing company (albeit on a two year cycle). Fairly modest in itself. Strip out the Disney payment and the P/E ratio falls to about 3. Net tangible asset value is £1.52. In my opinion the shares are worth north of £3 at this stage. The long term outlook is very favourable.
On a separate note, I am also a holder of Interior Services Group. They released an encouraging trading statement on Friday, despite the challenging economic conditions. They pay a very good dividend, and again I view the shares as a long term hold for income and capital gains.
However, I'll leave you with Avesco and one of the many reasons why I'm such a fan of this company. Look at this 3-D projection show by Creative Technology US:-
http://www.youtube.com/watch?v=i7Eqx7oQ0rA
Fantastic.
Disney do have the right to a further appeal, but the payout now looks almost certain in my view. Where would Disney go from here, and what would they hope to achieve? They lost the jury trial and were originally denied an appeal by the presiding judge. They took their case to the ninth court who have acted quickly in rejecting Disney's appeal. Both appeals were rejected unequivocally. Interestingly the ninth court of appeals indicated that they would reach their decision within 12 months but came back within 2 months. That clearly suggests the decision was relatively easy and in effect can't leave Disney with much hope, if any.
Avesco's shares shot up on the news to above £2 but have since pulled back a little. I expect them to go far higher. Broker forecasts were for EPS in the mid teens, and Avesco have beaten market expectations. Let's assume EPS of around 17p. That puts the shares on a modest rating of around 11 times earnings for a rapidly growing company (albeit on a two year cycle). Fairly modest in itself. Strip out the Disney payment and the P/E ratio falls to about 3. Net tangible asset value is £1.52. In my opinion the shares are worth north of £3 at this stage. The long term outlook is very favourable.
On a separate note, I am also a holder of Interior Services Group. They released an encouraging trading statement on Friday, despite the challenging economic conditions. They pay a very good dividend, and again I view the shares as a long term hold for income and capital gains.
However, I'll leave you with Avesco and one of the many reasons why I'm such a fan of this company. Look at this 3-D projection show by Creative Technology US:-
http://www.youtube.com/watch?v=i7Eqx7oQ0rA
Fantastic.
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