It's not often that one of your investments makes a 140% gain in a day, but that's exactly what happened to my holding in a company called Angle this week. In an earlier blog I'd described my interest in Angle as a 'punt'. To be more precise perhaps I should refer to it as a speculative investment since even after the huge rise in its share price, still over 100% despite a pullback, I have no intention of selling my holding in the near future.
What caused this sudden surge? Well it was the news that "the Company has achieved a major new breakthrough in the potential use of its Parsortix non-invasive cancer diagnostic product". Full story at the following link:- http://uk.advfn.com/news/UKREG/2013/article/55820539. As I mentioned in my previous blog at the end of December, if their Parsortix device is successful then its potential is huge.
My guess is that this news wouldn't have been released if any major issues with their research partners (currently testing the device) had cropped up, in fact one might assume quite the opposite. It is just guess work at this stage though, and of course there are still any number of banana skins that could potentially derail the current smooth progress. However, for the moment, the chances of success have certainly tipped in Angle's favour. Furthermore, if Angle do need to raise more cash from the markets, which is by no means a given, then the likelihood is that any placing will be at a price well above the levels I was buying the shares.
I'm not getting too excited at this early stage, but part of my investing style is about perceived value and a balance of probabilities. I can't claim on fundamentals that this was good value (see my previous blog - A new Angle), but this week I can't help feeling that the balance of probabilities has shifted in my favour. This is one to hold for the long term and watch developments. It might all end in tears yet, but conversely it could be a multi-bagger in the making. Time will tell.
It's also worth remembering that it's in everybody's interests for Parsortix to be a success, since it has the potential to save thousands of lives if it can guide treatments and provide early detection for various types of cancer. On that basis alone it would be a truly fantastic investment.
On other issues Avesco's Creative Technology have a swish new website:-
http://uk.advfn.com/news/UKREG/2013/article/55820539
Well worth a browse to see the diversity of projects they undertake globally.
As ever, no advice is intended or given.
P.S. By the way since Angle has already risen by 100% does that mean I've won the 2013 stocks to double competition on ADVFN. Perhaps traders would say yes (they've probably been and gone) and long termers would say no!!!!!
Sunday 20 January 2013
Sunday 13 January 2013
Avesco wins the Gold medal!!
Well, so much for my New Year resolution to post more often on my blog. Note to self, don't make resolutions that are almost impossible to keep. In truth I should have known that I don't really have sufficient time at the moment to post regularly due to other commitments. I might also point out that ad revenues from my blog, whilst welcome, are very small and hardly a great incentive to spend too much time posting when I can more usefully use the additional time on research.
Anyway, I shall endeavour to post at least once a week.
Avesco released their full year 2012 results this week, and as I predicted at the start of the year, results came in above market expectations with adjusted basic EPS at 21.7p. A gold medal performance indeed from staff and management who have clearly exploited the London Olympics to the full. In fact results would have been even more impressive if it wasn't for losses at CT Asia Pacific (around £1m) and costs associated with restructuring at Presteigne Charter.
Excellent results all round however, with revenues up 14%, operating profit 196%, trading profit 217% and EBITDA up 34%.
Markets are forward looking though, so what of 2013? Well the first quarter has been slow, but Avesco have indicated that Chinese operations are now more encouraging and that both the UK and US are showing clear signs of an upturn in business. It's highly unlikely that this year's bumper results will be repeated in 2013 due to the odd year effect, but it's probable that the underlying business will show further growth (although the first quarter will almost certainly show a loss).
Should I be looking to sell all or part of my holding in Avesco?
You must be joking.
This company is keeping its promises, and it's intentions are to continue to generate cash, reduce net debt, ensure the balance sheet remains strong and grow dividends. In the past two years Avesco have increased the dividend by 300% and 33% respectively with more increases on the way. Tangible NAV increased from £1.46 in 2011 to £1.52 this year. Margins have also been on the increase. As I have stated many times before Avesco is still cheap on any number of measures.
The share price is currently around £1.70, and is well supported by all of the above, throw in a possible £1.40 per share payout from Disney, a 29.9% shareholder in Taya Communications, a Chairman who fairly recently forked out a further £125,000 to buy shares in the group to bring his holding above 20% (most recently at prices around 160p - so not much below the current price), and their mysterious and tight-lipped reluctance to bring in a new CEO (although they would probably argue that management is sufficiently strong not to warrant hiring one in haste - umm...? over 6 months ago and counting).
This is also a company that is senstive to poor global economic conditions and yet Avesco has achieved outstanding growth in some of the most hostile conditions in the past 100 years. How will they fare when world economic growth eventually gathers speed? Very well I expect.
I can't see any reasons to part with a single share.
GCER have a 267p price target which I believe still underestimates the potential value to be unlocked here.
Anyway, as ever, interesting times ahead, and no advice intended or given.
Anyway, I shall endeavour to post at least once a week.
Avesco released their full year 2012 results this week, and as I predicted at the start of the year, results came in above market expectations with adjusted basic EPS at 21.7p. A gold medal performance indeed from staff and management who have clearly exploited the London Olympics to the full. In fact results would have been even more impressive if it wasn't for losses at CT Asia Pacific (around £1m) and costs associated with restructuring at Presteigne Charter.
Excellent results all round however, with revenues up 14%, operating profit 196%, trading profit 217% and EBITDA up 34%.
Markets are forward looking though, so what of 2013? Well the first quarter has been slow, but Avesco have indicated that Chinese operations are now more encouraging and that both the UK and US are showing clear signs of an upturn in business. It's highly unlikely that this year's bumper results will be repeated in 2013 due to the odd year effect, but it's probable that the underlying business will show further growth (although the first quarter will almost certainly show a loss).
Should I be looking to sell all or part of my holding in Avesco?
You must be joking.
This company is keeping its promises, and it's intentions are to continue to generate cash, reduce net debt, ensure the balance sheet remains strong and grow dividends. In the past two years Avesco have increased the dividend by 300% and 33% respectively with more increases on the way. Tangible NAV increased from £1.46 in 2011 to £1.52 this year. Margins have also been on the increase. As I have stated many times before Avesco is still cheap on any number of measures.
The share price is currently around £1.70, and is well supported by all of the above, throw in a possible £1.40 per share payout from Disney, a 29.9% shareholder in Taya Communications, a Chairman who fairly recently forked out a further £125,000 to buy shares in the group to bring his holding above 20% (most recently at prices around 160p - so not much below the current price), and their mysterious and tight-lipped reluctance to bring in a new CEO (although they would probably argue that management is sufficiently strong not to warrant hiring one in haste - umm...? over 6 months ago and counting).
This is also a company that is senstive to poor global economic conditions and yet Avesco has achieved outstanding growth in some of the most hostile conditions in the past 100 years. How will they fare when world economic growth eventually gathers speed? Very well I expect.
I can't see any reasons to part with a single share.
GCER have a 267p price target which I believe still underestimates the potential value to be unlocked here.
Anyway, as ever, interesting times ahead, and no advice intended or given.
Saturday 5 January 2013
Fantastic 3D, but where do I invest?
I'm a great fan of 3D movies, and have recently taken my family to see 'The Hobbit' and 'The Life of Pi' at our local cinema. I can thoroughly recommend both films.
Over the past year or two I have seen a number of newspaper articles that suggest that the 3D revolution is over hyped. I disagree. Personally, I won't go to the cinema to watch a film that isn't in 3D. I absolutely love the experience, and I'm sure I can't be the only one.
Critics have noted that some 3D movies have not attracted the expected audiences and that consumers are opting for the 2D versions. Sales of 3D TVs have been sluggish. Two simple reasons I'd suggest: cost and content. 3D movies are far more expensive than there 2D version counterparts, and 3D TVs are still expensive with content sparse. The past few years have been exceptional economic times with low consumer confidence, but world growth will eventually gather momentum and, in my opinion, so will the 3D revolution. But where to invest?
A company that has been on my radar for some considerable time is DDD group which describes itself as follows:-
"DDD transforms the visual experience by bringing 3D to the consumer. Its TriDef(TM) 3D solutions convert 2D to 3D automatically, and enable delivery to 3D TVs, PCs and mobile devices. Leading brands including Intel, Samsung, LG Electronics and Sony license these solutions. Over 20 million TriDef 3D products have been shipped by DDD's licensees worldwide. DDD's Yabazam! label delivers 3D everywhere with its online content portal and Smart TV apps."
DDD is a growing company with a terrific client list (see above) and market leading technology, it's just turned a maiden profit and has a solid balance sheet and gross margins currently running at 96%. Revenues were up 74% in the 6 months to June at $4m with EPS at 0.06c. So why haven't I bought any?
With a current market cap. of £30m it's a bit too expensive for my tastes at the moment. However, should a suitable opportunity arise then I'll be a keen buyer.
Please note I can also be found on twitter at :-
https://twitter.com/michae1mouse
My recommended reads are:-
http://astore.amazon.co.uk/httpmichae1mb-21
Friday 4 January 2013
Something on my mind
Sometimes it's easy to become preoccupied with certain events at a company, and forget about some important details that are currently unresolved.
Readers will know that I'm a great fan of Avesco, and believe the company to be undervalued on any number of measures with or without a payout from Disney.
Recently of course like most shareholders I've been eagerly anticipating the 2012 results (due in a week or two) and any news associated with the Disney case. However, something else is on my mind.
At the June interims, Ian Martin the CEO of the company stood down from the board after ten years. Nothing too surprising there perhaps, but that was 6 months ago and they haven't yet found a replacement unless they are waiting to announce the new incumbent with their final results?
I re-read the interim statement again today where Richard Murray (Chairman) states the following:-
"Ian Martin, the Chief Executive, has decided to step down from the Board and leave the Company to pursue other interests and opportunities. I have known Ian for a long time and since I asked him to come to Avesco ten years ago, we have worked closely together to build Avesco into a truly international business. With that work complete, we both knew the time was right for the Company to make a change. The parting has been amicable. I would like to thank Ian for his real contribution and leadership over the years. I know he wishes everyone at Avesco well and expects the Company to continue to go from strength to strength. The Board has asked me to dedicate more time to the business pending a decision regarding a replacement."
I am now intrigued by this line :- "...pending a decision regarding a replacement". Lots of different interpretations in those few words methinks.
I recently held shares in a company called Zetar which I have mentioned on this blog. It was recently subject to a takeover. Not long before the takeover approach Zetar announced this unexpected bit of news:-
"Our Chairman, David Williams, has announced his intention to step down from the Board at the forthcoming AGM. David played a pivotal role in the flotation of Zetar as an AIM listed company and has helped it to grow from a single GBP50m confectionery company to a confectionery and snack group with sales last year of GBP128m. The Board and, in particular, the Executives who have worked with him from Zetar's inception, would like to express their gratitude for all his guidance, support and the intuition he has demonstrated over these seven years and wish him every success for the future."
Umm........
I'm probably putting 2 and 2 together here to make 5, but make no mistake Avesco is cheap and is currently priced at less than twice this year's expected EBITDA. It's also worth remembering that Taya Communications are a 29.9% controlling shareholder and may eventually want to cash in their chips, so to speak, by selling the company on at some stage, although I have no insight into their long term intentions. Avesco attribute little intangible value to their company even though they have numerous prestigious clients. The current market cap. is little above the tangible value of their assets. As I said, cheap on any number of measures.
Clearly, the Disney case will need resolving one way or another, given the size of the possible payout, but once that's out the way....?
Anyway, just my idle thoughts which could be considerably wide of the mark.
As ever no advice is given or intended.
Good luck with your investing and if you need any good books to help, the link below takes you to my recommended reads:-
http://astore.amazon.co.uk/httpmichae1mb-21
Readers will know that I'm a great fan of Avesco, and believe the company to be undervalued on any number of measures with or without a payout from Disney.
Recently of course like most shareholders I've been eagerly anticipating the 2012 results (due in a week or two) and any news associated with the Disney case. However, something else is on my mind.
At the June interims, Ian Martin the CEO of the company stood down from the board after ten years. Nothing too surprising there perhaps, but that was 6 months ago and they haven't yet found a replacement unless they are waiting to announce the new incumbent with their final results?
I re-read the interim statement again today where Richard Murray (Chairman) states the following:-
"Ian Martin, the Chief Executive, has decided to step down from the Board and leave the Company to pursue other interests and opportunities. I have known Ian for a long time and since I asked him to come to Avesco ten years ago, we have worked closely together to build Avesco into a truly international business. With that work complete, we both knew the time was right for the Company to make a change. The parting has been amicable. I would like to thank Ian for his real contribution and leadership over the years. I know he wishes everyone at Avesco well and expects the Company to continue to go from strength to strength. The Board has asked me to dedicate more time to the business pending a decision regarding a replacement."
I am now intrigued by this line :- "...pending a decision regarding a replacement". Lots of different interpretations in those few words methinks.
I recently held shares in a company called Zetar which I have mentioned on this blog. It was recently subject to a takeover. Not long before the takeover approach Zetar announced this unexpected bit of news:-
"Our Chairman, David Williams, has announced his intention to step down from the Board at the forthcoming AGM. David played a pivotal role in the flotation of Zetar as an AIM listed company and has helped it to grow from a single GBP50m confectionery company to a confectionery and snack group with sales last year of GBP128m. The Board and, in particular, the Executives who have worked with him from Zetar's inception, would like to express their gratitude for all his guidance, support and the intuition he has demonstrated over these seven years and wish him every success for the future."
Umm........
I'm probably putting 2 and 2 together here to make 5, but make no mistake Avesco is cheap and is currently priced at less than twice this year's expected EBITDA. It's also worth remembering that Taya Communications are a 29.9% controlling shareholder and may eventually want to cash in their chips, so to speak, by selling the company on at some stage, although I have no insight into their long term intentions. Avesco attribute little intangible value to their company even though they have numerous prestigious clients. The current market cap. is little above the tangible value of their assets. As I said, cheap on any number of measures.
Clearly, the Disney case will need resolving one way or another, given the size of the possible payout, but once that's out the way....?
Anyway, just my idle thoughts which could be considerably wide of the mark.
As ever no advice is given or intended.
Good luck with your investing and if you need any good books to help, the link below takes you to my recommended reads:-
http://astore.amazon.co.uk/httpmichae1mb-21
Digital Barriers
Just for future reference, my twitter page is https://twitter.com/michae1mouse which I use to notify readers when my blog has been updated.
Just a few news stories released today. The company that I 've just a had quick look at is Digital Barriers which describes itself as a specialist provider of advanced surveillance technologies to the international homeland and defence markets. The news story that grabbed my attention was a RNSNON that detailed three new contract wins with a total value of £1.05m.
After a cursory glance, Digital Barriers looks an interesting potential growth company and the share price has been steadily moving upwards from a low in November this year.
Technical analysts may identify the up trend as a possible trading opportunity? The share price has advanced a further 3.9% today.
Reading further down the news stories, I noticed that six Directors had recently purchased £234,479 worth of shares in the company at £1.45. Further inspection reveals that this was their participation in a recent placing to raise £10m "to finance the acquisition of a fourth core technology".
All good so far. However, this led me to have a quick glance at the financials. The current market cap. is £70.5m and at the interim stage, whilst revenue has grown by an impressive 68%, the company made an adjusted loss of £5m. Whilst they still had £7m+ cash on the balance sheet (pre-placing), cash burn for the six months was a whopping £8m.
Some many fancy the potential growth story here and wish to research further, but for me it would take a huge leap of faith and it certainly won't be on my monitor at this stage in its development.
Good luck with your investing and if you need any good books to help, the link below takes you to my recommended reads:-
http://astore.amazon.co.uk/httpmichae1mb-21
Just a few news stories released today. The company that I 've just a had quick look at is Digital Barriers which describes itself as a specialist provider of advanced surveillance technologies to the international homeland and defence markets. The news story that grabbed my attention was a RNSNON that detailed three new contract wins with a total value of £1.05m.
After a cursory glance, Digital Barriers looks an interesting potential growth company and the share price has been steadily moving upwards from a low in November this year.
Technical analysts may identify the up trend as a possible trading opportunity? The share price has advanced a further 3.9% today.
Reading further down the news stories, I noticed that six Directors had recently purchased £234,479 worth of shares in the company at £1.45. Further inspection reveals that this was their participation in a recent placing to raise £10m "to finance the acquisition of a fourth core technology".
All good so far. However, this led me to have a quick glance at the financials. The current market cap. is £70.5m and at the interim stage, whilst revenue has grown by an impressive 68%, the company made an adjusted loss of £5m. Whilst they still had £7m+ cash on the balance sheet (pre-placing), cash burn for the six months was a whopping £8m.
Some many fancy the potential growth story here and wish to research further, but for me it would take a huge leap of faith and it certainly won't be on my monitor at this stage in its development.
Good luck with your investing and if you need any good books to help, the link below takes you to my recommended reads:-
http://astore.amazon.co.uk/httpmichae1mb-21
Thursday 3 January 2013
New Year resolution
Well my entry on the "stocks to double in 2013" ADVFN thread has made a decent start. Up a tad yesterday and a further 10.5% today. Very early days yet, and as I mentioned in an earlier blog, Angle is a punt that could multibag or amount to nothing based on the success of its Parsortix product. I just hope it's the former rather than the latter.
I've made a New Year's resolution to try and post more often on my blog and will aim to write a piece four or five times a week if time permits.
What I've decided to do is to pick out a company from the news stories of the day and write a brief piece about my initial thoughts on the company. Please note that I don't offer any advice just some observations after a cursory glance at recent company news and financials.
Today I am going to start with Chemring (CHG) who announced the appointment of a new Group Finance Director. Steve Bowers joins from UMECO, a company that were recently acquired for £5.50 per share (close to their all-time high of just over £6). Interestingly Steve Bowers was closely involved with acquisitions and disposals whilst with UMECO. I say interestingly since Chemring were recently in discussions with Carlyle Group about a possible takeover. However, talks have subsequently collapsed and Chemring's share price has followed.
Despite a 6.5% rise in the share price today, Chemring's historic p/e ratio is around 6 and if they hold the dividend the payout is nearly 6%. So why do the shares look cheap? Well a recent trading statement stated that 2012 had been extremely disappointing and the market backdrop for 2013 remained challenging.
On a more positive note, they also mentioned that in the final quarter there was a significant cash inflow and that nebt debt would be £250m down £12.7m on last year. They also have a relatively new CEO - Mark Papworth who delivered substantial improvements in profitability in his time at Wood Group.
A bit of a mixed bag, but if nothing else maybe one to keep on your monitor, although no advice is given or intended and the figures I have quoted are directly taken from other sources and need checking.
For those of you who take time to read the blog many thanks and I'll endeavour to keep my New Year resolution.
I've made a New Year's resolution to try and post more often on my blog and will aim to write a piece four or five times a week if time permits.
What I've decided to do is to pick out a company from the news stories of the day and write a brief piece about my initial thoughts on the company. Please note that I don't offer any advice just some observations after a cursory glance at recent company news and financials.
Today I am going to start with Chemring (CHG) who announced the appointment of a new Group Finance Director. Steve Bowers joins from UMECO, a company that were recently acquired for £5.50 per share (close to their all-time high of just over £6). Interestingly Steve Bowers was closely involved with acquisitions and disposals whilst with UMECO. I say interestingly since Chemring were recently in discussions with Carlyle Group about a possible takeover. However, talks have subsequently collapsed and Chemring's share price has followed.
Despite a 6.5% rise in the share price today, Chemring's historic p/e ratio is around 6 and if they hold the dividend the payout is nearly 6%. So why do the shares look cheap? Well a recent trading statement stated that 2012 had been extremely disappointing and the market backdrop for 2013 remained challenging.
On a more positive note, they also mentioned that in the final quarter there was a significant cash inflow and that nebt debt would be £250m down £12.7m on last year. They also have a relatively new CEO - Mark Papworth who delivered substantial improvements in profitability in his time at Wood Group.
A bit of a mixed bag, but if nothing else maybe one to keep on your monitor, although no advice is given or intended and the figures I have quoted are directly taken from other sources and need checking.
For those of you who take time to read the blog many thanks and I'll endeavour to keep my New Year resolution.
Wednesday 2 January 2013
Gambling vs investing
Hot off the press. Disney have "filed a petition to seek leave for a rehearing en banc with the Ninth Circuit" regarding the award of the damages made against them in favour of Celador.
It shouldn't come as any great surprise. Disney have tried to drag this out for as long as possible. It seems clear that they will pursue it to the bitter end i.e. until every possible option has been closed to them.
I have no idea how long the process could take from here, but I'd be very surprised if the ruling was overturned at any point. Quite frankly it would make a mockery of their judicial system, although Disney are clearly hanging on in there with a faint glimmer of hope!
As I mentioned before, the rapidity with which the ninth circuit rejected Disney's appeal seems to suggest that Disney's arguments against the ruling are weak, and I can't see that another panel of judges will wish to overule a jury, the original trial judge and three of their own judges. It may take some time yet, but I do think the original award will stand and that Avesco will eventually receive their $60m share.
However, the above does illustrate the huge difference between gambling and investing on the stock market.
Avesco is a profitable, cash generative and growing business that is more than worth its current valuation without any payout from Disney. Investors will have bought shares based on Avesco's prospects at present and for the future. However, the gambling fraternity have undoubtedly been buying and selling on every twist of the Disney case. I doubt very much if many of the gamblers have made any decent profits.
I shall sit tight and await Avesco's full year results with interest. Whilst 2013 won't be quite as spectacular as 2012 (the odd year effect), I anticipate that underlying growth will be encouraging and I expect that dividends will continue to rise.
It shouldn't come as any great surprise. Disney have tried to drag this out for as long as possible. It seems clear that they will pursue it to the bitter end i.e. until every possible option has been closed to them.
I have no idea how long the process could take from here, but I'd be very surprised if the ruling was overturned at any point. Quite frankly it would make a mockery of their judicial system, although Disney are clearly hanging on in there with a faint glimmer of hope!
As I mentioned before, the rapidity with which the ninth circuit rejected Disney's appeal seems to suggest that Disney's arguments against the ruling are weak, and I can't see that another panel of judges will wish to overule a jury, the original trial judge and three of their own judges. It may take some time yet, but I do think the original award will stand and that Avesco will eventually receive their $60m share.
However, the above does illustrate the huge difference between gambling and investing on the stock market.
Avesco is a profitable, cash generative and growing business that is more than worth its current valuation without any payout from Disney. Investors will have bought shares based on Avesco's prospects at present and for the future. However, the gambling fraternity have undoubtedly been buying and selling on every twist of the Disney case. I doubt very much if many of the gamblers have made any decent profits.
I shall sit tight and await Avesco's full year results with interest. Whilst 2013 won't be quite as spectacular as 2012 (the odd year effect), I anticipate that underlying growth will be encouraging and I expect that dividends will continue to rise.
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