I do enjoy adding my contribution to the stock doubler thread on Advfn at this time of the year, and I'm hopeful that I will continue with the successes I had in 2013 and 2014. In both of these years my selections have more than doubled, although with three more trading days to go I hope I'm not being a little too premature with my 2014 choice. Please note that these are the only two years I have contributed.
In 2013 Angle plc rose by a very healthy 194%, and this year Trakm8 is currently up 105%. Incidentally, I believe that either of these two companies could double again from their current share prices, and indeed I believe that all of my current holdings have this potential. In fact I wouldn't own the shares if I didn't believe that they could multi-bag given a long term horizon.
One of my Christmas presents this year is John Lee's book, "Making a Million Slowly". I like John Lee, he has a very sensible approach to investing that clearly mirrors many of the great stock market investors, all of whom despite their nuances, adhere to the key basic principles of successful investing which I have discussed many times on this blog.
It's an enjoyable read, although I confess that I haven't picked up anything particularly new which is perhaps in itself a comforting thought. One thing that he does point out that is worth remembering though is that investors often try to over complicate the process of stock picking when a few simple ratios and a huge sprinkling of common sense is all that is needed. However, don't mistake that for implying that investing in shares is easy, it still takes considerable time and effort.
Anyway before I lose track of the task in hand, the reason I mention John Lee's book is because my pick this year is a company that I'd guess John Lee would certainly wish to cast his eye over. Firstly, it's profitable, it boasts a rising dividend yield (prospective hike of 20% this year), much improved earnings, it's borrowings are very low and the company is cash generative. EPS is forecast at 0.5p this year (confirmed by a recent trading update) and 0.6p in 2015 which at the current share price implies a forward p/e of 8 falling to 6.5 the year after. The company is on such miserly ratings because this year's figures fall short of market expectations even though the miss appears to be because of a solitary contract which should now fall into the 2015 figures.
This just illustrates market stupidity since the shares have been punished despite the fact that earnings growth will still be 25% ahead of the previous year.
Add in to the mix a recent acquisition that is expected to be "significantly earnings enhancing in the first year" and that they recently turned down a takeover offer from Trakm8, and the valuation becomes even more compelling.
The company in question is Belgravium Technologies currently priced at 4p per share (mid) with a market capitalisation of around £4m. The Group designs, installs and maintains software applications and solutions for the airline, rail, retail and logistics industries, but please visit their website to learn more:- http://www.belgravium-technologies.com/
As with Angle and Trakm8, it should be noted that I do hold shares in this company.
Saturday 27 December 2014
Saturday 20 September 2014
2500 times revenues, an accident waiting to happen?
Who on earth wouldn't short the shares of a company that has just reported revenues of £24,000 and is valued at over £60m? A ridiculous valuation surely, and such an easy target. In fact, those figures can't be right can they? The company is valued at 2500 times revenues. Bonkers. Welcome to the world of social media. The figures are correct, and the company is the only LSE listed social media company, Audioboom.
I have written about Audioboo(m) several times in the past and I own a 20% stake through my holding in 7digital. You can follow my history of blogs about this company through the links below:-
http://michae1mouse.blogspot.co.uk/2014_03_01_archive.html
http://michae1mouse.blogspot.co.uk/2014/05/boom-one-delta-rises-more-than-100-on.html
http://michae1mouse.blogspot.co.uk/2014/05/7digital-reverses-into-ubc.html
http://michae1mouse.blogspot.co.uk/2014/06/billion-dollar-boom.html
It makes sense to open a spread bet on Monday on the SP collapsing, and sit back patiently and watch. After all look what happened to Monitise this week. In my opinion, Monitise was grossly overvalued, and I did comment on Monitise back in December last year:-
http://michae1mouse.blogspot.co.uk/2013/12/monitise-home-retail-group-and.html
However, I'm not going to short Audioboom shares despite their silly valuation or sell my shares in 7digital. Why? Firstly, if Audioboom retains it's current valuation (or rises even further) this implies that 7digital's own business is viewed by the market as having next to zero value. 7digital should achieve revenues of £14m this year, and whilst it is likely to be loss making in the short term, it is potentially a very exciting growth story on it's own merits.
Secondly, since listing Audioboom has announced content partnerships with CBS, Sky Sports and Essel Group (Essel is one of India's leading conglomerates, with a portfolio of entertainment and news channels) and a deal with talkSPORT to take on Audioboom's UK sports network sales.
This is terrific progress alongside it's 100% hike in registered users in 12 months from 1.4m to 2.8m at 25 August 2014. However, what would really put me off going short on the shares are the two following snippets from recent RNS releases. In July Rob Proctor CEO of Audioboom said this,
"The Company
has recently been approached by certain investors who have expressed interest in investing capital into the business. The Board considered these approaches, as the Company is growing very rapidly and additional personnel are required in new offices and in content management to direct this expansion. The Board has, however, decided that the number of initiatives in progress mean that this is not an appropriate time to raise further capital."
Followed by this paragraph in the interim results:-
"Alongside our own development, the world of social media continues to flourish; strategic acquisitions by global players, both Western and Asian, continue with regularity and at high valuations. Audioboom is operating in a global market, if we continue to develop our platform and technology, the future will look very interesting for shareholders. I intend to make the most of these opportunities."
It would appear to me that the company is looking to build quickly and sell quickly. In the present climate it's not too difficult to see Audioboom being sold for well in excess of it's current valuation, and possibly in the not too distant future.
I certainly won't be shorting the shares. Something I never do anyway.
However, just one final thing to add. Audioboom and 7digital are highly speculative, and there is no margin of safety with either company. In other words, the shares are not for widows or orphans, and whilst fortunes could be made, they could equally be lost.
For the record, I currently hold 7digital shares with their 20% holding in Audioboom.
Everything needs crossing, it's that type of punt.
I have written about Audioboo(m) several times in the past and I own a 20% stake through my holding in 7digital. You can follow my history of blogs about this company through the links below:-
http://michae1mouse.blogspot.co.uk/2014_03_01_archive.html
http://michae1mouse.blogspot.co.uk/2014/05/boom-one-delta-rises-more-than-100-on.html
http://michae1mouse.blogspot.co.uk/2014/05/7digital-reverses-into-ubc.html
http://michae1mouse.blogspot.co.uk/2014/06/billion-dollar-boom.html
It makes sense to open a spread bet on Monday on the SP collapsing, and sit back patiently and watch. After all look what happened to Monitise this week. In my opinion, Monitise was grossly overvalued, and I did comment on Monitise back in December last year:-
http://michae1mouse.blogspot.co.uk/2013/12/monitise-home-retail-group-and.html
However, I'm not going to short Audioboom shares despite their silly valuation or sell my shares in 7digital. Why? Firstly, if Audioboom retains it's current valuation (or rises even further) this implies that 7digital's own business is viewed by the market as having next to zero value. 7digital should achieve revenues of £14m this year, and whilst it is likely to be loss making in the short term, it is potentially a very exciting growth story on it's own merits.
Secondly, since listing Audioboom has announced content partnerships with CBS, Sky Sports and Essel Group (Essel is one of India's leading conglomerates, with a portfolio of entertainment and news channels) and a deal with talkSPORT to take on Audioboom's UK sports network sales.
This is terrific progress alongside it's 100% hike in registered users in 12 months from 1.4m to 2.8m at 25 August 2014. However, what would really put me off going short on the shares are the two following snippets from recent RNS releases. In July Rob Proctor CEO of Audioboom said this,
"The Company
has recently been approached by certain investors who have expressed interest in investing capital into the business. The Board considered these approaches, as the Company is growing very rapidly and additional personnel are required in new offices and in content management to direct this expansion. The Board has, however, decided that the number of initiatives in progress mean that this is not an appropriate time to raise further capital."Followed by this paragraph in the interim results:-
"Alongside our own development, the world of social media continues to flourish; strategic acquisitions by global players, both Western and Asian, continue with regularity and at high valuations. Audioboom is operating in a global market, if we continue to develop our platform and technology, the future will look very interesting for shareholders. I intend to make the most of these opportunities."
It would appear to me that the company is looking to build quickly and sell quickly. In the present climate it's not too difficult to see Audioboom being sold for well in excess of it's current valuation, and possibly in the not too distant future.
I certainly won't be shorting the shares. Something I never do anyway.
However, just one final thing to add. Audioboom and 7digital are highly speculative, and there is no margin of safety with either company. In other words, the shares are not for widows or orphans, and whilst fortunes could be made, they could equally be lost.
For the record, I currently hold 7digital shares with their 20% holding in Audioboom.
Everything needs crossing, it's that type of punt.
Sunday 14 September 2014
Trakm8 - Driving growth into new territories
Last week Trakm8 released a trading statement ahead of their AGM. In the first four months of the year, strong organic growth has continued with the value of new orders booked up 33% against the same period last year on a like for like basis.
This year will also see a full contribution from Box, which they acquired towards the end of last year, and as a consequence, revenues will be considerably higher with the corresponding benefit to profitability.
Interestingly, the current year has seen 17,000 more units reporting to their servers making 75,000 in total. If they continue at that rate then over the full year the number of units reporting to their servers will have almost doubled. This is extremely encouraging since the revenues generated are recurring, and form the basis of Trakm8's financial stability as it moves through the gears on it's growth trajectory.
In recent weeks they have also announced new contract wins with Kubota (an existing client) and Downton (a new customer). On Friday they announced a further contract win with SAGAsystem AS based in Norway moving them into Scandinavia which represents a new territory for Trakm8. It's reassuring to see Trakm8 are not only able to win new clients and move into new territories, but importantly existing clients keep returning to expand and update with Trakm8 solutions and products.
Whilst Trakm8 has already been a multibagger for me, I see no reason to sell my holding and remain hopeful that they can continue to capitalise on their position in the rapidly growing Telematics market place. I am cautiously optimistic that with the market opportunity that lies before them, over time they can develop into a company that commands a market capitalisation well above the current valuation of £22m.
The company remains on track to meet market expectations for the full year of 5.7p EPS which puts the forward p/e at just over 13, the predicted EPS for 2016 at 8.0p gives a forward p/e of just 9.5.
Given the rate of growth, this suggests the shares are very good value, and any announcement of further major contracts similar to their recent win with Direct Line would make the shares look extremely cheap.
This year will also see a full contribution from Box, which they acquired towards the end of last year, and as a consequence, revenues will be considerably higher with the corresponding benefit to profitability.
Interestingly, the current year has seen 17,000 more units reporting to their servers making 75,000 in total. If they continue at that rate then over the full year the number of units reporting to their servers will have almost doubled. This is extremely encouraging since the revenues generated are recurring, and form the basis of Trakm8's financial stability as it moves through the gears on it's growth trajectory.
In recent weeks they have also announced new contract wins with Kubota (an existing client) and Downton (a new customer). On Friday they announced a further contract win with SAGAsystem AS based in Norway moving them into Scandinavia which represents a new territory for Trakm8. It's reassuring to see Trakm8 are not only able to win new clients and move into new territories, but importantly existing clients keep returning to expand and update with Trakm8 solutions and products.
Whilst Trakm8 has already been a multibagger for me, I see no reason to sell my holding and remain hopeful that they can continue to capitalise on their position in the rapidly growing Telematics market place. I am cautiously optimistic that with the market opportunity that lies before them, over time they can develop into a company that commands a market capitalisation well above the current valuation of £22m.
The company remains on track to meet market expectations for the full year of 5.7p EPS which puts the forward p/e at just over 13, the predicted EPS for 2016 at 8.0p gives a forward p/e of just 9.5.
Given the rate of growth, this suggests the shares are very good value, and any announcement of further major contracts similar to their recent win with Direct Line would make the shares look extremely cheap.
Friday 1 August 2014
Will further business Floow in?
Direct Line Group shareholders will be pleased this morning. The Group released a solid set of half year results, and declared another special dividend alongside a 5% hike in the usual payout. In total shareholders will receive 14.4p (about 5% of the current share price). It looks like they are making a habit of this, and long may it continue. If you are looking at a dependable income stock then DLG should be right up there as a main contender.
As a shareholder in Trakm8, I was also interested to ascertain any snippets of information that related to their Telematics contract with the Group. The key snippets are these:-
"Our performance has also allowed us to continue to invest in the future of our business, to enhance our product propositions and improve our customer experience. We have rolled out self-install telematics boxes, which will enable us to reward better driving, and we've made it easier to buy our Motor products on smartphones and tablets."
"Distribution - In April, the Group launched its self-install telematics proposition in the UK following a successful pilot. This supports the Group's strategic aim of being a leading operator in developing the telematics market and enables it to offer telematics to a broader range of customers. Take-up remains strong for Direct Line new policies with one in five under 25 year olds electing for telematics, with take-up increasing to more than 50% for new business sales to under 21 year olds over the phone."
"In addition, the Group continued to improve its pricing sophistication for renewing telematics policies and announced an equity investment in The Floow, the supplier of smartphone applications and telematics data analytics for the Direct Line DrivePlus telematics product range."
"Furthermore, the Commercial division is piloting telematics propositions with Direct Line for Business and NIG customers."
It's also interesting that Trakm8 are working closely alongside the Floow on developing the Telematics for Direct Line. I wonder if this tie up will extend to other clients?
I notice that the Floow have been working with AIG, Accenture and a South African company called Tracker in the past 18 months. Trakm8 in turn would bring Eon, St Gobain, the AA, Fujitsu and Kubota to the party.
A strategic partnership between the two with this list a major clients would be interesting to say the least.
The Floow's comments on Accenture are intriguing:- "Accenture is a global powerhouse in many areas of technology consulting, including advising the world's top insurers on new technology and science. We created a Telematics Pilot that is being run in North America and this will form the basis to many products from Accenture, watch this space!"
As a shareholder in Trakm8, I was also interested to ascertain any snippets of information that related to their Telematics contract with the Group. The key snippets are these:-
"Our performance has also allowed us to continue to invest in the future of our business, to enhance our product propositions and improve our customer experience. We have rolled out self-install telematics boxes, which will enable us to reward better driving, and we've made it easier to buy our Motor products on smartphones and tablets."
"Distribution - In April, the Group launched its self-install telematics proposition in the UK following a successful pilot. This supports the Group's strategic aim of being a leading operator in developing the telematics market and enables it to offer telematics to a broader range of customers. Take-up remains strong for Direct Line new policies with one in five under 25 year olds electing for telematics, with take-up increasing to more than 50% for new business sales to under 21 year olds over the phone."
"In addition, the Group continued to improve its pricing sophistication for renewing telematics policies and announced an equity investment in The Floow, the supplier of smartphone applications and telematics data analytics for the Direct Line DrivePlus telematics product range."
"Furthermore, the Commercial division is piloting telematics propositions with Direct Line for Business and NIG customers."
It's also interesting that Trakm8 are working closely alongside the Floow on developing the Telematics for Direct Line. I wonder if this tie up will extend to other clients?
I notice that the Floow have been working with AIG, Accenture and a South African company called Tracker in the past 18 months. Trakm8 in turn would bring Eon, St Gobain, the AA, Fujitsu and Kubota to the party.
A strategic partnership between the two with this list a major clients would be interesting to say the least.
The Floow's comments on Accenture are intriguing:- "Accenture is a global powerhouse in many areas of technology consulting, including advising the world's top insurers on new technology and science. We created a Telematics Pilot that is being run in North America and this will form the basis to many products from Accenture, watch this space!"
Wednesday 30 July 2014
Addition to the virtual trading portfolio
Rightmove released their first half trading results this morning. The highlights include a 20% hike in revenues, underlying operating margins of 74%, underlying earnings up 24% and a 18% dividend hike. Great results, but on all fundamental values the shares look expensive. On last years figures they currently trade on a p/e above 30 with a market cap. approaching £2.3bn and the dividend yield is not much more than 1%.
I couldn't justify paying this price for my own long term portfolio, although I greatly regret not buying them in the depths of the financial crisis when they were less than a fiver. This is surely a Warren Buffet stock. The company boasts an invisible moat, a virtual monopoly in the UK. What's the first website you'd visit if you're looking to buy a property? It's got to be Rightmove.
The company's model ensures outstanding gross margins, it generates copious amounts of cash and has a history of hiking the dividend payment each year. In fact the dividend was held even between 2009-2010.
So whilst I'm not a real buyer (I don't believe that it will multibag in the near future from here), I'm going to add it to the virtual trading portfolio believing that it can surpass the previous highs of this year. As I write the price is £22.96.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.66
Vodafone £2.07 £2.04
Morrison £1.93 £1.73
Rightmove £22.96 £22.96
I don't think it's likely that there will be an opportunity to buy the shares and add them to my real portfolio at the bargain basement price which arose in 2009, but should the opportunity ever present itself when the shares once again look cheap then I'll more than likely snap them up, despite preferring to concentrate my efforts on the small/micro cap sector.
I couldn't justify paying this price for my own long term portfolio, although I greatly regret not buying them in the depths of the financial crisis when they were less than a fiver. This is surely a Warren Buffet stock. The company boasts an invisible moat, a virtual monopoly in the UK. What's the first website you'd visit if you're looking to buy a property? It's got to be Rightmove.
The company's model ensures outstanding gross margins, it generates copious amounts of cash and has a history of hiking the dividend payment each year. In fact the dividend was held even between 2009-2010.
So whilst I'm not a real buyer (I don't believe that it will multibag in the near future from here), I'm going to add it to the virtual trading portfolio believing that it can surpass the previous highs of this year. As I write the price is £22.96.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.66
Vodafone £2.07 £2.04
Morrison £1.93 £1.73
Rightmove £22.96 £22.96
I don't think it's likely that there will be an opportunity to buy the shares and add them to my real portfolio at the bargain basement price which arose in 2009, but should the opportunity ever present itself when the shares once again look cheap then I'll more than likely snap them up, despite preferring to concentrate my efforts on the small/micro cap sector.
Tuesday 29 July 2014
Virtual trading portfolio update
Some of you may remember that I started a virtual trading portfolio in early June. This was just for a bit of fun, but I thought I'd revisit it this morning to see how it's going so far. This is what I said back in June:-
"On a separate note, my virtual trade in Vesuvius is pretty much flat so far, although I notice that Directors are still keen buyers with a further purchase reported on Friday, and a small tick up of around 3% in the share price.
I am adding Vodafone and Morrison to my virtual trading portfolio. Vodafone is yielding over 5% and is off it's recent highs as investors "park" there special dividends elsewhere. My buying price for Vodafone is 207p. Morrison's I mentioned in my blog 31 May. Just to emphasise that these are all virtual trades, and I'm doing this just for a bit of fun. Of course I will continue to report on my actual holdings and purchases at regular intervals as usual.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.58
Vodafone £2.07 £2.07
Morrison £1.93 £1.93"
Well what's happened since? Not a lot really. The current state of play is given below:-
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.59
Vodafone £2.07 £2.02
Morrison £1.93 £1.72
As you can see, both my virtual trades in vod and vsvs are pretty flat and mrw is down. Hopefully today's news from mrw about the appointment of Andy Higginson may provide a fillip for the share price.
As a measure of my success, I am going to assume that I have invested £1000 in each initially. My budget will be £10,000 to start with, and I am going to set a 3 month time limit as my maximum holding period for each share I purchase.
Those of you who read the blog on a regular basis will know that this is not my actual investing style. I try to find small/micro cap companies that I perceive to be undervalued and then hold for the long term. The virtual portfolio requires a totally different mindset, and I'll need to be a little more reactive to news stories and sentiment with my future trades.
"On a separate note, my virtual trade in Vesuvius is pretty much flat so far, although I notice that Directors are still keen buyers with a further purchase reported on Friday, and a small tick up of around 3% in the share price.
I am adding Vodafone and Morrison to my virtual trading portfolio. Vodafone is yielding over 5% and is off it's recent highs as investors "park" there special dividends elsewhere. My buying price for Vodafone is 207p. Morrison's I mentioned in my blog 31 May. Just to emphasise that these are all virtual trades, and I'm doing this just for a bit of fun. Of course I will continue to report on my actual holdings and purchases at regular intervals as usual.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.58
Vodafone £2.07 £2.07
Morrison £1.93 £1.93"
Well what's happened since? Not a lot really. The current state of play is given below:-
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.59
Vodafone £2.07 £2.02
Morrison £1.93 £1.72
As you can see, both my virtual trades in vod and vsvs are pretty flat and mrw is down. Hopefully today's news from mrw about the appointment of Andy Higginson may provide a fillip for the share price.
As a measure of my success, I am going to assume that I have invested £1000 in each initially. My budget will be £10,000 to start with, and I am going to set a 3 month time limit as my maximum holding period for each share I purchase.
Those of you who read the blog on a regular basis will know that this is not my actual investing style. I try to find small/micro cap companies that I perceive to be undervalued and then hold for the long term. The virtual portfolio requires a totally different mindset, and I'll need to be a little more reactive to news stories and sentiment with my future trades.
Monday 28 July 2014
Snoozebox - trading statement
Snoozebox is a small company with interesting prospects over the longer term, and the company issued a positive trading statement this morning.
Essentially the company supplies portable hotel accommodation to the events sector. The model sounds interesting, and there is clear demand for their services.
I expect the share price to rise slightly on today's news.
However, it's not one that interests me. Firstly, at a market cap. (yesterday) of around £17m, but with adjusted EBITDA losses expected to come in at £1.6m in the first half of the year, the company still looks expensive.
They have recently raised £11m to fund the construction of their next generation of hotel room stock and hospitality units which is necessary for their growth, but I'd be very surprised if they didn't need further funding rounds in future. This company is capital intensive and needs to generate large amounts of cash to be self-funding. I don't see them being able to generate sufficient cash in the near future given today's statement regarding a negative adjusted EBITDA for the first six months of this year.
It's always good to read between the lines of a trading statement as well. Note the following from this morning:-
"the Company has made demonstrable progress in the development of its event programme and is creating a platform for growth and profitability."
In other words growth and profitability are someway off at the moment, and if in any doubt then:-
"I believe the progress made in the underlying operating model, combined with the launch of the Next Generation Portable Hotel in the autumn of this year, provides the platform on which to transform the performance of the business in 2015 and to scale it in 2016."
Longer term, and at a lower price, the company may become interesting, but at the current valuation, a loss making capital intensive company which is consuming cash and valued at over £17m is not for me.
This doesn't suggest I'm bearish either, but I always consider the number of companies out there that are valued similarly and are profitable, cash generative and arguably have better growth prospects.
Essentially the company supplies portable hotel accommodation to the events sector. The model sounds interesting, and there is clear demand for their services.
I expect the share price to rise slightly on today's news.
However, it's not one that interests me. Firstly, at a market cap. (yesterday) of around £17m, but with adjusted EBITDA losses expected to come in at £1.6m in the first half of the year, the company still looks expensive.
They have recently raised £11m to fund the construction of their next generation of hotel room stock and hospitality units which is necessary for their growth, but I'd be very surprised if they didn't need further funding rounds in future. This company is capital intensive and needs to generate large amounts of cash to be self-funding. I don't see them being able to generate sufficient cash in the near future given today's statement regarding a negative adjusted EBITDA for the first six months of this year.
It's always good to read between the lines of a trading statement as well. Note the following from this morning:-
"the Company has made demonstrable progress in the development of its event
programme and is creating a platform for growth and profitability." In other words growth and profitability are someway off at the moment, and if in any doubt then:-
"I believe the progress made in the underlying operating model, combined with the launch of the Next Generation Portable Hotel in the autumn of this year, provides the platform on which to transform the performance of the business in 2015 and to scale it in 2016."
Longer term, and at a lower price, the company may become interesting, but at the current valuation, a loss making capital intensive company which is consuming cash and valued at over £17m is not for me.
This doesn't suggest I'm bearish either, but I always consider the number of companies out there that are valued similarly and are profitable, cash generative and arguably have better growth prospects.
Sunday 27 July 2014
Angle preliminary results
Angle is one of my more speculative holdings, and the company released their preliminary results this week alongside an evaluation of their Parsortix device by the CEP Group at the Cancer Research UK Manchester Institute.
In short Angle's success or failure hinges on the findings of Key Opinion Leaders finding a clear clinical utility for the Parsortix device. The advantages of the device compared with the competition in this field and the relative cost effectiveness are already well documented, so to my mind the key issue is summed up rather neatly in the following paragraph:-
"The pilot study now underway (by the CEP group) will evaluate the feasibility and potential clinical utility of routine use of the Parsortix system to provide CTC information for patients at presentation and throughout their treatment."
In other words if Key Opinion Leaders can identify clear positive benefits for cancer patients by using the harvesting capability of the Parsortix device then investors will have hit the jackpot and more importantly many more lives may be prolonged or saved from this pernicious disease (in all its forms) by the development of personalised medicine.
Currently, it does look promising. Ged Brady, Deputy and Genomics Leader within the Clinical & Experimental Pharmacology group at Cancer Research UK Manchester Institute commented:
"The evaluation phase of our work is now successfully complete and we see great promise in the application of the Parsortix technology for harvesting CTCs for molecular analysis to enable personalised cancer care. We are now undertaking pilot studies using the Parsortix system in both colorectal cancer and pancreatic cancer."
At year end Angle had £3.9m cash on its balance sheet, and therefore a fund raising looks unlikely in the immediate future.
FDA approval is pending, but the big price driver will be the continued success of this device with Key Opinion Leaders and a tie up with one of the majors in agreeing a corporate deal and/or distribution partner. Given rumours earlier this year about a possible approach for the company, and the fact that Angle is essentially a one trick pony (albeit a potentially extremely rewarding trick), I expect the company to be sold in due course at a significant premium to the current price.
Speculative yes, but the signs are promising and I remain cautiously optimistic.
In short Angle's success or failure hinges on the findings of Key Opinion Leaders finding a clear clinical utility for the Parsortix device. The advantages of the device compared with the competition in this field and the relative cost effectiveness are already well documented, so to my mind the key issue is summed up rather neatly in the following paragraph:-
"The pilot study now underway (by the CEP group) will evaluate the feasibility and potential clinical utility of routine use of the Parsortix system to provide CTC information for patients at presentation and throughout their treatment."
In other words if Key Opinion Leaders can identify clear positive benefits for cancer patients by using the harvesting capability of the Parsortix device then investors will have hit the jackpot and more importantly many more lives may be prolonged or saved from this pernicious disease (in all its forms) by the development of personalised medicine.
Currently, it does look promising. Ged Brady, Deputy and Genomics Leader within the Clinical & Experimental Pharmacology group at Cancer Research UK Manchester Institute commented:
"The evaluation phase of our work is now successfully complete and we see great promise in the application of the Parsortix technology for harvesting CTCs for molecular analysis to enable personalised cancer care. We are now undertaking pilot studies using the Parsortix system in both colorectal cancer and pancreatic cancer."
At year end Angle had £3.9m cash on its balance sheet, and therefore a fund raising looks unlikely in the immediate future.
FDA approval is pending, but the big price driver will be the continued success of this device with Key Opinion Leaders and a tie up with one of the majors in agreeing a corporate deal and/or distribution partner. Given rumours earlier this year about a possible approach for the company, and the fact that Angle is essentially a one trick pony (albeit a potentially extremely rewarding trick), I expect the company to be sold in due course at a significant premium to the current price.
Speculative yes, but the signs are promising and I remain cautiously optimistic.
Thursday 24 July 2014
Belgravium trading update
An excellent trading update from Belgravium this morning:-
http://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html?code=BVM&rbDate=released&preDate=Last3Months
Key bit states:-
"It was reported at the AGM that trading in the period had started slowly. Pleasingly trading picked up significantly in Q2 and as a consequence the results for the six months ended 30 June 2014 will show an increase in revenue and a significant improvement in profits compared to the equivalent period last year."
Trading is in line with expectations and second half weighted.
"The directors are encouraged by the level of enquiries and are confident that a good proportion of these can be converted to sales in the second half."
Broker forecasts:-
This makes the shares look very cheap, particularly given current growth.
Appears to confirm my educated guess as to why the deal with Trakm8 fell at the first hurdle. Belgravium are understandably looking for a premium price for the business, and Trakm8 management like to seek out bargain basement prices. Bodes well for both companies in the future.
http://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html?code=BVM&rbDate=released&preDate=Last3Months
Key bit states:-
"It was reported at the AGM that trading in the period had started slowly. Pleasingly trading picked up significantly in Q2 and as a consequence the results for the six months ended 30 June 2014 will show an increase in revenue and a significant improvement in profits compared to the equivalent period last year."
Trading is in line with expectations and second half weighted.
"The directors are encouraged by the level of enquiries and are confident that a good proportion of these can be converted to sales in the second half."
Broker forecasts:-
| "Year Ending | Revenue (£m) | Pre-tax (£m) | EPS | P/E | PEG | EPS Grth. | Div | Yield" |
|---|---|---|---|---|---|---|---|---|
| 31-Dec-14 | 10.20 | 0.70 | 0.66p | 7.6 | 0.1 | +65% | 0.20p | 4.0% |
| 31-Dec-15 | 11.00 | 0.90 | 0.80p | 6.3 | 0.3 | +21% | 0.25p | 5.0% |
This makes the shares look very cheap, particularly given current growth.
Appears to confirm my educated guess as to why the deal with Trakm8 fell at the first hurdle. Belgravium are understandably looking for a premium price for the business, and Trakm8 management like to seek out bargain basement prices. Bodes well for both companies in the future.
Saturday 19 July 2014
Updates ACC, AVS and AVN
Following on from their interim results which were released this week, I notice that Michael Jackson has purchased another 500,000 shares at 2.9p (£14,500 worth) to add to his purchase in April of 1,280,000 at the higher price of 3.75p (£48,000 worth). Michael Jackson is the Non-Executive Chairman of Access Intelligence and now holds 10.36% of the company's issued share capital. You can see my previous blog for my thoughts on this week's interims.
I've also recently commented on Avesco who appear to be on track to beat market expectations for the full year. It's interesting to follow their Facebook page and Twitter feed where there appears to be a real leap in activity recently. This doesn't necessarily mean that business is booming compared to other years, but it does provide a timely reminder about the number of high profile events they are consistently involved in. Currently there is Golf's British Open and next week the Commonwealth Games. Yesterday they also announced this:-http://www.ct-group.com/news/ct-becomes-new-sponsor-eugames. Avesco is valued at approximately £20m and likes rewarding it's investors with chucky dividends.
Finally, Avanti Communications released a trading statement yesterday. It was a bit of a mixed bag, but given the highly speculative nature of an investment here, overall I remain encouraged by their progress. The key figures for me at this stage are that revenue is on track to meet market expectations at between $64m-$65m, and with a cash balance of $195m at year end they are well-financed. I am also encouraged that part of the shortfall in PBT is due to set up costs on large new projects, perhaps suggesting that revenue momentum is likely to continue. It shouldn't be forgotten that it's no mean feat getting two fully functional satellites into orbit, and in recent times their client list has become increasingly more impressive including the likes of Vodafone. Success certainly isn't assured just yet, and it's been a bumpy road but there are signs that the company is reaching a tipping point, and I certainly wouldn't write off the possibility of the company eventually becoming a takeover target.
Avanti is highly speculative as an investment, but whilst yesterday's trading statement caused an initial fall in the share price, there was an immediate bounce as longs honed in on the promising revenue momentum, current finances and the longer term opportunity. As a buy and hold investor you can ride out the fluctuations in share price movements over weeks, months and years if you believe in the company's long term prospects. Bears with short positions might be feeling a tad more nervous given Avanti's revenue momentum going forward and prospective cash generation.
I've also recently commented on Avesco who appear to be on track to beat market expectations for the full year. It's interesting to follow their Facebook page and Twitter feed where there appears to be a real leap in activity recently. This doesn't necessarily mean that business is booming compared to other years, but it does provide a timely reminder about the number of high profile events they are consistently involved in. Currently there is Golf's British Open and next week the Commonwealth Games. Yesterday they also announced this:-http://www.ct-group.com/news/ct-becomes-new-sponsor-eugames. Avesco is valued at approximately £20m and likes rewarding it's investors with chucky dividends.
Finally, Avanti Communications released a trading statement yesterday. It was a bit of a mixed bag, but given the highly speculative nature of an investment here, overall I remain encouraged by their progress. The key figures for me at this stage are that revenue is on track to meet market expectations at between $64m-$65m, and with a cash balance of $195m at year end they are well-financed. I am also encouraged that part of the shortfall in PBT is due to set up costs on large new projects, perhaps suggesting that revenue momentum is likely to continue. It shouldn't be forgotten that it's no mean feat getting two fully functional satellites into orbit, and in recent times their client list has become increasingly more impressive including the likes of Vodafone. Success certainly isn't assured just yet, and it's been a bumpy road but there are signs that the company is reaching a tipping point, and I certainly wouldn't write off the possibility of the company eventually becoming a takeover target.
Avanti is highly speculative as an investment, but whilst yesterday's trading statement caused an initial fall in the share price, there was an immediate bounce as longs honed in on the promising revenue momentum, current finances and the longer term opportunity. As a buy and hold investor you can ride out the fluctuations in share price movements over weeks, months and years if you believe in the company's long term prospects. Bears with short positions might be feeling a tad more nervous given Avanti's revenue momentum going forward and prospective cash generation.
Wednesday 16 July 2014
Access Intelligence - interims
A solid set of interim results released today from Access Intelligence which look in line with market expectations.
It's still early days yet, but at this stage it's encouraging to see that recurring revenues are 79% of total revenues, up from 72% at the full year, contracted revenue not yet invoiced is up 22% to £6.7m from £5.5m in H1 2013, and total revenue yet to be recognised in the income statement is £9.8m up from £8.7m in H1 2013.
Cash balances are down by £1.13m over the year, but just £381,000 in the last six months.
The current trading statement is certainly the most positive that they have issued since I've been a shareholder where they state that:-
"The business pipeline continues to grow with a number of exciting opportunities on the horizon to deliver a combined product offering using the new platform."
and
"The consistent, year-on-year increases in contracted revenue not yet invoiced, our recurring revenue base and sustained investment in innovative product development, demonstrate the Group's long term stability and provide a solid foundation for continued growth."
Cash generation is good. Cash inflow from operating activities was £518,000 compared with £278,000 in H1 2013.
In the main body of the text it is clear that all divisions have performed well and prospects continue to improve.
The company is well under the radar of most investors.
The share price initially dipped on release of these results, but volumes were very light and a number of small buys quickly moved the share price back up.
I remain optimistic about Access Intelligence's future and potential growth prospects.
See previous update:-
http://michae1mouse.blogspot.co.uk/2014/04/access-intelligence-final-results.html
It's still early days yet, but at this stage it's encouraging to see that recurring revenues are 79% of total revenues, up from 72% at the full year, contracted revenue not yet invoiced is up 22% to £6.7m from £5.5m in H1 2013, and total revenue yet to be recognised in the income statement is £9.8m up from £8.7m in H1 2013.
Cash balances are down by £1.13m over the year, but just £381,000 in the last six months.
The current trading statement is certainly the most positive that they have issued since I've been a shareholder where they state that:-
"The business pipeline continues to grow with a number of exciting opportunities on the horizon to deliver a combined product offering using the new platform."
and
"The consistent, year-on-year increases in contracted revenue not yet invoiced, our recurring revenue base and sustained investment in innovative product development, demonstrate the Group's long term stability and provide a solid foundation for continued growth."
Cash generation is good. Cash inflow from operating activities was £518,000 compared with £278,000 in H1 2013.
In the main body of the text it is clear that all divisions have performed well and prospects continue to improve.
The company is well under the radar of most investors.
The share price initially dipped on release of these results, but volumes were very light and a number of small buys quickly moved the share price back up.
I remain optimistic about Access Intelligence's future and potential growth prospects.
See previous update:-
http://michae1mouse.blogspot.co.uk/2014/04/access-intelligence-final-results.html
Saturday 12 July 2014
A holding in Avesco really does pay dividends!!
Avesco released their half year results in early June. What's not to like about this company? I've said it all before about why I believe Avesco offers terrific value, and I continue to hold all of my shares.
If you were a buyer when the shares were languishing between 20p-30p in 2009 then you'd already have had your money back 4 to 5 times over with the special dividend alone (£1.10). Add in the capital growth and regular dividend payments and you'll gather why I'm a fan.
Even now though with the share price at £1.10 the company is undervalued. From the interim results TNAV is around £1.65 and I'd guess the prospective dividend yield is around 6%-7% given the 50% hike at the interim stage (from 1p to 1.5p) and the reduction in share capital from around 26m to 19m shares following the buyback from Taya.
Results at the half year exceeded management expectations and they expect to do the same for the full year given that results will include the World Cup, Ryder Cup, Commonwealth Games etc.
The restructuring that has been taking place throughout the group appears to have gone smoothly, and tellingly management expects this to produce more stable and less volatile trading results, not only in even years where they have the benefit of major sporting events, but also in the odd years which have traditionally been more challenging for the Group.
Avesco is a terrific little company that is cash generative and believes in rewarding its shareholders with generous payouts. It's still dirt cheap. What more is there to say!!
Talking of dividends I'd recommend reading this article from last week's Sunday Telegraph:-
http://www.telegraph.co.uk/finance/markets/10948379/Dividend-yield-is-better-guide-than-the-FTSE-100-at-7000.html
If you were a buyer when the shares were languishing between 20p-30p in 2009 then you'd already have had your money back 4 to 5 times over with the special dividend alone (£1.10). Add in the capital growth and regular dividend payments and you'll gather why I'm a fan.
Even now though with the share price at £1.10 the company is undervalued. From the interim results TNAV is around £1.65 and I'd guess the prospective dividend yield is around 6%-7% given the 50% hike at the interim stage (from 1p to 1.5p) and the reduction in share capital from around 26m to 19m shares following the buyback from Taya.
Results at the half year exceeded management expectations and they expect to do the same for the full year given that results will include the World Cup, Ryder Cup, Commonwealth Games etc.
The restructuring that has been taking place throughout the group appears to have gone smoothly, and tellingly management expects this to produce more stable and less volatile trading results, not only in even years where they have the benefit of major sporting events, but also in the odd years which have traditionally been more challenging for the Group.
Avesco is a terrific little company that is cash generative and believes in rewarding its shareholders with generous payouts. It's still dirt cheap. What more is there to say!!
Talking of dividends I'd recommend reading this article from last week's Sunday Telegraph:-
http://www.telegraph.co.uk/finance/markets/10948379/Dividend-yield-is-better-guide-than-the-FTSE-100-at-7000.html
Trakm8 - Finals
Trakm8 released a great set of results on Monday. I believe that there is massive potential here, and below I have detailed some of the highlights for me:-
Firstly, this is a company achieving rapid growth organically and through acquisition in a area where a clear tipping point has been reached as companies clamour for Big Data. Revenues were up 94% at £9.19m (5 months contribution from Box Telematics) with recurring revenues up 111% at £4.5m. Like for like orders were up 46%.
This is profitable growth with good cash generation, and their recent acquisition was immediately earnings enhancing. Operating cash flow was £1.32m and adjusted EPS rose from 0.79p to 3.48p.
A major contract has been secured with Direct Line Insurance which is significant and potentially transformational for the company, and the outlook statement states that in the year to date revenues are well ahead of last year and trading is in line with expectations.
The narrative in the report is very positive with revenues from recently announced contracts to start really flowing through in the current financial year and beyond, providing a solid stream of recurring revenues now and in the future. Interestingly, they launched a sales and applications engineering team out of their office in Prague this year. This operation has secured several customers and they expect it to be self-funding by the end of the next financial year, following initial start-up costs.
I am still very excited by Trakm8's development where they are achieving profitable growth, generating strong cash flows, excellent gross margins, and strongly increasing recurring revenues which make up more than 50% of total revenues.
Their financial model is very strong, and it will be interesting to see if they can identify any further value enhancing acquisitions in the near future. One intriguing snippet from their final report says:- "The market remains largely fragmented although consolidation is occurring, particularly driven by interest in the space from VCs."
Trakm8 may be a predator at the moment, but I wouldn't discount the possibility of them becoming the prey either, although given the opportunity that lies ahead I'd prefer to see the company transform itself into a multi-million pound cap. by itself. Certainly, the management appear to be doing a great job at the moment.
Firstly, this is a company achieving rapid growth organically and through acquisition in a area where a clear tipping point has been reached as companies clamour for Big Data. Revenues were up 94% at £9.19m (5 months contribution from Box Telematics) with recurring revenues up 111% at £4.5m. Like for like orders were up 46%.
This is profitable growth with good cash generation, and their recent acquisition was immediately earnings enhancing. Operating cash flow was £1.32m and adjusted EPS rose from 0.79p to 3.48p.
A major contract has been secured with Direct Line Insurance which is significant and potentially transformational for the company, and the outlook statement states that in the year to date revenues are well ahead of last year and trading is in line with expectations.
The narrative in the report is very positive with revenues from recently announced contracts to start really flowing through in the current financial year and beyond, providing a solid stream of recurring revenues now and in the future. Interestingly, they launched a sales and applications engineering team out of their office in Prague this year. This operation has secured several customers and they expect it to be self-funding by the end of the next financial year, following initial start-up costs.
I am still very excited by Trakm8's development where they are achieving profitable growth, generating strong cash flows, excellent gross margins, and strongly increasing recurring revenues which make up more than 50% of total revenues.
Their financial model is very strong, and it will be interesting to see if they can identify any further value enhancing acquisitions in the near future. One intriguing snippet from their final report says:- "The market remains largely fragmented although consolidation is occurring, particularly driven by interest in the space from VCs."
Trakm8 may be a predator at the moment, but I wouldn't discount the possibility of them becoming the prey either, although given the opportunity that lies ahead I'd prefer to see the company transform itself into a multi-million pound cap. by itself. Certainly, the management appear to be doing a great job at the moment.
Trakm8 no longer interested in Belgravium Technologies
It would appear that Trakm8's potential bid approach for Belgravium Technologies is now dead in the water. Should investors in either company be disappointed (I hold both incidentally)? Not in my opinion. Although I have no knowledge of the initial negotiations, I strongly suspect that given talks have been terminated in less than five days, it's a case of there having being little common ground on price. Clearly, the two proposed valuations were poles apart.
Trakm8 recently acquired Box Telematics for £4.25m where Box produced revenues of £8.4 million and profit before tax of £850,000, given that Belgravium produced almost identical revenues to Box with a profit before tax of £125,000, it seems unlikely that they would wish to pay much more than that for Belgravium. At yesterday's close Belgravium was valued at about £4.9m.
As a shareholder in both companies, I am comforted that Trakm8 like acquiring good businesses at bargain basement prices, and Belgravium believe that their company is considerably undervalued.
In both cases one or more Directors have a substantial shareholding in their respective companies which ensures that their interests are aligned with the interests of their shareholder base.
Both companies continue to be a long term hold for me.
Trakm8 recently acquired Box Telematics for £4.25m where Box produced revenues of £8.4 million and profit before tax of £850,000, given that Belgravium produced almost identical revenues to Box with a profit before tax of £125,000, it seems unlikely that they would wish to pay much more than that for Belgravium. At yesterday's close Belgravium was valued at about £4.9m.
As a shareholder in both companies, I am comforted that Trakm8 like acquiring good businesses at bargain basement prices, and Belgravium believe that their company is considerably undervalued.
In both cases one or more Directors have a substantial shareholding in their respective companies which ensures that their interests are aligned with the interests of their shareholder base.
Both companies continue to be a long term hold for me.
Monday 7 July 2014
Holding the predator and the prey - a win win scenario?
I don't have much time to post on my blog at present, but I hope to add more detail in the not too distant future on some recent announcements from companies I have invested in.
Trakm8 released their full year results this morning which look superb, and as anticipated the outlook is exciting. See below for my most recent posts:-
http://michae1mouse.blogspot.co.uk/2014/05/trakm8-telematics-direct-line-to-success.html
http://michae1mouse.blogspot.co.uk/2014/05/bull-markets-and-telematics.html
Trakm8 are looking like a very long term hold for me, despite the share price having already multi-bagged from my purchase prices when they were friendless and bobbing around in the teens.
The day got even more interesting when it emerged that they have made a tentative approach to purchase another company I hold shares in - Belgravium Technologies. See below for my most recent post:-
http://michae1mouse.blogspot.co.uk/2014/05/belgravium-technologies-and-avanti.html
A merger between these two companies looks pretty enticing given the synergies and cash generative nature of both.
This would be a first for me holding both predator and prey, and it looks exciting. I await developments with interest and will comment further when time permits.
I will also comment on Avesco's excellent interim results where the dividend has been hiked by 50%, the shares still trade below TNAV and they are on track to exceed market expectations.
I hope to add more details soon.
Trakm8 released their full year results this morning which look superb, and as anticipated the outlook is exciting. See below for my most recent posts:-
http://michae1mouse.blogspot.co.uk/2014/05/trakm8-telematics-direct-line-to-success.html
http://michae1mouse.blogspot.co.uk/2014/05/bull-markets-and-telematics.html
Trakm8 are looking like a very long term hold for me, despite the share price having already multi-bagged from my purchase prices when they were friendless and bobbing around in the teens.
The day got even more interesting when it emerged that they have made a tentative approach to purchase another company I hold shares in - Belgravium Technologies. See below for my most recent post:-
http://michae1mouse.blogspot.co.uk/2014/05/belgravium-technologies-and-avanti.html
A merger between these two companies looks pretty enticing given the synergies and cash generative nature of both.
This would be a first for me holding both predator and prey, and it looks exciting. I await developments with interest and will comment further when time permits.
I will also comment on Avesco's excellent interim results where the dividend has been hiked by 50%, the shares still trade below TNAV and they are on track to exceed market expectations.
I hope to add more details soon.
Saturday 7 June 2014
Billion dollar Boom?
Not much news to report from my current share portfolio this week, although there was an interesting RNS from an indirect holding.
As previously reported, I hold shares in a company called UBC Media which will change it's name on Tuesday as it reverses in it's recent acquisition 7Digital. The enlarged group will hold 20% of Audioboom, a recently floated (by reverse takeover) social media site that describes itself as the audio equivalent of YouTube.
The RNS announces that CBS Radio Limited ("CBS") and Sky Sports Limited ("Sky Sports") have agreed to become major new content partners on Audioboom's social media platform.
This potentially sounds very exciting.
Rob Proctor, CEO of Audioboom, commented, "CBS and Sky Sports are two of the world's biggest broadcasters and we are delighted they are using our technology
and platform to further utilise and share their wonderful audio content. They are two of the most significant channel partners we have signed and are a great boost to the expansion of our sport and entertainment vertical audio markets.
"CBS also gives us fantastic reach and exposure in America which is a key and rapidly expanding market for us. Agreements with world class companies such as these illustrate the potential global reach of Audioboom as it continues to build momentum and become a major social media company."
It's very early days for Audioboom, and make no mistake this is a highly speculative investment in a company that will report negligible revenues in 2014, however, given the lofty valuations of successful social media sites, and the potential to be acquired by a major player (e.g. Twitter, Facebook etc.) then success could easily mean a $1bn plus valuation, and a hefty windfall for 7digital.
Whilst both 7Digital and Audioboom are highly speculative, they are also operating in an exciting and potentially very lucrative space. I don't directly hold shares in Audioboom, but I do like the fact that through 7Digital I will have a finger in both pies.
It would be fantastic if one or preferably both companies blossom, although I am mindful of the possibility that neither may prosper. It will be interesting (and hopefully lucrative) to watch developments over the medium and long term.
On a separate note, my virtual trade in Vesuvius is pretty much flat so far, although I notice that Directors are still keen buyers with a further purchase reported on Friday, and a small tick up of around 3% in the share price.
I am adding Vodafone and Morrison to my virtual trading portfolio. Vodafone is yielding over 5% and is off it's recent highs as investors "park" there special dividends elsewhere. My buying price for Vodafone is 207p. Morrison's I mentioned in my blog 31 May. Just to emphasise that these are all virtual trades, and I'm doing this just for a bit of fun. Of course I will continue to report on my actual holdings and purchases at regular intervals as usual.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.58
Vodafone £2.07 £2.07
Morrison £1.93 £1.93
As previously reported, I hold shares in a company called UBC Media which will change it's name on Tuesday as it reverses in it's recent acquisition 7Digital. The enlarged group will hold 20% of Audioboom, a recently floated (by reverse takeover) social media site that describes itself as the audio equivalent of YouTube.
The RNS announces that CBS Radio Limited ("CBS") and Sky Sports Limited ("Sky Sports") have agreed to become major new content partners on Audioboom's social media platform.
This potentially sounds very exciting.
Rob Proctor, CEO of Audioboom, commented, "CBS and Sky Sports are two of the world's biggest broadcasters and we are delighted they are using our technology
and platform to further utilise and share their wonderful audio content. They are two of the most significant channel partners we have signed and are a great boost to the expansion of our sport and entertainment vertical audio markets. "CBS also gives us fantastic reach and exposure in America which is a key and rapidly expanding market for us. Agreements with world class companies such as these illustrate the potential global reach of Audioboom as it continues to build momentum and become a major social media company."
It's very early days for Audioboom, and make no mistake this is a highly speculative investment in a company that will report negligible revenues in 2014, however, given the lofty valuations of successful social media sites, and the potential to be acquired by a major player (e.g. Twitter, Facebook etc.) then success could easily mean a $1bn plus valuation, and a hefty windfall for 7digital.
Whilst both 7Digital and Audioboom are highly speculative, they are also operating in an exciting and potentially very lucrative space. I don't directly hold shares in Audioboom, but I do like the fact that through 7Digital I will have a finger in both pies.
It would be fantastic if one or preferably both companies blossom, although I am mindful of the possibility that neither may prosper. It will be interesting (and hopefully lucrative) to watch developments over the medium and long term.
On a separate note, my virtual trade in Vesuvius is pretty much flat so far, although I notice that Directors are still keen buyers with a further purchase reported on Friday, and a small tick up of around 3% in the share price.
I am adding Vodafone and Morrison to my virtual trading portfolio. Vodafone is yielding over 5% and is off it's recent highs as investors "park" there special dividends elsewhere. My buying price for Vodafone is 207p. Morrison's I mentioned in my blog 31 May. Just to emphasise that these are all virtual trades, and I'm doing this just for a bit of fun. Of course I will continue to report on my actual holdings and purchases at regular intervals as usual.
Virtual portfolio Price paid Current price Price sold
Vesuvius £4.57 £4.58
Vodafone £2.07 £2.07
Morrison £1.93 £1.93
Sunday 1 June 2014
Vesuvius - set to erupt?
Regular readers of my blog will know that my investing style is to try and find interesting companies at what I perceive to be bargain basement prices, and then hold for the long term in the hope that the share price multi-bags. I have been very fortunate to have had a number of successes, and I hope there will be many more to come in future.
However, just for a bit of fun, I've decided to try some virtual trading. I intend to report on my virtual trades via this blog to see if I'm any good at it. I don't intend to move away from my long term buy and hold strategy because it has worked well for me so far. In the distant past, I have found it to be very frustrating after thoroughly researching a small/micro-cap company only to watch as the company's share price multi-bags (long term) when you thought how clever you were selling it earlier to realise a (mere) double digit gain. As mentioned yesterday, my mantra is if the story remains in tact, and the company is growing at an acceptable rate, then just buy at a good price and hold (I would add top-up on the dips when Mr Market turns miserable and throws the baby out with the bathwater!!). What is it that Warren Buffett says? Our favourite holding period is forever (or words to that effect).
Anyway, here goes, my first trade is to buy shares in a company called Vesuvius at £4.57. Please note that I haven't researched this company in any depth. What I do know is that the company was originally part of Cookson group until relatively recently. The company demerged with it's spin-off called Alent group.
Vesuvius is a global leader in metal flow engineering, developing, manufacturing and marketing mission-critical ceramic consumable products and systems to demanding applications, primarily in the global steel and foundry industries. Vesuvius also supplies fabricated precious metals to the jewellery industry in Europe and has significant precious metals recycling operations.
Why the trade? Firstly the share price is off it's recent highs of £5+, Directors have been recent purchasers of the shares (not insubstantial amounts), the company pays a dividend of over 3% (easily covered by earnings), it boasts a single digit p/e ratio, and doesn't have much interest on the BBs.
Whilst their interim management statement wasn't exactly inspiring, investors might have missed the fact that margins have improved and management are confident in meeting expectations for the full year.
In addition, Peter Lynch likes "spin-offs". He says:- "Spinoffs of divisions or parts of companies into separate, freestanding entities often result in astoundingly lucrative investments."
I'll let you know when I make a virtual sale, and keep you updated with my virtual trading activity.
Nothing to lose, or indeed nothing to gain.
However, just for a bit of fun, I've decided to try some virtual trading. I intend to report on my virtual trades via this blog to see if I'm any good at it. I don't intend to move away from my long term buy and hold strategy because it has worked well for me so far. In the distant past, I have found it to be very frustrating after thoroughly researching a small/micro-cap company only to watch as the company's share price multi-bags (long term) when you thought how clever you were selling it earlier to realise a (mere) double digit gain. As mentioned yesterday, my mantra is if the story remains in tact, and the company is growing at an acceptable rate, then just buy at a good price and hold (I would add top-up on the dips when Mr Market turns miserable and throws the baby out with the bathwater!!). What is it that Warren Buffett says? Our favourite holding period is forever (or words to that effect).
Anyway, here goes, my first trade is to buy shares in a company called Vesuvius at £4.57. Please note that I haven't researched this company in any depth. What I do know is that the company was originally part of Cookson group until relatively recently. The company demerged with it's spin-off called Alent group.
Vesuvius is a global leader in metal flow engineering, developing, manufacturing and marketing mission-critical ceramic consumable products and systems to demanding applications, primarily in the global steel and foundry industries
. Vesuvius also supplies fabricated precious metals to the jewellery industry in Europe and has significant precious metals recycling operations. Why the trade? Firstly the share price is off it's recent highs of £5+, Directors have been recent purchasers of the shares (not insubstantial amounts), the company pays a dividend of over 3% (easily covered by earnings), it boasts a single digit p/e ratio, and doesn't have much interest on the BBs.
Whilst their interim management statement wasn't exactly inspiring, investors might have missed the fact that margins have improved and management are confident in meeting expectations for the full year.
In addition, Peter Lynch likes "spin-offs". He says:- "Spinoffs of divisions or parts of companies into separate, freestanding entities often result in astoundingly lucrative investments."
I'll let you know when I make a virtual sale, and keep you updated with my virtual trading activity.
Nothing to lose, or indeed nothing to gain.
Saturday 31 May 2014
The Micro-caps of today can become the Large-caps of tomorrow!
Two news items in this week's FT weekend have caught my eye. Firstly there is a full page article entitled "Pharma opens new front in war on cancer". The article is essentially suggesting that the big pharmas may be on the cusp of the biggest breakthrough in cancer therapy for decades, and goes on to describe how several companies including Bristol Myers Squibb, Roche, AstraZeneca, Merck and Glaxo are developing new block buster drugs which could be worth several billions of pounds in revenues should they prove successful.
First and foremost let's hope that most are successful, and that the breakthrough proves to be as exciting as oncologists believe it could be. These drugs could really open up a whole new front in the war on cancer, and potentially prolong and save the lives of many thousands of people.
From an investment point of view, if these companies are successful with their pipeline drugs then clearly their valuations will increase substantially by the boost to their earnings. However, there are a number of hurdles to overcome yet, and it's difficult to predict the potential winners from the also-rans.
It did get me thinking about a company I hold shares in though.
Angle at £35m, is a minnow in comparison to the pharmas mentioned above, but it's Parsortix device is potentially a pivotal tool in any big advances in fighting a whole range of cancers. A non-invasive (simple blood test) way of monitoring the effectiveness of existing and potential drugs (and combinations) in the war on cancer has got to be highly desirable.
A lack of newsflow in recent weeks has meant that Angle's share price has dipped from it's highs whilst the company awaits further feedback from Key Opinion Leaders. However, if the feedback for the Parsortix device continues to be favourable then I fully expect substantial sales to follow, and the share price to resume it's upward trajectory, although ultimately I expect the company to be bought out by one of the majors. Angle have already achieved CE approval for their device, and currently await FDA approval.
The FT Money section also includes a small article on insurance fraud. Most notable is a 34% rise this year in the number of bogus car insurance claims. In fact, motoring accounts for more than three-fifths of fraudulent insurance claims. How long before insurers insist on a Telematics black box in every car? Not long methinks. I'm hanging on tightly to my Trakm8 shares. Right place, at the right time? Here's hoping. Trakm8 is a profitable, cash generative company in a potentially explosive growth industry. The shares are very modestly priced given their prospects.
In a recent blog, I mentioned that buying shares in relatively illiquid small/micro-cap stocks required a "strong stomach" as price fluctuations are often quite severe. Trakm8 is a good example of this type of stock. In my experience, as a long term investor, if the story remains in tact, it's best just to buy and hold. The micro-caps of today can soon become the large-caps of tomorrow!!
Finally, talking of large -cap companies, John Lee has written a brief article in todays' FT and has mentioned that he recently bought shares in Morrison's based on a 6% yield, activist shareholder base and freehold property assets. John Lee is an excellent value investor and ISA millionaire.
If I was interested in an income based portfolio, I'd definitely be adding Morrison's, alongside Sainsbury's, Tesco, GlaxosmithKline and Direct Line. Quality companies which are highly unlikely to go bust anytime soon and pay dividends around the 5% mark.
First and foremost let's hope that most are successful, and that the breakthrough proves to be as exciting as oncologists believe it could be. These drugs could really open up a whole new front in the war on cancer, and potentially prolong and save the lives of many thousands of people.
From an investment point of view, if these companies are successful with their pipeline drugs then clearly their valuations will increase substantially by the boost to their earnings. However, there are a number of hurdles to overcome yet, and it's difficult to predict the potential winners from the also-rans.
It did get me thinking about a company I hold shares in though.
Angle at £35m, is a minnow in comparison to the pharmas mentioned above, but it's Parsortix device is potentially a pivotal tool in any big advances in fighting a whole range of cancers. A non-invasive (simple blood test) way of monitoring the effectiveness of existing and potential drugs (and combinations) in the war on cancer has got to be highly desirable.
A lack of newsflow in recent weeks has meant that Angle's share price has dipped from it's highs whilst the company awaits further feedback from Key Opinion Leaders. However, if the feedback for the Parsortix device continues to be favourable then I fully expect substantial sales to follow, and the share price to resume it's upward trajectory, although ultimately I expect the company to be bought out by one of the majors. Angle have already achieved CE approval for their device, and currently await FDA approval.
The FT Money section also includes a small article on insurance fraud. Most notable is a 34% rise this year in the number of bogus car insurance claims. In fact, motoring accounts for more than three-fifths of fraudulent insurance claims. How long before insurers insist on a Telematics black box in every car? Not long methinks. I'm hanging on tightly to my Trakm8 shares. Right place, at the right time? Here's hoping. Trakm8 is a profitable, cash generative company in a potentially explosive growth industry. The shares are very modestly priced given their prospects.
In a recent blog, I mentioned that buying shares in relatively illiquid small/micro-cap stocks required a "strong stomach" as price fluctuations are often quite severe. Trakm8 is a good example of this type of stock. In my experience, as a long term investor, if the story remains in tact, it's best just to buy and hold. The micro-caps of today can soon become the large-caps of tomorrow!!
Finally, talking of large -cap companies, John Lee has written a brief article in todays' FT and has mentioned that he recently bought shares in Morrison's based on a 6% yield, activist shareholder base and freehold property assets. John Lee is an excellent value investor and ISA millionaire.
If I was interested in an income based portfolio, I'd definitely be adding Morrison's, alongside Sainsbury's, Tesco, GlaxosmithKline and Direct Line. Quality companies which are highly unlikely to go bust anytime soon and pay dividends around the 5% mark.
Avesco - interims due mid-June
Avesco should be reporting interim results around the middle of June. This is an even year which includes the Winter Olympics, the World Cup and the Commonwealth Games. These events should boost earnings, and hopefully expectations for the full year will be in-line with management guidance.
I do expect some exceptional costs associated with their recent restructuring, but this is a cash generative company valued at a substantial discount to NAV which currently pays a generous 5% dividend. What the market may also have overlooked is that Avesco recently bought back 30% of its share capital. This should substantially boost future earnings, and indeed dividend payouts. I expect a hike in the interim and final dividend distribution. Please see my reasoning from a previous blog:-
http://michae1mouse.blogspot.co.uk/2013/12/proposed-share-buy-back-and.html
Other recent news items from Avesco's website include "With CT around the world":-
http://www.ct-group.com/news/ct-around-world
"JVR and Creative Technology Holland Combine Their efforts:-
http://www.ct-group.com/news/%EF%BB%BF%EF%BB%BF%EF%BB%BFjvr-and-creative-technology-holland-combine-their-efforts
and
"CT Streamlines European Operational Structure":-
http://www.ct-group.com/news/ct-streamlines-european-operational-structure
For investors, it's worthwhile visiting their facebook page on a regular basis to keep abreast of the projects they are involved with on a global scale.
https://www.facebook.com/creativetechnologygroup
Avesco has been a fantastic investment for me since I first bought shares back in 2009. However, the company with a market cap. of less than £20m still looks incredibly cheap on all sorts of measures.
http://uk.advfn.com/p.php?pid=charts&symbol=LSE%3AAVS
Please note that the sudden dip on the chart from over £2 to the current price relates to a special dividend payout to shareholders of £1.10 per share.
I do expect some exceptional costs associated with their recent restructuring, but this is a cash generative company valued at a substantial discount to NAV which currently pays a generous 5% dividend. What the market may also have overlooked is that Avesco recently bought back 30% of its share capital. This should substantially boost future earnings, and indeed dividend payouts. I expect a hike in the interim and final dividend distribution. Please see my reasoning from a previous blog:-
http://michae1mouse.blogspot.co.uk/2013/12/proposed-share-buy-back-and.html
Other recent news items from Avesco's website include "With CT around the world":-
http://www.ct-group.com/news/ct-around-world
"JVR and Creative Technology Holland Combine Their efforts:-
http://www.ct-group.com/news/%EF%BB%BF%EF%BB%BF%EF%BB%BFjvr-and-creative-technology-holland-combine-their-efforts
and
"CT Streamlines European Operational Structure":-
http://www.ct-group.com/news/ct-streamlines-european-operational-structure
For investors, it's worthwhile visiting their facebook page on a regular basis to keep abreast of the projects they are involved with on a global scale.
https://www.facebook.com/creativetechnologygroup
Avesco has been a fantastic investment for me since I first bought shares back in 2009. However, the company with a market cap. of less than £20m still looks incredibly cheap on all sorts of measures.
http://uk.advfn.com/p.php?pid=charts&symbol=LSE%3AAVS
Please note that the sudden dip on the chart from over £2 to the current price relates to a special dividend payout to shareholders of £1.10 per share.
Wednesday 28 May 2014
Belgravium Technologies and Avanti Communications
Belgravium Technologies have released an encouraging AGM trading statement this morning, alongside a contract win for around £420,000 with a European airline operator. Trading in the year to date is "significantly ahead of the equivalent period last year", although they also add that "it has commenced more slowly than anticipated". They also state that their new sales strategy has created a good deal of opportunity, and that the separately announced contract is in addition to an earlier contract win of £1.1m with First Great Western.
Significantly, cash flow looks strong and they now have £1.9m cash on the balance sheet which is similar to that prior to the Feedback acquisition.
Last year's earnings were around 0.4p, so if they are significantly ahead of this figure then the forward PE will be a single digit for 2014. Broker forecasts for the dividend payout, at 0.2p, would be double 2013's distribution, and amount to around 4.7% at the current share price.
I like these small, profitable and cash generative companies which can demonstrate good growth at a reasonable price. In fact BVM looks cheap to me.
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11967696
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11967603
In other news, Avanti Communications have announced yet another contract win.
Whilst an investment here is highly speculative, the quality and quantity of contract wins in recent weeks and months is very encouraging, and I intend to hold on and watch developments.
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11967629
Significantly, cash flow looks strong and they now have £1.9m cash on the balance sheet which is similar to that prior to the Feedback acquisition.
Last year's earnings were around 0.4p, so if they are significantly ahead of this figure then the forward PE will be a single digit for 2014. Broker forecasts for the dividend payout, at 0.2p, would be double 2013's distribution, and amount to around 4.7% at the current share price.
I like these small, profitable and cash generative companies which can demonstrate good growth at a reasonable price. In fact BVM looks cheap to me.
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11967696
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11967603
In other news, Avanti Communications have announced yet another contract win.
Whilst an investment here is highly speculative, the quality and quantity of contract wins in recent weeks and months is very encouraging, and I intend to hold on and watch developments.
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11967629
Saturday 24 May 2014
7Digital reverses into UBC
After nearly six months suspended from the stock market following it's stated intention to acquire 7Digital, UBC Media shares returned to the stock market on Tuesday. The share price immediately slumped by 50%, and has remained at around 3.125p since its reinstatement. Having been out all day, it was a bit of a surprise (to say the least!) to return and see such a dramatic fall. Before reading the RNS I assumed that the acquisition had fallen through. However, this was not the case, and the reason for the fall was the share issue priced at 2.7p to pay for the acquisition, and to raise additional working capital. UBC will change it's name to 7Digital, and the reversal will take place on 10th June if it is approved by shareholders at a General Meeting on the 9th June. The share capital will also undergo a 10 for 1 consolidation on the same date.
UBC's share price movement was in stark contrast to that of Audioboom (formerly One Delta) where the share price has more than doubled since it's reversal.
Whilst it's disappointing for UBC shareholders to wait six months only to see the share price fall so dramatically when it eventually relisted, some perspective is required.
Firstly when UBC's shares were temporarily suspended in November at around 6p, the shares had only recently been lifted to this price in a matter of days by speculators. The market cap. of around £11m would be difficult to justify given that UBC is loss making (and has been for a number of years) with recently reported year end revenues of just £2.9m.
Secondly, UBC needed to add considerable scale to it's business. It's done just that through the acquisition of 7Digital. You might argue that it should have just reversed in Audioboom, but whilst that may have had a more positive effect on the share price in the short term, for longer term investors I think a finger in both pies could be far more lucrative.
Thirdly, 7Digital (UBC) holds a near 20% shareholding in Audioboom. Any increases in Audioboom's share price will enhance the NAV of 7Digital. BOOM's current market cap. is worth just over £4.4m to 7Digital (UBC).
Both 7Digital and Audioboom are both highly speculative investments. However, Audioboom is yet to monitise it's business model whilst 7Digital boasts yearly revenues of over £11m. 7digital's unaudited management accounts for the quarter ended 31 March 2014 showed a 34 per cent. year-on-year increase in monthly recurring technology licensing revenue to £1,075,000 (2013: £800,000) with an overall gross margin for the business of 50.3 per cent. (2013: 45.2 per cent.). Furthermore, at the end of December 2013 the normalised yearly run-rate of monthly recurring technology licensing revenue was £4.6 million (2012: £2.5 million).
When 7Digital reverses into UBC on 10 June, the enlarged group will be worth around £33m at the current share price of 31.25p (post-consolidation). That doesn't sound too outrageous to me for what has the potential to be a very exciting growth story, particularly when combined with its 20% shareholding in Audioboom.
7Digital will also boast a heavy-weight board of Directors who should be able to steer the combined company in an upward trajectory. Simon Cole CEO of UBC Media states:- "our joint management teams have already started winning business together and I am confident that the combination of our combined global networks in technology and media will create an opportunity on the London market for investors to benefit from the growth of this dynamic sector."
At Audioboom, Rob Proctor CEO of the company states :- "We are working on a number of exciting developments, particularly in the US and Australia, which already account for a large proportion of our traffic, and have just opened our New York and Brisbane offices. We believe there are a number of potentially transformational deals for Audioboom in the US, Australia and Europe and I look forward to announcing developments in the near future."
Of course, 7Digital and/or Audioboom may or may not prove to be good investments over the longer term. However, at present I'm more than happy to hold on to my shareholding and watch developments with optimism and interest.
When you invest in small/micro-cap companies you have to be prepared to take the rough with the smooth, and possess a strong stomach for often volatile share price movements. However, with a reasonably good eye for spotting opportunities, and a long term buy and hold strategy, profits from your winners will more than make up for any losers in your portfolio.
UBC's share price movement was in stark contrast to that of Audioboom (formerly One Delta) where the share price has more than doubled since it's reversal.
Whilst it's disappointing for UBC shareholders to wait six months only to see the share price fall so dramatically when it eventually relisted, some perspective is required.
Firstly when UBC's shares were temporarily suspended in November at around 6p, the shares had only recently been lifted to this price in a matter of days by speculators. The market cap. of around £11m would be difficult to justify given that UBC is loss making (and has been for a number of years) with recently reported year end revenues of just £2.9m.
Secondly, UBC needed to add considerable scale to it's business. It's done just that through the acquisition of 7Digital. You might argue that it should have just reversed in Audioboom, but whilst that may have had a more positive effect on the share price in the short term, for longer term investors I think a finger in both pies could be far more lucrative.
Thirdly, 7Digital (UBC) holds a near 20% shareholding in Audioboom. Any increases in Audioboom's share price will enhance the NAV of 7Digital. BOOM's current market cap. is worth just over £4.4m to 7Digital (UBC).
Both 7Digital and Audioboom are both highly speculative investments. However, Audioboom is yet to monitise it's business model whilst 7Digital boasts yearly revenues of over £11m. 7digital's unaudited management accounts for the quarter ended 31 March 2014 showed a 34 per cent. year-on-year increase in monthly recurring technology licensing revenue to £1,075,000 (2013: £800,000) with an overall gross margin for the business of 50.3 per cent. (2013: 45.2 per cent.). Furthermore, at the end of December 2013 the normalised yearly run-rate of monthly recurring technology licensing revenue was £4.6 million (2012: £2.5 million).
When 7Digital reverses into UBC on 10 June, the enlarged group will be worth around £33m at the current share price of 31.25p (post-consolidation). That doesn't sound too outrageous to me for what has the potential to be a very exciting growth story, particularly when combined with its 20% shareholding in Audioboom.
7Digital will also boast a heavy-weight board of Directors who should be able to steer the combined company in an upward trajectory. Simon Cole CEO of UBC Media states:- "our joint management teams have already started winning business together and I am confident that the combination of our combined global networks in technology and media will create an opportunity on the London market for investors to benefit from the growth of this dynamic sector."
At Audioboom, Rob Proctor CEO of the company states :- "We are working on a number of exciting developments, particularly in the US and Australia, which already account for a large proportion of our traffic, and have just opened our New York and Brisbane offices. We believe there are a number of potentially transformational deals for Audioboom in the US, Australia and Europe and I look forward to announcing developments in the near future."
Of course, 7Digital and/or Audioboom may or may not prove to be good investments over the longer term. However, at present I'm more than happy to hold on to my shareholding and watch developments with optimism and interest.
When you invest in small/micro-cap companies you have to be prepared to take the rough with the smooth, and possess a strong stomach for often volatile share price movements. However, with a reasonably good eye for spotting opportunities, and a long term buy and hold strategy, profits from your winners will more than make up for any losers in your portfolio.
Sunday 18 May 2014
Bull markets and Telematics
The bull market has been running for 5 years now, so surely we are due a bear market phase shortly. Not so according to Ken Fisher in his weekend article entitled "Back to the future as we rerun the nineties"
http://search.ft.com/search?queryText=back+to+the+future+as+we+rerun
You will need to be a subscriber or buy the paper for the full text.
It's an excellent article that draws a startling number of parallels between now and 1995 when the bull market ran for a further five years. He writes :-
"Then, as now, a five-year-old bull was still in its early stages. Small stocks had beaten large ones and US stocks had beaten the world. After stocks rose sharply in 1995, fear of heights was catching, just as it is today after 2013's big gains. Folks fretted that the bull was losing steam and couldn't fathom it lasting years more. It did.".
He talks about investors memories of the IPO frenzy, but points out that in the mid 90s mature firms such as Alcatel-Lucent, and Andarko floated and it was only at the end of the decade that companies such as Netscape - exciting technology that later became obsolete came to the stock market. He goes on "Those (later) memories drive jitters over Facebook today, but recent IPOs are mature, quality offerings such as Hilton and Container Store. This is a sign of rising optimism - just like the mid-1990s. No euphoria then, none now."
Whilst I consider myself a stock picker and long term investor with little interest in macro conditions, I believe that he may be right and this bull has a few more years to run yet.
I don't think investors have truly grasped the enormity of the financial crisis and deep recession or indeed the subsequent opportunity it presented to investors to pick up great stocks in a sort of "sale of the century". I said at the time and still believe that 2009 was a once in a lifetime opportunity to build a great portfolio at ludicrously low prices. The events that took place were unprecedented in recent living memory and global recovery is still in its infancy.
Whilst many p/e ratios may looked stretched, they may look less so when economic recovery moves rapidly through the gears. Other factors to consider are whilst interest rates remain at historic lows with no immediate threat of increasing, where else can you get a decent return on your money? Finally it is interesting to note that many Directors are snapping up shares in their own companies like they're going out of fashion despite (in some cases) their shares have risen considerably in the past 5 years. From a contrarian point of view, many traders and investment managers have already increased their cash piles. Bear markets are rarely anticipated.
I currently see no reason to sell any of my holdings, and touch-wood I have been very pleased with their progress where recent RNS releases have been very encouraging. As ever, I constantly keep my eye out for any bargains that may arise through irrational selling, or any other reasons. Mr Market always provides opportunities.
Moving on to one of my current portfolio favourites - TRAKM8 - this weeks Sunday Telegraph has made me think that as optimistic as I am about this company's future, its recent trading statement and tie up with Direct Line Insurance (sole supplier), perhaps even I've underestimated just what a potentially exciting area and company this could turn out to be. On the front page of today's Sunday Telegraph and in their money section we have:-
"Drivers to have a spy in the car"
http://www.telegraph.co.uk/finance/personalfinance/insurance/motorinsurance/10837263/Drivers-without-insurance-black-box-could-be-forced-off-the-road-within-10-years.html
Some of the key paragraphs include:-
"Drivers will within 10 years face inflated insurance premiums – or even be forced off the road – unless they allow their driving to be monitored at all times by tracking technology."
"Tom Ellis of Gocompare, the insurance comparison website, who spoke at the British Insurance Brokers' Association (Biba) seminar, told The Telegraph: "In 10 years' time there will still be customers who prefer not to have a telematics device installed, [but] it will be an opt-out situation, rather than an opt-in. "
"The technology will soon be fitted in new cars as standard. Under EU regulations, all new cars will need black box-style technology, known as eCall, from October 2015, to help emergency services find crashed vehicles. "
"Direct Line this year launched a self-install device available to all drivers, which it said could save young drivers up to 25pc. The firm said drivers with the best driving records could get a 40pc discount on renewal. "
It's worth reading the full article but it also includes this:-
"Penny Searles, managing director of the firm, said: "We are seeing a tipping point this year, where more insurers are making this technology available to the mass market. "
From Trakm8's recent trading statement they also talk about this year being a tipping point for their Telematics solutions. The market is potentially massive, and the sole supplier agreement that Trakm8 has with Direct Line is a hugely significant milestone.
Without trying to get too overexcited, Trakm8 are operating profitably with excellent cashflow, a high percentage of recurring revenues and gross margins (last reported) above 70% in a potentially explosive growth area. The market cap. is still just under £25m. If the company continues to develop in the way it has so far then it could potentially be worth many hundreds of millions in the not too distant future.
Here's hoping anyway.
http://search.ft.com/search?queryText=back+to+the+future+as+we+rerun
You will need to be a subscriber or buy the paper for the full text.
It's an excellent article that draws a startling number of parallels between now and 1995 when the bull market ran for a further five years. He writes :-
"Then, as now, a five-year-old bull was still in its early stages. Small stocks had beaten large ones and US stocks had beaten the world. After stocks rose sharply in 1995, fear of heights was catching, just as it is today after 2013's big gains. Folks fretted that the bull was losing steam and couldn't fathom it lasting years more. It did.".
He talks about investors memories of the IPO frenzy, but points out that in the mid 90s mature firms such as Alcatel-Lucent, and Andarko floated and it was only at the end of the decade that companies such as Netscape - exciting technology that later became obsolete came to the stock market. He goes on "Those (later) memories drive jitters over Facebook today, but recent IPOs are mature, quality offerings such as Hilton and Container Store. This is a sign of rising optimism - just like the mid-1990s. No euphoria then, none now."
Whilst I consider myself a stock picker and long term investor with little interest in macro conditions, I believe that he may be right and this bull has a few more years to run yet.
I don't think investors have truly grasped the enormity of the financial crisis and deep recession or indeed the subsequent opportunity it presented to investors to pick up great stocks in a sort of "sale of the century". I said at the time and still believe that 2009 was a once in a lifetime opportunity to build a great portfolio at ludicrously low prices. The events that took place were unprecedented in recent living memory and global recovery is still in its infancy.
Whilst many p/e ratios may looked stretched, they may look less so when economic recovery moves rapidly through the gears. Other factors to consider are whilst interest rates remain at historic lows with no immediate threat of increasing, where else can you get a decent return on your money? Finally it is interesting to note that many Directors are snapping up shares in their own companies like they're going out of fashion despite (in some cases) their shares have risen considerably in the past 5 years. From a contrarian point of view, many traders and investment managers have already increased their cash piles. Bear markets are rarely anticipated.
I currently see no reason to sell any of my holdings, and touch-wood I have been very pleased with their progress where recent RNS releases have been very encouraging. As ever, I constantly keep my eye out for any bargains that may arise through irrational selling, or any other reasons. Mr Market always provides opportunities.
Moving on to one of my current portfolio favourites - TRAKM8 - this weeks Sunday Telegraph has made me think that as optimistic as I am about this company's future, its recent trading statement and tie up with Direct Line Insurance (sole supplier), perhaps even I've underestimated just what a potentially exciting area and company this could turn out to be. On the front page of today's Sunday Telegraph and in their money section we have:-
"Drivers to have a spy in the car"
http://www.telegraph.co.uk/finance/personalfinance/insurance/motorinsurance/10837263/Drivers-without-insurance-black-box-could-be-forced-off-the-road-within-10-years.html
Some of the key paragraphs include:-
"Drivers will within 10 years face inflated insurance premiums – or even be forced off the road – unless they allow their driving to be monitored at all times by tracking technology."
"Tom Ellis of Gocompare, the insurance comparison website, who spoke at the British Insurance Brokers' Association (Biba) seminar, told The Telegraph: "In 10 years' time there will still be customers who prefer not to have a telematics device installed, [but] it will be an opt-out situation, rather than an opt-in. "
"The technology will soon be fitted in new cars as standard. Under EU regulations, all new cars will need black box-style technology, known as eCall, from October 2015, to help emergency services find crashed vehicles. "
"Direct Line this year launched a self-install device available to all drivers, which it said could save young drivers up to 25pc. The firm said drivers with the best driving records could get a 40pc discount on renewal. "
It's worth reading the full article but it also includes this:-
"Penny Searles, managing director of the firm, said: "We are seeing a tipping point this year, where more insurers are making this technology available to the mass market. "
From Trakm8's recent trading statement they also talk about this year being a tipping point for their Telematics solutions. The market is potentially massive, and the sole supplier agreement that Trakm8 has with Direct Line is a hugely significant milestone.
Without trying to get too overexcited, Trakm8 are operating profitably with excellent cashflow, a high percentage of recurring revenues and gross margins (last reported) above 70% in a potentially explosive growth area. The market cap. is still just under £25m. If the company continues to develop in the way it has so far then it could potentially be worth many hundreds of millions in the not too distant future.
Here's hoping anyway.
Monday 5 May 2014
Trakm8 telematics - A Direct Line to success?
This is just a short blog after some reading and a little bit more thinking about the future of Trakm8 and telematics. Firstly, after wading through several hundred posts on the Advfn Quindell thread, I did actually read one that was useful which was simply the link below:-
http://www.telematics.com/telematics-blog/telematics-stay/
Whilst there is no mention of Trakm8 (Trakm8's clients now include Direct Line, Eon, St Gobain, the AA and Fujitsu), it does imply that telematics is at a key juncture which tallies with John Watkins' (Executive Chairman of Trakm8) outlook statement at the half-year where he states that a tipping point in mass market adoption of telematics appears to have been reached.
Bearing in mind Trakm8's Friday announcement of it's contract win with Direct Line as sole telematics supplier of self install devices, I then read Direct Line's recent trading statement which has this to say about its roll-out:-
"On 23 April 2014 the Group launched its self-install telematics proposition in the UK after a successful pilot. The Group believes this positions it as one of the leaders in developing the telematics market and enables it to offer telematics to a broader range of customers. Take-up remains strong in Direct Line new policies with one in five under 25 year olds electing for telematics."
No wonder John Watkins describes the partnership as a key milestone for Trakm8.
Even after Friday's share price rise, at 72p Trakm8 is still a minnow with a valuation of just less than £21m. With a short, medium and long term view I'm getting increasingly excited about Trakm8's prospects. Interestingly employees and others seem to share my enthusiasm and have been acquiring shares out of treasury with the last purchases at a price of 69.5p.
N.B. I don't have any interest in Quindell apart from its involvement in Telematics.
http://www.telematics.com/telematics-blog/telematics-stay/
Whilst there is no mention of Trakm8 (Trakm8's clients now include Direct Line, Eon, St Gobain, the AA and Fujitsu), it does imply that telematics is at a key juncture which tallies with John Watkins' (Executive Chairman of Trakm8) outlook statement at the half-year where he states that a tipping point in mass market adoption of telematics appears to have been reached.
Bearing in mind Trakm8's Friday announcement of it's contract win with Direct Line as sole telematics supplier of self install devices, I then read Direct Line's recent trading statement which has this to say about its roll-out:-
"On 23 April 2014 the Group launched its self-install telematics proposition in the UK after a successful pilot. The Group believes this positions it as one of the leaders in developing the telematics market and enables it to offer telematics to a broader range of customers. Take-up remains strong in Direct Line new policies with one in five under 25 year olds electing for telematics."
No wonder John Watkins describes the partnership as a key milestone for Trakm8.
Even after Friday's share price rise, at 72p Trakm8 is still a minnow with a valuation of just less than £21m. With a short, medium and long term view I'm getting increasingly excited about Trakm8's prospects. Interestingly employees and others seem to share my enthusiasm and have been acquiring shares out of treasury with the last purchases at a price of 69.5p.
N.B. I don't have any interest in Quindell apart from its involvement in Telematics.
Sunday 4 May 2014
Ignore market conditions and take the long term view
Friday brought further good news for my holding in Trakm8 with the announcement it had been appointed the sole telematics supplier of self-install devices to Direct Line Group for the recently launched Direct Line DrivePlus Plug-in device. It was confirmation of the significant hardware order Trakm8 announced on 13 January 2014.
John Watkins, Executive Chairman of Trakm8 commented:
"This is a key milestone for Trakm8, as Direct Line Group launches a step-change in telematics for UK consumers. This proposition accelerates the awareness of telematics as an effective tool to improve driving skills and reduce fuel costs. We look forward to building on this relationship further as consumers adopt the Plug-in device."
Trakm8 continues to make excellent progress, and boasts a high percentage of recurring revenues which provide the financial stability from which the company can accelerate its growth.
The recent April trading statement was also very encouraging. The share price rose by 9% on Friday and the current market cap. is around £21m:-
http://michae1mouse.blogspot.co.uk/2014/04/trading-statement-trakm8.html
Avanti Communications also released news of a contract win on Friday with Avonline Broadband. This is a multi-million dollar contract extension, and follows on from a very encouraging rate of contract wins that the company has announced in recent months.
Whilst this is a speculative holding for me, the recent spate of newsflow fills me with cautious optimism, and I continue to hold the shares.
On a separate note, those of you who regularly read my blog will recognise that I am a long term holder of shares, and have very little interest in the general direction of the main indices, I am only ever interested in individual companies and whether or not they look cheap and are worthy of consideration. Buffet's recent letter to Berkshire's shareholder's is well worth reading if you haven't already:-
http://michae1mouse.blogspot.co.uk/2014/03/buffets-letter-to-shareholders.html
Particularly this line:-
"Forming macro opinions or listening to the macro or market predictions of others is a waste of time".
Consider this: in around 2002, all seemed lost in a group called Ashtead, and I distinctly remember watching the share price fall to 1.5p, and considered having a punt. However, I didn't, but did buy some later at 15p when the shares had already 10 bagged from this low point. I later sold the shares for a modest profit. Shares in Ashtead currently stand at £8.73. A £1000 investment at 1.5p would currently be worth £582,000, and at 15p £58,200. Not a bad return over 12 years I'd suggest. Financial crisis!! Who cares if you're a reasonable stock picker with a long term view?
John Watkins, Executive Chairman of Trakm8 commented:
"This is a key milestone for Trakm8, as Direct Line Group launches a step-change in telematics for UK consumers. This proposition accelerates the awareness of telematics as an effective tool to improve driving skills and reduce fuel costs. We look forward to building on this relationship further as consumers adopt the Plug-in device."
Trakm8 continues to make excellent progress, and boasts a high percentage of recurring revenues which provide the financial stability from which the company can accelerate its growth.
The recent April trading statement was also very encouraging. The share price rose by 9% on Friday and the current market cap. is around £21m:-
http://michae1mouse.blogspot.co.uk/2014/04/trading-statement-trakm8.html
Avanti Communications also released news of a contract win on Friday with Avonline Broadband. This is a multi-million dollar contract extension, and follows on from a very encouraging rate of contract wins that the company has announced in recent months.
Whilst this is a speculative holding for me, the recent spate of newsflow fills me with cautious optimism, and I continue to hold the shares.
On a separate note, those of you who regularly read my blog will recognise that I am a long term holder of shares, and have very little interest in the general direction of the main indices, I am only ever interested in individual companies and whether or not they look cheap and are worthy of consideration. Buffet's recent letter to Berkshire's shareholder's is well worth reading if you haven't already:-
http://michae1mouse.blogspot.co.uk/2014/03/buffets-letter-to-shareholders.html
Particularly this line:-
"Forming macro opinions or listening to the macro or market predictions of others is a waste of time".
Consider this: in around 2002, all seemed lost in a group called Ashtead, and I distinctly remember watching the share price fall to 1.5p, and considered having a punt. However, I didn't, but did buy some later at 15p when the shares had already 10 bagged from this low point. I later sold the shares for a modest profit. Shares in Ashtead currently stand at £8.73. A £1000 investment at 1.5p would currently be worth £582,000, and at 15p £58,200. Not a bad return over 12 years I'd suggest. Financial crisis!! Who cares if you're a reasonable stock picker with a long term view?
BOOM.....!!! One Delta rises more than 100% on Audioboo reversal
Unexpectedly, Friday turned out to be an eventful day for three of my current holdings.
Firstly, on Thursday, One Delta released news that the acquisition through a reverse takeover of Audioboo had been agreed subject to shareholder approval with the new company to be rebranded as Audioboom. Whilst I don't hold shares in One Delta, I indirectly have a proportionate 20% stake in the company through holding shares in UBC Media. One Delta's shares returned to the market on Friday after a period of suspension, and soared over 100% in a day. It's highly speculative of course since the company is not set to make any meaningful revenues in 2014 whilst it concentrates its efforts in rapidly growing the volume of content, investing in technology, increasing the number of registered users, listens-per-user and content partners. At the current share price of 3.625p, the market cap. of the enlarged group would stand at just under £17m which clearly can't be justified on fundamentals, but compared with the multi-billion dollar valuations of other successful social networking sites, it could turn out to be grossly undervalued (Twitter is currently valued at around $22billion).
This is great news for UBC Media holders, Simon Cole, CEO of UBC Media, will become a Non-Executive Director of Audioboom, and UBC will be its largest shareholder with around 20% (including warrants), and bodes well for their own reverse takeover of 7Digital.
7digital have grown revenues 289% over the past five years, and details of the reverse takeover are expected in May (I anticipate that this could be as early as next week) at which time UBC Media shares will return from suspension. It appears that investor appetite for these types of companies remains high, and I expect 7Digital's listing to be very favourably received by the market. Of course there are no guarantees, and we shall just have to wait and see, but I do like the potential synergies that exist between 7Digital, UBC Media and Audioboom.
N.B. Previous blog on UBC Media :-
http://michae1mouse.blogspot.co.uk/2014/03/ubc-media-trakm8-and-synety.html
Firstly, on Thursday, One Delta released news that the acquisition through a reverse takeover of Audioboo had been agreed subject to shareholder approval with the new company to be rebranded as Audioboom. Whilst I don't hold shares in One Delta, I indirectly have a proportionate 20% stake in the company through holding shares in UBC Media. One Delta's shares returned to the market on Friday after a period of suspension, and soared over 100% in a day. It's highly speculative of course since the company is not set to make any meaningful revenues in 2014 whilst it concentrates its efforts in rapidly growing the volume of content, investing in technology, increasing the number of registered users, listens-per-user and content partners. At the current share price of 3.625p, the market cap. of the enlarged group would stand at just under £17m which clearly can't be justified on fundamentals, but compared with the multi-billion dollar valuations of other successful social networking sites, it could turn out to be grossly undervalued (Twitter is currently valued at around $22billion).
This is great news for UBC Media holders, Simon Cole, CEO of UBC Media, will become a Non-Executive Director of Audioboom, and UBC will be its largest shareholder with around 20% (including warrants), and bodes well for their own reverse takeover of 7Digital.
7digital have grown revenues 289% over the past five years, and details of the reverse takeover are expected in May (I anticipate that this could be as early as next week) at which time UBC Media shares will return from suspension. It appears that investor appetite for these types of companies remains high, and I expect 7Digital's listing to be very favourably received by the market. Of course there are no guarantees, and we shall just have to wait and see, but I do like the potential synergies that exist between 7Digital, UBC Media and Audioboom.
N.B. Previous blog on UBC Media :-
http://michae1mouse.blogspot.co.uk/2014/03/ubc-media-trakm8-and-synety.html
Wednesday 23 April 2014
Biome Technologies - Worth a punt?
One of today's big risers is a company called Biome Technologies following a positive trading update. I didn't recognise the name at first, but when I glanced at the news I noticed that part of the company is Stanelco. I do remember Stanelco, I seem to remember that they were developing some packaging technology some years ago, but were continually making losses. A real jam tomorrow company. I did follow their fortunes for a while, but lost interest. Is Biome Stanelco in disguise or was it acquired? Perhaps someone can help out here?
Anyway, Biome have released a positive trading update today, and the share price has risen accordingly. In fact by 12% whilst I am writing this article.
The company appears to comprise of two divisions:- A 'Bioplastics Division' and 'Stanelco RF Technologies Division'. In today's first quarter update both divisions are trading well ahead of the same period last year with Bioplastics recording revenues of £0.5m (Q1 2013: £0.2m) and Stanelco revenues of £0.6m (Q1 2013: £0.2m). The cash burn during the period is just £0.1m, 'reflecting increased activity, receipt of deposits for the RF Technologies division and working capital movements.' A confident outlook has been expressed for the year as a whole based upon increasing volumes of Biome's materials being procured in the period for use in the US single-serve coffee market amongst other applications, and Stanelco's order book growing in an encouraging manner with 2014 orders now in excess of the revenues achieved in 2013. Activity has now commenced on the recently announced GBP1.5m contract to supply advanced analytical equipment to a customer in a regulated industry.
Looking at last year's results and today's trading statement, revenues are increasing from a very low base and profitability looks some way off. Cash burn in 2013 was significant. However, if they can continue to control the cash burn whilst accelerating sales then this could be an interesting punt.
Tangible assets come in at £4.4m with no debt, against a market cap. of approx. £4m after today's share price rise. Not one where I'll be chasing up the share price, and I'd definitely need to do more research, but interesting nevertheless.
Anyway, Biome have released a positive trading update today, and the share price has risen accordingly. In fact by 12% whilst I am writing this article.
The company appears to comprise of two divisions:- A 'Bioplastics Division' and 'Stanelco RF Technologies Division'. In today's first quarter update both divisions are trading well ahead of the same period last year with Bioplastics recording revenues of £0.5m (Q1 2013: £0.2m) and Stanelco revenues of £0.6m (Q1 2013: £0.2m). The cash burn during the period is just £0.1m, 'reflecting increased activity, receipt of deposits for the RF Technologies division and working capital movements.' A confident outlook has been expressed for the year as a whole based upon increasing volumes of Biome's materials being procured in the period for use in the US single-serve coffee market amongst other applications, and Stanelco's order book growing in an encouraging manner with 2014 orders now in excess of the revenues achieved in 2013. Activity has now commenced on the recently announced GBP1.5m contract to supply advanced analytical equipment to a customer in a regulated industry.
Looking at last year's results and today's trading statement, revenues are increasing from a very low base and profitability looks some way off. Cash burn in 2013 was significant. However, if they can continue to control the cash burn whilst accelerating sales then this could be an interesting punt.
Tangible assets come in at £4.4m with no debt, against a market cap. of approx. £4m after today's share price rise. Not one where I'll be chasing up the share price, and I'd definitely need to do more research, but interesting nevertheless.
Monday 21 April 2014
The low p/e, small cap., high yielders vs. FTSE all-share
In January I started a study to see how a small portfolio of low p/e, small cap., high yielders would perform against the FTSE all-share index. The nine selected shares are listed in the link below:-
http://michae1mouse.blogspot.co.uk/search?updated-max=2014-01-06T12:56:00-08:00&max-results=3&start=12&by-date=false
Whilst I don't own shares in any of the nine companies, I did make some initial observations after some cursory research which can be seen in subsequent blogs:-
http://michae1mouse.blogspot.co.uk/2014/01/21st-century-technology-plc.html
http://michae1mouse.blogspot.co.uk/2014/01/fairpoint-and-h-group.html
http://michae1mouse.blogspot.co.uk/2014/01/ms-international-and-hydro-international.html
http://michae1mouse.blogspot.co.uk/2014/02/quarto-group-tandem-and-walker-crips.html
So how is this portfolio performing so far? Well whilst the FTSE-all share has fallen from 3605 to 3554, a 2.3% decline, the value portfolio has got off to a flying start, and is up 10.1% for the year to date. In fact just three of the selections are showing a loss whilst the other six have made impressive gains.
The star performer is Tandem with a gain of 40%. This has been driven by the release of better than anticipated end of year results and a positive outlook. Whilst revenues and EPS were down on last year, as expected, the dividend payment has been hiked by 4.5% and they state that revenue for the first quarter is well ahead of the corresponding period in the prior year.
The next best performer is MS International with a 16.1% gain. I can't see any specific company news to have driven the share price forward, but there have been some confidence boosting Director purchases.
Fairpoint has currently recorded a gain of 15%. Fairpoint recently released a good set of prelims. where, although revenues were slightly down, adjusted EPS had improved, they reported strong cash flow and improved the dividend pay-out by 9%.
An encouraging trading statement from Walker Crips has driven the share price 13.4% higher and Director purchases appear to have added to the growing confidence.
H&T has gained a respectable 9%. This was even better until recently when an expected bargain basement purchase of certain assets from Albermarle and Bond fell through. H&T also released their final results where they reported on a challenging year with EPS falling 63% and a reduced dividend (60%) to 4.8p. More positively, net debt had been reduced by 25% to £20.7m.
Quarto Group recorded a more modest gain of 4.6%. Following a challenging year, the group appears more confident about the outlook, they remain focussed on debt reduction, maintained a generous dividend and have recently entered into a joint venture with a Brazilian distributor.
Bisichi Mining is little changed with no notable news flow.
Hydro International is down 4% following final results where EPS halved to 5.15p. They predict a difficult year in 2014, although the dividend was maintained and longer term the management appear confident about the growth prospects.
Finally, the worst performer to date is 21st Century Technology which has lost 12%. Whilst there has been no new news, it appears that the value investor Peter Gyllenhammar has been unwinding his significant percentage holding in the company. The share price has risen a little in the past week or so following his disposal.
It's early days yet, and I'll try to revisit the performance of the portfolio on a fairly regular basis, but certainly it's got off to a flying start in 2014.
http://michae1mouse.blogspot.co.uk/search?updated-max=2014-01-06T12:56:00-08:00&max-results=3&start=12&by-date=false
Whilst I don't own shares in any of the nine companies, I did make some initial observations after some cursory research which can be seen in subsequent blogs:-
http://michae1mouse.blogspot.co.uk/2014/01/21st-century-technology-plc.html
http://michae1mouse.blogspot.co.uk/2014/01/fairpoint-and-h-group.html
http://michae1mouse.blogspot.co.uk/2014/01/ms-international-and-hydro-international.html
http://michae1mouse.blogspot.co.uk/2014/02/quarto-group-tandem-and-walker-crips.html
So how is this portfolio performing so far? Well whilst the FTSE-all share has fallen from 3605 to 3554, a 2.3% decline, the value portfolio has got off to a flying start, and is up 10.1% for the year to date. In fact just three of the selections are showing a loss whilst the other six have made impressive gains.
The star performer is Tandem with a gain of 40%. This has been driven by the release of better than anticipated end of year results and a positive outlook. Whilst revenues and EPS were down on last year, as expected, the dividend payment has been hiked by 4.5% and they state that revenue for the first quarter is well ahead of the corresponding period in the prior year.
The next best performer is MS International with a 16.1% gain. I can't see any specific company news to have driven the share price forward, but there have been some confidence boosting Director purchases.
Fairpoint has currently recorded a gain of 15%. Fairpoint recently released a good set of prelims. where, although revenues were slightly down, adjusted EPS had improved, they reported strong cash flow and improved the dividend pay-out by 9%.
An encouraging trading statement from Walker Crips has driven the share price 13.4% higher and Director purchases appear to have added to the growing confidence.
H&T has gained a respectable 9%. This was even better until recently when an expected bargain basement purchase of certain assets from Albermarle and Bond fell through. H&T also released their final results where they reported on a challenging year with EPS falling 63% and a reduced dividend (60%) to 4.8p. More positively, net debt had been reduced by 25% to £20.7m.
Quarto Group recorded a more modest gain of 4.6%. Following a challenging year, the group appears more confident about the outlook, they remain focussed on debt reduction, maintained a generous dividend and have recently entered into a joint venture with a Brazilian distributor.
Bisichi Mining is little changed with no notable news flow.
Hydro International is down 4% following final results where EPS halved to 5.15p. They predict a difficult year in 2014, although the dividend was maintained and longer term the management appear confident about the growth prospects.
Finally, the worst performer to date is 21st Century Technology which has lost 12%. Whilst there has been no new news, it appears that the value investor Peter Gyllenhammar has been unwinding his significant percentage holding in the company. The share price has risen a little in the past week or so following his disposal.
It's early days yet, and I'll try to revisit the performance of the portfolio on a fairly regular basis, but certainly it's got off to a flying start in 2014.
Sunday 13 April 2014
Access Intelligence - Final results
The last time I reported on my holding in Access Intelligence was back in October following a mild profits warning from the company:-
http://michae1mouse.blogspot.co.uk/2013/10/access-intelligence.html
At the end of the post I stated that I might add to my holding on further weakness, and that's exactly what I did at prices around and below 3p.
At the beginning of the month, the company reported their annual results with turnover up 4% at £8.4m, contracted not yet invoiced revenue up 21% to £6.6m, recurring revenue up 9% to £6m at 72% of sales, adjusted EBITDA up 57% to £576,000 and a cash balance of £1.5m.
The company reported a loss, but this is substantially due to the impairment of intangibles, otherwise the operating profit was a modest £77,000.
Over the last couple of years, Access Intelligence has invested heavily in product development to deliver long term shareholder value, and there are signs that the company is beginning to see the benefits of this investment with the number of new contracts that it has signed and the increase in contracted revenue not yet invoiced.
As with Trakm8, future visibility is good since recurring revenues are a significant percentage of sales and the company has strong cash generation. This is a small company which is making steady progress, but is well under the radar of many investors at the moment.
Another attractive feature is it's hugely impressive and wide client base:- BG Group, Debenhams, NHS, Metropolitan Police, AstraZeneca, Investec, Ladbrokes, Met. Office, Centrica, Easyjet, etc. to name just a few.
Following the results Michael Jackson took advantage of the low share price and grabbed £48,000 worth at 3.75p per share. Incidentally, Michael Jackson is former Chairman of PartyGaming plc, Computer Software Group, Planit Holdings and until August 2006 was chairman of FTSE100 company, The Sage Group plc, where he was a Board Director for 23 years and saw the company rise from a market cap of less than £5m to its current valuation of over £3bn.
Maybe he can do for Access Intelligence what he did for Sage Group?
A swish new website went up this week and it's well worth having a good browse:-
http://www.accessintelligence.com/
http://michae1mouse.blogspot.co.uk/2013/10/access-intelligence.html
At the end of the post I stated that I might add to my holding on further weakness, and that's exactly what I did at prices around and below 3p.
At the beginning of the month, the company reported their annual results with turnover up 4% at £8.4m, contracted not yet invoiced revenue up 21% to £6.6m, recurring revenue up 9% to £6m at 72% of sales, adjusted EBITDA up 57% to £576,000 and a cash balance of £1.5m.
The company reported a loss, but this is substantially due to the impairment of intangibles, otherwise the operating profit was a modest £77,000.
Over the last couple of years, Access Intelligence has invested heavily in product development to deliver long term shareholder value, and there are signs that the company is beginning to see the benefits of this investment with the number of new contracts that it has signed and the increase in contracted revenue not yet invoiced.
As with Trakm8, future visibility is good since recurring revenues are a significant percentage of sales and the company has strong cash generation. This is a small company which is making steady progress, but is well under the radar of many investors at the moment.
Another attractive feature is it's hugely impressive and wide client base:- BG Group, Debenhams, NHS, Metropolitan Police, AstraZeneca, Investec, Ladbrokes, Met. Office, Centrica, Easyjet, etc. to name just a few.
Following the results Michael Jackson took advantage of the low share price and grabbed £48,000 worth at 3.75p per share. Incidentally, Michael Jackson is former Chairman of PartyGaming plc, Computer Software Group, Planit Holdings and until August 2006 was chairman of FTSE100 company, The Sage Group plc, where he was a Board Director for 23 years and saw the company rise from a market cap of less than £5m to its current valuation of over £3bn.
Maybe he can do for Access Intelligence what he did for Sage Group?
A swish new website went up this week and it's well worth having a good browse:-
http://www.accessintelligence.com/
Trading statement - Trakm8
Trakm8 released a very encouraging trading update this week indicating that profit for the year ended 31 March was ahead of management expectations. Reassuringly the acquisition, and subsequent integration of BOX telematics into the group, appears to have gone well, and net cash at the end of the year at £0.6m was higher than anticipated.
Most encouragingly, on a like for like basis, Trakm8 orders are up 46% year on year, and the outlook statement indicates that they are now in a strong position to grow faster, and consider further value enhancing acquisitions.
A further caveat to the statement explains that exceeding management expectations this year was "primarily due to elevated levels of increased margin Engineering Services revenues in the final quarter of the financial year. These were very much associated with new projects that although beneficial for the results to 31 March 2014, will be predominantly delivered in the current financial year."
The trading statement also says that "the outlook for the current financial year is more positive than at any time in recent years."
Trakm8 is still a small company, and of course there are inherent risks and potential banana skins as it strives for rapid growth. However, I am very encouraged by their progress to date, and so far the management team have put in an impressive performance. Growth is being achieved through a measured approach without stretching the balance sheet. Comfortingly this is a high margin business with a high percentage of recurring revenues and strong cash flow. Interestingly, although the new financial year has just begun, I noted that future visibility means that management already expects the Group to achieve an improved trading performance in the new financial year, in line with their existing expectations.
On Friday the share price reached a new 52-week high.
The Director's hold sizeable stakes, and I noticed that at the end of the week an employee bought £21,000 worth out of treasury at a price of 60.25p per share.
Current broker forecasts are for 4.3p to end March 2015 putting the shares on a forward P/E of around 14. Given their impressive growth, and the potential for further value enhancing acquisitions, the share price looks good value to me.
I remain highly optimistic about Trakm8's future and shall continue to hold for the foreseeable future.
Most encouragingly, on a like for like basis, Trakm8 orders are up 46% year on year, and the outlook statement indicates that they are now in a strong position to grow faster, and consider further value enhancing acquisitions.
A further caveat to the statement explains that exceeding management expectations this year was "primarily due to elevated levels of increased margin Engineering Services revenues in the final quarter of the financial year. These were very much associated with new projects that although beneficial for the results to 31 March 2014, will be predominantly delivered in the current financial year."
The trading statement also says that "the outlook for the current financial year is more positive than at any time in recent years."
Trakm8 is still a small company, and of course there are inherent risks and potential banana skins as it strives for rapid growth. However, I am very encouraged by their progress to date, and so far the management team have put in an impressive performance. Growth is being achieved through a measured approach without stretching the balance sheet. Comfortingly this is a high margin business with a high percentage of recurring revenues and strong cash flow. Interestingly, although the new financial year has just begun, I noted that future visibility means that management already expects the Group to achieve an improved trading performance in the new financial year, in line with their existing expectations.
On Friday the share price reached a new 52-week high.
The Director's hold sizeable stakes, and I noticed that at the end of the week an employee bought £21,000 worth out of treasury at a price of 60.25p per share.
Current broker forecasts are for 4.3p to end March 2015 putting the shares on a forward P/E of around 14. Given their impressive growth, and the potential for further value enhancing acquisitions, the share price looks good value to me.
I remain highly optimistic about Trakm8's future and shall continue to hold for the foreseeable future.
Saturday 22 March 2014
UBC Media, Trakm8 and Synety
On Monday UBC Media confirmed the reports that had appeared in last Sunday's Telegraph.
They have now signed Heads of Terms with 7digital, outlining the detailed material terms of the potential acquisition of 7digital by UBC. A period of exclusivity exists up to 4 April. Whilst UBC's shares remain suspended until the end of May or the deal falls through, shareholders should at least receive more detail on the acquisition in two or three weeks time. The aim of the merger is to create a new public company via 7digital which will be perfectly placed to exploit the rapidly developing market for online and mobile music services.
Potentially, the new entity could be very exciting, particularly if 7digital can maintain or even improve upon it's current growth rate. 7digital have grown revenues 289% over the past five years:-
http://about.7digital.com/news/7digital-ranked-deloitte-technology-fast-500-emea-2013
In the same announcement UBC revealed that Audioboo is also to list on Aim via a reverse takeover of One Delta. UBC shareholders will retain a 20% holding in the company should the reversal successfully go ahead. Audioboo currently boasts 2.3m registered users, up from 600,000 less than 18 months ago.
It will be interesting to see the market reaction to Audioboo's listing where its initial market cap. will be modest in the extreme when compared to the multi-billion dollar listings of the big name social media sites such as Twitter and Facebook.
Also of interest will be whether Audioboo or 7digital lists first (assuming either go ahead as planned)? Of course if it's Audioboo and they receive a positive response, it will have a material impact on sentiment when 7digital lists.
As a shareholder in UBC Media, I am hoping for a positive response to the developments and remain cautiously optimistic. I await further details.
Trakm8 released news of a further contract win this week from a leading UK wireless security and safety provider with a significant hardware order to manufacture remote wireless fire monitoring products.
The contract is a £680,000 hardware order for remote wireless fire monitoring units with all of the revenues expected in their next financial year commencing 1 April 2014. This hardware order is part of a recently signed supply agreement that is expected to lead to revenues in excess of GBP1m per annum.
This RNSNON may have been missed by many investors, and the company probably still lies well below the radar of many investors.
Significantly, John Watkins, Executive Chairman of Trakm8 commented:
"The scale of this order also underpins our financial expectations for the coming year."
I have high hopes for the future of this excellent little company that is still only valued at around £16.5m.
Finally, Synety released their full year results on Friday which show remarkable growth, albeit from a low base. Whilst this is a highly speculative investment, the signs at this early stage look very encouraging, not least their constant referral to accelerating growth, and 'pushing on an open door' when referring to sales. This confidence has now been backed up by the company promising to provide quarterly updates regarding their KPIs (Key performance indicators). The next one due in less than three weeks time.
Particularly exciting is their entry into the US market where they already have a number of customers using CloudCall. They appear to be 'pushing at an open door' here as well, and I certainly don't recall having invested in any UK company before where US customers are pulling them into their territory.
Early days still with Synety, but potentially very exciting.
At the same time that Synety announced their final results, they also announced a fund raising for £5m through a placing and open offer. The placing and offer is at £2.50 per share which may have appeared a steep discount to the prevailing share price on Thursday evening. However, perspective is everything, and since you could buy the shares at £1.50 or less in the open market less than five months ago (as I did) then to be able to place shares to institutions at a 67% premium to this price in such a short space of time gives you some idea of the rapid progress and confidence they are building. Quite frankly if any company I hold shares in needs to raise capital at a double digit premium to the price I paid just a few short months ago then I'll be quite happy. Of course I always prefer companies to grow without the recourse to capital raisings and the subsequent dilution, but in cases such as Synety's it's a necessary evil. Besides, whilst the share price initially dipped in response to the fund raising, by the end of the day the bid price was back to where it started as investors concentrated on the more important growth figures and outlook statements that had been reported.
I shall continue to hold my shares in this company, and share the Directors confidence in the future.
They have now signed Heads of Terms with 7digital, outlining the detailed material terms of the potential acquisition of 7digital by UBC. A period of exclusivity exists up to 4 April. Whilst UBC's shares remain suspended until the end of May or the deal falls through, shareholders should at least receive more detail on the acquisition in two or three weeks time. The aim of the merger is to create a new public company via 7digital which will be perfectly placed to exploit the rapidly developing market for online and mobile music services.
Potentially, the new entity could be very exciting, particularly if 7digital can maintain or even improve upon it's current growth rate. 7digital have grown revenues 289% over the past five years:-
http://about.7digital.com/news/7digital-ranked-deloitte-technology-fast-500-emea-2013
In the same announcement UBC revealed that Audioboo is also to list on Aim via a reverse takeover of One Delta. UBC shareholders will retain a 20% holding in the company should the reversal successfully go ahead. Audioboo currently boasts 2.3m registered users, up from 600,000 less than 18 months ago.
It will be interesting to see the market reaction to Audioboo's listing where its initial market cap. will be modest in the extreme when compared to the multi-billion dollar listings of the big name social media sites such as Twitter and Facebook.
Also of interest will be whether Audioboo or 7digital lists first (assuming either go ahead as planned)? Of course if it's Audioboo and they receive a positive response, it will have a material impact on sentiment when 7digital lists.
As a shareholder in UBC Media, I am hoping for a positive response to the developments and remain cautiously optimistic. I await further details.
Trakm8 released news of a further contract win this week from a leading UK wireless security and safety provider with a significant hardware order to manufacture remote wireless
fire monitoring products. The contract is a £680,000 hardware order for remote wireless fire monitoring units with all of the revenues expected in their next financial year commencing 1 April 2014. This hardware order is part of a recently signed supply agreement that is expected to lead to revenues in excess of GBP1m per annum.
This RNSNON may have been missed by many investors, and the company probably still lies well below the radar of many investors.
Significantly, John Watkins, Executive Chairman of Trakm8 commented:
"The scale of this order also underpins our financial expectations for the coming year."
I have high hopes for the future of this excellent little company that is still only valued at around £16.5m.
Finally, Synety released their full year results on Friday which show remarkable growth, albeit from a low base. Whilst this is a highly speculative investment, the signs at this early stage look very encouraging, not least their constant referral to accelerating growth, and 'pushing on an open door' when referring to sales. This confidence has now been backed up by the company promising to provide quarterly updates regarding their KPIs (Key performance indicators). The next one due in less than three weeks time.
Particularly exciting is their entry into the US market where they already have a number of customers using CloudCall. They appear to be 'pushing at an open door' here as well, and I certainly don't recall having invested in any UK company before where US customers are pulling them into their territory.
Early days still with Synety, but potentially very exciting.
At the same time that Synety announced their final results, they also announced a fund raising for £5m through a placing and open offer. The placing and offer is at £2.50 per share which may have appeared a steep discount to the prevailing share price on Thursday evening. However, perspective is everything, and since you could buy the shares at £1.50 or less in the open market less than five months ago (as I did) then to be able to place shares to institutions at a 67% premium to this price in such a short space of time gives you some idea of the rapid progress and confidence they are building. Quite frankly if any company I hold shares in needs to raise capital at a double digit premium to the price I paid just a few short months ago then I'll be quite happy. Of course I always prefer companies to grow without the recourse to capital raisings and the subsequent dilution, but in cases such as Synety's it's a necessary evil. Besides, whilst the share price initially dipped in response to the fund raising, by the end of the day the bid price was back to where it started as investors concentrated on the more important growth figures and outlook statements that had been reported.
I shall continue to hold my shares in this company, and share the Directors confidence in the future.
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