In September 2011, I mentioned that I had purchased shares in an outfit called Trakm8.
It's a real tiddler, but I think it has excellent potential.
For almost a year the share price changed very little, and hovered around a mid-price of about 13p. However, recently there have been signs of life, and Friday's mid closing price is 19.5p.
In my opinion this is a great little company. Growth in revenues over the past two years have been 22% and 25% respectively, and in a recent trading statement, it appears that the first few weeks of the new financial year have been encouraging and growth has continued.
The company is profitable, cashflow positive, has a robust balance sheet, healthy margins, and a high percentage of it's revenues are recurring.
Since issuing their results in July, they have announced a major contract award with Motorola Solutions. They have released technology updates and a product launch ("ecoN can enable the vehicle operator to
reduce fleet fuel consumption by up to 20%. This product has already undergone
extensive fleet trials and the savings have been proven." - sounds like a winner with today's sky high fuel prices). The Directors' have made share purchases to the tune of £140,000 (4.2% of the company) at a 21% premium (17p) to the prevailing offer price at the time. Finally they bought back 2% of the issued share capital.
At today's price the company is still only valued at about £3.7m, shares are thinly traded and illiquid, but with a medium to long term horizon I have high hopes and am very encouraged by all of the noises coming out of the company.
I like the management who draw relatively modest salaries but have a lot of 'skin in the game'.
As with all growth companies it's the potential future earnings to keep an eye on, and it's probably not worth guessing this year's EPS figure. However, if they continue with their double digit revenue growth then it's not too difficult to see them earning between £500,000 and £1m profit in the not too distant future which equates to EPS of between 2.6p-5.2p. Apply a modest 12 times earnings and the share price would be between 31p-62p (although proven growth companies often trade on a far higher multiple).
It is a company at an early stage of development and all the usual caveats apply, but so far so good!
Sunday, 21 October 2012
Saturday, 13 October 2012
A bear raid on Avanti
I've always thought that shorting shares (for PIs) is a very risky practice, particularly since it involves spreadbetting (from my understanding) where gains and losses can be very substantial indeed.
However, it hasn't stopped one well-known bear raider, and a few others from shorting Avanti shares following their recent results. Their arguments can be read on the Avanti thread on ADVFN.
As I have already stated in two previous posts, Avanti is a speculative punt for me, but I continue to hold and may add on any further price weakness.
Whilst revenues were well below the level that they had indicated only a month or so earlier, I'm prepared to take their explanation at face value where they say that they have decided to adopt a more conservative approach to aspects of their accounting in preparation for their listing on the main exchange.
Herein probably lies a conundrum for the shorters. They have centred their arguments around Avanti's accounts, and inferred a lack of transparency. However, I'd question why the company would expose itself to the more rigorous scrutiny of the main exchange, if they were trying to keep their accounting practices under wraps. Surely they would have just stuck with AIM and reported the £17.5m in revenues? Furthermore, seven Directors have just picked up another £166,000 worth of shares between them to add to their existing holdings. Either all seven are insane and happy to throw good money after bad or they believe in the future of the company.
With all speculative companies, one of my main worries would be cash and the possibilty that they burn through it too quickly and have to tap shareholders for extra funds. However, Avanti seem to have enough for the forseeable future, and I am reassured by the following statement:-
"The Company also continues to evaluate options for additional satellites, but only if they can be prudently debt financed without recourse to shareholders".
Which clearly suggests they wish to preserve shareholder value.
Futhermore, the bears have conveniently ignored the very positive steps forward that Avanti have made and are achieving. Two fully operational satellites and a further fully financed satellite currently being built. Capacity on the satellites is selling well and on target (£11m per month).
It's also worth noting that the current market value of the company is not substantially above its tangible NAV.
For now I'll assume that Avanti's biggest mistake was not informing investors beforehand of the change in accounting practice. That said, if they had released this news without the positive news about progress, then the shares would probably have fallen further, so in retrospect it was probably the right move to wait.
As I've already said, I wouldn't bet the house on Avanti, but I am still optimistic that over the next few years the company could generate an excellent return.
Good luck to the shorters if they can make some money from a very risky approach, but I'll stick with my long game and avoid all the unnecessary stress. Touch wood it's served me well so far.
However, it hasn't stopped one well-known bear raider, and a few others from shorting Avanti shares following their recent results. Their arguments can be read on the Avanti thread on ADVFN.
As I have already stated in two previous posts, Avanti is a speculative punt for me, but I continue to hold and may add on any further price weakness.
Whilst revenues were well below the level that they had indicated only a month or so earlier, I'm prepared to take their explanation at face value where they say that they have decided to adopt a more conservative approach to aspects of their accounting in preparation for their listing on the main exchange.
Herein probably lies a conundrum for the shorters. They have centred their arguments around Avanti's accounts, and inferred a lack of transparency. However, I'd question why the company would expose itself to the more rigorous scrutiny of the main exchange, if they were trying to keep their accounting practices under wraps. Surely they would have just stuck with AIM and reported the £17.5m in revenues? Furthermore, seven Directors have just picked up another £166,000 worth of shares between them to add to their existing holdings. Either all seven are insane and happy to throw good money after bad or they believe in the future of the company.
With all speculative companies, one of my main worries would be cash and the possibilty that they burn through it too quickly and have to tap shareholders for extra funds. However, Avanti seem to have enough for the forseeable future, and I am reassured by the following statement:-
"The Company also continues to evaluate options for additional satellites, but only if they can be prudently debt financed without recourse to shareholders".
Which clearly suggests they wish to preserve shareholder value.
Futhermore, the bears have conveniently ignored the very positive steps forward that Avanti have made and are achieving. Two fully operational satellites and a further fully financed satellite currently being built. Capacity on the satellites is selling well and on target (£11m per month).
It's also worth noting that the current market value of the company is not substantially above its tangible NAV.
For now I'll assume that Avanti's biggest mistake was not informing investors beforehand of the change in accounting practice. That said, if they had released this news without the positive news about progress, then the shares would probably have fallen further, so in retrospect it was probably the right move to wait.
As I've already said, I wouldn't bet the house on Avanti, but I am still optimistic that over the next few years the company could generate an excellent return.
Good luck to the shorters if they can make some money from a very risky approach, but I'll stick with my long game and avoid all the unnecessary stress. Touch wood it's served me well so far.
Wednesday, 10 October 2012
Avanti results and Disney appeal
I took a brief look at Avanti's results before popping out for the day, and revenues aside, the tone of the report looked upbeat. When I came home to see the drop in the share price, I assumed that both satellites must have fallen to earth later in the day, and that they hadn't been paying the insurance premiums.
Fortunately no such event had occurred, and I took the time to read the report more thoroughly. As I said in my weekend post, this is a speculative punt with a view to the long term. Can't see any reason to change my mind. I'll continue holding, and may add a few if the price dips again. Clearly the Directors still feel confident since the tone of the report is very positive, and five of them have been topping up their holdings at around the £3 mark.
On a separate issue, Disney and Celador were back in court again today. You can see a brief report on the day by following the link below:-
http://www.hollywoodreporter.com/thr-esq/disney-urges-court-appeal-overturn-377909
It would be fantastic for the court to uphold the original verdict, but since Avesco's SP doesn't contain any premium for the possible payout, in my opinion, it's all to gain and nothing to lose.
Avesco is a growing company that will be throwing off cash to its shareholders over the next few years. I think it's undervalued without any payout. Full year figures should be good, and the noises coming out of the company are encouraging. Richard Murray has been a recent purchaser of shares on two separate occasions.
Worth noting that if the Court of Appeal does uphold the verdict then I would expect the SP to double overnight. Although, I'm unclear whether further appeals are possible.
Fortunately no such event had occurred, and I took the time to read the report more thoroughly. As I said in my weekend post, this is a speculative punt with a view to the long term. Can't see any reason to change my mind. I'll continue holding, and may add a few if the price dips again. Clearly the Directors still feel confident since the tone of the report is very positive, and five of them have been topping up their holdings at around the £3 mark.
On a separate issue, Disney and Celador were back in court again today. You can see a brief report on the day by following the link below:-
http://www.hollywoodreporter.com/thr-esq/disney-urges-court-appeal-overturn-377909
It would be fantastic for the court to uphold the original verdict, but since Avesco's SP doesn't contain any premium for the possible payout, in my opinion, it's all to gain and nothing to lose.
Avesco is a growing company that will be throwing off cash to its shareholders over the next few years. I think it's undervalued without any payout. Full year figures should be good, and the noises coming out of the company are encouraging. Richard Murray has been a recent purchaser of shares on two separate occasions.
Worth noting that if the Court of Appeal does uphold the verdict then I would expect the SP to double overnight. Although, I'm unclear whether further appeals are possible.
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