A quick update on three shares I hold, and have mentioned recently.
ISG kicked off the week with encouraging news about £100m worth of contract wins in the UK and overseas.
David Lawther, ISG Chief Executive, said:
"We continue to see robust demand for our services from our blue-chip customer base, both in the UK and overseas."
Clients include Heathrow airport and Marks and Spencer.
http://www.isgplc.com/home/default.asp
The shares went ex-dividend this week and have dipped a little, but with good news about economic growth in the UK also announced this week, I am optimistic about future prospects here.
River and Mercantile Asset Management picked up an additional 200,000 shares on Friday to increase their holding to above 5%.
Richard Murray, Avesco's Chairman, continued to increase his holding in the group picking up another 20,000 shares at 159p and 160p. Over the last month or so he has topped up his holding by spending around £125,000. He owns over 20% of the company.
It's worth taking a peek at Creative Technology's facebook page for a glimpse of Avesco's recent contract wins:-
http://www.facebook.com/creativetechnologygroup?sk=wall
Notably there is a Brazilian project mentioned which is important given that Brazil will be hosting the next football World Cup and Olympic games.
No news on the Disney case yet, although this is an interesting article:-
http://www.dailybusinessreview.com/PubArticleDBR.jsp?id=1350208605438&9th_Circuit_airs_arguments_over_game_show_Millionaire_profits&slreturn=20120927041916
It hints that Disney's appeal may not be successful.
However, I'm happy to hold these whatever the outcome. This is a growing company that will be throwing off cash in the future. Avesco has performed exceptionally well despite the less than conducive economic conditions.
Finally, Indigovision's former Chief Executive looks to have finally thrown in the towel and has sold his entire holding. Clearly he no longer harbours ambitions about regaining control of the company, which allows management the opportunity to concentrate on moving the business to the next stage without unwelcome distractions.
Saturday, 27 October 2012
Sunday, 21 October 2012
Trakm8 revving up?
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!
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!
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.
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