Well we've reached the end of December, and still no word on Disney's intentions. The question is, will they try and pursue a further appeal against paying Celador $324m ($60m is Avesco's share).
Disney have managed to drag this out for several years, but it's difficult to see how they could possibly get this overturned now. Even if they launch a further appeal, is it likely that another court and/or panel of judges will overturn the decision of the original judge and jury and now the ninth court of appeals? It doesn't seem likely to me.
Come on Disney, it's time to pay up.
If Disney do capitulate then Avesco is a doubler in 2013. Avesco have aleady announced that results will be ahead of market expectations, which in itself would more than justify the current share price. If Disney pay up then it's worth a further £1.40ish per share to AVS shareholders. As I've mentioned many times before Avesco is a growing, profitable and cash generative company. I'd expect the share price to move above £3. We'll see.
Talking of doublers in 2013, I notice that there is a thread on the ADVFN bulletin board for suggestions of shares that may increase 100% during 2013. I could nominate Avesco of course, but instead I am going for ANGLE.
Amongst my share purchases this year, I've made two very speculative additions to my portfolio. One I've already mentioned in a previous blog - Avanti Communications and now Angle.
Angle was a red hot stock earlier this year. Great excitement surrounded its Parsortix product when the company released several news stories to the market about its success in capturing circulating tumour cells (CTCs) in various forms of spiked and patient blood. The share price shot up above 90p at one stage as investors speculated about the possible returns from a product that could be launched to a research market worth £250m per annum and the later launch of a clinical product to a market estimated to be worth £6 billion per annum.
Angle also had two other products of note - Geometrics (Computer graphics) and Novocellus (IVF) both of which had/have the potential to generate significant revenues and profits.
So why has the share price capitulated to its current 27p?
Well one reason appears to be that Novocellus has effectively been shelved for the forseeable future, and secondly (possibly) that a Parsortix device was scheduled to be delivered to the research market a month or so earlier than it has been.
Stocks, such as Angle, are in my experience highly volatile and the share price is highly sensitive (more than most) to perceived good and bad news. Hardly surprising since this type of stock is impossible to value on fundamentals. It has a reasonable balance sheet, but burns cash and won't make profits for some time yet.
So why I have bought stock. Quite frankly I've taken a punt.
My only justification is that with a Parsortix device now with their research partners, if successful then it's potential is massive. Without being too dismissive, my impression was that Geometrics and Novocellus were very much secondary to their investment in Parsortix, and the original rise in the share price all centred around this product.
Clearly Angle isn't for widows and orphans since if it all goes pear-shaped with the Parsortix device then (imo) Geometrics by itself won't prop up the share price. However, success with Parsortix will see a multi-bagger.
One other caveat is that Angle will undoubtedly have to raise more cash at some point (unless they make a Geometrics trade sale which they mentioned in the final results - although I have no idea how much that would raise?), but hopefully any placing will be above the current share price of 27p.
Anyway, Angle is my speculative doubler for 2013 and if the Parsortix device does what they hope it can do, it will be a feel good factor from so many perspectives.
A very belated Merry Christmas and a Happy New Year.
Saturday, 29 December 2012
Saturday, 8 December 2012
Appeal falls on deaf ears....
Great news from Avesco this week. Firstly they announced that results would come in ahead of market expectations for the year ending September 2012, and secondly the ninth court of appeals rejected Disney's appeal against Celador and upheld the verdict and payout. This amounts to over £1.40 per share to Avesco shareholders.
Disney do have the right to a further appeal, but the payout now looks almost certain in my view. Where would Disney go from here, and what would they hope to achieve? They lost the jury trial and were originally denied an appeal by the presiding judge. They took their case to the ninth court who have acted quickly in rejecting Disney's appeal. Both appeals were rejected unequivocally. Interestingly the ninth court of appeals indicated that they would reach their decision within 12 months but came back within 2 months. That clearly suggests the decision was relatively easy and in effect can't leave Disney with much hope, if any.
Avesco's shares shot up on the news to above £2 but have since pulled back a little. I expect them to go far higher. Broker forecasts were for EPS in the mid teens, and Avesco have beaten market expectations. Let's assume EPS of around 17p. That puts the shares on a modest rating of around 11 times earnings for a rapidly growing company (albeit on a two year cycle). Fairly modest in itself. Strip out the Disney payment and the P/E ratio falls to about 3. Net tangible asset value is £1.52. In my opinion the shares are worth north of £3 at this stage. The long term outlook is very favourable.
On a separate note, I am also a holder of Interior Services Group. They released an encouraging trading statement on Friday, despite the challenging economic conditions. They pay a very good dividend, and again I view the shares as a long term hold for income and capital gains.
However, I'll leave you with Avesco and one of the many reasons why I'm such a fan of this company. Look at this 3-D projection show by Creative Technology US:-
http://www.youtube.com/watch?v=i7Eqx7oQ0rA
Fantastic.
Disney do have the right to a further appeal, but the payout now looks almost certain in my view. Where would Disney go from here, and what would they hope to achieve? They lost the jury trial and were originally denied an appeal by the presiding judge. They took their case to the ninth court who have acted quickly in rejecting Disney's appeal. Both appeals were rejected unequivocally. Interestingly the ninth court of appeals indicated that they would reach their decision within 12 months but came back within 2 months. That clearly suggests the decision was relatively easy and in effect can't leave Disney with much hope, if any.
Avesco's shares shot up on the news to above £2 but have since pulled back a little. I expect them to go far higher. Broker forecasts were for EPS in the mid teens, and Avesco have beaten market expectations. Let's assume EPS of around 17p. That puts the shares on a modest rating of around 11 times earnings for a rapidly growing company (albeit on a two year cycle). Fairly modest in itself. Strip out the Disney payment and the P/E ratio falls to about 3. Net tangible asset value is £1.52. In my opinion the shares are worth north of £3 at this stage. The long term outlook is very favourable.
On a separate note, I am also a holder of Interior Services Group. They released an encouraging trading statement on Friday, despite the challenging economic conditions. They pay a very good dividend, and again I view the shares as a long term hold for income and capital gains.
However, I'll leave you with Avesco and one of the many reasons why I'm such a fan of this company. Look at this 3-D projection show by Creative Technology US:-
http://www.youtube.com/watch?v=i7Eqx7oQ0rA
Fantastic.
Sunday, 11 November 2012
Trading statements and cashing in a 50% profit
It's been a fairly eventful week, with two of the companies I hold shares in issuing trading statements.
Unfortunately neither statement was particularly pleasing, although it could be argued that neither was disasterous either.
However, I have subsequently sold one of my holdings and retained the other.
The holding I have sold are my shares in Indigovision.
During 2012 the company has been extremely bullish about its prospects, and as I have previously written, when Indigovision increases sales whilst maintaining margins the effect on the bottom line is quite dramatic.
When they issued their final results in September, the tenor of the report gave the impression that 2012/2013 was set to be a year with good growth prospects. In fact having achieved double digit growth in the second half of the year, it mentioned that double digit growth had continued into the new year. I quote " A good start has been made in the current year. Double digit sales growth has continued into the first seven weeks of the current year, and the rate of order intake is equally encouraging."
Barely a few weeks later revenue growth has been reported at 6% and order intake at 10% (just about double digits), more concerning is the fall in margins and the increase in operating expenses.
It begs the question, what exactly has happened in a few brief weeks?
Let's be generous and just say that the trading statement wasn't quite what I was expecting.
I was also a little puzzled by the following:- "As ever, the visibility of future orders remains short.....". Well that's obvious.
But then we have:-
"Given the outstanding performance achieved in last year's first half, we expect benefits to operating performance to be skewed towards the second half of the current year."
So let me get this right. Forward visibility is limited (to say the least), but they expect benefits to operating performance to be skewed towards the second half. How on earth do they have any idea what the second half will look like?
To be honest that line looks like gobbledygook to me. What's the first half of last year got to do with the second half of this year? Perhaps it's just me!!
Anyway, unfortunately I was out on Thursday, pretty confident that the statement would be good, if not great. I was more than a little surprised to see a 65p decline in the SP when I returned home.
My worry is that over the past year or two, there has been more time spent on a power struggle than on improving the performance of the business, and now I'm totally unsure about the prospects here. The picture is very opaque in my view.
I think the company is probably reasonably priced, but for me, the issue of forward visiblity will always be a worry and hence I sold my holding on Friday.
I have no complaints. With the special dividend and some capital growth, I have banked a 50%+ profit in just under a year. As ever, I'll keep them on the monitor, but for the moment I'll invest elsewhere.
Earlier in the week Densitron also gave out a trading statement. The bear points are that they will miss market expectations for the year (delayed orders which will now fall into 2013)and there is ongoing litigation (although they hope to settle out of court). The share price dipped by around 10%.
On a positive note, the possibilty that they would undershoot market expectations, and their intention to resolve the dispute about a lease out of court were flagged up in the interim results and not too much of surprise.
Furthermore, operating profits for the year will still be ahead of 2011 which puts the company on a forward p/e of less than 7. The order book is strong and 10% ahead of the same period last year, with prospects for 2013 looking encouraging.
It appears that the bad news is already in the price. Clearly the uncertainty around the lease dispute is a risk, but a swift and not to painful resolution would see the company back on track and, in my opinion, undervalued on future prospects.
The current dividend is around 7%. I hope this can at least be held, but again I expect that the outcome of the litigation may influence their decision on this year's payment (0.2p was already distributed at the interims).
Unfortunately neither statement was particularly pleasing, although it could be argued that neither was disasterous either.
However, I have subsequently sold one of my holdings and retained the other.
The holding I have sold are my shares in Indigovision.
During 2012 the company has been extremely bullish about its prospects, and as I have previously written, when Indigovision increases sales whilst maintaining margins the effect on the bottom line is quite dramatic.
When they issued their final results in September, the tenor of the report gave the impression that 2012/2013 was set to be a year with good growth prospects. In fact having achieved double digit growth in the second half of the year, it mentioned that double digit growth had continued into the new year. I quote " A good start has been made in the current year. Double digit sales growth has continued into the first seven weeks of the current year, and the rate of order intake is equally encouraging."
Barely a few weeks later revenue growth has been reported at 6% and order intake at 10% (just about double digits), more concerning is the fall in margins and the increase in operating expenses.
It begs the question, what exactly has happened in a few brief weeks?
Let's be generous and just say that the trading statement wasn't quite what I was expecting.
I was also a little puzzled by the following:- "As ever, the visibility of future orders remains short.....". Well that's obvious.
But then we have:-
"Given the outstanding performance achieved in last year's first half, we expect benefits to operating performance to be skewed towards the second half of the current year."
So let me get this right. Forward visibility is limited (to say the least), but they expect benefits to operating performance to be skewed towards the second half. How on earth do they have any idea what the second half will look like?
To be honest that line looks like gobbledygook to me. What's the first half of last year got to do with the second half of this year? Perhaps it's just me!!
Anyway, unfortunately I was out on Thursday, pretty confident that the statement would be good, if not great. I was more than a little surprised to see a 65p decline in the SP when I returned home.
My worry is that over the past year or two, there has been more time spent on a power struggle than on improving the performance of the business, and now I'm totally unsure about the prospects here. The picture is very opaque in my view.
I think the company is probably reasonably priced, but for me, the issue of forward visiblity will always be a worry and hence I sold my holding on Friday.
I have no complaints. With the special dividend and some capital growth, I have banked a 50%+ profit in just under a year. As ever, I'll keep them on the monitor, but for the moment I'll invest elsewhere.
Earlier in the week Densitron also gave out a trading statement. The bear points are that they will miss market expectations for the year (delayed orders which will now fall into 2013)and there is ongoing litigation (although they hope to settle out of court). The share price dipped by around 10%.
On a positive note, the possibilty that they would undershoot market expectations, and their intention to resolve the dispute about a lease out of court were flagged up in the interim results and not too much of surprise.
Furthermore, operating profits for the year will still be ahead of 2011 which puts the company on a forward p/e of less than 7. The order book is strong and 10% ahead of the same period last year, with prospects for 2013 looking encouraging.
It appears that the bad news is already in the price. Clearly the uncertainty around the lease dispute is a risk, but a swift and not to painful resolution would see the company back on track and, in my opinion, undervalued on future prospects.
The current dividend is around 7%. I hope this can at least be held, but again I expect that the outcome of the litigation may influence their decision on this year's payment (0.2p was already distributed at the interims).
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