I find watching the progress of some companies and their share prices mesmerising even when I not actually invested. One such company that currently has me transfixed is Nanoco.
Nanoco is currently valued at around £350m. From their blurb on the website :-
"Nanoco partners major R&D and blue-chip industrial organisations in the
development of applications incorporating semiconductor nanoparticles, “quantum
dots”."
and apparently:-
"Nanoco Technologies is the only manufacturer presently able to supply production
quantities of quantum dots which do not use a regulated heavy metal."
which, from what little snippets of information that I have read, appears to open up a huge market for them. In fact they have recently signed a deal with Dow Chemical and from the interims :-
"Our worldwide licensing agreement with The Dow Chemical Company is transformational for Nanoco. It represents a major endorsement of Nanoco's technology, scalability and market potential."
This all sounds very sexy, and of course Nanoco could become massive, perhaps even a multi-billion dollar company.
Will I be buying shares then? Well certainly not at this valuation.
Firstly, I like to have at least a decent grasp of a company's business before I invest, and I have to be honest and admit that semiconductor nanoparticles are not really something within the realm of my understanding. Perhaps I'll regret not carrying out the necessary research?
However, the main reason to stop me buying is the current valuation based on their interim report.
With a market cap. of around £350m, if we gave Nanoco a p/e of say 25 for a growth company then that would imply an operating profit of £14m.
Currently, revenues for the sixth month period (end Jan 13) are approx £2.5m with an operating loss of £1.2m. Net assets come in at £16.3m. Cash and cash equivalents are around £12.5m down from around £15.5m six months ago. Full commercial production with Dow Chemical is anticipated in 2014.
For me, it would take a massive leap of faith to invest in this company, but clearly traders have been pouring in. Good luck to them and I hope it lives up to expectations, but there is no margin of safety that I can see and let's hope that those buying now are not just being suckered by the 'greater fool' method of trading.
Friday, 12 April 2013
Wednesday, 3 April 2013
An intelligent choice?
Over the past year I have been buying shares in a company called Access Intelligence for prices between 3p-3.75p. This is a micro-cap company which describes itself as a "leading supplier of Software-as-a-Service (SaaS) solutions for the full life cycle management of a company's governance, risk and compliance."
As with all of my share selections, I'm looking at a medium to long term investment and felt that this micro-cap has significant potential. The company has a market cap. of just £9.1m, and the results which were released on March 5th 2013 show that the company produced revenues of just over £8m, and a small loss of £114,000.
On the face of it the results don't look particularly impressive until you dig deeper.
Firstly this is a company that is currently investing heavily in it's future to increase long term shareholder value, and initial indications are that this investment is paying off.
Whilst turnover was up 11% from 2011, most significantly, contracted not yet invoiced revenue was up 101% to GBP5,453,000 (2011: GBP2,713,000) and recurring revenue was up 16% to GBP5,562,000 (2011: GBP4,807,000) at 69% of sales (2011: 66%). Gross margins are a very healthy 70%.
The company also boasts a solid balance sheet with £2.8m cash and very little debt. In fact a small dividend will be paid to shareholders during this month (approx 1.25%) as a sign of their confidence in the future.
There will be continuing investment in 2013 with the full benefits coming through in the latter part of the year, and the company states that "Access Intelligence's solutions are core to companies achieving compliance and there continues to be significant opportunities for growth, both within our enviable customer base and regulated markets as a whole."
The shares leapt an impressive 23% today, although the reasons for this are unclear since it wasn't driven by any news (a tip possibly? leaked news of a contract win or bid approach? who knows?). However, the company looks a good medium to long term bet to me anyway, and the following research note also suggests that at the current price of 4p, the shares are significantly undervalued:-
http://www.accessintelligence.com/downloads/07032013_accessintelligence_initiation.pdf
"Applying this suggested recurring revenue multiple range to Access Intelligence implies an enterprise valuation range of £11m to £14.4m, or 5.5p-7.0p, considerably above the current share price."
It should also be noted that during December, Joanna Arnold (Chief Operating Officer) bought £200,000 worth of shares at 4p a piece, and other Directors were also hefty buyers during March 2012.
As with all of my share selections, I'm looking at a medium to long term investment and felt that this micro-cap has significant potential. The company has a market cap. of just £9.1m, and the results which were released on March 5th 2013 show that the company produced revenues of just over £8m, and a small loss of £114,000.
On the face of it the results don't look particularly impressive until you dig deeper.
Firstly this is a company that is currently investing heavily in it's future to increase long term shareholder value, and initial indications are that this investment is paying off.
Whilst turnover was up 11% from 2011, most significantly, contracted not yet invoiced revenue was up 101% to GBP5,453,000 (2011: GBP2,713,000) and recurring revenue was up 16% to GBP5,562,000 (2011: GBP4,807,000) at 69% of sales (2011: 66%). Gross margins are a very healthy 70%.
The company also boasts a solid balance sheet with £2.8m cash and very little debt. In fact a small dividend will be paid to shareholders during this month (approx 1.25%) as a sign of their confidence in the future.
There will be continuing investment in 2013 with the full benefits coming through in the latter part of the year, and the company states that "Access Intelligence's solutions are core to companies achieving compliance and there continues to be significant opportunities for growth, both within our enviable customer base and regulated markets as a whole."
The shares leapt an impressive 23% today, although the reasons for this are unclear since it wasn't driven by any news (a tip possibly? leaked news of a contract win or bid approach? who knows?). However, the company looks a good medium to long term bet to me anyway, and the following research note also suggests that at the current price of 4p, the shares are significantly undervalued:-
http://www.accessintelligence.com/downloads/07032013_accessintelligence_initiation.pdf
"Applying this suggested recurring revenue multiple range to Access Intelligence implies an enterprise valuation range of £11m to £14.4m, or 5.5p-7.0p, considerably above the current share price."
It should also be noted that during December, Joanna Arnold (Chief Operating Officer) bought £200,000 worth of shares at 4p a piece, and other Directors were also hefty buyers during March 2012.
Sunday, 24 March 2013
There's many a slip twixt the CUP and the lip!
Oh dear, what's happened to Cupid? On Friday the shares fell a massive 57% after the company released a statement about the appointment of auditors to investigate recent press speculation about the activities of the company's 'motivation team'.
I wrote about Cupid in August 2011, and although I never did purchase shares in the company I did leave them on my monitor just in case the share price fell back to enter my value based criteria:-
http://michae1mouse.blogspot.co.uk/2011/08/will-you-fall-in-love-with-cupids.html
I wrote the article when the shares were priced around the £2.50 mark. Now the shares are trading at about 50p, a quick glance at the recent finals would suggest that the shares are now a bargain basement price. The company has achieved outstanding growth since listing, and currently sit on a single figure p/e ratio with plenty of cash on the balance sheet and no debt.
Am I tempted to buy at these levels given the current situation?
Certainly the fundamenals are seductive, and I do wonder how damaging these allegations will be in the long run? What's the worst that can actually happen here? How many users will actually care that much about these allegations, particularly if their experiences have been positive?
I've no idea how much a year's subscription to a site like this would cost, so even if the company are found to have deceived/duped customers into signing up (which hasn't been proven yet) what sort of compensation is likely to be payable, and exactly how many lonely hearts are likely to want to come forward anyway? Of course, it's difficult to gauge the extent of any possible lasting damage and that's why the shorters are currently enjoying a field day with planting doubt in the minds of shareholders and potential investors.
My own feelings are that this may just turn out to be a very temporary blip for a rapidly expanding company that has a presence in 15 different countries. Certainly online dating appears to be a huge growth area. This could turn out to be a massive opportunity to buy shares whilst they are extremely cheap.
From a bear perspective though, one thing does worry me. From 2011 to present, the Director sells have far outweighed the Director buys, apart from a recent purchase from Bill Dobbie. If this is such a great growth story why have the Directors been cashing in so early on in its history? In fact Martin Higginson (a non-exec) sold his entire holding in 2011 (although I don't know if he is stilll a non-exec?).
I'm not going to guess what the final outcome from all this will be, nor am I going to buy or short sell the company, but I do have sympathy for current shareholders since this is one of those situations where at around £2, on all fundamentals, the company did look at least fair value until all the recent shenanigans.
I suppose it's now a trust thing for shareholders, and in any relationship there's got to be an element of trust if there is going to be any future at all!!
I wrote about Cupid in August 2011, and although I never did purchase shares in the company I did leave them on my monitor just in case the share price fell back to enter my value based criteria:-
http://michae1mouse.blogspot.co.uk/2011/08/will-you-fall-in-love-with-cupids.html
I wrote the article when the shares were priced around the £2.50 mark. Now the shares are trading at about 50p, a quick glance at the recent finals would suggest that the shares are now a bargain basement price. The company has achieved outstanding growth since listing, and currently sit on a single figure p/e ratio with plenty of cash on the balance sheet and no debt.
Am I tempted to buy at these levels given the current situation?
Certainly the fundamenals are seductive, and I do wonder how damaging these allegations will be in the long run? What's the worst that can actually happen here? How many users will actually care that much about these allegations, particularly if their experiences have been positive?
I've no idea how much a year's subscription to a site like this would cost, so even if the company are found to have deceived/duped customers into signing up (which hasn't been proven yet) what sort of compensation is likely to be payable, and exactly how many lonely hearts are likely to want to come forward anyway? Of course, it's difficult to gauge the extent of any possible lasting damage and that's why the shorters are currently enjoying a field day with planting doubt in the minds of shareholders and potential investors.
My own feelings are that this may just turn out to be a very temporary blip for a rapidly expanding company that has a presence in 15 different countries. Certainly online dating appears to be a huge growth area. This could turn out to be a massive opportunity to buy shares whilst they are extremely cheap.
From a bear perspective though, one thing does worry me. From 2011 to present, the Director sells have far outweighed the Director buys, apart from a recent purchase from Bill Dobbie. If this is such a great growth story why have the Directors been cashing in so early on in its history? In fact Martin Higginson (a non-exec) sold his entire holding in 2011 (although I don't know if he is stilll a non-exec?).
I'm not going to guess what the final outcome from all this will be, nor am I going to buy or short sell the company, but I do have sympathy for current shareholders since this is one of those situations where at around £2, on all fundamentals, the company did look at least fair value until all the recent shenanigans.
I suppose it's now a trust thing for shareholders, and in any relationship there's got to be an element of trust if there is going to be any future at all!!
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