Reach4entertainment - an apt name for an entertaining investment?

On the face of it, shares in Reach4entertainment, an Aim listed company look very cheap with a current market cap. of around £3m. The company which recently released an in-line trading statement has turnover around the £70m mark and a p/e ratio of less than 4.

Shares this morning have jumped by around 7% on a renegotiation of it's debt repayment:-

"Heads of Terms Agreement
r4e, the transatlantic media and entertainment company, today announces that it has entered into a Heads of Terms agreement with Allied Irish Bank to restructure the existing loan facility which is due to expire in May 2015.
This agreement, subject to contract, establishes a six year term from date of contract and a new interest rate of 3 per cent over LIBOR."

r4e, describes itself as a transatlantic media and entertainment company, and in recent times looks to have entered a period of uncertainty regarding it's future viability as a going concern. Hence the lowly share price.

The company has substantial debt and for investors with little appetite for high risk, this is certainly one to avoid since there is no margin of safety whatsoever. In fact if trading were to stall or worse suddenly deteriorate, then there is a chance that the company will go bust. The balance sheet shows that r4e has negative net assets despite £18m of goodwill on the balance sheet.

However, on the other side of the coin this is one of those companies that could multi-bag if they can keep costs under control and maintain trading momentum. Gross margins are reasonable (25%) and have improved 2% from last year.

Thomas cook are a good example in recent times of what can happen when heavily indebted companies begin to improve trading and are able to sort out their balance sheet. At one point TCG was trading at around 14p per share.

These "recovery play" situations are extremely risky but can be very rewarding indeed, and I'm certainly not averse to taking a punt from time to time. Ashtead was a really good example some years ago. I did buy Ashtead shares for about 15p if I remember rightly, but sold far too early. Currently the share price is 702p. Unbelievably at one point you could have bought the shares for 1.5p when it looked odds on that the company would go bust.

Will I buy r4e? It's certainly a dilemma! It would certainly be an entertaining if not nail-biting ride.

Indigovision disappoints again

Those of you who regularly read my blog will know that I have been a holder of Indigovision shares on two separate occasions. The first time I held shares I was lucky enough to crystallise profits of 750%. Relatively recently I took a more modest 50%. I've kept the company on my monitor, but haven't felt inclined to buy back in. I gave my reasons for selling the shares back in November, and after today's trading update I feel justified in having sold when I did. You can read my reasoning below:-

Trading statements and cashing in a 50% profit.

http://michae1mouse.blogspot.co.uk/2012/11/trading-statements-and-cashing-in-50.html

The shares slid back 12% today following the trading statement, and I have to say that I won't be buying back in unless the price falls substantially from here.

Back in 2004 when I first bought shares in Indigovision (for about 62p) and they went on to multi-bag, it looked very possible that the company would be a very long term hold for me. However, circumstances changed and it appeared to me that the company had lost their competitive advantage.

This statement today from Marcus Kneen, Chief Executive is very telling :- "We have made progress towards our goal of repositioning IndigoVision to achieve market rates of sales growth..."

There was a time when Indigovision aspired to and briefly did achieve more than the market rates of growth with what appeared to be a market leading position. The company now gives the impression of a being a "me also" company in its sector. Although that may be a little harsh.

The positives for shareholders are that Indigovision is profitable and boasts a strong balance sheet with no debt. It also pays dividends. It's highly unlikely that you're going to lose your shirt with a holding in Indigovision, and I certainly wouldn't dismiss a future bid for the company given the above.

However, it now looks like a company struggling to find momentum for growth, and I don't consider the company is cheap enough to have multi-bagger potential at these levels and so I'll sit on the sidelines for now.

Of course circumstances do change and I'll remain vigilant.

As ever, no advice intended or given. All opinions expressed are my own personal musings.

Nanny doesn't always know best when it comes to Aim

Anybody who invests in companies listed on the Aim market will no doubt be elated that from 5th August these shares will be eligible to be held in tax free ISAS. There's a great article written in today's Sunday Telegraph by Tom Stevenson that echoes my sentiments entirely:-

"Nanny doesn't always know best when it comes to Aim"

http://www.telegraph.co.uk/finance/comment/tom-stevenson/10205683/Nanny-doesnt-always-know-best-when-it-comes-to-Aim.html

A good balanced article I would suggest. He's quite right that a large number of companies listed on Aim are not worth a second glance, but if you're a stock picker with a reasonable eye for sifting out the potential disasters from the possible winners then it is an exciting market with opportunities to multi-bag your money.

Is Aim listed Angle (AGL) one to stick into an ISA?

I've mentioned before that this is a speculative investment for me, and full year results will be released on Wednesday of this week. I'm not expecting the figures to be impressive at this stage in it's development, but I will be looking carefully at the narrative.

News to date has given cause for encouragement, and on Thursday 25th July they released news relating to a positive evaluation of the Parsortix System from the Cancer Research UK's Paterson Institute for Cancer Research.

Whilst I won't pretend to understand  the significance of the Parsortix System being "Cell marker (epitope) independent", I am encouraged to read the comments from

The Paterson's Genomics Group Leader and Deputy, Clinical & Experimental Pharmacology, Dr Ged Brady, who commented:

"We see great promise in the Parsortix system with the possibility that it may help broaden our understanding of cancer patient blood borne biomarkers which may in turn eventually help us guide and improve therapy. The major attractions for us are the potential for the system to deliver an increased range and number of CTCs along with simplicity of execution. Initial positive results have resulted in the inclusion of the Parsortix device in our ongoing efforts to deliver personalised medicine."

It's incredibly difficult to say with any certainty what lies ahead for Angle. How much additional funding will they require and how will it be raised? how long will it be before we see significant sales of this device? etc, but if the Parsortix System does live up to it's promises then potentially it could be a very bright future for investors, although I might add the caveat that it's still early days relatively speaking!

I look forward to Wednesday with interest, and as ever no advice is intended or given.