Here's a rule to follow. Always be prepared to break your own investing rules, although not too often perhaps. Some time ago I wrote a blog about why I tend to avoid investing in companies that have recently listed on the stock market. However, a fellow investor whose track record and investment reasoning I have found to be well worth listening to, brought my attention to a fairly new issue - Fishing Republic. With a healthy degree of scepticism, I carried out some research on the company, and liked what I saw.
Subsequently, I bought shares in the company for 17p in October 2015. As ever, I wasn't expecting fireworks in the first few months, particularly since the company is a fishing tackle retailer. Not very sexy really. What attracted me to the company was a solid balance sheet, a modest valuation and a low market cap.
In less than eight months, the shares have rocketed forward and at the end of today, they stood at 41.5p. If you'd have asked me at the time of buying into Fishing Republic which of my holdings is likely to more than double in the next year then this one wouldn't have been listed in my top five. In all the time that I've been investing, I've learnt to accept that this can often be the case though.
I'm certainly not complaining.
You'll notice that the FISH bulletin board is nice and quiet with one or two lone positive voices and probably a few more negative voices. No surprise there either.
Thanks to the poster Norbert Colon for bringing Fishing Republic to my attention.
Monday, 6 June 2016
Wednesday, 25 May 2016
LWRF - poor interims
I've been very sceptical about a company called Lightwave RF (LWRF) and expressed concerns on the ADVFN bulletin boards several times.
The company released dreadful interim results this morning I'm afraid. Revenues have fallen a whopping 47% to just £804,455 and an order book of just £750,000 is pretty poor when they're burning through cash like it's going out of fashion. They used more than £500,000 of recently raised funds in just six months, and the balance sheet is looking pretty ropey. Cash remaining on the balance sheet is just £119,000. Losses amounted to almost £400,000.
They've attributed a net book value of £600,000 to the group in a rather laughable attempt to suggest that the group is increasing in value when tangible assets have increasingly got worse. In fact if you strip out intangibles then the group is worthless with tnav of minus £316,719.
With losses likely to be heavy for the full year alongside significant cash burn then even at this lowly market cap. you'd need a huge leap of faith to invest in my opinion.
Clearly the IoT hasn't quite arrived for this company yet. Now where did I put my mobile phone?
The company released dreadful interim results this morning I'm afraid. Revenues have fallen a whopping 47% to just £804,455 and an order book of just £750,000 is pretty poor when they're burning through cash like it's going out of fashion. They used more than £500,000 of recently raised funds in just six months, and the balance sheet is looking pretty ropey. Cash remaining on the balance sheet is just £119,000. Losses amounted to almost £400,000.
They've attributed a net book value of £600,000 to the group in a rather laughable attempt to suggest that the group is increasing in value when tangible assets have increasingly got worse. In fact if you strip out intangibles then the group is worthless with tnav of minus £316,719.
With losses likely to be heavy for the full year alongside significant cash burn then even at this lowly market cap. you'd need a huge leap of faith to invest in my opinion.
Clearly the IoT hasn't quite arrived for this company yet. Now where did I put my mobile phone?
"In the short run........."
To quote Ben Graham:-
“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
R4e is a company that I've mentioned before, and this morning they released their full year results.
In recent weeks, the share price has shot up with persistent buying from Gate Ventures plc, who now hold just over 18% of the company. Good luck to them I say. To be frank I can't see what the appeal is?
Let's take a look at today's finals.
Firstly, they report in the headline figures a profit before tax of £4.5m. Ignore this totally. This profit comes from writing off a significant debt.
The headline figure is this:- "Underlying profitability for r4e (Adjusted EBITDA*) reduced by 31 per cent to £1.8 million (2014: £2.6 million)". Note that even this is adjusted EBITDA i.e. excluding impairment of goodwill and exceptional items. The true figure is actually a huge £4.3m operating loss.
I cannot see anything appealing about this company at all.
Even though they have recently undertaken a massively dilutive placing at 1p, the balance sheet looks awful. Cash is just £1.16m, net current assets of minus £6m, and tnav of minus £7.1m. Debt whilst more manageable is still a hefty £6.7m.
In summary, it's a company with a horrible looking balance sheet making losses and burning through cash (it burnt through £855,000 last year) with just £1.16m in cash remaining. Gross margins are around 24%. Hardly mouth watering.
The company claims to be the leader in it's field. Well good luck with that.
Can investors seek solace in 2016:-
The voting machine may be in full flow at the moment, but the company's a flyweight and I've got a feeling that it'll all end in tears again.
“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
R4e is a company that I've mentioned before, and this morning they released their full year results.
In recent weeks, the share price has shot up with persistent buying from Gate Ventures plc, who now hold just over 18% of the company. Good luck to them I say. To be frank I can't see what the appeal is?
Let's take a look at today's finals.
Firstly, they report in the headline figures a profit before tax of £4.5m. Ignore this totally. This profit comes from writing off a significant debt.
The headline figure is this:- "Underlying profitability for r4e (Adjusted EBITDA*) reduced by 31 per cent to £1.8 million (2014: £2.6 million)". Note that even this is adjusted EBITDA i.e. excluding impairment of goodwill and exceptional items. The true figure is actually a huge £4.3m operating loss.
I cannot see anything appealing about this company at all.
Even though they have recently undertaken a massively dilutive placing at 1p, the balance sheet looks awful. Cash is just £1.16m, net current assets of minus £6m, and tnav of minus £7.1m. Debt whilst more manageable is still a hefty £6.7m.
In summary, it's a company with a horrible looking balance sheet making losses and burning through cash (it burnt through £855,000 last year) with just £1.16m in cash remaining. Gross margins are around 24%. Hardly mouth watering.
The company claims to be the leader in it's field. Well good luck with that.
Can investors seek solace in 2016:-
"The platform for 2016 has been established"
"2015 marks a significant milestone for the Group. Cleared of the prohibitive debt facility from AIB, the business now has the ability to organically grow as well as invest and expand where the opportunities present themselves, particularly in exploring new geographies and pursing data-based marketing and other digital initiatives. The management team is confident that the Group will be able to pursue these growth opportunities while maintaining and building upon its position as a theatre and entertainment market leader in the London and New York. "
Reading between the lines it looks like they are going to require a considerable amount of additional capital, and they're not going to fund expansion through their own cash generation.
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