Don't try this at home!

Quick blog update re: Avanti  Communications.

Now regular readers will know that I'm a long term micro-cap investor by nature. It has served me well to date.

You will also have read my recent blog about my investment in Avanti Communications:-

http://michae1mouse.blogspot.co.uk/2016/07/avanti-communications-triumph-of-hope.html

Well today I acted out of character and did something I wouldn't normally consider.

In short I made a trade in Avanti. Yes I know.... after everything I have written about speculating!!!!!

However, let me explain and try and convince you that it wasn't as speculative as it may first appear.

Firstly, can I just say a big thank you to the poster on ADVFN who posted a link to the FT.

Most stuff posted on BBs is waffle and junk posted by those with a vested interest, similarly on dubious tip sites. However, links to respectable websites are often useful.

This particular FT link was suggesting that Avanti Communications had received an indicative offer of £1.40 from Inmarsat, although clearly it never materialised for whatever reasons. It also suggested that Avanti were in discussions with two other potential bidders.

Now I had a dilemma. Avanti had been a speculation for me, but I was convinced at the time that it's asset base and the considerable risk and difficulties encountered by launching satellites into space would enable the company to come good in the end. They were also beginning to gain traction in selling capacity to Blue Chip companies. Unfortunately, as is often the case, debt was Avanti's Achilles heel combined with a slower than anticipated take up of capacity on their satellites. The rest is history as they say. It's a shame because given more time Avanti could have been a excellent British start-up success story.

However, the bid story appeared plausible to me given the reasons I have expressed  above.

Since the share price was 27p, I took a calculated punt, and how I laughed as the price fell back instantly after I'd made the trade.

However, a brief moment of regret soon turned to joy as the price then began to soar. I took profits later in the day. Not a bad days work I'd venture. Making a quick buck through trading isn't usually my bag, but when you're familiar with a company and it's history, I have found that you get a feeling when a trade is possible. However seldom that may be in my case.

What now then? Well I'm wondering if I should have just stuck in there?

Technical factors may push Avanti much higher from here even if a bid doesn't materialise in the next few days. I may even be back for further trades.

Undoubtedly shorters will be having a sleepless night and palpitations. Imagine a bid coming in at £1.40+. Short covering will possibly be rampant tomorrow, particularly since I gather that a certain tipster has suddenly recommended that his lemmings (sorry followers) close their shorts in Avanti. What happened to his carrion cry of this one's going to zero? Mind you, if you follow third rate websites with dubious and equally third rate tipsters then you get what you deserve.

I won't mention the website, but you'll know the one I mean, there's lots of puerile swearing and given the captions you might think that you've landed on a soft porn site. God knows what you receive if you register with them? Anyway, I suppose it knows it's audience.

Tomorrow should be interesting, and remember this is a one off for me and don't try this at home!

Stilo update

mudbath - It could indeed be a bullish indicator, although it may be neither a bullish or bearish indicator and simply a practical solution to a company that generates most of it's revenues outside the UK. Just 2% of revenues came from the UK in 2015 whilst 67% were generated from North America and 14% from Asia.

What might be construed as bullish from yesterday's announcement is that they expect to release results for the 6 months ending 30th June on 1st September.

A quick look through the records indicates that this will be their earliest release of results in the last few years. At best they have released in the second week of September and often towards the end.

In all my time investing, I've rarely, if ever, known a company keen to rush out poor results and prospects going forward. Usually the opposite in fact.

Also with a high percentage of revenues in dollars, surely that will provide a further boost to earnings?

I'm not expecting this year's results to "blow the bloody doors off", but I'm optimistic that we will see a decent improvement and with Author Bridge contributing more significantly in future years (from 2017) then things could get exciting. Fingers crossed anyway.

Angle - Full year results

Angle plc is a long standing holding of mine:-

http://michae1mouse.blogspot.co.uk/2012/12/a-new-angle.html

I have written several blogs since buying the shares at around 27p in 2012 (see above).

Angle released their full year results this morning, and I am very encouraged with the approach and progress they have made towards commercialisation of their Parsortix liquid biopsy device.

I commented on ADVFN this morning:-

http://uk.advfn.com/cmn/fbb/thread.php3?id=34862319&from=2819

Post 2829

"The report reads very well and I am more than happy to wait patiently as developments continue, particularly now revenues are beginning to build. £361,000 of revenues since first sales in December which is marginally ahead of forecasts.

The strategy that they have pursued is now beginning to pay off in spades, and there are strong signs that they are going to be a market leader in a very large and developing market place. The portability of the Parsortix device is clearly a key differentiator, alongside the ability to harvest the cells and the high specifity and sensitivity.

It's also telling that research centres are finding additional uses for the device at their own cost.

Holding tightly."

Interestingly, even though revenues are in their infancy, it should be noted that gross margins are high. First sales of £361,000 produced gross profits of £254,000. In other words a margin of 70%. Wonderful.

As revenues improve going forward then these large gross margins may see profitability sooner than anticipated. £10m (at the current margin) would produce £7m in gross profit. Operating expenses were around £5.5m which would generate a £1.5m profit.

The research market is estimated to be worth £250m alone. £10m in revenues would be just 4% of this market. The clinical market is far larger of course. £300m just for Ovarian cancer.

Whilst I would anticipate that operating expenses will increase as the current trials take place (Ovarian cancer trials have been initiated in the US and Europe), the percentage rise in sales should  outstrip the increases in costs in the not too distant future.

Of course my calculations are very simplistic, but quite frankly that usually gives me enough idea of how future earnings will pan out. Sometimes it takes longer than expected, at other times it's sooner.

The key point is that the device is gaining very favourable reports by key opinion leaders and this will drive sales forward at a pace. Gross margins are and will continue to be excellent.

Angle plc won't even need to gain a large percentage of the research or clinical markets to be a very profitable and cash generative company.

The company is also currently well funded.

As the weeks, months and years pass by I am getting more and more confident of my holding here.