If only it was always that easy......

I couldn't let the past two days trading in Avanti Communications go without further mention.

Please see Thursday's blog post:-

http://michae1mouse.blogspot.co.uk/2016/08/dont-try-this-at-home.html

Following another stellar 44 % rise in Avanti's share price on Friday, the shares have nearly doubled in two days.

If only short term trading was always that easy.

For reasons that I explained in my previous blog, following the FT article it was pretty much a one way bet.

The only possible fly in the ointment could have been Avanti denying any bid rumours. That was very unlikely to happen since they are currently conducting a strategic review, and it was no surprise to see them issue a statement on Friday (pm) to note the share price rise and neither confirm or deny the rumours. Why would they? The rising value of the equity is very much to their advantage.

If there were more one way bets like this then I'd consider short term trading far more often. As it is, I've always found my current style more profitable in the long run i.e. Seeking out value in micro-caps, building a reasonable position and patiently waiting for the company to grow and prosper. It's also less stressful and allows me to get out and about without being stuck in front of a screen all day. Anyway each to their own.

What next for Avanti? I don't know. I hope that the company can find a satisfactory solution to its debt issues since they have achieved a considerable amount, albeit more slowly than anticipated. Let's not forget that in the recent trading statement they said the following:-

"Avanti (AIM: AVN) a leading provider of satellite data communications services in Europe, the Middle East and Africa confirms that revenue for the financial year ("FY") ended 30^th June 2016 is expected to be approximately $83m.  This represents growth in core revenues year-on-year (excluding the spectrum sale in the prior year) of over 35%.  EBITDA is expected to be approximately $8m.

Avanti's commercial reputation for high service quality and product innovation is strong, enabling it to win high value contracts with prestigious telecoms companies.  In particular, the Group is leading the market in winning cellular backhaul business, and many opportunities are opening up around the EMEA region.  Contract wins in the fourth quarter were over $70m showing commercial traction is building."

It's not a bad company, it just took on too much debt and wasn't growing quickly enough.

Shame on those going short on the stock and trying to precipitate Avanti's decline for their own selfish purposes by destroying the value of the equity over a sustained period of time.

Anyway, anyone who lost money going long on the stock was given a wonderful opportunity to recoup some or all of their losses with the price action this week, and I hope Avanti do manage to reach a satisfactory arrangement where they can survive and prosper in the longer term.

Well done if you've taken profits and good luck if you've decided to hold on for more.

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.