Free shares guv that'll do nicely!

I'm incredulous, no actually I'm not. In fact I'm not surprised at all.

It's been brought to my attention that a certain dubious character and the organisation that he works for has been reported to the FCA for perceived wrongdoing. A regular occurrence I'm led to believe. I couldn't possibly comment other than report the facts.

Apparently, the accused has issued some kind of rebuttal on his own website which is a laugh a minute. In fact when it was related to me, I couldn't actually believe that he thinks anyone in their right minds would take him seriously, but he clearly thinks people are so stupid that they'll believe his b*llsh*t.

To cut a long story short, the issue centres around this organisation being paid in company 'shares' for services rendered at their investor shows. For example, let's say company A wants a stand at an investor show but doesn't want to pay cash. The company can pay the equivalent and a bit more in shares apparently. Surely nothing wrong with that is there? Oh hang on, the company receiving the shares is a share tipping site. Now let me think about this. Ummm....It doesn't sound good does it. Seedy, unethical, ?illegal? probably doesn't cover it.

Free shares gov, that'll do nicely. Nudge, nudge, wink, wink.....report on your company coming up on our website.....ramp, ramp........know what I mean guv'nor.......gullible subscribers....nudge nudge......share price ramped up..........say no more ;)

Let's say I'm a share tipster that has just received payment in company A's shares for services rendered. What might I do in these circumstances?

a) Not write about the company.
b) Write a negative report about the company.
c) Ramp the company to high heaven, and try and exploit the opportunity for all it's worth.

Answers on a postcard please.

What is incredulous is that as a rebuttal, the following excuses are given:-

1) It's OK  to do this if they like the company in question.

Ummmm............?

2) In the past they've told investors to sell a company's shares whilst continuing to hold on to them themselves.

Eh.........? How does that work? Would you buy shares in a company and then write a article explaining why everyone else should sell them unless of course you were trying to buy some more on the cheap which is totally unacceptable. So it's either mindless stupidity or totally unethical?

3) The individual doesn't receive any personal reward from the receipt of the company shares, but his dependants do.

Oh that's ok then. My dependents have nothing to do with me. Oh hang on they're my dependents!!

You couldn't make this nonsense up. Sadly it's true. FCA get your act together!!!!

P.S. I won't name the individual or website, but in a recent blog I mentioned that they looked like they were peddling soft porn, at least now they've had the decency to remove it. Pure coincidence of course since they can't possibly read my blog ;).

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!