I've written two blogs today. I'll let you make the connections and fill in the blanks between them both.
OptiBiotix listed on Aim in 2014 at a share price of 8p and has spectacularly risen to today's 70p and a heady £55m market cap. Wow!!! A multi-bagger in no time at all.
So what transformational deals have produced this stellar re-evaluation since the initial listing? Ummm...........now that's a tough one.
Certainly OptiBiotix has been given heavy exposure and promotion by individuals with vested interests, but let's look at the facts.
Interim results were released today.
Revenue £88,000.
Loss £615,000
NTAV £4m
Cash £3.6m
Operating cash outflow £900,000
Oh dear! Cash outflow is going to be about £2m this year, and this will clearly ramp up, as costs for R&D etc accelerate. A cash call will surely follow in 12/18 months time, since revenues will be wholly inadequate for the foreseeable future in my opinion.
The market cap. clearly can't be justified on fundamentals. On fundamentals, a share price of 8p is about right.
Ok, I've been terribly negative here. What does the company actually do? Well, in short it does the following:-
"OptiBiotix has established a pipeline of microbiome modulators that can impact on lipid and cholesterol management, energy harvest and appetite suppression."
Now I've no idea if this is an area that will eventually be successful or not, and for that reason alone I wouldn't be tempted to pay the huge premium on the shares at the moment. Secondly, if this is indeed a massive growth area then the competition will be very fierce.
I've already stated many reasons to be cautious here on my Advfn thread:-
http://uk.advfn.com/cmn/fbb/thread.php3?id=35291865
If you look at the CEO speaking today and on other occasions, each time he is asked about progress he refers to the IP and the share price. Not once does he ever refer to the timings for significant revenue generation or profits. I'd suggest these are years away yet.
Other warning signs for me are that the Chairman has just stepped down, a plan to break the company into 4 separate divisions has been shelved (less than two months after declaring that this was their intention), and ludicrous statements about trillion dollar markets when they've recorded just £88,000 in revenues.
Finally, would I be interested in consuming a product that claimed to suppress my appetite? The answer is a categorical no. Firstly, the market for dietary products is overcrowded and unnecessary. Eat healthily and encourage healthy eating habits. Anybody who has ever used these products will tell you that as soon as they stop using them then they return to their bad eating habits and put any weight they lost back on again in no time at all. In short, they just don't work. Personally, I'd be very wary of consuming something claiming to suppress my appetite.
Anyway, if you are a shareholder then good luck, perhaps I've got it wrong and a huge deal will appear out of the blue.
For the time being, shareholders may need to rely on share promoters to try and keep the share price propped up. A sceptic might suggest that some of these enthusiasts had been given "free shares". I couldn't possibly comment.
Thursday, 25 August 2016
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 ;).
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 ;).
Saturday, 6 August 2016
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:-
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 30th 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.
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