I don't suppose I make myself very popular when I make negative comments about a company's prospects. Notice the understatement!!
I don't do it very often, although this week has been an exception. I've no interest in going short for very many reasons. One of those reasons is that I've found going long on a stock and holding onto that stock until the story changes for the worse (if indeed it does) is far more profitable and a much safer option.
I'd like to think that in general when selecting companies for investment I'll work through the financials then apply some common sense assessing the business model, and the likelihood of success. It also helps you to avoid companies that are likely to get into distress or flatline. I have to say at this point that I don't always follow my own advice, and have been known to take a complete punt.
However, one company I did avoid investing in despite the so-called "sexy" area it's working in is Lightwaverf which is involved in the IoT market.
Since I first commented on the stock back in October 2015:-
http://uk.advfn.com/forum/search?q=michaelmouse&post_poster=on&post_post=on&index=posts&thread_id=32612016&offset=30
The stock has fallen from around the 26p/27p mark to its current 15p.
Some of my comments were a little flippant and designed to be amusing, but this one now appears to have been highly pertinent:-
http://uk.advfn.com/cmn/fbb/thread.php3?id=32612016&from=2593
"Will I ever buy shares in this company? Well never say never, but not at the moment. The reasons I've listed are good enough for me to avoid this one in the short to medium term, but my bigger concern is longer term.
I might be totally wrong but I think that this market will take considerably longer to develop than many think by which time the competition will be intense.
I would imagine that the best chances of success are selling their products to companies that will install them in new builds - both offices and new homes. However, (and I more than happy to be corrected here) it appears that they are trying to get retailers to sell them to homeowners e.g. through Maplin stores etc.
The majority of homeowners are undoubtedly aged 35+ and the majority of those are probably older. The demand for devices that remotely control your heating, lighting etc through an APP will be low for some years to come since the age group most likely to need them is the least tech savvy or interested.
In ten/fifteen/twenty years then it may be a different story as today's tech savvy cash poor youngsters eventually get onto the housing ladder, but as I stated that's a considerable time to wait.
Now I may not fully understand their business model or the full range of products they offer, but if I don't then sadly there are a large proportion of people in the same boat. Judging by this line in their finals, "Although we continue to remain alert to how we pursue our strategy in detail", neither do their management team. The sentence is total and utter gobbledygook, and illustrates that their strategy lacks any clarity."
A report in today's Telegraph suggests that my caution seems well placed:-
http://www.telegraph.co.uk/technology/2016/08/27/internet-of-things-struggles-as-use-of-smart-home-gadgets-flatli/
"The figures suggest that such connected home gadgets, which allow their owners to control their lighting without leaving the sofa or turn on the heating as they come home, are failing to resonate with consumers."
“Some of them aren’t resonating well because they offer too little,” he said. “The ability to micromanage the temperature in your house doesn’t appeal to the mainstream, and the savings aren’t significant enough to upgrade.”
In my experience, it's very easy to underestimate the amount of time it will take for a "new" market to develop. If you do buy shares in a company in these "new and sexy" areas then expect to wait many years for a decent return on your investment. Think dot-com boom. These type of stocks fly up on hype and hope, and then come crashing back down to earth when reality sinks in.
As ever though, this is a personal blog and I don't offer buy or sell advice. It's simply a record of my experiences.
Sunday, 28 August 2016
Saturday, 27 August 2016
OptiBiotix say one thing, so why does a sharetipster claim another?
My last two blogs are linked, and this is the final one in the trilogy.
I did post this on ADVFN, but a vile lunatic seems intent on following me around and trying to trash the thread. Sadly, these days it's not unusual for the ADVFN site. I would simply ban this madman from the thread if I paid for their services, but since I haven't and have no intention of doing so, I can neither moderate or ban him and have therefore opted to post below.
Those of you who have read my previous two blogs will no doubt see the link with the following:-
In July, OptiBiotix issued a RNS stating a change in strategy. The CEO said the following:-
"I believe that OptiBiotix's diversity of both IP and Commercial relationships offers shareholders multiple opportunities where future value to shareholders may be best realised by spinning out domain specific opportunities where we as a Board believe the individual parts may be properly resourced and valued."
Now it's not difficult to compare that statement with yesterday's clear change in tone:-
"As these divisions grow in substance and start making a significant contribution to group earnings we will consider forming new legal entities with the potential for a separate public listing."
So the first RNS hints at spinning out the divisions and then raising extra cash to fund each entity.
Yesterday's statement clearly indicates that they have received no support for this idea, and can only consider it IF the individual parts can eventually make a profit in their own right.
Note:- "significant contribution to group earnings" before considering a spin-off. Since the group is barely producing any revenues, let alone earnings, then one can assume that the spin-off idea is a considerable time away.
You don't need to be Einstein to work it out. It's in black and white in the company's own words.
Why then (from the main thread) does Billy Liar say the following:-
"So all in all it is very good, but not absolutely brilliant. Not enough to drive an immediate one day re-rate. What is needed for that:
1. A demerger. We were hoping for hard news on that today. We now expect it in either this coming SEPTEMBER or early OCTOBER. That could drive a MAJOR RE-RATE."
So despite the company stating quite clearly in yesterday's report that each division would need to turn a profit first, Pinnochio thinks that news of a de-merger could happen as early as next week? Is he referrring to the same company that reported revenues of just £88,000 and a whopping loss yesterday?
He also says:-
"Cash will be boosted in H2 by a) more sales and b) the exercise of the last warrants from before the RTO that created Optibitix which must all be exercised by January 17 2017. But there is clearly " NO " funding concern, at all."
Who's he trying to kid? Bloody hell, the company had a cash outflow of £900,000 in H1 from operations. Administrative expenses are up considerably (£300,000). The small contribution that they get from revenues will be totally negated by increasing expenditure and I'd estimate full year cash consumption from operations will be around £2m. Further funding is almost inevitable at some point if they intend to exploit their "opportunity". About 12/18 months I'd guess.
Finally, just to clarify. I've nothing against OptiBiotix. I'm not short of the stock. The share price could go up or down in the next few months. I just happen to think it's a "jam tomorrow" stock that is currently overvalued.
My key point is that I can't stand the duplicitous fraudsters that often talk these companies up for their own gain. See:-
http://michae1mouse.blogspot.co.uk/2016/08/free-shares-guv-thatll-do-nicely.html
They'll quite happily talk shares up or down to line their own pockets by any means possible.
They need exposing.
I've done my bit, and I'll leave it there for a while.
I don't normally issue advice on this blog, I'll make an exception this time.
Don't sign up to share tipping sites. If you can't make share purchase decisions yourself using your own research then buy a tracker fund. It's safer, and you won't be throwing money to these duplicitious shysters.
I did post this on ADVFN, but a vile lunatic seems intent on following me around and trying to trash the thread. Sadly, these days it's not unusual for the ADVFN site. I would simply ban this madman from the thread if I paid for their services, but since I haven't and have no intention of doing so, I can neither moderate or ban him and have therefore opted to post below.
Those of you who have read my previous two blogs will no doubt see the link with the following:-
In July, OptiBiotix issued a RNS stating a change in strategy. The CEO said the following:-
"I believe that OptiBiotix's diversity of both IP and Commercial relationships offers shareholders multiple opportunities where future value to shareholders may be best realised by spinning out domain specific opportunities where we as a Board believe the individual parts may be properly resourced and valued."
Now it's not difficult to compare that statement with yesterday's clear change in tone:-
"As these divisions grow in substance and start making a significant contribution to group earnings we will consider forming new legal entities with the potential for a separate public listing."
So the first RNS hints at spinning out the divisions and then raising extra cash to fund each entity.
Yesterday's statement clearly indicates that they have received no support for this idea, and can only consider it IF the individual parts can eventually make a profit in their own right.
Note:- "significant contribution to group earnings" before considering a spin-off. Since the group is barely producing any revenues, let alone earnings, then one can assume that the spin-off idea is a considerable time away.
You don't need to be Einstein to work it out. It's in black and white in the company's own words.
Why then (from the main thread) does Billy Liar say the following:-
"So all in all it is very good, but not absolutely brilliant. Not enough to drive an immediate one day re-rate. What is needed for that:
1. A demerger. We were hoping for hard news on that today. We now expect it in either this coming SEPTEMBER or early OCTOBER. That could drive a MAJOR RE-RATE."
So despite the company stating quite clearly in yesterday's report that each division would need to turn a profit first, Pinnochio thinks that news of a de-merger could happen as early as next week? Is he referrring to the same company that reported revenues of just £88,000 and a whopping loss yesterday?
He also says:-
"Cash will be boosted in H2 by a) more sales and b) the exercise of the last warrants from before the RTO that created Optibitix which must all be exercised by January 17 2017. But there is clearly " NO " funding concern, at all."
Who's he trying to kid? Bloody hell, the company had a cash outflow of £900,000 in H1 from operations. Administrative expenses are up considerably (£300,000). The small contribution that they get from revenues will be totally negated by increasing expenditure and I'd estimate full year cash consumption from operations will be around £2m. Further funding is almost inevitable at some point if they intend to exploit their "opportunity". About 12/18 months I'd guess.
Finally, just to clarify. I've nothing against OptiBiotix. I'm not short of the stock. The share price could go up or down in the next few months. I just happen to think it's a "jam tomorrow" stock that is currently overvalued.
My key point is that I can't stand the duplicitous fraudsters that often talk these companies up for their own gain. See:-
http://michae1mouse.blogspot.co.uk/2016/08/free-shares-guv-thatll-do-nicely.html
They'll quite happily talk shares up or down to line their own pockets by any means possible.
They need exposing.
I've done my bit, and I'll leave it there for a while.
I don't normally issue advice on this blog, I'll make an exception this time.
Don't sign up to share tipping sites. If you can't make share purchase decisions yourself using your own research then buy a tracker fund. It's safer, and you won't be throwing money to these duplicitious shysters.
Thursday, 25 August 2016
OptiBiotix - A trillion pound market opportunity!!!!!
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.
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.
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