Angle PLC is one of the more speculative holdings in my portfolio, and I bought shares in the company at the back end of 2012 at around 27p.
http://michae1mouse.blogspot.co.uk/search?updated-min=2012-01-01T00:00:00-08:00&updated-max=2013-01-01T00:00:00-08:00&max-results=17
At the time I mentioned that the share price would be volatile, and this has certainly proved to be the case as the story has developed. In general, the progress has been encouraging and I have maintained my position and holding in the company.
This morning they released details of a discounted placing, subscription and offer of 65p per share to the prevailing share price of 85p on Friday . This should see the company through to delivering its first clinical application to address the ovarian cancer market which they estimate to be worth in the region of £300m per annum. Since the placing is substantially above my purchase price, and will raise a net amount of £8.2m for the company, I am more than happy to continue to hold my shares in Angle and await developments.
Whilst I continue to emphasise that Angle PLC is a highly speculative investment, and the share price movements will continue to be volatile in the short term, there is also the potential for substantial rewards. The key to unlocking the multi-million pound market for their Parsortix device is essentially in the hands of Key Opinion Leaders who are currently evaluating it's clinical potential. Whilst research sales may appear later this year, it is the clinical utility of the Parsortix device that will realise Angle's and investor's future return.
Alongside, the placing announcement today, Angle also detailed a collaboration with MD Anderson to "investigate the clinical use of ANGLE's Parsortix system as a companion diagnostic in colorectal cancer." An encouraging collaboration since, "United States News & World Report's "Best Hospitals" survey has ranked MD Anderson as one of the nation's top two cancer centres every year since the survey began in 1990. MD Anderson's Clinical Center for Targeted Therapy is the largest programme in the world expediting the development of new cancer drugs.". This increases the number of highly respected KOLs to nine.
If all goes well then I would expect a raft of good news stories emanating over the next two years with the key drivers being positive patient data from the KOLs and sales of the Parsortix device for research purposes. The company also awaits FDA approval which is critical for US sales, although effectively meaningless without validation of Parsortix's clinical utility.
For me, the single biggest indicator that my speculation in this stock could prove to be hugely lucrative in the long term was the news release on 27 January that The Medical University of Vienna will lead, in collaboration with ANGLE, a clinical study of the use of the Parsortix system as a clinical application in the routine detection and treatment of ovarian cancer patients after patient data showed "unprecedented sensitivity and specificity" for Parsortix ovarian cancer clinical application. In my experience, medical staff are not renowned for hyperbole, and hence the most striking quote was from Dr Eva Obermayr, Principal Investigator at the Medical University of Vienna, who described the results with ANGLE's Parsortix system as "sensational".
In conclusion, whilst accepting that an investment in Angle PLC is still speculative, with funding now in place and KOL data highly positive so far, I am hopeful that this could turn out to be an exceedingly rewarding long term hold.
Monday, 16 February 2015
Sunday, 18 January 2015
Playing the long game!
Those of you who follow my blog will know that I am truly a long term investor. I love to spot and buy shares in small/micro cap companies which the market has either overlooked, discarded or simply fallen out of love with. Often these companies offer exceptional potential.
Avesco is one of those companies that I spotted back in 2009 which has produced superb capital gains and generous dividends, not least the £1.10 pay out to shareholders last year following the successful outcome of the Disney litigation.
The company released it's full year results this week, and despite significant share price appreciation since 2009, the company still remains considerably undervalued. As ever, I would recommend reading the results in full before coming to your own conclusions, but I'm more than comfortable with their performance last year and their forward looking statements. Richard Murray, Chairman stated,
"The first quarter of the current financial year has continued the positive momentum from last year. We expect to see further benefits flow from the cost savings generated by the Group's restructuring programme, so that any "odd year" dip in profitability is minimised. With the restructuring programme now completed and substantial forward momentum in the businesses, we are able to continue our focus on increasing profitability, generating cash and growing dividends."
I don't think you can ask for too much more than that? Total dividends for 2014 were 6p, representing a yield of around 4.8%, with a forecast of 7p this year and 8p in 2016 (5.7%, 6.5% respectively). The current share price represents a 28% discount to net tangible assets, and the market cap. is less than it's EBITDA. Does this sound familiar? It does to me. Post 2 and 75 back in 2009 when I initiated the ADVFN thread:-
http://uk.advfn.com/cmn/fbb/thread.php3?id=20681152&from=2
http://uk.advfn.com/cmn/fbb/thread.php3?id=20681152&from=75
Of course, since then investors have 10-bagged their initial investment (including dividends) and are currently taking a 25% yield on that initial investment which is set to become 32% by 2016.
As an aside and before I continue, I just want to briefly explode one or two pieces of absolute claptrap that I hear on bulletin boards and elsewhere:-
1) It's illiquid and you can't buy in size. Avesco shares are purportedly illiquid, but I've never had a problem buying substantial quantities. Neither did Taya, and neither did Richard Murray, the Chairman who currently owns close to 30%. In fact, his most recent purchase was £136,000 worth on Friday.
2) It's risen ten fold it's expensive, it's fallen by ninety five percent it's cheap. Total rubbish. Avesco is a great example of the former, it's still cheap and there are numerous examples of the latter, just because a company's shares have fallen 95% doesn't mean they won't fall another 95% or worse still lose all their value.
3) The AIM market is too risky. No it isn't. Some companies listed on AIM are risky and some aren't. Basically don't buy overvalued companies of any sort wherever they're listed or companies that are overloaded with debt etc. In 2009 do you choose AIM listed Avesco or main market listed HMV?
Anyway, I digress.
Playing the long game has worked well for me and Avesco is just one such example. I will continue to hold for the foreseeable future.
Some further food for thought before I conclude though. Firstly, there is considerable intangible value not recognised in Avesco's balance sheet. Not least "Fountain Studios" (Wembley) that is listed at book value, but must be worth considerably more, and their long list of prestigious clients that return year after year because of Avesco's quality service.
Finally, Murray holds near 30% of the company and is 65 years old or thereabouts. When he eventually chooses to retire (of course he may decide to continue for some time yet), he might well wish to cash in his holding. If I was him, I'd be looking at far more than EBITDA for my holding. How does 3 or 4 times EBITDA sound?
Avesco is one of those companies that I spotted back in 2009 which has produced superb capital gains and generous dividends, not least the £1.10 pay out to shareholders last year following the successful outcome of the Disney litigation.
The company released it's full year results this week, and despite significant share price appreciation since 2009, the company still remains considerably undervalued. As ever, I would recommend reading the results in full before coming to your own conclusions, but I'm more than comfortable with their performance last year and their forward looking statements. Richard Murray, Chairman stated,
"The first quarter of the current financial year has continued the positive momentum from last year. We expect to see further benefits flow from the cost savings generated by the Group's restructuring programme, so that any "odd year" dip in profitability is minimised. With the restructuring programme now completed and substantial forward momentum in the businesses, we are able to continue our focus on increasing profitability, generating cash and growing dividends."
I don't think you can ask for too much more than that? Total dividends for 2014 were 6p, representing a yield of around 4.8%, with a forecast of 7p this year and 8p in 2016 (5.7%, 6.5% respectively). The current share price represents a 28% discount to net tangible assets, and the market cap. is less than it's EBITDA. Does this sound familiar? It does to me. Post 2 and 75 back in 2009 when I initiated the ADVFN thread:-
http://uk.advfn.com/cmn/fbb/thread.php3?id=20681152&from=2
http://uk.advfn.com/cmn/fbb/thread.php3?id=20681152&from=75
Of course, since then investors have 10-bagged their initial investment (including dividends) and are currently taking a 25% yield on that initial investment which is set to become 32% by 2016.
As an aside and before I continue, I just want to briefly explode one or two pieces of absolute claptrap that I hear on bulletin boards and elsewhere:-
1) It's illiquid and you can't buy in size. Avesco shares are purportedly illiquid, but I've never had a problem buying substantial quantities. Neither did Taya, and neither did Richard Murray, the Chairman who currently owns close to 30%. In fact, his most recent purchase was £136,000 worth on Friday.
2) It's risen ten fold it's expensive, it's fallen by ninety five percent it's cheap. Total rubbish. Avesco is a great example of the former, it's still cheap and there are numerous examples of the latter, just because a company's shares have fallen 95% doesn't mean they won't fall another 95% or worse still lose all their value.
3) The AIM market is too risky. No it isn't. Some companies listed on AIM are risky and some aren't. Basically don't buy overvalued companies of any sort wherever they're listed or companies that are overloaded with debt etc. In 2009 do you choose AIM listed Avesco or main market listed HMV?
Anyway, I digress.
Playing the long game has worked well for me and Avesco is just one such example. I will continue to hold for the foreseeable future.
Some further food for thought before I conclude though. Firstly, there is considerable intangible value not recognised in Avesco's balance sheet. Not least "Fountain Studios" (Wembley) that is listed at book value, but must be worth considerably more, and their long list of prestigious clients that return year after year because of Avesco's quality service.
Finally, Murray holds near 30% of the company and is 65 years old or thereabouts. When he eventually chooses to retire (of course he may decide to continue for some time yet), he might well wish to cash in his holding. If I was him, I'd be looking at far more than EBITDA for my holding. How does 3 or 4 times EBITDA sound?
Saturday, 27 December 2014
My 2015 stock choice - will it double in share price and make three in a row?
I do enjoy adding my contribution to the stock doubler thread on Advfn at this time of the year, and I'm hopeful that I will continue with the successes I had in 2013 and 2014. In both of these years my selections have more than doubled, although with three more trading days to go I hope I'm not being a little too premature with my 2014 choice. Please note that these are the only two years I have contributed.
In 2013 Angle plc rose by a very healthy 194%, and this year Trakm8 is currently up 105%. Incidentally, I believe that either of these two companies could double again from their current share prices, and indeed I believe that all of my current holdings have this potential. In fact I wouldn't own the shares if I didn't believe that they could multi-bag given a long term horizon.
One of my Christmas presents this year is John Lee's book, "Making a Million Slowly". I like John Lee, he has a very sensible approach to investing that clearly mirrors many of the great stock market investors, all of whom despite their nuances, adhere to the key basic principles of successful investing which I have discussed many times on this blog.
It's an enjoyable read, although I confess that I haven't picked up anything particularly new which is perhaps in itself a comforting thought. One thing that he does point out that is worth remembering though is that investors often try to over complicate the process of stock picking when a few simple ratios and a huge sprinkling of common sense is all that is needed. However, don't mistake that for implying that investing in shares is easy, it still takes considerable time and effort.
Anyway before I lose track of the task in hand, the reason I mention John Lee's book is because my pick this year is a company that I'd guess John Lee would certainly wish to cast his eye over. Firstly, it's profitable, it boasts a rising dividend yield (prospective hike of 20% this year), much improved earnings, it's borrowings are very low and the company is cash generative. EPS is forecast at 0.5p this year (confirmed by a recent trading update) and 0.6p in 2015 which at the current share price implies a forward p/e of 8 falling to 6.5 the year after. The company is on such miserly ratings because this year's figures fall short of market expectations even though the miss appears to be because of a solitary contract which should now fall into the 2015 figures.
This just illustrates market stupidity since the shares have been punished despite the fact that earnings growth will still be 25% ahead of the previous year.
Add in to the mix a recent acquisition that is expected to be "significantly earnings enhancing in the first year" and that they recently turned down a takeover offer from Trakm8, and the valuation becomes even more compelling.
The company in question is Belgravium Technologies currently priced at 4p per share (mid) with a market capitalisation of around £4m. The Group designs, installs and maintains software applications and solutions for the airline, rail, retail and logistics industries, but please visit their website to learn more:- http://www.belgravium-technologies.com/
As with Angle and Trakm8, it should be noted that I do hold shares in this company.
In 2013 Angle plc rose by a very healthy 194%, and this year Trakm8 is currently up 105%. Incidentally, I believe that either of these two companies could double again from their current share prices, and indeed I believe that all of my current holdings have this potential. In fact I wouldn't own the shares if I didn't believe that they could multi-bag given a long term horizon.
One of my Christmas presents this year is John Lee's book, "Making a Million Slowly". I like John Lee, he has a very sensible approach to investing that clearly mirrors many of the great stock market investors, all of whom despite their nuances, adhere to the key basic principles of successful investing which I have discussed many times on this blog.
It's an enjoyable read, although I confess that I haven't picked up anything particularly new which is perhaps in itself a comforting thought. One thing that he does point out that is worth remembering though is that investors often try to over complicate the process of stock picking when a few simple ratios and a huge sprinkling of common sense is all that is needed. However, don't mistake that for implying that investing in shares is easy, it still takes considerable time and effort.
Anyway before I lose track of the task in hand, the reason I mention John Lee's book is because my pick this year is a company that I'd guess John Lee would certainly wish to cast his eye over. Firstly, it's profitable, it boasts a rising dividend yield (prospective hike of 20% this year), much improved earnings, it's borrowings are very low and the company is cash generative. EPS is forecast at 0.5p this year (confirmed by a recent trading update) and 0.6p in 2015 which at the current share price implies a forward p/e of 8 falling to 6.5 the year after. The company is on such miserly ratings because this year's figures fall short of market expectations even though the miss appears to be because of a solitary contract which should now fall into the 2015 figures.
This just illustrates market stupidity since the shares have been punished despite the fact that earnings growth will still be 25% ahead of the previous year.
Add in to the mix a recent acquisition that is expected to be "significantly earnings enhancing in the first year" and that they recently turned down a takeover offer from Trakm8, and the valuation becomes even more compelling.
The company in question is Belgravium Technologies currently priced at 4p per share (mid) with a market capitalisation of around £4m. The Group designs, installs and maintains software applications and solutions for the airline, rail, retail and logistics industries, but please visit their website to learn more:- http://www.belgravium-technologies.com/
As with Angle and Trakm8, it should be noted that I do hold shares in this company.
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