This week brought good news from two companies that I hold in my portfolio.
Firstly, Belgravium Technologies released their final results for the year ended 31 December 2014 which were as expected with EPS more than doubling to 0.5p from 0.22p the previous year leaving the shares on a p/e ratio of just 10 times falling to 8 times if they meet this year's forecasts. Cash generation was strong at £1.5m, and cash on the balance sheet improved from £219,000 (2013) to £731,000. The company has no debt.
I am still confident that the Belgravium share price will double this year from its 4p starting point:-
http://michae1mouse.blogspot.co.uk/2014/12/my-2015-stock-choice-will-it-double-in.html
Certainly the narrative in the final report is encouraging with John Kembery, Chairman of Belgravium, saying: "2014 was a much improved year with increased revenue and profits. The Group has made continued progress in extending its activities and offerings to cater for a wider and more discerning market. The Board believes that further progress will be achieved in the current year."
A final dividend has not been proposed, but may be paid at the interim stage depending upon the outcome of a proposed acquisition. Whilst I enjoy receiving increasing dividends, Belgravium have demonstrated that their recent acquisitions have been fairly priced, prudent and quickly earnings enhancing. In addition, any acquisition will be made with existing cash resources and bank debt. I'd anticipate that if the acquisition is successful then the EPS figure may be significantly higher than the anticipated 0.6p, otherwise investors can still look forward to a very healthy dividend and a less than demanding forward P/E ratio.
Further encouragement is provided from the fact that having established dominance in the airline industry, they are now gaining traction in the rail sector with a number of notable contracts, including First Great Western and Leo Express (Czech Republic). I look forward to news of further developments as the year progresses.
Avesco, a great favourite of mine, also released a trading statement ahead of it's AGM which stated that:- "the directors anticipate that results for the year to 30 September 2015 will be comfortably ahead of their previous expectations."
I have held shares in Avesco for a number of years,
http://michae1mouse.blogspot.co.uk/2015/01/playing-long-game.html
Two things strike me about this statement. Firstly, I have never known them release such a confident statement so early on in their financial year (just 5 months in), and secondly, as promised, they appear to be minimising the odd year dip effect that may have put off some investors in the past. Given the confident early statement, and clear forward visibility, I wouldn't be surprised to see further upgrades as the year progresses. The current p/e ratio is 13.1 for the current year falling to 8.1 in 2016. The company still trades below it's tangible NAV (backed by quality assets), and boasts a progressive dividend policy with a current yield of 4.6%.
Looking even further ahead, Avesco is likely to further dampen any odd year effect in 2017 when London hosts the World Athletics Championship. 2012 was a truly bumper year for Avesco when England hosted the Olympic games.
A pleasing week indeed, as these two growth companies appear to be going from strength to strength.
Good luck with all your investments.
Sunday, 8 March 2015
Monday, 16 February 2015
Speculating on success
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.
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.
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?
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