Trakm8 interims

Trakm8 released their interims this morning and the share price has currently taken a 30% hit. I'm not sure what investors were expecting, but in my view, it's the usual wild over-reaction by myopic investors looking for short term gains. Trakm8 has a fantastic opportunity to exploit in the telematics industry, and has clearly gone for that opportunity in a big way with a very large spend on engineering capacity, alongside sales and marketing resource. We'll be able to judge in the medium to long term. In the short term, although revenues continue to grow, profitability will suffer a little. I'm happy with that. As I said in a recent blog :-

http://michae1mouse.blogspot.co.uk/2016/11/still-on-trak-week-on-monday.html

"My view is that with a long term view, the company is hugely undervalued. I'm not particularly bothered whether or not they hit expectations this year, as long as they keep growing that order book."

I'm not going to do a forensic analysis of the results:-

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB00B0P1RP10GBGBXAIMI.html

but as usual you should DYOR.

It's also worthwhile taking a look at the short video presentation by John Watkins:-

hTTp://www.piworld.co.uk/videos/2016/11/28/trakm8-trak-h1-results-presentation-september-2016

For me, the clear risk going forward is can they turn the increased engineering, sales and marketing spend into the proportionate eventual increases in revenues and profitability, and will their expansion into China and the US bear fruit?

However, in my previous blog I wrote this:-

"With a medium/long view on Trakm8, I'm looking for £10-£20. In the short term, at the current lowly valuation, they are possibly vulnerable to a bid at around £5. "

Personally, I think they'd have been remiss not to go for the opportunity in the telematics arena with their market leading solutions, and I see no reason to change the targets stated above, as things stand at the moment.

I am in the advantageous position in that I bought my holding in Trakm8 when the SP was in the teens, and I accept that some investors may have bought recently and are sitting on paper losses.

I bought my shares in 2011, and if I'd closed down my computer and not come back until now then I'd be very pleased with progress. Bully for me eh!!

Something to think about if you're currently sitting on paper losses. If you'd bought Avesco shares in 2007 then you'd have paid just over a £1 and then watched as they fell to around 20p. Not nice. However, assuming that you didn't sell then even if you didn't pick any more up from that time onwards you'd now have got yourself a 6.5 bagger, a £1.10 special dividend, and all their interim and final dividends.

I offer no advice with Trakm8, but I'm happy to stick around. If all else fails, think about their blue-chip clients and installed devices (recurring revenues) and think what a larger player might pay to enter this growing and lucrative market.

Another bad CALL?

I mention this company with some trepidation. Cloudcall formerly known as Synety. All my history with Cloudcall is contained in the following blog and links:-

http://michae1mouse.blogspot.co.uk/2015/09/open-doors-that-needed-far-bigger-push.html

The link above will give you a feel for why I invested in the first place at around 150p. Fortunately, as explained above, I only place small amounts of capital in my more speculative investments. It's just as well since they are more often than not my worst performers. Why wouldn't they be? Why do I bother with them? Answers on a postcard please.

From the link above, I wrote:-

"In my view the group still has it's work cut out to achieve cash break-even and an operating profit. That said, they are clearly getting there quite rapidly which means that even in the eventuality that they do need to raise more cash in the future then the scale of the cash raise should be minimal, and with a supportive shareholder hopefully not at a deeply discounted price."

The share price was in the low 90s at the time. Oops, cue another placing at 57.5p. You need a sense of humour when you're investing or should I say speculating in the case of Cloudcall.

Anyway, as you've guessed I've taken the sensible option and walked away.

Except that's a lie and I haven't done the sensible thing, and instead I've bought some more at prices around 55p.

Now I know what you're thinking. He's lost the plot with this one, and you might be right.

However, in my defence, the company is making progress (albeit far more slowly than originally hoped), and if they do reach break-even then it's game on since this company's revenues will largely be recurring revenues.

I like the ties with Bullhorn and I don't recall the Directors selling any shares, in fact quite the contrary, they have been constant buyers and have a lot of skin in the game.

I should emphasise that I have bought another modest amount for me, and except this speculation could go either way.

The only consolation (if it goes wrong) would be that at least I know the Directors would be sharing my pain. Only more acutely.

I'd suggest starting your research with the latest interim results if you're interested, but I will say again that this is not a conviction buy for me at this stage, although things can change depending on their progress.

AA - 10,000 car trial using black boxes

In today's Telegraph there is a small report in the business section that will be of significant interest to Trakm8 investors. The article is entitled

"AA using black boxes to fix customers' cars before a breakdown"

Now investors will know that Trakm8 are the suppliers of these black boxes.

I won't reproduce that whole article, but it states that the AA are currently running a trial of 10,000 cars fitted with "black boxes" which monitor their systems, sending early warnings of potential problems. This is sent to the AA's control centre as well as members via an app.

Apparently, the test found that almost one in five cars being monitored developed a problem that was likely to cause a breakdown if the system did not flag them, allowing them to be fixed early, reducing the number of roadside breakdowns and cutting the AA's workload.

There is also a hint that the AA will be rolling out the black boxes to both breakdown and insurance members (for a reduced premium).

Now investors will know that Trakm8's partnership with the AA has been established for a few years and that recently they announced the following:-

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/TRAK/12621392.html

However, this news is potentially a further game changer. Whilst Trakm8 currently serve the AA breakdown vehicles and no doubt some newly acquired fleets (via the AA). This trial suggests that the black boxes could be offered and rolled out to each and every AA customer i.e. Breakdown member, insurance member, fleet cars etc.

If successful, and it sounds like it's going extremely well, it won't stop with the AA either. New and existing Trakm8 customers won't want to be left behind.

Anyway, as a holder of Trakm8 shares, I feel quite excited!!

Please note that this is a personal blog and I strongly suggest that you DYOR. With a press article such as this one I have made several assumptions.