Gresham Technologies Share Discussion Threads

[richjp] 13/1/2017 10:44

Gottafly, you raised a question about how would Cantor service their clients after a recommendation in a small cap stock with a limited free float. Here is a simple answer.

The Cantor recommendation was made public on 22nd December. If you look carefully at the price graph you will see that the share price had been moving up to around 120P before their recommendation. It is quite possible that Cantor recommended their discretionary clients to buy into GHT before making their forecast public. I don’t think there is anything wrong with doing that. Some of those clients then may have bought via Cantor.

Ask yourself why would Cantor make a public forecast? Anybody who is not a Cantor client will either buy through their own broker, or like many such as myself will nowadays buy through an online broker, therefore Cantor will receive no direct fee income. However by going public, that will encourage other non Cantor investors to buy into the share thereby pushing up the SP, giving the Cantor clients the chance to sell out at a nice profit.

It’s a ploy Goldman Sachs gave been accused of in the past, where they have set high expectations which have not materialised. Do not be surprised if you see people cashing in around the 160 – 170P mark as there is no guarantee that the 180P target will be met.

[gottafly] 13/1/2017 10:16

noble3r

When I say think, there must be a reason for the disparity, but what?

That is the thinking exercise.

[noble3r] 13/1/2017 09:43

i like what i see, just bought another 25521 shares @ 155.9

[noble3r] 13/1/2017 09:30

tell me what it makes you think, because i'm struggling to interpret the same topic.
I notice that cantor's rating wasn't a corporate one and therefore they are not paid a fee for providing services to Gresham.

What determines whether or not a broker initiates coverage of a company?

[gottafly] 13/1/2017 09:15

Had a chat with a pal last night and we somehow got onto GHT (ok am a bit preoccupied on this at the moment).

The question asked of me was, how come now there are two brokers following the stock that the price expectation is so different - 180 BUY, against a then market value of 114p - given that the forecasts are about the same, that is a difference over 50% in valuation.

Makes you think!

[gottafly] 12/1/2017 15:01

dd, thanks.

It does seem a conundrum though, why would an institution sell now that Cantor have come out with a 180p BUY. Would you not normally sit and await the share price rise or say ok the price is 180p.

Am I being too simple here.

[double double] 12/1/2017 14:58

I must say the share price is showing alot of strength and no sign of retrace.

Not sure about my extensive knowledge... otherwise I wouldnt have been here for so long! But then the best things come to those who wait.

Instituions tend not to drive up or down wildly the prices whilst buying or selling. I think we talked about some accumulation around 144p/145p. I also noticed the same around 114p/115p. Other ways for an institutional to get hold of large amount of shares is to get Market Makers to get them from another institution. Rights issues or placings are other ways.

[gottafly] 12/1/2017 10:33

Not a great share volume yesterday, only 60k, and only a single trade today so far, so no overnight instructions. iii are showing a bid offer spread of 149-155, it seems there is a determined effort to keep the share price at or below the 150p mark.

Also the share volume over the last few days has hardly been large and has been dominated by lots of small trades, presumably small private investors. How easy (not very I guess) would it be to acquire a sizeable number of shares, say 250k plus, surely an institution would require at least this amount.

Now that Cantor have published their report and BUY note at 180p, how will they service their client base and get them into the share. A mate of a mate said that they had been approached to sell 500k, that may or may not be true but it certainly didn't go through the market.

So no big volume trade since the escaling share price this year, is this yet another GHT conundrum, or are all the big investors simply staying put?

dd, have you any thoughts on this, since your knowledge seems to be pretty extensive.

[richjp] 11/1/2017 17:29

amt, there is one very big and important difference since the share price was 90P and that is the big increase in the cash position. I think that is what hopefully can support the share price at the current level.

Otherwise I am very much in agreement with your post. With their SaaS preferred model that does mean that revenue can build slowly, but I recall earlier in the year when they made announcements about new clients, they said that these clients would contribute significantly in the current year. Also with the weakness in sterling in the second half of the year, I would have expected them to perhaps slightly beat the house broker forecast, whereas if you take away the C24 revenue I think they have come in slightly below.

I agree with you about market sentiment but with the wonderful benefit of hindsight, 90P seems to have been too negative whereas where we are now seems to me just about right.

What they have to say in the full accounts should be interesting.

[schytalk] 11/1/2017 10:34

amt, sorry but I strongly disagree with you. Yes the results were just about ok but the share price was significantly under what it should have been in my view. As always DYOR but this share price is about where it should be but if it goes to the Cantor 180p perhaps that is another matter.

As always seems to be the case with GHT, the information (little though that is) seems to be confusing. Richard Holway/Techinvest are very supportive and I heard it said that GHT has never been in better shape, the Capital Markets Day presentation seems to confirm that view - enthusiastic and dare I say almost bullish. Slide 27 shows expected CTC software revenues for 2016 to be in excess of 5.5 million which is way above the reported 4.7 million, how come?

So in the final quarter, has £800k really gone 'missing' and remember that GHT have been prudent in their forecasts/figures over the last couple of years, so making the numbers and no more should not come as a surprise. I surmise that this is a revenue recognition issue coupled with continued prudence, I don't believe we are talking about lost sales here. Some £200k of this expected revenue was for Clareti Loan Control of which there is no specific mention in the trading update. I also suspect that the signing of the insurance contract in December (and the circa £400k revenue recognition) has provided scope for deferral of other revenues such as the 'milestone' revenue from the North American Tier 1 bank.

My view is that Gresham is now a well established niche player and that the current share price and forecasts reflect this. So on this basis we can expect solid growth in the region of 15% (as per Cantor) rather than stellar performance. However, as a Fintech outfit and with all the opportunities that surround the payments industry then GHT could really break into the big time, we shall see. Unless GHT change their communication strategy, remember it is under review, then we will have to wait until the full report is published on the week of March 13th.

[qantas] 10/1/2017 17:43

Please do your own research.

The place you need to look at for data is company's house for the figures on C24




Registered office address
Commodity Quay, St Katharine Docks, London, England, E1W 1AZ

Company status
Active

Company type
Private limited Company

Incorporated on
27 July 2009

Accounts overdue

Next accounts made up to 31 March 2016
due by 31 December 2016

Last accounts made up to 31 July 2015
Confirmation statement

Next statement date 27 July 2017
due by 10 August 2017

Last statement dated 27 July 2016

[double double] 10/1/2017 17:26

Perhaps they will sell a legacy business and are managing revenue as planned.I think people are in shock as it is finally happening.

[schytalk] 10/1/2017 17:13

richjp, I do not want GHT to chase unrealistic targets or create hype/a bubble, we have been there before, so no repeat please.

My point is that I think, probably due to what happened a couple of years ago, they are too cautious and a degree of sand bagging has been going on. A good and prudent thing for a while but you can get stuck in a conservative/cautious attitude. GHT will have stiff competition from other Fintech outfits, so they need to set realistic but high expectations.

Agree that C24 looks a great acquisition but extreme caution is needed because it can, too easily be, the road to ruin as GHT have already experienced. Even though C24 is relatively small and a very 'good fit' I think the H2 figures were somewhat adversely affected due concentration on the acquisition, multi tasking can easily loose your focus. On the positive side perhaps this sets things up for a storming H1 17.

[richjp] 10/1/2017 15:35

I agree. C24 seems like a good acquisition but I share your concern going forward.

What concerns me in this respect is that GHT have developed CTC with what appears to be very sophisticated technology and would anything acquired be of the same standard and be able to integrate with CTC effectively.

[double double] 10/1/2017 15:03

Acquisitions....
That is the only worry for me, any more acquisition. Some companies go wild and on a diluation binge and destroy value of the company.

Let us longterm shareholders have our day in the sun then the company can go on a binge.

[richjp] 10/1/2017 14:28

dd, I hope you are right about their ability to generate cash and let us hope it continues. As far as paying a divi goes I would expect them to make some kind of statement in that regard when we get the full results in March, as the subject was mentioned in the 2015 year end results and also in the results for first half 2016.

I would ideally like to see a divi in the not too distant future, not so much for the income as it would probably be small anyway initially, but as a statement of confidence. However the TU mentions that the C24 acquisition was the "first" Claretti lead acquisition implying obviously that there could be more, so I think we just have to wait and see what they decide is the best use for their cash.

schytalk, as far as setting higher targets is concerned, I certainly do not want to see a return to the days when GHT has set too high an expectation only to disappoint. I am not sure when the house broker last updated their 2017 forecast but it was probably after the 2016 half year results.

I would expect them to update their 2017 target and give one for 2018 as well, when the full results for last year are announced.

[jadeticl3] 10/1/2017 13:12

Who was it that wrote "What History teaches us is that History teaches us nothing"?
It appears that many on this thread are long-time holders and we have stayed with this company over many years. I rode the high peaks but top sliced on the way down at about 350p, then bought back in far too early at 260p. If I had waited I could have bought much lower and been rich now!!!
However, I have enjoyed the ride and believe that despite everything "this time things will be different".
I have about 36,000 shares so it matters to me how this company progresses.

[double double] 10/1/2017 11:54

I am sure there will be pull backs to allow people to buy back.

In the meantime the share price is telling a good story here and will unfold more over the coming months and years. I remember RTN and the hype where they hardly won any clients or made much money and yet it was 450p. But this time round they are actually winning fee paying clients and banking the money. Keeerching! The company must be doing somehting right.

[schytalk] 10/1/2017 11:28

dd I really hope you are correct and there does seem to be a feel about the level of business they could be signing up. However, their trading update was only in the 'ok' territory and keeps them as a niche player.

Can GHT finally break out into a mainstream supplier, they have the opportunity, some great people and the product (with more under development, Data Accelerator etc.) but have they got the market presence and sales nouse?

The CEO was brought in to resolve the historical GHT issue so fingers crossed. As I said on here recently, one concern I have is the apparent conservatism with the 2017 forecast, in my view even as a niche player this should be significantly above £20 million given the C24 acquisition would appear to be about £2 million on its own. If you don't aim high you will never get there, something does not add up with the forecast and market potential. which Cantor describe as "stand before significant GLOBAL market opportunities".

[double double] 10/1/2017 10:24

I did say this target of 180p will look silly.

This is still on a measly pe of 24 for current year.

Gresham have been jogging slowly and are almost ready to run with client wins.

Just look at the cash, they could have £10-12m cash in the bank by end of the year if not more.

[schytalk] 10/1/2017 09:48

Well some 40 trades yesterday and a good volume at 300k, already 30k today, so some liquidity coming into the stock but for how long?

[wh1spa] 10/1/2017 06:31

Of course Mifid 11 - My price target for GHT at year end £1.85

[double double] 09/1/2017 22:27

Can i also point out gresham was always confident about its cash well before c24. It restructured itselft early last year(?) to allow divs and share buyback looking into 2017. I really dont think c24 came with a wad of cash.

[schytalk] 09/1/2017 22:12

richjp, I know of one large investor who is pressing for a dividend subject of course to performance. GHT could decide to pay an interim dividend re 2017 if things continue to go well.