Reach4entertainment Ente... Share Discussion Threads

[briangeeee] 22/1/2016 16:45

Well, I guess we'll see we'll see how it goes!

I'm not overly positive on the comapany, but am sympathetic to TW's argument that FCF will be strong and it will look increasingly attractive as debt is paid down.

Wray will probably work with Stoller to ensure the company is run sensibly and debt paid down until small bolt-on acquisitions are identified.

[michaelmouse] 22/1/2016 16:22

BrianGeeee - It may surprise you to know that I don't disagree with much of your post.

However, your post merely illustrates why I deem R4E to be a risky investment that doesn't offer good value for money.

Your first paragraph would be fine, and the company may warrant a second look, if the business had a great track record and was growing it's EPS at say 20%+ per year. It's not. Unless gross margins improve markedly then I doubt growth will ever be spectacular, and that's assuming that it grows at all.

The first thing I look at when evaluating a company is the balance sheet. Even after the dilutive share placing, I doubt it will hold many attractions. At this stage the profit/loss account shows a loss at the interim stage. Cash flow isn't great either. It doesn't add up to a risk worth taking does it?

[briangeeee] 22/1/2016 10:18

Loss making at the interim stage. Well yes, but you might want to wonder about that tax charge, and also the reduction in interest charges looking forward. If you've got an alternative model to the Allenby forecast, I'm all ears. Allenby are going for a normalised full year profit of £700k. What do you think?

[michaelmouse] 22/1/2016 07:51

The placing price of 1p will also create a drag on the share price. Upticks will be sold into.

[michaelmouse] 22/1/2016 07:31

BrianGeee - With respect, I not interested in reading research by allenbycapital. Surely R4E are a client of allenbycapital and the research is hardly going to be negative is it?

All I need to know is that in the interims the company was loss making, gross margins are poor, cash flow is poor and they have literally nothing in the way of tangible assets. They've had to make a massively dilutive placing to pay off some debt at 1p per share.

I will watch out for the final results with interest, but unless margins, and cashflow improve drastically then this is a company I'd avoid at all costs.

A company like this is too susceptible to economic shocks. It's worthless really unless it can throw off mountains of cash, and grows strongly. It's not doing that, and I doubt that it will in the near future.

What exactly are investors buying here? It doesn't pay dividends, it isn't growing strongly, and it has virtually zero tangible assets.

I'll leave you will this quote:-

"When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."

Warren Buffett

Good luck though.

[briangeeee] 21/1/2016 19:03

michaelmouse, I've just looked at your blog to see why you consider R4E to be worthless, and was surprised to see only one paragraph of fairly trite analysis, which started: "if you'll pardon my French, R4E is an absolute sack of sh*te". It didn't improve much.

Surely you must have some understanding of Dewynters and Spotco, and must be aware that they are mature and routinely profitable businesses. The company under prior management took on excessive debt to make acquisitions in non related business activities that are no longer current.

Nigel Wray made significant effort recently, along with the company, to restructure its burdensome debts. It is not a company, like many on AIM, with over-paid low quality management. David Stoller isn't active in the business on a day-to-day business, but works on strategy, and has totally transformed the senior management team.

Don't let your negative view of TW or ShareProphets prevent you from making a rational analysis. The Allenby research is a good start of course if you haven't already looked

[michaelmouse] 21/1/2016 16:45

Shareprophets trying to prop the price up throwing more good money after bad possibly? Horrible chart. Perfect downtrend. Just draw a couple of parallel lines through the peaks and troughs to see what I mean.

[michaelmouse] 21/1/2016 11:03

standish11 - I'm rather enjoying myself actually. I'm hoping that somebody can come up with a bull case here?

When a company has to make huge dilutive equity raisings just to pay down debt then it's un-investable in my view. Chances are they'll continue to make losses and get into trouble again. I've seen it so many times.

[standish11] 21/1/2016 10:55

Michaelmouse. I think we have got your message so perhaps you could move on.

[michaelmouse] 21/1/2016 10:00

Down 11%. Equity is worthless.

[michaelmouse] 21/1/2016 09:48

R4E now down 9% and falling.

[michaelmouse] 21/1/2016 08:50

R4E share price already down. Much further to go. Any economic downturn or disruptive event could potentially finish this business. Toxic combination of debt, few assets, and year on year losses. Happy to listen to a bull case.

[michaelmouse] 20/1/2016 21:23

Possibly the funniest paragraph I've ever read:-



"Bottom line: R4E should report a pre and post tax profit of £2 million at some stage within the next two to three years. Put that on a PE of 10 - assuming that over time remaining borrowings are cleared and assuming that employees grab their 20% stake and the market cap is £20 million. At 1.25p on a fully diluted ( bar the 5p still out of the money warrants) basis the market cap is £7.5 million. So buy in the market and you should almost treble your money. Of course placees will do even better but do not let (justifiable) anger get in the way of you making a return. Buy - FIML has inded done just that today. - See more at: hxxp://www.shareprophets.com/views/16570/r4e-placing-and-refinancing-and-chat-with-nigel-wray-we-buy-shares#sthash.VhLAawlL.dpuf"

He should have added:- "assuming the business hasn't gone under".

"R4E should report a pre and post tax profit of £2 million at some stage within the next two to three years."

LOL. Classic.

Assuming your Aunt becomes your Uncle.

[michaelmouse] 20/1/2016 21:11

R4E a great shorting opportunity?

[blondviking] 31/12/2015 11:04

I agree that it has been a dog and I got out some time ago but I have bought this morning and moved the market with buys of about £4k

[mikeh30] 18/12/2015 13:55

Yep gonna get tight here

[tromso1] 10/12/2015 11:03

Looks like they are continuing to buy with regular blocks of 350k going through.