Vanco and Bullen Energy
It's been a great few weeks to be an investor/trader and news on some of my holdings coming up.
But first, one of my major holdings, IT company Vanco, held a shareholders afternoon this week so I decided to go along.
Why not? I bought at 181p over a year ago and the shares have done very well - I've always held onto them because the company keeps producing good results.
So, why not find out more about a company I've invested in?
Anyhow, I spent three very interesting hours there and I am now a definite Vanco expert!
So what did I discover? A company that is very dynamic, very focussed and knows exactly what it's doing, where it's going and how it's going to get there.
The most telling thing for me, and it might only be a small detail but I think it's very important and that's the company's obvious dedication to its customers.
John Locke, the very impressive and irrepressible chief technical officer showed us round the technical areas.
As he showed us the area where phone calls from customers come in and their problems are fixed, he told us about their "ratings system".
When a call to a customer has ended, that customer gets the chance to leave a one to ten rating for how he or she felt the call was handled by Vanco.
Any customer that leaves a five or below rating gets a callback within 15 minutes from one of the company's bosses.
That is the kind of attention to detail and service that impresses me. Workers are incentivised in many ways. They seem to really enjoy working there.
One of the shareholder's sons works there and he says his son rarely comes home until 10pm because he enjoys the work so much.
Vanco stands for "Value Added Network Company".
It was set up in 1988 by the man still in charge, Allen Timpany. I believe he really knows his onions. He also holds 61% of the shares in the company.
So what does it do? Come on, bet you shareholders have no idea have you!
Vanco basically goes after very large contracts and the biggest companies and handles all their networking.
Here's an example. Vanco manages the Avis car rental network - so that's its entire network across many countries and different languages. So when they look up your booking, Vanco runs that part of it.
If anything goes wrong with the system it's up to Vanco to sort it out.
Vanco is a virtual operator so it doesn't own the assets.
While its volatile share price may make you think revenue is in and out, the opposite is the case.
Each contract is signed for an average of four years. The initial fee payable is about £600k then £1m per year, so total value of each contract is about £3.6m.
So the company's revenues are long-term and assured.
On top of that, 30% is added for out of contract charges (for example if Avis moved to another building at Heathrow).
Clients include Ford, Virgin, Kenzo, the FT, Clarks and Bosch. There are 200 Vanco sites across 30 countries.
Revenues have grown every year since 1994. In 2003 55m, 2004, 80m and analysts expectations are of 110m next year - expectations that the finance director told us he expects to meet.
Simon Hargreaves (Finance Director) told us profit growth was accelerating - profits to end Jan 2005 are likely to double from the previous year.
He describes their contracts as "unbreakable" and says even if they won no new contracts they would do as well next year as this!
Amazingly they can pass on their additional costs to customers such as if the price of circuits goes up or foreign exchange costs. The outlook for gross margin is 32%.
Investors often worry about the company's debt. However Simon is confident debt is under control and will become stable and then start to come down. He says this will help the share price to start heading higher.
That's one of the reasons for the setting up of "Vanco Finance". So if a company needs the finance, a third party handles it (Barclays in effect) . As Simon says: "This means I get my cash on day one".
So what edge does Vanco have over its rivals? Companies prefer an independent company to going to someone like BT, says Vanco. This is because Vanco can say, shop around and get better deals on things like telecoms.
And what will drive growth and therefore the share price?
Endorsements from top analysts. More sales staff and more contributing. Average contract size increasing. USA and Australia growth. New sales operations in Brussels and Zurich. Increasing demand for Voice services. Enhanced buying power. More contracts on the way.
And they are also doing well in partial penetration of very large accounts. For example they got into one part of hotel chain Accor and then won a much bigger slice.
And even better: Vanco is growing off a sub 1% market share - there is plenty to go for and networking is something bigger companies cannot skimp on.
I'll finish with a quote from CEO Allen Timpany. "This will be a massive business if we get it right".
It looks to me like they're getting it right already and I'm convinced enough by my visit to continue to hold Vanco as an excellent long-term growth share and to possibly add more shares quite soon.
The visit has certainly made me feel like accepting other invites as a shareholder.
I bet the market is being kind to you - most of us investors have been making money in this upmarket and the party continues as I write.
In particular excellent results from Havelock Europa and White Young Green have helped my portfolio.
But not as much as Burren Energy! This great share I bought at 239p is steaming upwards on the back of excellent drilling news. I also have a £50 spreadbet long so I'm getting £500 or so added into my account every day at the moment.
With things going so well with my holds, I am still thinking the time will come to take profits... just not yet!