Best Of The Best Share Discussion Threads

[investographer] 18/11/2020 08:32

Investors now getting bored with this one. I can not believe why this has dragged on for over 5 months.It is not a complex company.A massive distraction

[peart] 18/11/2020 08:16

If you take last year's two trading statements and this year's two from September and November, together they appear pretty much the same. Quite simply, positive, ahead of internal targets, and heading in the right direction.

[peart] 18/11/2020 08:10

My interpretation of the trading update is that it simply confirms and reiterates what they said on 6.9.20. The company have issued similar statements in the past after a previous update. I view this as a strong update, but do not feel that we should hang onto every word or adjective, either included or omitted, as the world does with the Federal Reserve's statements, by example. Trading is strong and continues to be as mentioned on 6.9.20 and the FSP is ongoing, with no guarantees, with the inclusion of a few potential buyers and Private Equity. I view the main difference in that Private Equity has been mentioned, not that it matters who buys the company but that it provides more detail as to interested parties. It also implies to me, by its mention, that someone or some people are very serious.

[thomasearnshaw] 18/11/2020 07:55

Who will pay a PE of 40x for hot air

[sundance 13] 18/11/2020 07:50

It's a holding statement probably issued in response to the recent price falls, they'd have to be very careful what they say if they're still in bid talks/negotiations I expect.

[hdavies1] 18/11/2020 07:50

I guess they have an advantage with the sale in that 80% of shares are held by a 4 individuals and so even if share price rocketed due to a trading update they may already have agreed in principle a price based on the future forecast?

[3ootuk] 18/11/2020 07:23

It sounds like any interested parties must be in the right price range. It also seems to indicate multiple bidders rather than just one.
I bet Paul Scott's followers who sold out might well now be kicking themselves.

[peart] 18/11/2020 07:19

Also, the longer this FSP moves on, with strong and improving trading, the more value gets baked into the cake, justifying a healthy price. I like the sound of what's happening within the business regardless of a sale. Investors who hold, I'm sure will be fine.

[peart] 18/11/2020 07:13

Useful update with FSP ongoing. I suspect that they were hoping to finalise a deal with this announcement, but that delays have forced them to make the slightly late update so as to stick to their annual diary, as it were. I feel with a number of interested parties and now private equity mentioned that there's a reasonable chance of a deal soon.

[pastybap] 17/11/2020 23:51

Do you not think that because they haven't yet issued an ahead statement (it must surely be ahead?), the FSP discussions could still be ongoing? Or is this a case of short term wishful thinking...

[ryanc106] 17/11/2020 15:14

Good balanced points Mammyoko :)

[mammyoko] 17/11/2020 09:48

I am not suggesting what the forward multiple should be.

Prior to the TU on 7th May the prospective p/e was 16.5. This rose to 23 immediately prior to the results on 15th June but dropped again to 16.5 after FinnCap revised their 2021 forecast eps. The p/e rose to 20 when the FSP was announced on 17th June.

In the absence of any large institutional holdings, which seems unlikely to change at this stage and bearing in mind the potential regulatory risks and ownership concentration, in the absence of a bid premium it seems reasonable to suggest that this could revert to trading at around 16 times earnings as a worst case. The lack of liquidity and the fact that the price is influenced by small trades from private investors could see the multiple increase towards 20, but I don't think that it is likely to hit 30 times without some very significant and surprising trading updates.

Would be happy to be proven wrong but going to base my decisions on an assumption that bid interest has evaporated and that the consequent downside should be limited to around 10%-15% and upside could be 50%. For a growing business, that seems a good risk/reward ratio. It may overshoot in either direction due to illiquidity but it should revert to trading on prospective earnings eventually.

Like everyone else here, I think it would be better for the company to announce the end of the FSP accompanied by an 'ahead of' TU and an upgrade from FinnCap to around 80p eps.

[ryanc106] 16/11/2020 18:57

Why would you apply a multiple of 15 to a business that is growing earnings exponentially. Makes no sense.
They’ve cracked online marketing it would seem so that would suggest earnings will keep increasing I would of thought.
A multiple of 30-50 surely makes more sense for a pure play online business smashing earnings targets.
I just think it’s a case of it’s gone off peoples radars.
Will soon be back on when it smashes eps forecasts.
Just time to be patient I guess.

[mammyoko] 16/11/2020 18:19

Volume not sufficient to suggest a leak. People getting bored and moving on. Paul Scott said today he thinks a deal is now unlikely. Somebody decided to sell up. Excessive time over simple company could suggest either buyers unwilling to pay up or more than one buyer. No way of telling until we are told.

Provided there are no funnies the risk/reward for longer-term holders is starting to look attractive again. It's possible that FY eps will be over 80p. Assuming a reasonable 15x earnings means there is a base at £12 - only around 10% lower than current price. If this year's earnings come in at, say, 90p with next year's forecast at 110p then £18 to £20 is not unreasonable, even absent a bid. I will take a 50% upside for a 10% downside and did so, in small size, today.

Assuming no deterioration in trading, I will be a happy long-term buyer if the price continues to fall tomorrow.

[firtashia] 16/11/2020 18:19

Respected investor Paul Scott has revealed he sold a few, on the "Stockopedia" website. Maybe his followers doing the same. He's still highly positive about the business, just thinks there's a chance to buy in lower as he is sceptical about a deal going through.

[peart] 16/11/2020 18:12

Perhaps simply a few people taking some profits to jump on the current rally on stocks that have been pummelled this year....

[perimore] 16/11/2020 18:03

Ok, maybe not large buys but there were quite a few small orders. They could be stop loss hunting I hope!

[perimore] 16/11/2020 17:59

You sure? Lots of very small sales to push the price down throughout the day and then large buys in the last hour...

[investographer] 16/11/2020 17:26

Safe to say something has been leaked & deal is off

[ryanc106] 13/11/2020 16:23

Still nothing?! Seriously, what are they fluffing around at I wonder?
I'm perplexed as to why we haven't heard anything about the FSP or had a trading update.

[ryanc106] 10/11/2020 12:43

It would seem it’s still ongoing Serratia.
Can’t be far off being completed now...
I’m expecting a fantastic takeover offer which it would have to be for them to sell

[serratia] 10/11/2020 10:41

A company has to RNS anything that has a significant effect on the market. Eg if an order arrives that is material, normally defined as having an effect of around 10% on the profitability of the company. The decision as to what is material is in the hands of the broker.
As the bid interest produced an RNS it would be expected that its failure would also need an RNS.

As an aside brokers can hold the announcement for a week or so. This is thought to be so they can pass on the info to interested parties prior to going public.

[peart] 10/11/2020 10:02

And if it were negative news regarding the FSP, as in it's off, does the company not have a duty to inform investors/the city immediately. I'm not sure of exact rules but suspect that they have to.

[ryanc106] 10/11/2020 08:55

I’m of the same opinion Peart.