Brainjuicer Share Discussion Threads

[woozle1] 19/5/2011 16:50

Longshanks,

I was waiting for you to start making offensive comments like "It seems to me that you haven't done enough research to actually be qualified to say what a fair valuation of the business is" without knowing anything about me!

Their claims to be predictive are in fact bogus: you can not predict hits (go to the IPA and you'll see all the hit emotional adverts) with any certainty. If you could, every record and film producer would be all over you like a cheap suit.

The claims to being predictive relate to closed social experiments where the audience have a limited number of options and vote, like X factor. And not I'm not promoting YouGov but they make similar claims using their panel. Advertising is not closed experiment. It is open, which is why it is so difficult to predict.

Their other claim using Tropicana fruit juice yielded 3.5% differential in effectiveness; which is not statistically meaningful (you can listen to that presentation on their website) because it was one sample. No degree statistcics required to figure that one.

In terms of behavioural economics, it always interests when you challenge people with rational argument as I have done. I have presented reasonable arguments which are evidence based. And it goes to show that once people have committed to a decision, any argument is unlikely to dissuade them and is in fact likely to make their position more entrenched (there is an excellent book on the subject called Influence by Cialdini). I suspect the only thing that will change your mind will be a falling share price! The irony is that is the fall will be totally rational (and may in fact represent an excellent entry point - I've got it on my watch list) but a decision to sell will be driven irrational fear.

Good luck.

W

PS
Just in case you didn't know, a p/e of 18 means you're paying for 18 years worth of today's earnings. History shows that buying stocks on such valuations rarely yields positive returns. You clearly like long odds!

[woozle1] 19/5/2011 14:41

Longshanks .. I think you underestimate the threat from the larger players and how the market will grow .. By BJU's own admission (see the presentation on their website), emotionally targeted advertising tends to work for companies just starting out or looking to make a splash .. Most ad spend is by large companies/governments for whom emotionally targeted advertising is not really appropriate and in fact is risky .. large companies/governments tend to use logic based advertising to cement already large positions and just need to remind consumers .. If the large co ad market is not available to BJU, then by definition their target market is small.

Moreover, BJU's research is rear mirror based. I'd like to know about the success/failure ratio of emotional ad. To me, emotional ads are like hit records and movies. It is almost impossible to predict what music will be a hit; as it tends to tap into the popular Zeitgeist. You only need to look at the economics of movies and music to see that business is bankrolled by a few hits; which are by definition almost impossible to predict.

BJU can tell you why an ad was successful but it will not tell which ad will be a hit.

My other issue is that the sky high valuation (18xs) which I believe is too high for a small company, operating in a business where the barriers to entry are low. Also a rapidly rising and now high cost base, leaves this company v vulnerable to a downturn. I'm reminded of YouGov that went on a hiring bender in the belief that online market research (because it is so much cheaper) would not be vulnerable to a downturn. This was not the case. Fortunately for the company it had a large cash balance to absorp the hits and has managed to turn itself around. BJU does not have the luxury.

W

[theophilus] 19/5/2011 10:28

Good to read Woozlel's post.

A well argued reply Shanks.

Encouraging to have a thread where people can offer differing views politely.

Sometimes a view that differs from one's own can be the most valuable and stimulating

Th.

[longshanks] 19/5/2011 07:18

Thanks for your input Woozle1.

I don't think the company has every claimed to have invented the underlying techniques that they are applying. In fact they go to great lengths to give credit to the likes of Prof Paul Ekman whose research they have used.

I guess the point you are making is that they don't have any intellectual property rights to the actual science and that competitors can use this science as much as BrainJuicer.

That is a point well made but you are wrong to suggest that the world of applying emotional insight to market research is one that BrainJuicer wishes to keep to itself.

They are pioneers in application of these techniques and are doing so with the firm belief that where they lead others will follow: in fact that is something they are actively supporting. However, once the market opens up BJU will have established itself as one of the leaders. With that market position comes certain perks that the "sheep" companies will find hard to attain irrespective of how huge and dominant they may be in their current markets.

As a company that helps others to optimise their brands - you can be sure that BrainJuicer will be fully capable and savvy in techniques to do the same with their own brands.

I think you are also mistaken in the view that once competition arrives that BJU will find it harder to maintain growth. If you think it through logically, once competition starts copying BrainJuicer - it will be because they are finding the market one in which it is difficult to sell their archaic and irrelevant tools. That implies that the market for tools such as those developed by BrainJuicer will be growing. BrainJuicer, being a leaner, more efficient, more focused machine will be at a significant competitive advantage to further develop their role within that market. Their overall percentage of the market for such tools may shrink over time - but the market will continuously become so very much larger. In this respect BrainJuicer has more than a fair chance of maintaining significant growth for many more years.

[woozle1] 18/5/2011 20:34

Beware the company's claims that make the research look proprietary .. It is not .. It is using some psychology research from the 1970's .. The company presents it well and almost convinces you that it's predictive .. At the moment none of the large research houses are using emotional measuring techniques but once they do our friends at BJU will find it hard to deliver the levels of growth .. So far the company has not felt the chill winds of competition.

At the moment, the momentum is with them but don't expect it to last.

[longshanks] 17/5/2011 00:21

Newly announced senior appointment of Federico Trovato. He comes from Philips and before that Nielsen where he held VP positions. He is joining the BrainJuicer Executive Management team as "Chief Client Satisfaction Officer" with what looks to be strong client contacts; he is being brought in to " take BrainJuicer's global account capabilities to the next level and help fuel the company's already impressive growth with multinational clients.". Timing appears linked to the formal post-trials launch of SatisTraction by BrainJuicer.

Mr Trovato is based in the Netherlands which shows the company is making a strong committment to supporting Carola Vershoor in turning that important market around although his role is more as an international MR heavyweight.

Video is available on YouTube of an interview between him and JK:

Interesting to note that as of May 16th, company is actually up to 135 personnel - 70% higher than this time last year.

Full press release as issued by MRWeb:


"In London, market research agency BrainJuicer has appointed Federico Trovato, former Head of Consumer and Market Intelligence at Philips - as Chief Client Satisfaction Officer. He will also join the Executive Management Team and will start in August.

Trovato in his role at Phillips was a long-time client of BrainJuicer. Having also worked with both Procter and Gamble and Nielsen, he will bring ample agency and client side experience to his new position, where he will lead the implementation of SatisTraction, one of the company's newest products.

SatisTraction uses the FaceTrace methodology to measure emotions and capture customer and employee satisfaction: this appointment signals its formal roll-out after initial trials with HSBC and other clients in financial services, retail and telecoms.

Of his appointment Trovato said: 'Having worked with BrainJuicer for many years and seen their research expertise first hand at Philips, I am extremely excited to be joining such an innovative and dynamic company. BrainJuicer has bold goals of changing the way market research is perceived in the board room, making research more inspiring and actionable for marketers.'

John Kearon, founder and Chief Juicer, comments: 'Federico is a star. A hugely talented researcher and leader who together with his great team at Philips, transformed the role of research inside the company, to become a strategic partner in the innovation process. His determination to make research inspiring, his passion for understanding consumers' motivations and behaviours and being a thoroughly nice guy, make him the perfect fit for BrainJuicer.'"

[pentangle] 13/5/2011 12:15

Hi Longshanks, thanks for the link to this new thread. I have not been onboard BJU as long as you, but they are showing me a return of about 40% since I bought in last September so no complaints. And I agree with the rest of your analysis. This is an ambitious and innovative little company with ambitions to be a big company over the next decade and with a proven track record of delivering.

[longshanks] 13/5/2011 11:54

Hi Pentangle - why don't you come over to the other thread - we are missing your input (well I am):



To be fair to IC - it is not unreasonable to consider the company from a fundamentals perspective. However shares like BrainJuicer do become very fashionable - especially when they continuously outperform - and for those kinds of companies you can throw fundamentals out of the window. Short term vision, as you say, can cause you to fail to recognise such potential.

I think we will be at £4 before we know it.

[pentangle] 13/5/2011 11:16

Some mention in both Shares Magazine and IC this week. SM thinks it is positive that there is another sale by a founding shareholder and also mentions that Unilever, as an original shareholder, have been reducing. Notes the new institutional investors who are now on board as positive omens for future price performance.

IC in its usualy myopic fashion, fixates about the short term P&L and concludes that the share is 'Good Value at Best', whatever that means!

[longshanks] 12/5/2011 21:36

Company website has been updated with new breakdown of the substantial shareholders. It seems the company is regularly neglecting to notify the market - ho hum - not a big deal but it does make interesting analysis.

As well as the recent announced purchases by Standard Life, Sleep & Zakaris and Herald Investments - the company has another large (3.8%) respected shareholder in CI Investments Inc. Also it looks like Liontrust and Hargreave Hales are continuing to acquire shares. It would seem that precious few, if any, of the shares divested by UV and JK have actually been released to the general market.

In total, shares owned by Directors and the seven substantial shareholders come to 9.9m. After the 660K shares held in treasury - that leaves a remaining float of just 2.5m shares.

That might explain just why the price is still going up...the shares are hot, hot, hot.

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Another employee has been added to the website - this time Paralegal, Gayatra Kapoor, for the Corporate support team.

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Also looks like we are getting some further press scrutiny: Shares magazine rate BJU a buy after the sales by Directors and U.V. to institutional investors.

[longshanks] 12/5/2011 11:54

So it was Nick Sleep and Qais Zakaria who made the purchase. No notification/confirmation as to where they sourced those shares - but I guess that will come in time.

These guys are a little bit too secretive for my liking. They look like some kind of Hedge Fund/Private Equity outfit - but it is difficult to glean any information through the wonders of Google.

[longshanks] 11/5/2011 21:36

no worries Jdb2005. You never know - perhaps the price will drop once the insti's stop carving up the available large chunks of equity.

There is a new Research Exec listed on the companies website for the UK: Andrew Taggart.

Brings numbers up to around 125 by my reckoning.

[jdb2005] 11/5/2011 20:04

Thanks for update Longshanks.
Waiting for more funds so can you keep share price below 260p.

[longshanks] 11/5/2011 19:43

Interesting volumes traded today. Looks to me like JK's equity backed loan deal from last July has been cashed in now that the shareprice is above the £2.55 trigger point. Too early for it to be at his request - so presumably the "third party lenders" were persuaded by an offer by an institution to buy the full 400K off them. They make a neat £360K return on the £650K loan that they made last year - not bad!!

[longshanks] 10/5/2011 15:05

All my shares are in nominee accounts so I don't get any papers myself but details are on website: 24th May - 10 a.m. at 1 Cavendish Place, London.

[jdb2005] 10/5/2011 12:54

Longshanks - believe the AGM date is 18 May, I still have not received papers, have you ??

[longshanks] 10/5/2011 07:32

More new staff announced on the company website: Phaedra Ballard - Research Exec for the U.S. "SatisTraction" team, Agnieszka Hoffman - Research consultant for the U.K. team and Grace Zek - Research consultant for the Dutch team.

All three are "revenue generating" staff.

AGM is later this month - I would hope there will be a bullish 1st quarter trading statement to go with it.

[kenmitch] 09/5/2011 12:39

I didn't buy expecting the shares to do THAT well!

With a share like this I agree that it is usually far better to buy and hold than try trading,

It also removes the risk of being out of the shares on a quick bounce following good news.

[longshanks] 06/5/2011 14:08

I think that is a fair assessment kenmitch.

I also tend to feel that the "sell in May, return on St Leger day" adage had more validity when the summer hiatus was taken without the benefit of iPhones/iPads/WiFi etc. These days - it is easy for traders (and PI's) to be aware of market bargains and take advantage of them from the beach.

I somehow feel that with a market cap above £30m - BJU is now firmly in the radar of many small cap funds. The company has not put a foot wrong in five years and has crossed that difficult transition between being an owner-led start-up with a bright idea and a business with a diverse client base and world-class management.

BrainJuicer could become a very "hot" stock and the share price could surge to a seriously high PER and a PEG factor well in excess of 1. PER and PEG can be useful indicators when judging the risk of buying a company's stock - but because they are historic measures and don't account for how growth could be delivered in the future can also be wholly misleading.

Many of these new investors are paying prices in excess of Hoodless Brennan's 12 month target price announced earlier this year. They have done due diligence, done some serious research and IMHO have come to similar conclusions to my own.

I anticipate some volatility around £2.75p but for the price to then cruise more or less effortlessly to £4 or £5 this year.

I could trade the peaks and dips - but I seriously doubt I would be much better off. Someone sold a few shares yesterday and turned a few hundred quids return on one months investment - however I will be surprised if they can buy back in below the price they sold at. I have bought more or less every month over the last two years and will carry on doing so whilst I think they offer good value. I believe this share will give me a return in excess of 2000% over the next ten years: that makes £2.50 per share a steal.

[kenmitch] 06/5/2011 09:54

Thanks longshanks for your brilliant posts on Brainjuicer.

Jdb2005.

Even if "sell in May" proves right for larger Companies and some sectors, very often shares like Brainjuicer and many other smaller companies ignore big market moves in both directions.

So I wouldn't hold off buying Brainjuicer on those grounds.

[longshanks] 06/5/2011 01:12

Recruitment continues: details on the website of a new VP in the US who appears to have started up an "Atlanta" office for BrainJuicer. Another high calibre candidate who was previously "Research Director" at BBDO: Matte Wicklin

[jdb2005] 05/5/2011 19:51

Thanks Longshanks for comments. I completed postgrad in Marketing a few years ago, so have watched how BJU innovative approach to market research has proved successful.

BJU one of few in positive territory today but markets are trying to absorb worsening economic data - see rise in US jobless nos today and how Banks & Miners have slipped back. Old adage of sell in May rings true 7 out of 10 years so unless you are investing for long term expect 5-6% fallback.
Few will seek to trade BJU short term as the spread is too wide with spreadbet firms. As you know you can always look and see if there are higher proportion of shares out on loan to those who short sell companies.

[longshanks] 05/5/2011 14:20

I was wrong.

News this afternoon of who most of the new investors are. We have Herald increasing their stake from 500K to 700K; Nick Sleep and Qais Zakaria taking a 700K stake for their Private Equity vehicle and last, but not least, Standard Life taking on a good 700K.

We still have around 780K shares unaccounted for from the UV disposal and JK's sale yesterday - but I presume those are with smaller sub 3% institutional holdings that don't need to make any announcement.