Can't buy any online here |
Wow stunning volume- the most in its entire history- potential turning point |
Sound reasoning piratic, I too hold. This market completely ignores fundamentals at the moment. Let's hope that changes soon. |
 As a holder, I consider Focusrite deeply underpriced at 11x P/E, to the extent that if they only hit their forecasts from here (which are not ambitious) and the share price stays at these levels, then I suspect this will not be a public company on a 2 year view at the stock may have been acquired.
The product positioning and customer affinity, as well as the overall ethos of the company is very strong in my opinion. And very rare to find on the UK small cap markets. Good amount of US dollar exposure here as well.
I think that even today this should be more like a 15x earnings stock (>570p). In the very short term, investors are able to take advantage of what seems to be an institutional overhang on the shares at the moment judging by the bid ask spread activity.
Results later this month I expect to show good demand for the latest Scarlett launches. Meanwhile the first half of the year base comparators are quite soft which I think bodes well.
Big fan of this stock at these levels as it has fallen off the radar. It'll take a chunky earnings forecast miss to drive the stock materially lower than these current levels in my view, which I don't consider likely.
Eric |
In fairness to Woodford it was unlisted / illiquid investments + redemptions that killed him off. Had it been a closed ended fund he wouldn't have needed to sell (but also wouldn't have had access to as much capital) |
"Fund NAV at 30/06/23 was £451m, so they've burned ~1.5% of NAV on that Marshall's trade alone. It really is as bad as anything I've ever encountered."
Seriously impressive failure but I wonder if they still come second to Woodford in the incompetance stakes?
hxxps://www.moneymarketing.co.uk/analysis/whos-to-blame-for-woodford-collapse/ |
It's a closed ended fund, there are no redemptions...
"The Company is closed ended in nature and therefore it is not required to sell investments when shareholders wish to sell their shares."
P20 of the annual report;
There are simply out of their depth IMO.
Marshall's is another example. On 20/06/23 Abrdn smaller co's held 37,586,624 shares, representing 14.85% of the company.
They started dumping shares in October, the first TR1 was on the 6th showing a 2m decrease. 5 further TR1's followed, the last of them shows they have reduced to 22,355,798 as of 25/10. So they sold ~15m shares in October, driving the shares to 7 year lows at £2.
To make things even more bizarre, they bought >6m Marshalls shares in Jan & Feb 23 at well over £3...
Fund NAV at 30/06/23 was £451m, so they've burned ~1.5% of NAV on that Marshall's trade alone. It really is as bad as anything I've ever encountered. |
Not defending them but if they are seeing a lot of redemptions, they are obliged to liquidate some holdings. Perhaps they choose the ones they think are on a downward path which in turn accelerates the downtrend. |
Nope, it looks like it used to be Standard Life UK Smaller Companies, I suspect most of the funds will be in 'dormant' pension pots which the owner is either unaware of or unaware of where the money is invested.
It's underperformed the UK Smaller Companies benchmark by a shocking 25% over the last 3 years;
Fund managers, Abby Glennie & Amanda Yeaman were appointed in August 2019, it appears to me that they don't have a clue how to manage a portfolio. Consistently dumping illiquid companies at their lows is criminal & no doubt a large contributor to the fund underperformance.
Abrdn acquired Standard Life in 2017, so it would appear the old managers were dispensed of then, along with any common sense. |
Why anyone would entrust their hard earned with any fund manager is beyond me |
Here is some comedy from the Abrdn UK smaller companies annual report (25th Aug)
"The five worst contributors to relative performance during the year were as follows:
- Focusrite -130bp (shares -57%) the shares have struggled this year, partly as a normalisation of Covid spending has impacted demand for the company's products. It navigated supply chain issues early in the year and continued to invest in new product solutions to drive demand."
This fund held ~973k shares at 30/06/2023
A year earlier, on 30/06/22, the same fund held ~1379k shares
So they sold just over 400k TUNE shares during the year
Do they ever wonder whether it's their own behaviour which is responsible for continued awful fund performance?
I note their commentary;
"Performance
I am disappointed to be reporting to shareholders that in the year just ended, the Company has extended its period of underperformance against its benchmark on both a net asset value ("NAV") and share price basis. We are very aware that the effect of this underperformance, over one, three and five years, is that anyone who made their initial investment in the Company in the last five years will most likely have seen a reduction in the value of their investment."
Absolute charlatans. |
I see we have the reason for the continued overhang here; good old Abrdn asset management. Their last TR-1 was on 29/09/2022, reporting a decrease from 10.59% to 9.97%. Quite incredibly, in the period since then they have sold 2,739,146 shares, equivalent to 4.62% of the company.
I note that they appear to have bought most of their holding during 2020, issuing a TR-1 on 23/12/2020 reporting an increase from 5.59% to 10.46%...
So they very likely bought from £10-18 and have been selling at £4-8. A very effective way to destroy capital & also put a small companies share price under sustained pressure.
It is utterly pathetic behaviour. Funds like Abrn should be subject to very strict regulations regarding small cap holdings IMO. If they buy a position they can't sell it for at least 5 years and when they do they can only dispose of 10% in a 12 month period. Dumping half of their holding here in a bear market is shocking.
They've repeated the trick with multiple small & mid caps on LSE in the last 12 months;
Watches of Switzerland - dumped an 8% stake at the end of August forcing shares to multi year lows
Dumped a 10% stake in XP Power in early October forcing shares down 75%, since up nearly 100%
Dumped a 6% stake in Inspecs at the end of 2022, forcing shares to huge all time lows, from which they bounced 200%
Dumped 3% of Yougov as per a mid October RNS, just after multi year lows were reached, it's up 50% since
There will be many other examples I'm sure, however what it tells me is the TUNE is very likely trading at 50-100% less than it should be. A PE of 11x is surely incredibly cheap... |
$4k + $3k + $3k + $3k + $1k + $1k + $1.5k + $1.5k + $1k + $1k + $1k + $2k + $3.5k + $3.5k + $3.5k + $3.5k + $3.5k + $3.5k + $3.5k + $3.5k + $3.5k + $3.5k + $3.5k
$61k
Focusrite is a fantastic business back to £7/share soon IMO very aligned founder is a big shareholder |
How much did that lot cost? |
easy trip back to £7/share IMVBiasedO |
Focusrite is one of a host of good smaller UK firms trading at seemingly good prices but as British small caps are competing with high yielding and safer bonds and other equity classes not burdened by being part of the "sick man of Europe" UK valuations could fall furhter --- but I believe "0ne day.........." |
The new 4th generation Scarlett 4i4 is fantastic and loved by the reviewer community. |
In this latest episode of the Desert Island Investor my very dear friend and fellow ‘pod-castaway’ Paul Kerin discuss Focusrite ( TUNE ), having recently added to my position |
I think this is is difficult to asses but the chart is encouraging. It looks as though the support at around 425 has been respected and is now in a trading range. A break above 600 would be encouraging. I will look to buy if price falls to 480 and would consider buying if there is a break north of 600 |
Might have to temper my hopes of a slight beat for FY23 as having looked at the FY22 results in more detail there was a decent sized exchange gain reflected in finance income (due to USD strength) that is unlikely to be repeated. Will also be a tick up in bank charges due to increase in level of average debt they were running with over the FY. I noticed consensus broker forecasts on sharepad were revised from 39p to 38.8p so I'm expecting FY EPS in line. |
Good call on the H2 EPS - if they beat H222 for revenue & margins improved then you'd think EPS would be similar. Agree on FY24 comps, I also note that they released their new Scarlett model on 31/08 and online reviews look excellent.
No stock available online - I think this has bottomed and could now recover nicely towards the 200DMA at £6.20, after that the next resistance is the uptrend line at £7 which was broken in March. |
Agree, was expecting a H2 miss but think its got the potential to surprise despite them guiding to lower end of expectations. H1 adj EPS was 18p, they need to do H2 EPS of 21p to hit consensus fcast. In FY22 H2 they did 24.9p adj dil EPS on £19.5m EBITDA. Assuming they come in at lower end of expectations EBITDA for H2 TY would be £20.1m.
Given we're already 6 weeks into the new FY and they have some very soft comparables in H1 after the channel inventory issues LY I think the next 6 mths could be more interesting. |
Full year TU a lot better than I expected - trading at less than 8x adjusted EBITDA seems exceptionally cheap. I remember first looking at TUNE way back in November 2017 when shares traded at just under £3, turnover for FY17 was £66m with £13m in EBITDA.
So the business fundamentals have roughly tripled over the last 6 years yet it's trading only 60% higher... That's some serious multiple compression which will surely start to unwind over the coming months? |
The interesting part with regards to yesterdays jump and prior recent jumps, is that they have been on the back of relatively very high volumes. This share is normally very lightly traded, as over 70% is held by either the founder (Phil Dudderidge) or a handful of institutions e.g. Sandford de Land, Liontrust. The daily volume is normally around the 20k - 30k range. Yesterdays volume was over 170k and on jumps over the last few weeks has been on bigger volumes. Maybe someone building a stake. Quite possible one of the funds buying more as money flows back into these funds.
Have to think it is undervalued at these prices, but that's just a personal opinion (DYOR). No doubt, revenues have been down in comparison to Covid related peak. However, this company still is a leader in the fields it is involved with, so think the long term outlook is still solid. |
Yeah, nice rise....wonder what's behind it....I find that this share can be a bit of a black box with fairly limited news flow |
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