Intercede Share Discussion Threads

[yump] 29/10/2006 21:54

Its an interesting debate about top-slicing. imo the nature of the spike is very important. For instance I would never top-slice on a spike on a stock that I KNEW was still cheap on the spike. On the other hand if it spiked to a forward p/e of 30 on next year, I would definitely top-slice on a UK share as we just don't do p/e's of 40 very often and not for long if we do.

If a share never spiked, but spent several years growing at 20% on a p/e of 10, I'd be topping up each time results confirmed growth.

Never used to top-slice at all, but I do believe the nature of markets has changed and spikes are exaggerated to the extent that you can quite often reach the rating you were expecting to reach in a year or 2's time.

imo its dangerous not to modify your strategy somewhat to take account of that - or perhaps not dangerous but expensive as the share could well spend a long period after that, with the growth 'proving' the rating as the share goes sideways. Safe, but an opportunity for gain missed somewhere else.

I have at least two shares that have done that: IBG and DTK, both with getting on for 2 year runs where I haven't lost money, but the share price has been trading rangebound because the shares jumped at an early stage.

[wjccghcc] 29/10/2006 20:29

Agree with spooky. Forrester Research predict a tenfold increase in spending on IT and physical security convergence from 2005 to 2008. With IGP anticipating a proportional increase in their revenues, you could be looking at 20mm revenues in 3 years time. If they only increase 5x, that's 10mm. Given the 95% margins, their only cost is people. Given their indirect licensing model, they mainly have to support their OEM partners so staff numbers unlikely to rise more than 30%, giving op expenses of, say 3.5mm. That means pretax profit of 6.5mm and EPS (on a fully taxed basis) of 13p. PE of 20 and you're looking at £2.60, a 70% compound return on the share price at 50p.

Clearly if their revenues increase 10x (as per the research) and staff costs double, then you're looking at EPS of 30p and a share price of £6.00, a compound return of 130%.

Do I think that's likely? No, but I certainly wouldn't rule it out if they get the UK ID card scheme among others. Even so, to get a 20% compound return from here (even on a PE of 15) would require EPS of 4.3p which means sales of 5mm in three years time and that I do think is highly likely.

In the industry, it seems that while the likes of Actividentity and Bell ID have been focusing more on Smart Cards for government, IGP have concentrated more on the corporate front - Verisign, RSA, Safenet, Oracle, Thales all are leaders in the corporate security sector - while still being one of the systems of choice for the smart card companies such as Oberthur, Gemalto and G&D. The corporate sector is where the longer-term potential lies IMHO and it will be interesting to watch how the business develops over the next few years.

Sell at 50p? Call me again at a quid and I'll review my Maths :-)

[Abuse team] 29/10/2006 16:21

Post removed by ADVFN

[spooky] 29/10/2006 15:50

TaurusTheBear - It's a way to make money but it's not a way to make a lot of money.If there is one lesson i have learned it is that you must make your best ideas pay and pay big.The only method i have found to achieve this is to use a wide trailing stop loss,if you don't do that you are going to sell on every spike and there is no chance of holding on to a multi bagger.Yes you will get stopped out a number of occasions but that one big pay off will make it all worth while.For the statisticians among us i have had this looked at mathematically and statistically that is the best way to maximise profits.

[taurusthebear] 29/10/2006 13:21

zeepers1650 - 29 Oct'06 - 13:19 - 345 of 346 (Filtered)

yump - you nervous non-believer, you! ;0)

I bought 10k IGP at 39p on Monday and let them go at 49.5p on Friday. A grand profit doesn't sound half as impressive as 27% offer to bid. And that's the point, for me...

In March/April this year I watched IBG rally from 23p to 37p, and didn't top-slice (from my original holding at 4p). Price now, 31p.

This month I watched SOLA rally from 140p up to 237p, and didn't top-slice. Price now, 192p.

No, I've learned my lesson, and it's this: when there's a big rally in your shares, don't get greedy, top-slice. You know it makes sense... :0)

[Abuse team] 29/10/2006 13:19

Post removed by ADVFN

[rambutan2] 29/10/2006 01:07

for the record...

ASIS International 2006

Dates: September 25-27, 2006
Venue: San Diego Convention Center
Location: San Diego, CA USA
URL:

Intercede's MyID integrated with AMAG physical access control system will be demonstrated on AMAG's booth #3713

[yump] 28/10/2006 21:53

Well after much consideration I let a few go, as I reckon its 50/50 whether the market will price ahead much beyond March 2007 and profits of around 700,000 are already factored in. The rest is staying put.

If I can then evaluate how cheap it is say next year based on forecast eps etc. I may start topping up.

Illogical some might say, or nervous or 'a weak holder', but at the moment I do not have any actual concrete figures on which to make a judgement of value, so I cannot assess the risk. That's how I work. I don't want to be overweight in something where I cannot assess the risk - or I won't sleep properly.

The nice thing about this share is that the potential is so big, that imo if it goes as hoped for, once some profits flow in, the forecasts will pencil in so much growth that most investors won't believe it and certainly won't buy in advance of evidence. That will give opportunity to buy in cheaply. If it doesn't because the share goes blue sky as soon as the forecasts come in, then so be it.

[rambutan2] 28/10/2006 14:32

oracle identity management page, with lots of resources etc...

[igoe104] 28/10/2006 10:21

Smart card industry expects boost via government deadline.

[rambutan2] 27/10/2006 22:16

good on you taurus. everyone to his own.

the more opinions/takes a thread has the better.

helps keeps everyone a little grounded.

[igoe104] 27/10/2006 17:00

id cards in the middle-east.

ps i know gemalto have been getting alot of deals, in this part of the world.

[pork belly] 27/10/2006 16:38

another reason i like very much like IGP, both from IGP results:

"Further improvement in gross margin to 95% (2005: 94%)."

"According to Forrester Research, European and North American spending on IT and physical security systems convergence is conservatively set to increase from
$1.1bn in 2005 to $11.3bn in 2008, representing a 10-fold increase in only 3
years"

profits could increase rather rapidly in a relatively short space of time.

[igoe104] 27/10/2006 15:59

I wish you would sell them all taurus, so i then won,t have to hear nervous investors like you winge on,about it all the time.

[taurusthebear] 27/10/2006 15:53

Up to you, Aphro, I can see where you're coming from. Call me an early investor, and you a late one, if you like...

I've just sold 10k shares, for no other reason than to balance my portfolio. If the share price goes up or down has minimal interest to me in terms of that sale, because I did it for money-management reasons, not for greed (or fear).

Have a good weekend! :0)

[aphrodites] 27/10/2006 08:43

Taurus

To answer two of your questions:

(1) "You seem to have a different outlook from me, on which you buy as the price goes up. Would you do that with any other aset?"

The answer to that question is-yes. I am a director of a small property company and of course we buy more as prices rise. Just like IGP if we see prices are rising and the market appears good value we buy more properties if we perceive they offer good income potential and further price appreciation. It a bit like re-rating a company. We buy and either build or improve the property by investment.

I am also a director of a fast expanding electrical wholesale business; unquoted. I buy shares at every opportunity even if the price is higher.My expectations is that they will certainly trebble.

(2) You talk about "investing", but that doesn't really seem to square with this sort of short-term approach

Not a short term approach but one which squares with my view that as companies that meet the criteria I specified in my post are made aware to fund managers and institutions and they start to crawl on board I am prepared to join further in the momentum. I do not mean the puffing of a share price that frequently goes on an ADVFN threads. I don't think that is happening here yet but who knows if the price gets to 80p.

Incidentally, I think KBC the MM is keeping the bid side of the market artificially high so that it can sell stock. They have a seller and I hope they knock the price further as I want to buy more. Certainly, the buying has run out of steam and when that happens there is only one way the share price can go.

[taurusthebear] 27/10/2006 08:12

Aphro,

The difference between "trading" and "investing" is akin to the difference between "investing" and "gambling". Both are subjective comparisons, but both can be based on one's own asumptions of what they mean.

When I buy a share, I like to think there is some "value" in it. That might be based on a low PE or, in the absence of "E", a low price based on a realistically good outlook for profits in the near-term. When a share price rises without news to proportionally match that rise, then the share can easily be seen to be of less "value". Hence it becomes less enticing to hold. I think that much is clear to most people other than those who refuse to see it.

At 80p, IGP would be about 20% of my portfolio, but I was merely making a point in that selling some shares is not only based on the fact that they are of less perceived "value" than they were, but on the fact that such a rise leads to them becoming a disproportionate part of one's portfolio. That too, I would have thought, was obvious.

You seem to have a different outlook from me, on which you buy as the price goes up. Would you do that with any other aset?

"I think IGP's share price will certainly double from here. If it does next week I will buy more."

You talk about "investing", but that doesn't really seem to square with this sort of short-term approach:-

"But I am conscious that with only two MM's it is impossible to get out when the price starts to move down."

Basically, I choose to buy a certain stock at a certain price because I think it has "value", but as I cannot control subsequent share price action, I let the market decide when and to what I extent I start selling down my holding. To do otherwise is, to me, akin to not having an exit strategy.

Good luck with your IGP holding anyway! :0)

[aphrodites] 27/10/2006 07:25

Taurus

Stock selection is the most important factor whenever you trade shares; and I emphasise "trade" in this context.

So, if I read your post correctly, when you took your stake you were taking a short-term gamble in size. If this is the case then I quite concur with your view that it is sensible to take some money off the table. That is sensible money management.

And if you have one third of your portfolio in an AIM loss making stock that is a massive gamble. Not sure if you have this from your post.

I think where we are at odds is my emphasis is on "investment".

While I have no idea what the potential of this company is at present, the recent announcements makes IGP a very interesting investment. Backed by the research of a respectable broker and having researched the Smartcard implications, I am quite prepared to buy stock around here on that basis. I would not have put some in my SIP otherwise. As I have said I expect the price to move back to 46p but you can only buy this in any size when there are sellers.

I look for shares with the potential to double and and quadruple in price or vice versa. But the speed of the rise does not determine my exit strategy.

When my research shows that a company is breaking new ground, with new contracts and has the potential to move quickly from a loss making to a profit making position then I am prepared to invest on a rising share price basis and to watch every announcement to determine what this might mean to its future.

At this time IGP looks very, very interesting and is breaking into new ground in the US. The potential for growth looks incredibly rewarding and because it is impossible to evaluate this at present I am not prepared to entertain any exit strategy.

We all know what aberrational markets can do to a share price. But I do not think we are talking about aberrational here. This share has traded at an average price of 30p since the middle of 2005. At 50p we are only 65% above that price and that is not aberrational. The recent announcements have already made a re-evaluation of the business a reality. In most cases loss making AIM stocks never attract any interest from fund managers or institutions. It is only when there is a material re-evaluation that things change and then the AIM company oblige the institutions by making placements to them at cheap prices to allow them to get on board. And Peel Hunt is notorious for helping their customers out on this front! Care here!

I think IGP's share price will certainly double from here. If it does next week I will buy more. But I am conscious that with only two MM's it is impossible to get out when the price starts to move down.

Interesting debate. I think we both know where we are coming from and I wish you well with your stake. Well done so far and lets hopew we are both still here next year when the price is £2+ :0)