Neo Energy Metals Share Discussion Threads

[guidfarr] 18/3/2009 15:46

just a thought: suppose we have two parties acting in concert:

one party lent the money to another party (in agreement) to short the shares.

This other party started shorting the share to envoke anxiety and panic small investors to sell their holdings for pennies... they could always short it up to the amount of their holdings while buying additional shares of small investors on the cheap. And then even if the prices later rocketed (because the shares cannot be borrowed for ever and the amount on loan would have to crystallize at some point and few buyers at these levels would sell for a loss) the short seller wouldn't lose anything as the amount shorted equals the amount held by the other party!!? So in theory what the shorter would have lost when the shares rocketed would be compensated by the gains on the core holdings plus both parties now have more shares (of us small minnows)

Result: one big holder effectively controlling the company.

How to avoid issuing an RNS? -> buying the shares via CFDs?

Is this possible? Is this legal!!!!? the problem with these kind of companies is that manipulation is rampant.

[guidfarr] 18/3/2009 15:15

yes the business is sound, reasonably diversified across different payment services and countries and profit generating!! But the peace of mind that provides grrrr

at least it seems to be attracting a big buyer at these levels if they aren't two parties working in concert....but the fact is there's a big seller and a greedy buyer who wants it for less and less and less

hey it is now trading at 35.75 with one share traded lol (better laugh)

[adh0] 18/3/2009 15:13

It doesnt look too good does it, no support whatsoever. I did buy a small amount after reading the update as i thought it was quite reassuring and showed there was no real reason for the drop from 50/60p range. I expected them to bounce strongly, i was obviously wrong.

I am not selling here though, i will hold on to them until there is bid speculation or the person dumping/shorting has stopped which should lead to a recovery. The business is essentially sound i think, Director buys last year were all well above these lows.

Oh well, its just a good job i dont have to sell. Its annoying though that i dont see a move up for 6 months now either.

[guidfarr] 18/3/2009 13:26

hmm can smell some panicky selling too

'they don't normally do it like that its normally done by closuring and reopening all the way down.'

hmm we will have to check that next month, this doesn't look like the usual shorting to me - it looks more like the activity of one determined party - if the amount on loan has increased further than it wouldn't be the case? - is there a place where we can check the amount on loan daily as opposed to monthly? amount on loan for february was already a huge chunk at 13.44%

[25cent] 18/3/2009 13:26

Here is the 400k following it down just like whatgoesup talks about.
Unbelievable another 400k is dumped.

[whatgoesupcomesdown] 18/3/2009 13:24

interesting KBC took the bid at 35.75. let see what happens

[25cent] 18/3/2009 12:46

Guifdfarr they don't normally do it like that its normally done by closuring and reopening all the way down.
I presume that the 500k on the buy side was short closing,who knows?
What i do know is that this looks yet again a very sick share.

I think the whole point is why rather than whom is selling?

Yet another 400k just dumped and takes neo down to yet again what is another new sad low.

[guidfarr] 18/3/2009 12:42

is the shorter our desmond? i can't imagine anyone other than a big-time holder doing this!! and why!!? to squeeze us little minions!!!?? and what's the sense of that I ask at some point he will have to buy them back which will drive the price berserk!!!? if someone is selling someone is buying only buying at ever lower prices. I have to suffer a lot in a similar way with RNK (it is only now that Rank is recovering) - it seems another similar story here and I'll end up having to dig the trenches.

[25cent] 18/3/2009 11:49

WhatGoesUpComesDown, thanks for the info.
If they don't announce a dividend than that goes against all the broker consensus figures that i have seen and also against what the board have actually said in the past via RNS.

On a slightly more postive note, it does seem to have found a base at this level (god know how long it will last)
it did the same at about 44p before the next lurch down to this level.

Was a yesterdays RNS from Templeton an increase or decrees does any one know?

Also on the positive side someone seems to be buying at 36p or maybe closure down os part of that shorts who knows, but this share needs a short Sharpe lift to break this wretched bear trend.

[whatgoesupcomesdown] 18/3/2009 10:15

25cent:
I believe the TU made it quite clear there will be no cash return (whether as divi or otherwise). Well as I as said previously, I am not happy with the share price action over the last 2/3 months. No one shorts that size without due diligence. There is a reason for it, and I can't see it - but rest assured there must be one. I am not in the business of throwing my money away, but I sold 90%. It took me a while... -I don't have bot doing it for me :)
Re company contacts, I have spoken to Ron in the past, but not of late.

Shame as I do believe in the business...Well if all of this is smoke and mirrors to control the share price then fine, good luck to you guys -bad luck to me- NEO currently trade at fraction of NAV and still NEO share price is being controlled ... 400,000 @ 35 now moved to offer to stabilise the price.
... it is too fishy for me.
Might be back.

[25cent] 17/3/2009 16:55

I think the FSA will be looking at the source of these shorts after my formal complaint,and will probably ask the company why they held back the trading update for 2 months.

Mono
I don't necessary think the company should pay a dividend, your quite right the money could be spent and put to better purpose.
However i personally am not sure spending a significant part of the free cash on the Newteller platform is good value.
The only reason i mention the dividend is because the company all but promised one this year and i think if they don't deliver on it, the market may well punish them even more.

[snowman10] 17/3/2009 16:37

It was after it was floated. We were bought out few years back at a premium (but not enough) .David Marsh was and still is the CEO. A good yorkshire man.

Please note that the post copied is not mine.

I have a further view for the delayed TU.

Maybe the new non exc wanted to get a feel for the company BEFORE he signed it off as they all do? I would want to check things.

I think a E mail to the company advising them of the current shorts may be a good thing. Its almost impossible to track these things with most shares held in nominee accounts.
Snow

[25cent] 17/3/2009 14:34

Overall a very good post Snowman.
BTW yep Dolphin packing, know it well, i thought it got taken over some time back, (i may be wrong on that)

Edit (i just read the last bit in your post.) i still drive past the factory most days when i take the dog for a walk on Holes Bay.
Was DP not a PLC?

[snowman10] 17/3/2009 14:23

Copied from III board.

Neovia shares are now down to 36p, a record low. Based on estimates by Daniel Stewart (Neovia's house broker) the P/E is 5x 2008 earnings, 8.3x 2009 and 3.9x 2010 earnings. A price of 36p/share values Neovia at about $60m, which is a discount of about 33% to Neovia's net asset backing of about $90m, most of which is in cash.

In its recent trading statement, Neovia said it although it has $82m of cash, it had only $68m of working capital, of which $38m was "free cash". "A substantial proportion of this available cash is earmarked for capital expenditures in 2009 and the IDT acquisition."

Based on these numbers, Neovia shares are very cheap, but what might make them go up?

I see two possibilities.

The less attractive possibility would be a takeover bid by Dermot Desmond, who owns 26% of the company and is reputed to be a very smart investor. The potential benefits to him of taking the company over at (say) 50p are enormous. He could immediately distribute 20p of free cash to himself and within three years recover most of the remaining 30p from distributing Neovia's free cash flow back to himself.

From a current level of 36p, a bid from Mr Desmond at 50p would be likely to be warmly received by shareholders. The board would have a hard time convincing shareholders to reject the bid, despite its cheapness.

As attractive as a bid at 50p might seem, it is probably the second best option for shareholders. A much better option for shareholders would be if the board were to announce that it was going to do the following:

i) Publicly commit to paying 100% of all earnings as dividends, while offering a dividend reinvestment plan ("DRP") to shareholders to provide some capital for the company to use to grow its business. Based on Daniel Stewart numbers, this would place the shares on a 2009 dividend yield of 12% and a 2010 dividend yield of 26% at 36p. I suspect that this decision alone would cause a substantial upwards re-rating of Neovia shares, probably to well over 50p in a short space of time.

Neovia has a cash generative business and by its own admission has substantial surplus cash. Neovia's profits should be distributed to the shareholders, the owners of the company, rather than used to grow the business for its own sake. After all, what is the use of growing the business, if the share price never reflects the value of the business?

ii) Additionally, commit to buying back shares whenever they can be bought at a discount to net asset value of more than (say) 30%. This would put a floor under the share price at around 40p per share at current exchange rates.

Share buybacks at large discounts to net asset value are beneficial for both long term and short term oriented shareholders. The former benefit from a higher share price, while the latter benefit from the fact that such buy-backs themselves increase net asset value per share.

Paradoxically, a commitment to do this might not actually involve spending much cash as it would probably cause a rerating of the shares, especially if combined with a 100% dividend payout policy.

From a shareholder perspective, the above course of action is incredibly attractive.

Unfortunately, it is not shareholders who will decide the issue. It is the company's board and management who will decide if the share price stays at 36p or rises to something closer to net asset value of about 53p per share.

So what can shareholders do?

If you own Neovia shares, you need to make your views known to Neovia's board.

Tell them if you are happy to see the share price where it is, or whether you would like to see action by the board to lift the share price to a level closer to the real value of the business.

Tell them if you'd like to be paid 100% of earnings as dividends, or if you'd like earnings retained in the company.

Tell them your opinion about whether the company should attempt to buy back shares to lift both the share price and the net asset value per share. You might care to remind them of Warren Buffett's saying that the goal of a management ought to be to grow per-share value rather than to grow management's empire.

There are three ways you can communicate with the company.

The fastest is to send a message to Neovia's investor relations department via:


You could mail a letter to Dale Johnson, the Chairman, at
Audax House
6 Finch Road
Douglas
IM1 2PT
Isle of Man

His fax number is 01624 615320.

It would be sad if shareholder inaction enabled Mr Desmond to buy the shares at a cheap price, and even worse if continuing board inaction kept the shares at a huge discount to their real value.

Fellow shareholders – over to you...

Disclosure: I have owned the shares for two years and am very frustrated about the share price, and the board's apparent indifference to the share price.




I do not agree with all these points but some are correct.

Please have a read and post a view. We can then sort things out and talk to IR dept on the IOM.

I am happy to try and contact them short term.

25 percent
Getting fed up of posting to you but whilst some of your points are valid, please do not dress them up with spin.
The Free cash situation is very different from CASH. Please do not confuse the two.
A further broker has again today placed a buy on NEO target 85p.

The market may warm to these sooner or later.

I note your reply to Tiger who i have met. If you are from Poole ( very nice it is)you may of heard of a company Dolphin Packaging?

It was mine till we sold out to the Yanks.

Snow

[monosodiumg3] 17/3/2009 09:48

Europe's biggest prepaid market is Italy where they are a way of life. The UK is quite a way behind was, until the crisis that is, expected to overtake it 2010.

Neo seems to be focusing on closed loop (cards that can be spent only in specific shops such as gift cards) rather than open-loop. The two markets are very different. Closed loop has good penetration in the UK but open-loop is very weak.

Thank you 25c for clearing up your confusion on estimated value. You initially stated p.e. of 8 and eps of 8c which makes 64c (45.7p). Your new eps figure of 4.5p = 6.3c gives an estimated value of 6.3 x 8 = 37.8p, a little above your stated 32p. I expect the difference is down to wetware rounding error.

Your estimate suggests Neo is approximately correctly priced.

If the general argument is that DD is offloading then he must be doing so at a loss. The share has never been cheaper. I can believe he could be offloading because he needs his powder for bigger fish, though I have no insight whatsoever into his motives.

Whatever the reason, if whoever is offloading then there will come a time when they have completed that operation and that component will then disappear from the sell side. Given that the continued (I'm taking your word for this - I have no level whatever) selling is not pushing the price down much, it appears that *so far* there has been sufficient appetite to soak up the extra supply. You reckon 13% or so has been sold over the 6 weeks (or is it since start of year?). That's quite a chunk. Could be we are half-way through.

Of course that all means nothing. The seller(s) could be working to a deadline and might then have to dump faster as it approaches, pushing down the price. The buyers might get sated. There might be a takeover. Markets might crash, markets might recover etc etc.

This is effectively a new business, risen out of the ashes of Neteller but clearly working ot win in a different market. Paying divis does not make any sense at this stage, not least for the same reason that returning cash to holders makes no sense.

It's a HOLD for me.

[stewjames] 17/3/2009 01:06

On the cash issue, given the current financial industry woes, it would not be at all surprising if the rules have recently been tightened up as to what NEO can and cannot claim as free cash.

If you're worried about it, might be worth asking the company.

[whatgoesupcomesdown] 16/3/2009 23:10

I must admit I am worried. Although I do not necessarily agree with 25¢ (referring to the collusion of board members). I do not believe anyone would take such a large position without thorough research. A large position such as this, cannot be unwound quickly, and the seller knows this. This makes me believe the reason why the position was taken is not apparent yet. Whatever profit gained so far would be more than wiped by buying in it back.
Further the selling was organized to drive the price down – 400,000 sitting on the bid every day, and following all the way down – (I haven't had the possibility to check since the update, is it still happening? –L2 people?- This –to me- would show someone who needs to get out double quick (but then not really at whatever price otherwise the share price could have been properly trashed- when we were at 60p, if the seller needed to get out why not put 1,000,000 at 40p and you are out!) but then it doesn't explain the On Loan data going up and up. –No, face it someone is shorting.
Now there are a few possibilities –and this is definitely not exhaustive-
- A short, in its most simple meaning, someone investigated the accounts (?), saw something (?), or expected NEO to make a big payout (?) and based on this decided the share price was way overpriced (PS I don't know what it is).
I further believe, if this is the case, NEO (DD?) has had a hint, hence the delayed update and the slight change of tone (including the write off (!))
- A simple method to keep valuation in check. (ps in that case short is covered by existing share holding) –understand as you want-
- DD took a position via derivatives a very long time ago, then converted to stock (why now?) When he converted to Stock was he actually intending to sell the lot? –The idea being to use the "BID!! Coming" hype to offload- Is he unwinding his position now?, has he been ever since he converted to stock? (using derivatives). Was the update delayed and rather tamed because of the unwinding, otherwise could been seen as ramping the shares up so shareholder(s) can get out. Why does he want to sell? –that's the worrying part?

RE Cash position, I do not agree with you 25¢, the Free cash do not represent cash for NEO valuation purposes:
Think of it in those terms: if NEO were to give all customers's deposits (that's not NEO's money) to a third party (for argument sake!) , all the regulatory cash (on top of deposit) would stay NEO's property, the third party would have to cough up the regulatory cash if their regulator requires it. So All regulator cash should count toward company valuation – including cash with processors (what is the meaning of not counting –in effect- cash in transit!!) As an example of this let assume you are "worth" $100,000 and you transfer all of it from Your account A to your account B and transfer take 5 days, YOU ARE STILL WORTH $100,000 even as the money "Travels" –even if it is not free money –ie you cannot touch it!-. In the update NEO was playing down –big time- any return to shareholders (for which only free cash could be returned).


I don't know. Any thoughts?

[onionbhaji] 16/3/2009 19:11

ref 421
OH HOW HORRIBLE.
lol

[castleford tiger] 16/3/2009 19:05

25 CENT

I shall not rise to your petty remarks.

If your research is as good as you thinking that AIM companies have just 3 months to report then we are in big trouble.
see note
An AIM company must publish annual audited accounts which must be sent to its
shareholders without delay and in any event not later than six months after the end of the
financial year to which they relate.

Yes i am a Co Director, a Non-exc and a Chairman. So please do not try and blind me or others with your FACTS.

They are nothing more.
Even the cash situation is wrong. Read the statement again, and again, until it sinks in.
NEO is a fast growing company, and your suggestion that the directors of the PLC have held the trading statement back to allow the share to be shorted is a serious allergation.
It has no founding other than you say 13% of the shares are on loan to shorts. You have also stated that the above was held back to allow the shares to be dumped by a big holder. Again this is serious.
You also suggest that the holder has failed to inform the company ( i think in one post you said it may have been a board member)

I have no axe to grind with you but there are people who take every word you say as fact. As i have proven they are often not.

Yes you have said several times that you called the price right as it fell. My charts also told me it was in a down trend.
Markets are imperfect and these shares unloved, but this company is making money after a very difficult time with its USA problems.
I remain of the opnion that DD will bid for NEO and this year. I would also suggest that the shares may remain flat until that becomes public.

In the meantime use my proper name or at least offer to buy me lunch so we can discuss this face to face.

Mr Castleford Tiger