Shearwater Share Discussion Threads

[northwards] 14/8/2020 12:23

Can finally sell in some degree of volume. Has the drip feed seller finished?

[northwards] 13/8/2020 12:41

I think the board will be disappointed if it doesn't nail it's acquisition before Xmas.

[jh59] 13/8/2020 12:35

Watcher13, I tend to agree. Also the short term liabilities exceed the short term assets, whereas the long term assets are much greater than long term liabilities. It maybe the reason for the Barclays facility, in which case I don’t see much growth via acquisition in the short term unless we are in for further dilution.

[watcher13] 13/8/2020 12:19

I agree, the inside commitment is strong but it also helps win any shareholder vote eg on any larger deal. I also still wonder what was the real reason for the £2.40 placing which really took the momentum out of the share price it was an odd time to do it with the Covid crisis underway and if it was with a specific acquisition in mind then that looks like it’s not happened. Many companies report strong end of year cash by managing their working cap and I suspect the real reason for the raise was that cash was much tighter than indicated.

[jh59] 13/8/2020 11:39

Northwood:If you were to look at the shareholding in SWG, you would see that the board and other company insiders hold nearly 29% of all shares. To me that’s commitment! As for director salaries, they are below average for this type and size of company. This is a solid company, sit tight and await developments. I will average down at these share price levels

[earwacks] 12/8/2020 23:52

The results were as indicated in the April update, but now audited with a little more detail. Very upbeat statements about future growth but no actual update on current trading which is now over 4 months on. The initial market reaction was positive so the sudden change of direction with no negative news seems to suggest a persistent seller is still active as two late trades today indicate. The CEO is clear that the turnaround and restructure has taken place and they are now on the road to growth. A trading update with some figures to back that up would be useful.

[northwards] 12/8/2020 10:11

It's very frustrating. My hunch is they have a transformational acquisition being lined up but, as you suggest, that will entail dilution. I'm also struck by the lack of director buying. Perhaps that's because they are committed to participate in the next fund to acquire ?

[watcher13] 12/8/2020 09:35

It seems to me that the prospects for SWG, once apparently very rosy, need reassessing. Despite the comments elsewhere, adjusted EBITDA is a perfectly reasonable way of presenting underlying performance and the market understands that, so the question is why is SWG trading on a multiple against EBITDA of only 13? - a multiple that should be ascribed to an average company in an average sector with average prospects.

This highly rated board and management cannot seem to find the right levers for organic growth so are still pushing the acquisition plans, but with limited cash that is only going to make a material difference if they can use the shares as currency and diluting current holders at £1.70 or less is going to go down like a lead ballon.

I did once see a potential for SWG to achieve a 20+ multiple as a growth stock in a growth market, but I now think like many AIM companies they are stuck in a slow build game and with the potential for further dilution, anything over £2 a share would be reasonable, so not really much upside.

[jammytass] 12/8/2020 08:19

All gone dead on here they have lost massive amounts due to very poor management draining the pot. Perhaps a new funding for future pay packets is on the cards
The only thing that does not fall is the bod pay package lol

[jammytass] 03/8/2020 12:07

You were all warned that this is a full-time loss making share

[northwards] 31/7/2020 17:15

Berenburg new price target of 3.80 and a buy rec

[northwards] 31/7/2020 11:27

Has the selling dried up?

[northwards] 30/7/2020 15:09

With the markets being a sea of red on worries of 2nd Covid waves, the share price is holding up reasonably ok. Cyber security is not a discretionary spend - and I'm hopeful we will increasingly find ourselves in a sweet spot.

[rockstar10] 30/7/2020 13:32

Fair point Ramridge.
Also 41% increase in revenue is misleading as Brookcourt was only included for part of the ye 31.3.19 results. Brookcourt revenues alone for ye 31.3.19 were circa £29m. So maybe that’s why the muted reaction.

[ramridge] 30/7/2020 09:26

Guys - you have to look at both adjusted figures and statutory figures. If the adjusted numbers are reasonably close to the statutory ones, then I tend to accept the adjusted ones and don't worry about the differences.

But if the adjusted numbers are way out of the statutory ones ( as in this case), you have to study where the differences are coming from and if they are justified. Very much down to the analyst to work it out and take a view. 'Creative accounting' is when there are large differences and the directors are 'adjusting out' real costs, or taking into profit questionable future earnings or revenue.

[northwards] 29/7/2020 23:22

I believe the company is presenting to institutions over the coming days. Let's see if that has an impact.

[earwacks] 29/7/2020 18:26

Thanks Martin. Yes 1.3 million pretax loss. The underlying profit is £3.1 million which is a first for them and according to accountants research this is the important number analysts look at. Very much have to take a view on this. The directors have put a lot of their own money in so far. I think they have been a bit unlucky with whoever the main seller has been over the last few months and they had no trouble raising more than they asked for in recent placing. Revenue up 41%. Not many companies get a market reaction for that like today.

[martinthebrave] 29/7/2020 17:48

earwacks - Today's numbers show: "Loss for the year and attributable to equity holders of the Company(1,504m)." CEO talking about post results or more likely post exceptionals. Either way I dipped a toe in this afternoon 189p. I hope he can deliver!

[earwacks] 29/7/2020 17:21

Quite a lot to digest, but on the whole very upbeat. One thing I don't quite get is reports about this company being loss making still. One of the last statements by the CEo clearly states '
Following our restructuring, and having reached profitability, we are well-placed to embark on a strategic, targeted acquisition program.' I notice a couple of companies within the group recorded losses. However the £3.1 million profit , although remarkably similar too their cost saving figure it is still a profit whichever way you look at it surely. Not so much news on current trading but claim revenue collection is heavily weighted towards Q4 end. I suspect there was some disappointment that there was no actual news on acquisition but clearly the intent is there and focussed. Have suspicion that the main reason for the fall is an ongoing seller waiting for the opportunity to continue unloading into the positive news today which is frustrating. It was basically an affirmation of what was in the preclose statement back in April when the share price was £2.40. Nothing likely to get us back to £2.90 unless some very good new figures in Q4.

[ramridge] 29/7/2020 16:16

Cheers, 2LB. You also say it as you see it. No waffle.

[2lb] 29/7/2020 15:57

An honest assessment ramridge - kudos to you.

For what its worth I think you will see a decent return on your purchase it just may take quite a bit longer than most on here woud like to think.

Not really a question of hindsight - I posted pretty soon after the bell , when it was still well up, that they we being creative in their presentation of the numbers and that investors, current or potential, should focus straight in on the annual loss that had been posted, however well disguised.

SWG really needs to step up over the remainder of 2020, I find the Covid message somewhat conflicting but the words used clearly indicate that some areas are having a very tough time.....

[ramridge] 29/7/2020 13:34

2LB - I am one of the PI who looked at this share, liked what I saw and bought a small lot at the bell. See my analysis in the earlier post.

Hindsight gives us 20:20 vision, maybe?

A few days back, I made a similar analysis with KNOS. My assessment was a buy decision and bought at the bell. KNOS went on to put 25% on the day.

Now I am going to look at my assessment of this share before the bell, and work out what questions did I not consider.

Feedback learning is a continuous process.

[husbod] 29/7/2020 13:02

Mind you having said that it's also that classic conundrum- will I miss out if I don't buy as this could be the start of real upward momentum - the joys of investing.

[husbod] 29/7/2020 12:59

Definitely a good example of the hazards of buying at the open.