Telit Communications Share Discussion Threads

[homeytheclown] 29/3/2017 08:35

timmy

You should not hope losses for anyone, their (shorters) gift is/was to allow you to buy shares at a cheaper price.

[timmy11] 29/3/2017 08:25

hope sphere and his friends losing lots of money

[owenski] 29/3/2017 07:20

Another slight reduction in short position on the 24th - Blackrock

[bbluesky] 28/3/2017 09:12

[...]

"Morgan Stanley recommends that in their portfolio weightings its clients should be overweight Telit shares.

The shares currently trade at 327p – chief executive officer Oozi Cats bought just over 10,000 shares at an average price of 319p this week, taking his stake up to 19.83% - and Morgan Stanley reckons the shares are worth 350p on a discounted cash flow basis.

Its most bullish assessment has the shares valued at 600p on a sum of the parts basis, based on where the business could be at by 2020."

[owenski] 28/3/2017 08:34

Small decreases yet again in short positions on the 22nd and 24th.

[homeytheclown] 24/3/2017 12:26

The shorters that are reducing their positions are realizing losses. If you map their short trades over time and overlay it with a graph of the share price you can see just how much they are losing. The recent reductions occur at a time when the share price is near its all time high. If shorters are reducing their positions when the share price is this high, one could guess that the shorters may be ready to exit their positions. I suppose the smart money isn't looking so smart now.

[bones30] 24/3/2017 11:11

Puff pieces in Proactive. Bullish sell side broker notes from MoST. Director token purchases.

Oh, they're (Telit) worried, I reckon...

[owenski] 23/3/2017 21:22

Another two short positions reducing on the 20 and 21st.

Encouraging, looks like it might be an orderly unwinding. Small amounts but reductions none the less.

[mark4231] 23/3/2017 10:46

It might only be a very small buy, but at least it isn't a sell.

[bones30] 23/3/2017 10:34

That's one hell of a purchase! What's his salary again?

[scantrader] 22/3/2017 21:48

Considering he's trying to protect his holding of circa 23 MILLION shares rather

a trivial and cynical gesture to try and pull in blind followers of director buys.

[droid] 22/3/2017 21:46

Homeytheclown- many thanks for articulating what so many of us Telit bulls appreciate. I have a relative who works for a Big Board quoted Silicon Valley corporate which is a big customer of TCM gear and believe me- this is no Globo mark 2.

[revoman] 22/3/2017 19:37

Oozi's just bought another 10,000 shares. Thats just what the doctor ordered.

[homeytheclown] 22/3/2017 15:18

Jaknife

I thought you might have taken a break from this stock after the results were published. Thanks for posting the Shareprophets article. Let me address each of the issues listed in the article.

Cash Flow: What the shorters and critics of Telit fail to understand is that the IoT is a nascent industry. Telit is building a global IoT company that is truly a one stop shop for IoT. Feel free to name another company that could be considered a one stop shop and you will find that you require just one hand. Telit is investing in people, acquisitions, R&D, all of which costs money. Telit has admitted that they are where they want to be from a hardware perspective, so little to no additional acquisitions in that space. There could be future software-related acquisitions. Telit is choosing to spend money to invest in the future, a future which is very bright and lucrative. I fully agree with this approach and would even prefer they suspend the dividend.

P&L: There are rules surrounding capitalization and amortization and there is no evidence that Telit is circumventing these rules. The practice at Telit is standard for the industry and the matching of expenses to future revenue is a concept that most reasonable investors can understand and agree with.

Tax: This was an unusual comment to raise. Is the author fully aware of any tax incentives given to Telit to locate and operate their R&D offices? It is extremely common to have differences between tax and corporate accounting. If the investor thinks this is a red flag, I think the investor should choose a simpler investment vehicle.

Receivables:
Big deal! Payables also shot up $77.6M to $113.7. Is there a chance of a higher bad-debt expense, of course but I think the author is fishing for something more sinister.

So from a sea of red flags, 2 flags are worthy of discussion of which we have discussed repeatedly.

The only question I have is whether the short positions will unwind in an orderly fashion or will there be a rush for the door. My bet is on an orderly unwind in the absence of a takeover or US stock listing.

[seans66] 22/3/2017 14:13

Sold out completely yesterday at 3.24p. Too many on going questions re; cash generation, so took my 40% profit. Long term I am sure this be taken out by a bigger rival at many multiples of current share price but probably a bit of volatility before then.

[owenski] 21/3/2017 15:40

Ennismore and Lombard slight decreases in short positions as of 13 and 14 of this month. Could be the start of reducing positions then??

[henchard] 21/3/2017 12:59

JakNife, that P/E of 95 is not dissimilar to a Price/Free Cash Flow of 81 in this article Either way, TCM looks overvalued with a lot of hope in the price.

[bones30] 21/3/2017 12:43

That's quite an article!

[henchard] 18/3/2017 12:05

WhiskeyInTheJar

"The eps growth forecast quoted is 78% ... I assume this forecast growth is disputed by the bears!"

EPS growth - whatever it is - isn't the issue for bears. Nobody can deny TCM is showing strong growth in paper profits. But free cash flow (aka reality) is an altogether different story.

FCF is minimal, and in fact persistently negative if acquisitions are considered an integral part of TCM's business which is clearly the case.

In its 2015 results the company said: "Gross R&D, Sales and Marketing and General and Administrative costs are all coming down as a percentage of Group revenue and will continue to go down in the coming years ... the business will start to generate significant free cash flows."

For 2015 those 3 things - Gross R&D, Sales and Marketing and General and Administrative costs - amounted to $114,858,000 and were 34.4% of group revenue of $333,493,000.

The latest results for 2016 show those things not "coming down as a percentage of Group revenue" but increasing to 35.7% ($132,100,000 on revenue of $370,264,000).

And the business hasn't started "to generate significant free cash flows."

I note in the latest results TCM has dropped any reference to free cash flows, let alone significant free cash flows.

The costs which it said in 2015 "are all coming down ... and will continue to go down in the coming years" will now, according to the latest results, come down "in the next few years."

TCM has it all to prove and is patently overvalued on a free cash flow basis.

[whiskeyinthejar] 18/3/2017 09:25

Its the high earnings growth forecasted that gives the low peg of course.

They screen for earnings that are expected to grow by at least 15%. The eps growth forecast quoted is 78%. Underpinning tcm numbers are some quite reputable brokers. Anyway, I assume this forecast growth is disputed by the bears!

No position here, just watching with interest.

[sphere25] 16/3/2017 15:44

Folk like Bazildonbond and Timmy seem to have got it in their head, that just because shorts like myself are out of the money on their positions, it means we are distressed or desperate and having to put up more and more margin etc

Really not the case folks!

If you keep your exposure sensible on shorts, and realise that we're in a raging bull market with folk like me having a 99% long portfolio, any short positions are irrelevant. Even if they were relevant, I wouldn't risk a large amount of my capital on any position (especially an unlimited loss short position).

These could double overnight and I could close the positions and it wouldn't be an issue. It'd be the daftest trade I've made for a long time yes, but it wouldn't stop me from continuing trading.

Playing the long game here though and expecting the market to correct the price materially. Short term trend is still up and there is a possibility of a further squeeze. That doesn't stop me from going long when I see that the book is strong - I am a shorter term trader by nature.

If you think about it, it is the stocks which divide opinion so significantly that actually provide you with the best trading opportunities also. At the same time, I'm fully expecting a short report to drop here, and when (not if imo) that happens, I won't miss any of the move (should I be away from the screen or it lands out of hours). Stocks can easily halve in absolutely no time when these reports land.

If I get the opportunity at that point, I will then to look increase the position materially. There are too many shorts in this and too much at stake now for this to not happen imo, it's happened in the past with Globo, Quindell and PAYS (albeit recovered) when the number of shorting funds increase like they have here and there is that real air of bad smell around the fundamentals.

But yes I admit, short term the majority of shorts have been mis-timed and well done to the bulls. You see that! All civil and no running or hiding from anyone ;-)

Part of the reason I don't post so often on these boards is because you end up going round and round explaining the same things...over and over and back around. And then if you say too much on the negative side, you're desperate or part of some shorting group etc etc.

So I'm happy to keep it limited and come in on material news.

Good luck folks!