Venture Life Share Discussion Threads

[apad] 21/8/2018 10:16

A correction, if a may be so bold, red.
3D printing has a wide range of applications. For example, it can also be used as a core in the casting industry (e.g. in Goodwin and especially for complex shapes), for the production of jewellery, for prototypes that will not be eventually produced in the same way.
It has been a hell of a long time in development - I remember research projects a quarter of a century ago.
I do not have a view about the eventual size of the market. Although there is a range of applications, the kit may be too expensive outside of hi-tech industries.

Why would you want to take on the political risk of Russia, red?

I bought HZD on the 5May under my "buy a small holding, then research it properly" policy. Got around to studying it more deeply, squealed and sold it on the 6June.

apad
ps
"GRAPHENE NANOCHEM PLC suspended.
apad's rule - never by anything with nano or graphene in the name, and this has both!"

pps
AI is the new media word for 'computing'.

[multibagger] 21/8/2018 10:04

Investing in individual companies at the leading edge of tech or biotech have a very high risk of commercial and stock market failure. The tech or biotech may work at a proof of concept level, but the barriers to cross to develop a commercially profitable product is exceptionally hard, takes 4x-10x cost budgeted for and at least 4x the length of time. More often than not displacing the incumbent technology requires a whole eco-system level of change which puts paid to any aspirations. So unless you have the backing of silly Silicon Valley money...most tech companies do not take off.

It would be well worth reading "Crossing the Chasm" by Geoffrey Moore, and "Technological Revolutions and Financial Capital" by Carlota Perez..to understand the scale of the challenge

I have had my share of successes with the likes of SUMM, TRX, Silence Therapeutics, NANO...but also lost a packet with the likes of OXA, OXB, HZD, VIY etc. Many more that don't immediately spring to mind as I have been investing for over 25 years. My CYAN where I have a decent position and which was I thought was de-risked following some large contracts is about several hundred £k underwater !

Boring is often good....ARC,IDEA and LTG for starters :)

[attrader] 21/8/2018 09:55

Thanks Red, about time I should study RSW ..

[hazl] 21/8/2018 09:52

Wow INFA up another 5.6% this morning BIGTIME glad you joined us on the journey!

[redartbmud] 21/8/2018 09:35

Hydrus

Good comment, I have dabbled in a few like that over the years.
Nanoco has been my all time disaster. When I jumped in, they were intimating that big things were literally unfolding. Three or so years later, the 'customers' were still trialing the product, with no signs of commercial production. Government legislation to ban cadmium dots did not happen - but when do they ever make decisions in the EC!!

attrader
Rsw markets a 3D printing machine. They cannot produce enough to meet demand at present. Very niche though as customers use them for very high end components, with big margins.

red

[hydrus] 21/8/2018 08:41

Attrader - that's why I stay away from investing in 'themes' like crypto currencies or AI etc. My sense is most companies in new exciting areas tend to have little substance, often exploiting naive 'investors'. My belief is that the most successful strategy for investment success is to focus on high quality, non cyclical companies. Ideally growing quickly. Company first, rather than 'theme'.

[attrader] 21/8/2018 08:34

Interesting how some of these groundbreaking innovations never deliver their potential. Look at charts of 3D printing companies ..

[redartbmud] 21/8/2018 07:58

A flavour of the risk involved in gene technology:

Peel Hunt is waiting on Horizon Discovery’s (HZD)’s September interim results before adopting a more bullish stance on the gene editing specialist.

Analyst Miles Dixon retained his ‘hold’ rating on the company after its most recent trading update guided to earnings lower than consensus expectations.

‘Our thesis on Horizon Discovery has always been that consensus built in unrealistic revenue growth expectations over the near term,’ he said.

‘We remain believers in the capability of Horizon Discovery and there is a market for gene editing research products and services, but we look to the results on 17 September to gain more confidence in the near-term growth trajectories whilst integration of the business and additional operational expenditure investment progress.’

Dixon reduced his target price from 181p to 177p. The shares were trading at 189p yesterday.

red

[redartbmud] 21/8/2018 07:55

I exited Kaz a while ago. I made a strategic decision to deploy my capital elsewhere.
I no longer follow the share, and this therefore came as a shock:

Liberum has upped its rating on Kaz Minerals (KAZ) after the sell-off that greeted the miner’s plans to expand into Russia brought the shares down to its target price.

Analyst Ben Davis upgraded the stock to ‘hold’ from ‘sell’ with an unchanged 460p target price. The shares have fallen 54% since peaking at £10.50 in June, and were yesterday changing hands at 471.3p.

Kaz earlier this month announced a $900 million (£691 million) deal to buy a Russian copper project from a group of investors including Chelsea Football Club owner Roman Abramovich.

‘The announcement of the KAZ Mineral's new endeavour has clearly come at a time when the market does not see the value in large scale greenfield projects in Russia,’ said Davis.

‘We can understand why the market is repricing the company risk given that the investment proposition has changed so materially. Current investors do not want to be on this new journey, but others will eventually, assuming that the company take the appropriate steps to derisk.

‘With the share price now at our price target we upgrade to “hold”, and on a short view see upside risk on a reverse on the overly negative sentiment in copper.’


Any comments around?

red

[apad] 20/8/2018 17:41

ARC FY on Thursday should be very interesting. Daughter's ISA holding up 44%. 72% above the price I took profits. Doh!

Note to self - make your own mind up BEFORE reading cbootle's much more informed opinion.

😊😊😊😊8522;😊ԅ22;😊😊;😊

[apad] 20/8/2018 17:35

PEPSICO buying a sparkling water US firm for $3.2billion in CASH!
Reminds one of just how rich these yoodle companies are.

Is this an omen for Fever-Tree?

I'd be able to retire if it is.

Hang on, I'm already retired!

Nod to the aged Mr. Pip.

apad😊

Good point Big7 I jettisoned BQE back in the day but, unfortunately I didn't keep an eye on it.

[big7ime] 20/8/2018 16:08

Distinguishing between long term growth and quick turnarounds is also difficult. E.g. New management, restructuring, new prods. The change of fortune can be dramatic in the short term and phissal out or could be a new beginning that lasts many yrs

BQE has had such transformation in the last 18mths and the rating has increased dramatically too so that they now look expensive unless the growth continues apace

[apad] 20/8/2018 13:13

Yup, revenue growth is what it's all about with companies that pose existential threats to the established businesses. I make last years revenue growth 73%.

There are a couple of peerless posters on the ZOO board, ed.

Revenue/Employee ($1k) 140 165
is also increasing and a very relevant metric.

The rest of the metrics are irrelevant(ish)

It's high risk, therefore a bet on management if you accept that it poses an existential threat.

apad

[hydrus] 20/8/2018 12:47

*fibbers oops - dubbers. Hope that's not an omen! PS potential can't be measured in metrics. The evidence I described above gives me confidence.

[hydrus] 20/8/2018 12:44

Hi EdThe level of organic revenue growth at ZOO is really extraordinary. Currently 100% plus. You just don't find that level of organic growth at small companies. That rate of growth has been accelerating over last couple of years. That tells me that what they are providing is increasingly in demand. There is plenty of other supporting evidence in relation to number of employees, freelancers being used which suggest growth is powering ahead. This company specific evidence is powerful. Read the RNSs to see the pattern. The market for translation services (subtitling and dubbing mainly) is expanding rapidly because of services such as Netflix, Amazon Prime, Disney and many others who are producing more and more original content which needs translating.I can't see that changing anytime soon. Put those two factors (company factors plus market) together and I see large potential still. I would also say it seems as if their competitors have mainly invested in buildings - recording studios. Large fixed costs and very limited scale.ZOO have created cloud services. Low fixed costs and massive scale as the subtitles/fibbers don't need a recording studio. They have a significant advantage.

[redartbmud] 20/8/2018 11:30

APAD

Applies to gals as well.
I'm in love with Liv Garfield at Svt:-)

red

[apad] 20/8/2018 11:30

Error in my earlier post about PTSG

Company Revenue per Employee (£1k) Operating Profit to Revenue Cash Outflow from Investing to revenue
PTSG 115.8 20% 31.8%

Looks much better.

Probably more errors.
🍷

[apad] 20/8/2018 11:23

I look at how they change over the years, FELIX, and try to get a 'feel' for whether what they indicate makes any sense.

So, FEVR Operating Profit/Revenue is 33%. RSW is 25%.
Based on Price to free cash flow FEVR is two and a half times more expensive than RSW.
Tells me that RSW is pretty damn good value (cf equivalent stalwarts) and that FEVR is not as ridiculously expensive as some commentators believe.
However, the way that the figures change next year is the key to firming up such an observation. If FEVR succeeds in yoodleland its price to free cash flow ratio of 77 (years!) will look great value. If it doesn't then the share price could easily halve.

I tried 'screens' but got confused, so am developing my own approach - at least I can believe I understand it, and as long as I am prepared to admit to being wrong, that's fine!

apad😊

[redartbmud] 20/8/2018 11:22

PS
Forgot Ltg & Rws.

Plonker from Poole.

red

[redartbmud] 20/8/2018 11:20

It is very easy to over complicate your analysis with signals and indicators that are largely based on historic data. They give a trend, but how do you gauge forward momentum nd it's impact on growth and the share price?
If you select a few easily obtained ratios and then look at the detail of the underlying business, and assess momentum, that is about as good as it gets.

I missed out on Ffx, because I am not a fan of currency businesses, although I have a few banks in the portfolio. The underlying fact was the guy behind it is determined to significantly develop the business into something much larger than when he started.

XPD is going the same way - guys who have a plan and know exactly what they are doing.

Spx, Rsw, Hils and Bree have the same fundamentals, but in very different businesses.

Buy in, sit back and enjoy the ride:-)


red

[felix99] 20/8/2018 10:37

Apad - what do you compare the value of these ratio's to? i.e what is a good or bad figure for each in your view or do you just benchmark the results against your other investments to see how the results fair.

[apad] 20/8/2018 10:12

ROCE is clearly a good accounting metric. I'm trying to find metrics that are more 'personal' to a company, and me perhaps, attrader.

PEG is a decent one for long term record, Big7, and I can look it up if I want to.
One of my drivers is to make me look at the accounts and think about whether the company is still delivering.

So PVR is investing 10% of its revenue (much in China) and its operating profit/revenue is only 11%. Red Flag.

I seem to have tried lots of metrics on for size over the years and have ended up with those four ratios! PER I found to be treacherous (for a non-accountant). I used to skate over revenue and revenue growth, but now consider them to be vital for my type of company.

This is my total list:
Price
Shares Issued (m)
Employees
Revenue ($m)
Revenue Growth
Dividend (p)
Net Cash ($m)
EBIT(operating profit) (£m)
Free Cash Flow ($m)
Cash outflow from investing ($m)

Revenue/Employee ($1k)
EBIT/Revenue
Price/FCF
Cash Outflow Investing /revenue
Free Cash Flow/Revenue

apad