Voyager RNS Log WC 25/03/2018 & A Catch-Up
As ever, although I may get keen about a stock, what I put into print here is purely me sharing my rambling thought process and NOT INVESTMENT ADVICE to either buy or sell a particular stock.
The key for the colouring of text within these notes:
Text in normal black: just my thoughts.
Text in blue italics: direct lifts or copy & paste from the RNS issues by the business.
Text in green: loosely, the investment principles that I feel comfortable with.
Red is a disclaimer in that what I write is NOT investment advice.
Back on the keys this week and what a nice feeling it is after a few weeks diversion of my attention to matters of more immediate importance than investing. I have kept abreast of RNS releases as I honestly believe these are your insight into the market. Any regular readers will know I have almost zero time for market noise and that includes the opinions of the so-called experts, tipsters etc. For me, it's about the information coming from the company, particularly RNS flow and an evaluation of the numbers provided. Oh yes, and not to forget hacking your way through the various adjustments that sometimes used to massage the numbers.
Whilst I have been away from the keys, I have made a few portfolio changes. The following few jottings bring you up to date with these changes:
XP Power: XPP: made another top up in late February: nice business with a lot of the financial ration/numbers that I look for. It’s a company I have held and added to for a couple of years now.
Norcros: NXR: sold approximately 60% of my patient holding of NXR, it was a fairly large holding; in truth quite a nice return steady total return of around 30% but the patience of a saint etc. I still retain a holding in NXR with a feeling that someday the market will re-rate the business.
Somero: SOM: I thought the results as ever looked very encouraging including a significant increase in dividend: overall the company and tidy accounts, give me long-term confidence. I added to my current holding on the morning of the results, 14/03/2018. Note: I have held SOM shares for a few years now originally buying at a touch over 100p. I have since top sliced a couple of times but if you still believe the news flow is good, there is nothing wrong with going back in even after selling/top slicing and topping up again and again.
Spectra Systems Corp: SPSY: Final results on 19/03/2018 failed to inspire the punters who were no doubt looking for more positive stuff from the business but I guess that’s trading rather than investing. I am happy to continue to hold but suspect that some investors whilst content with the revenue stream including those from royalties, were looking for more positives.
De La Rue: DLAR: sold at the bell following a trading update that said that profits would be at the lower end of expectations 20/03/2018. Honestly what an underhand way to inform the market hiding the “lower end of expectations” within a headline RNS of a Directorate change De La Rue plc today announces that Jitesh Sodha, Chief Financial Officer, has informed the Board of his intention to step down to pursue his career outside of the Company.
Jitesh resigns as a Director with immediate effect but will remain in the business until the end of September 2018 in order to ensure an orderly transition while a suitable successor is identified. Comment from me: So, is it immediate effect for the FD or not quite immediate?
Separately, the Board expects to update the market on the outturn for the year in the third week of April, and is currently expecting the result to be around the lower end of the current consensus range.
How strange that the two days later, or let’s call it a day later if you watch the BBC news in the evening, DLAR announce that they have lost out on their tender to continue to provide passport services for the UK. Remembering that I try to practice what I preach, I saw the 20/03/2018 RNS as a minor profits warning, that’s one red flag and the FD resigning with immediate effect, a second red flag, I sold at an 18% loss; never nice but not a major holding. The point is, had I held on for a couple of days my loss would have been over 30%. Here I go again: procrastination is a major destroyer of an investors wealth.
IQE: I sold my holding on 20/03/2108 early on the day of the release of their final results. In a nutshell, I bought IQE as a positive momentum stock and over eight months it has given me a greater than 40% return. The reason for the sale? Well, to be honest, I am not massively influenced by the bear cases or other market noise; it’s more my lack of conviction together with just possibly some creative use of numbers to paint a picture for the final results; there is a lot in note 4 of the accounts that accompanied the final results. Maybe I will return when it stops drifting but it’s become a bit of a trading stock.
This week’s RNS Log as I get back on track with the Voyager Log:
Monday 26/03/2018: Bioventix: BVXP: Mkt Cap £129m: RNS Half Year Results:
The chairman & chief executive statement reads:
We are delighted to be able to report such positive news for the current
half-year. We are pleased with the continued success of our vitamin D
antibody and the remainder of the core antibody business. We remain
optimistic about our troponin project and the success of Siemens as their
product launches around the world and we look forward to further progress in
the second half of the year.
My View: The numbers themselves were very encouraging from one of my favourite companies; they always seem to underpromise yet over-deliver, a trait I absolutely love and one to cherish with a small company. I immediately added to my current holding. Note: I have held BVXP since the shares were valued at £7 back in 2014. I did heavily top slice when the share price simply got ahead of itself back in October 2017 and am delighted to have topped up at a significantly lower price than my October top slice.
Wednesday 28/03/2018: AB Dynamics: ABDP: Mkt Cap: £169m: RNS Trading Update and Notice of Interim Results
AB Dynamics plc (AIM: ABDP) the designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive industry, is pleased to provide a trading update in advance of announcing its Interim Results for the six months ended 28 February 2018.
Revenues and operating profits (adjusted to add back share option charges) for the six months to 28 February 2018 are expected to be significantly ahead of the same period last year and in line with management expectations.
The Group has seen a further increase in demand for its track testing products. A strong forward order book has secured a sales pipeline for the remainder of this financial year and into the next financial year. Looking ahead, the Group continues to invest and develop new products and technologies which will secure the Group's future.
Tony Best, Chairman, commented: "I am delighted to report that we are once again in a position to deliver another year of successful growth and have a good pipeline of orders to take us into the next financial year. Our new HQ has enabled us to improve our production capability and will also facilitate further growth."
My View: rather nice positive words from the Chairman in terms of delivery of future growth. Can we read anything into the significantly ahead part? The optimist would say yes but the realist (me) would say “fine, in line with market expectations”. Overall, I do like this company in which I bought my first tranche of shares a couple of years back and have added to a couple of times since. I see ABDP as a well-run AIM company that I am happy to continue to hold for the long term in my portfolio and will be seeking the opportunity to add on any share price weakness.
I should really do a catch up Glad I Am Not ( GINT) There, so here we go:
I should say these are not “clever dick” notes just simply an attempt to help investors learn from their mistakes and let's face it, we all make mistakes: the crucial point is what we learn from those mistakes. I have in the past held two of the companies that appear in this weeks GINT; TCM and SPRP, but jettisoned them from my portfolio as doubts arose in my mind either from the accounts or from the RNS flow: both were jettisoned from the Voyager a couple of years ago. Those actions saved me a considerable amount of capital as the individual stories unfolded over the following months.
Incidentally, I do feel that when investors comment about a share, even say in a Tweet, they should indicate if they have an interest in that share. I also strongly believe that if a market commentator unmasks a particular share as let’s say a fraudulent one, then they should return to the story sometime later and close off the story even if necessary admitting that their “outing” was wrong. To admit you are wrong certainly is not a sign of weakness but more one of strength.
Telit Communications: TCM: Oh dear here go the smoke and mirrors mob again. I always ask myself “do I have confidence in the management”? if the answer is no; then it’s off to the exit; simply why take the risk with your hard-earned? The Financial Conduct Authority (the "FCA") has notified Telit Communications PLC ("Telit", AIM: TCM), a global enabler of the Internet of Things (IoT), that it has commenced an investigation into Telit with regard to the timeliness of announcing certain matters included in the interim results published on 7 August 2017. Telit has cooperated fully with the FCA in its enquiries to date and will continue to do so. Will more buried bodies be identified? I did write about TCM a couple of years ago listing some of my reasons for mistrust; now after a few more horror stories the price dwindles further south; simply uninvestable in my view. I don’t hold a position in TCM either long or short.
Sprue Aegis: SPRP: This like TCM is another company I sold about two years ago again at the opening bell, or as close as I could get to it, following a profits warning. Fortunately, by selling early at the opening, the loss was not a significant one but by close of trading the share price had declined by a mighty 54%. Why do some investors hang on and justify their position? Now whilst SPRP appearances on my smoke and mirrors (I think there is a joke in there) screens from time to time, I am sure they are a far more worthy than TCM but for me, SPRP just seems to be so heavily accident prone as demonstrated by various RNSs over recent years. What does that tell me? It tells me I can not place huge confidence in the management of the company, they just don’t seem to have their finger on the pulse; hence not one for me. The most recent RNS issued on 23/03/2018 makes worrying reading regarding potential hits to the bottom line caused by a fall out with BRK. Again, not one for me; simply why expose yourself to the risk. I don’t hold a position in SPRP either long or short.
Utilitywise UTW: A company that I have written about a few times and one that has very real difficulties in deciding what’s a sale and what’s not a sale to be included within their numbers. They came back to the market on 23/03/2108; one for the gambler as how can you, at least for the next couple of years have faith in the integrity of the published numbers. I should add that the excellent Paul Scott has been warning investors about the dodgy accounting practices at UTW for years. Maybe one for the punters but not for me. I don’t hold a position in UTW either long or short.
Conviviality: CVR: issued a profits warning on 08/03/2018 “adjusted EBITDA for the current year will be approximately 20% below current market expectations”. Now I know I bore folk to death about emotionless closure of positions that issue profits warnings. If you had sold at the bell you would probably have missed some but only some of the 60% fall in share price that occurred that day. However, as sometimes happens, worse was to follow: somewhere in the accounts department of CVR a Revenue & Customs obligation note asking for £30.0 million was discovered; just how do you overlook that? Again no confidence in the credibility of the management of the company. The shares are currently suspended and another massive % fall can be expected if they return from suspension or even worse a 100% fall should they move into administration. I don’t hold a position in CVR either long or short. I have to say I have researched the company in the past and liked some of the growth story but three things prevented me from investing. Firstly the vulnerability of very low profit margin, secondly the high level of debt and thirdly, simply as much as I like a beer or a glass of red or two, these days I struggle ethically to invest in such companies that offer bargain booze or exploit the the less well off in society in any way at all e.g pawnbrokers/loan shark companies. I suppose it's investing with a social conscience. Leaving my conscience to one side, apart from the low profit margin and the level of debt, there was an attractive growth company in there that just became overstretched and the demise came rapidly. I don't think any investors that seriously lost money on CVR should beat themselves up; rather make a note to be wary of rising debt and tight profit margins in the future. Late yesterday after the market had closed CVR issues what in effect is a “were finished” RNS as the required funds could not be raised. The late RNS went on to say “The Company is in discussions with its lending banks and advisors regarding other possible options and is in receipt of a number of inbound enquiries regarding a potential sale of all or parts the business. The Board believe that shareholders in the Company will receive little-to-nil value”. Friday 29/03 an RNS confirming the end as Administrators are to be appointed. Comisserations to holders.
Before I close off this week, l will just leave a thought with readers; if you are a middle-aged male or the partner of a middle-aged male, then seriously consider going along to the GP and commence regular PSA blood testing; don’t be fobbed off by the rottweiler on reception. Under the NHS men over the age of 50 are entitled to a PSA test, it’s simple, very important and could just save your life! Do have a think about it.
Have a good Easter and let's look forward to the onset of Spring!
Happy investing; catch you all next week