Good morning! Yes it's Thursday, and true to form, I've overslept - I literally did not hear the alarm, so my apologies for that. What an interesting evening though - we saw three companies present at Mello Central last night, the most interesting of which was Seeing Machines (LON:SEE) - an Australian blue sky company which has developed remarkable technology that tracks the human eyes and face, in order to allow special computer boxes (with cameras) to prevent accidents for drivers & pilots by raising an alarm when they nod off - perhaps they could allow me to borrow a box every Wednesday evening, to ensure I get up on time the next morning?
It is the market leader in the mining sector, where 12 hour shifts, driving short, repetetive journies, in massive trucks (that cost $5m each, and where even a tyre costs $100k!), creates a big problem.
Most importantly, SEE is commercialising its technology through partnerships with major companies in various sectors, that's the key I think (e.g. Caterpillar & various other thinly disguised major companies like Bo-cough, splutter, and Sam-herrumph!). The story is so good, that in a bull market I can foresee investors collectively picking up this ball & running with it, so the figures don't actually matter that much - just look at the valuations of things like WANdisco (LON:WAND) and Ocado (LON:OCDO), where crazy valuations are already in the rear view mirror, and the market has gone directly to Bonkers Street, without even stopping to Pass Go and collect £200! So the £20m market cap at SEE is akin to paying a fine or taking a Chance - we always do the latter, as it's more exciting! Yes I'm a value investor, but everyone has to have a little fun, so I have a small long position in SEE within my personal portfolio, DYOR as usual of course.
We also heard from Bioventix (OFEX:BVXP), an ISDX Listed (the new name for Plus Market) research company that develops antibodies from sheep. The figures there are astonishing, and even after big recent rises, the shares still don't look expensive on forecast earnings. However, I have two reservations. Firstly that the business is not really scaleable - they have found a tiny niche, where their expertise means they can create massive profit margins on small turnover. Secondly, the profits all come from the expertise of little more than a handful of people. So there is always a risk that, at some point, they will tire of making money for shareholders, and walk away.
Finally, we saw the CEO of Tangent Communications (LON:TNG) explain their business to us. I like the sound of it, and the valuation looks resonable, so will do some more research on that one.
In case you missed it yesterday, the author of "Free Capital", a modern classic on investing (which would have included my life story, were it not for a short-sighted publisher that cut out my chapter at the last minute, despite it being by far the most entertaining), has published a remarkable Blog piece, which is really worth a read if you have time. It is here.
I'm back into London today to see a couple more interesting companies, as whilst opinions differ on this (and both are perfectly valid views to hold), I am firmly in the camp which believes meeting company management is a good idea, and helps me better understand businesses, as well as getting a flavour for the people who are running them. It's not about whether I found them pleasant people, or if they made me laugh or not, or inspired me (often a danger signal!), it's just about being able to dig into a business model & understand it better, as well as getting a flavour for the people involved. My instincts on people are very reliable, so I can usually spot a BS merchant a mile off.
Anyway, let's have a quick look at some results & trading statements. As always, this is just one person's opinion, based only on a very quick skim of the figures. So please only ever regard this as a (fallible) personal view, and a first impression only - there may well be factors which I haven't had time to discover, which make my first impression wrong, so please never rely on anything written here. It's always vital to DYOR, but hopefully I do succeed in flagging up some interesting ideas for further research.
After all that rambling, I've only got 20 mins to review some company results, but luckily there are very few issued today, so here's a really quick glance:
Scapa (LON:SCPA) announce positive trading for the six months ended 30 Sep 2013. They refer to "good growth" over last year in both turnover and trading profits. "Trading" is defined as operating profit before exceptionals and amortisation, so presumably those two items are higher than last year, otherwise the distinction would not have been made perhaps?
Current trading is in line with full year management expectations. As usual, one has to take it as read that management have similar expectations to the market, but it always makes me slightly uneasy when that distinction is made in trading statements. You feel that maybe they are giving themselves some wiggle room?
Broker consensus for y/e 31 Mar 2014 is for 5p EPS, so at 85p the shares don't look good value to me. The dividend yield is poor, at just under 1%. I held these shares about 10 years ago, and recall there was an issue with asbestos, or a pension deficit? Worth double-checking that anyway.
I've touched on Driver (LON:DRV) here before, it's a small consultancy to the engineering & construction industries, so you would expect them to be doing well in a cyclical recovery, as they are. Today's pre-close trading update for the year-ended 30 Sep 2013 says it has been an "excellent year", with turnover "signifcantly ahead" of last year, and profit in line with management expectations. All sounds good, although the Stockopedia graphics are quite weak - all orange and a little bit of red, so I don't see any vaue there, based on current forecasts.
Immunodiagnostic Systems Holdings (LON:IDH) issues an in line with expectations trading update for the six months ended 30 Sep 2013. The full year outlook is for an improvement in H2, with pre-exceptional profit being in line with last year. I've dabbled with these shares in the past, but have decided that I don't understand their sector, so am not revisiting it.
That'll have to be it for today, as I have to head into town shortly for more meetings.
(of the companies mentioned today, Paul has a long position in SEE, and a short position in OCDO)