Good morning. One hour fifty minutes late this morning, defective bogey at Earlsfield. OK, the real reason is less glamorous, in that I got so involved in interesting & convivial conversations at Mello Beckenham last night, that I didn't get back home until 1am, and was then too hyped up to sleep. Another terrific investor evening, thanks as always to the organiser David Stredder.
I enjoyed the presentations from an unlisted company raising loan financing, and also from niche Fund Manager Chris Boxall, of Fundamental Asset, and Investors Champion. Chris gave a very insightful talk about a sector he's researched in depth, the high yielding shares of companies providing the "picks & shovels" to the oil drilling sector.
However, at that point I experienced a severe lack of oxygen (and Peroni), so ducked out of the presentation from David Cicurel of Judges Scientific (LON:JDG). Apparently he was given a bit of a hard time by investors who were miffed about not being given access to the latest fundraising (reported on yesterday). In my opinion that criticism is misguided. The reality (as I see it) is that Cicurel has done a remarkable job, in driving up his share price 18-fold, and then raising fresh capital at only a small discount to the market price, on a very warm valuation of 20 times, for minimal dilution of existing holders. He should be warmly congratulated by existing holders, not criticised! It's cemented my view that the valuation is now too high at 1687p, on almost 20 times current year earnings, and I don't think these shares offer attractive risk/reward at this point.
A company should not be priced on a growth rating when the growth is coming from acquisitions, in my opinion. It does deserve a management premium, given Cicurel's great track record, but to my mind a price of about 12 times earnings would be more sensible, so I think the shares are probably worth realistically about £10-12 perhaps?
As always, this is not a prediction on what the share price will do - I have absolutely no idea what the share price will do, as with all shares. My comments are always about how I see the fundamental underlying value of the company. The share price can detach from that value for long periods of time, but eventually shares tend…
