thought about having a punt here but don’t really understand the competitiveness of the tech and the following FT article set alarm bells ringing:
https://www.ft.com/content/1a5...
The short positions seem to be ramping up.
Is this the next ARM or Wirecard?
Any short taken out at 380 to 400 closing about now will have made 66% ish on the initial sale. Unsurprisingly the total short of just over 4% in March 22 is now 2.62% (9-5-22). That short position could become very painful very quickly now (think Tesla) for a few reasons:
I bought on this view at 175 recently and added yesterday at 116.
A similar situation played out with Equals (EQLS) – whose price sank from 122 in July 2019 to 24 on 30-3-20. I kept looking at the latest news for disasters but cold see none. I added at 29p and the price has increased on solid growth to the current 85. AWE looks to show a similar pattern, but more hairy, it could be a lot bigger on the upside though.
It is not guaranteed but I like the odds.
Just been looking at this stock. shares are still falling, directors have been buying, also Fidelity recently bought 34m. Very strange.
It seems it was overhyped as an IPO. The director buying is certainly very curious. Insiders own 59% of the stock. Institutions own 35%.
Growth rank is 100%. Presentation from Capital Markets Day last month certainly very interesting. I’ve taken a punt, might take awhile to get moving who knows. They are still in the consolidation period with ramp up scheduled to begin around end of 2024. Maybe not much will happen until then but if so, it might be worth taking advantage of this to build up a reasonable position. They seem to have high profile customers on board and they claim to be unique with their IP. They forecast a 20% CAGR increase over the next three years and are aiming for a billion dollars revenue by 2027.
I can’t decide if nearly 60% insider ownership is good thing or not. I think its supposed to be a good thing but it seems so unusual.
I've bought Alphawave (LON:AWE) in a couple of batches recently as it looked very decent value for a tech growth company. The shares have popped 8% today on good volume - cant find any news to support this move. Nice balance sheet. Directors sold at 400 on float and bought back at circa 100 which has caused some outrage.
I was looking at Alphawave IP (LON:AWE), only thing I can see is: https://www.aap.com.au/aaprele...
Perhaps, looking at the stocko scores - terrible momentum but quality and value starting to look attractive and a ton of cash on balance sheet if I've understood things correctly.
Yes the figures look good, thats why I can't understand why the shares have gone down so much. I'm still well down.
Looking at the conference news - wonder if 5G may kick start the share. Wandisco (I don't hold) has been on a tear.
I had a small holding, bit of a punt, but did not expect it to go like that. Should stick to my rules. Paul Scott is right UK small caps are a minefield at the moment.
Alphawave IP (LON:AWE)
Alphawave at present has waaaaaay to many red flags for me to invest at present.
You pays your money you take your chances
main red flags were/are
their system of "bookings" being the headline number rather than sales is simply annoying.
add in the fact they have had material amount of transactions from related parties
and there is the whole china thing - do they have any control over anything that goes through china ? They have all this great ip and yet they are the ones having to push then cash funds into this joint venture - why isnt someone paying them bigstyle to partner up in china?
In some resects the recent large acquisition might be the most solid thing about this company.
Who knows though - none of the red flags i have prove this company will not deliver exactly as they say on then tin. The fact a company that is more than doubling sales and more than doubling profits and yet has forward p/e of under 15 suggests the market simply doesnt believe the hype. If anyone loses their shirt here they should not be surprised.
I kinda feel if this company is totally legit they could have done everything in a clearer and more transparent manner and the market probably wouldnt have trashed them like they have. In business though you gotta do what you gotta do - so if the end result is decent profits and cashflow in 2 years time then its good job done. Jury is very much out for me at present.
"Bookings" - My understanding is that these are contractual and for the large part non-cancellable financial commitments. Therefore they provide assurance of future income not yet classed as revenue. So very much worth headlining.
"material transactions from related parties" - So far as I'm aware the IPO documents revealed these in the manner required and no rules were broken. Many new start-ups rely initially on support from related parties. Even the FT Alphaville article (which contributed to its downtrend) admitted that.
"whole china thing" - Most of their current design wins I understand to actually be related to North America and Europe. Their deal with Wisewave was before the IPO and its details are mentioned in the IPO. That deal seemed to me an initial stepping stone. Only a small amount of the revenue that Alphawave have generated has come from China and if you read through all the RNS, you'll find they have been quite transparent about the proportion of the revenue that has come from Wisewave. Only a small number of Alphawave's IPs are on license to Wisewave from which they will continue to receive royalties for a period of time. Alphawave have no intention of partnering up with anyone in China and it is most definitely not in their interest to do so. Their focus is on North America and Europe.
"recent large acquisition" - The Banias acquisition is extremely significant but in fact their OpenFive acquistion even more so. In doing so, they bought into a company with an existing order book with a substantial backlog. It instantly broadened their portfolio.
"market simply doesn't believe their hype" - They will do in time, should it become evident that the increasing revenue they forecast is consistently being met.
Alphawave was excessively overvalued at the IPO sadly to the detriment of those who invested at that time. However, the timing was in a way unfortunate, as several IPOs around that time were getting trashed and heavily shorted, as well as the fact that the semi-conductor sector went into a downturn during the IPO year. On the plus side, the large amount of cash raised from the oversubscribed IPO looks to have been very wisely invested in some very well planned acquisitions. In fact, Alphawave spent several years preparing to make these acquisitions before the IPO was even launched. It is worth researching all three of the acquisitions made and trying to understand how they should make Alphawave's vertically integrated business model succeed.
Watching their investor annual report webcasts and Capital Market Day Presentations, especially the Q&A sessions should you give some really useful insight into the management of this company. I personally found their team to be very decent and relatable.
Finally, I know the Stockopedia team work hard to promote their systematic trading system based on their stock rankings, but my style is to identify stocks with high growth, deep value and financial quality - in that order. I'm not of big fan of momentum investing, though I do appreciate the psychology behind why it appears to work. If a stock has a red momentum ranking score, it doesn't necessarily put me off from researching further especially if the stock has a high growth ranking score (as it the case for Alphawave - at time of writing). I tend to make my decisions by analysing the latest annual and interim reports on the company's website rather than using the stock reports which for me serve as useful quick overviews.
Please don't take anything I've written as a recommendation to purchase this stock.
Here's an article that provides an interesting summing up of Alphawave. The views therein are the author's and not mine.
https://hakastocks.substack.com/p/alphawave-semi-a-data-center-play
Well I was one of the few LON: WAND sceptics and warned everyone that orders can be flaky when it comes to software. The whole situation is going to put many people of UK software stocks and I can see why. But that may create buying opportunities for the more discerning. I have a background in software and worked for a data migration company in my last formal role - the idea that it is down to one rogue salesman is laughable IMO. It makes Sam Bank Fried look plausible in comparison!
Hi Phil,
"Bookings" - My understanding is that these are contractual and for the large part non-cancellable financial commitments. Therefore they provide assurance of future income not yet classed as revenue.
Unfortunately NOT though for software deals selling through a channel (i.e. to other tech Cos that ultimately pass the service on). It was (and possibly still is) fairly common practice to bring forward some orders to meet a target that then, hopefully, becomes a real deal in the following quarter. If not they can be cancelled or postponed.
I am not saying that this is happening at AWE as it appears much more Project/Systems Integration based.
There is quite a big difference between WANdisco (LON:WAND) and Alphawave IP (LON:AWE)
The directors in the latter have a large residual stake in the business and have been buying significantly more. Unlikely they would be doing this from a fraud perspective. Plus they are a much bigger company and have spent cash that they raised at IPO on buying other businesses that generate significant revenues. So it's not really comparable at all. Different businesses doing different things with different shareholder bases in different phases of business strategy etc.
