Looking at interesting companies and then hitting a roadblock is always a bit disappointing, but perhaps there's something to be said for being extra prudent with your money when the market has risen lots. A rising tide lifts all boats, as they say, and some of those boats are liable to sink rather more quickly than the marker might expect. Since I've spent the last couple of hours looking at three companies, then, I thought I might as well go through where I got to.


Expansys popped up in my screen as it's now trading at what is, apparently, a discount to its tangible assets. The online retailer and SIM card distributor now trades at 0.48p, about a quarter of where it sat a year ago, and significantly under the 14p per share it reached in 2010. The latest cliff the share price dropped off of came about because of a trading update on the 21st of March, noting that trading had been significantly below expectations, with the usual chatter about cost saving initiatives being implemented and a strategic review being undertaken. I was a bit confused by this:

The Board is undertaking a strategic review in order to accelerate its objective of becoming an end-to-end solutions provider to MNOs, MVNOs and OEMs. This is not currently envisaged to involve a sale of the Company.

My understanding of the business was that a large chunk of their revenues, as well as their previous capital expenditure, has gone on the retail side of things - their expansys.com website and the regional operations. Their previous half yearly report was talking about double digit growth rates. Is being involved in retail a part of being a 'end-to-end solutions provider to (hang on while I google these) Mobile Network Operations, Mobile Virtual Network Operators and Original Equipment Manufacturers'? There's also potential legal trouble in the SIM card segment, apparently with O2.

I just don't really get it. Management's narrative confuses me - which may very well be my own fault by being too easily confused - but I can't help but feel there's far too much stuff I'm missing that's relevant to the valuation. I'm pretty sceptical of online retail businesses anyway given the way Amazon seem to operate. If they're shifting into other segments for that reason, fine - but I don't want to pay ~1.5 times net assets for…

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