Small Cap Value Report (10 Oct) - SEE, BVTX, SCPA, DRV, IDH

Thursday, Oct 10 2013 by

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…

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Seeing Machines Limited is engaged in developing, selling and licensing products, services and technology to detect and manage driver fatigue and distraction, including continued market development to secure sustainable channels to market for the product. The Company's segments include automotive, off-road, fleet, aviation, scientific advance and other. The Company is also engaged in developing driver-monitoring technology to incorporate into passenger cars; entering commercial agreements with partners for the development, manufacturing and sale of products into target markets, and research and development of the Company's processing technologies to support the development and refinement of the Company's products. It also offers driver monitoring system (DMS) technology. more »

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Bioventix PLC is a United Kingdom-based biotechnology company. The principal activity of the Company is the development and supply of antibodies. The Company specializes in the development of sheep monoclonal antibodies (SMAs) for use in immunodiagnostics focusing on the areas of clinical diagnostics and drugs of abuse testing. The Company's non-vitamin D business consists of antibodies, NT proBNP (heart failure), testosterone, Free Triiodothyronine (FT3) (thyroid hormone), estradiol, and various drugs, such as tetrahydrocannabinol (THC)/cannabis, and progesterone. The Company offers products for indications, such as thyroid, fertility, oncology, cardiac, vitamin D, drug of abuse, infectious disease and miscellaneous. Its sheep hybridoma technology produces cell lines that secrete SMAs. The Company offers a panel of SMAs to 25-OH D and has various 25-OH D2 and 25-OH D3 specific antibodies. It sells its products through direct sales and through distributors. more »

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  Is LON:SEE fundamentally strong or weak? Find out More »

11 Comments on this Article show/hide all

Gostevie 10th Oct '13 1 of 11

Hi Paul,

Good to see you yesterday.

Is there any way that you can get the 'missing chapter' from Free Capital published online somewhere as a standalone? I'm sure there would be many interested readers. Perhaps suggest that readers make a small donation to one of the charities that you support.


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Another John 10th Oct '13 2 of 11

One of my favorites Air Partner (AIP) reported this morning, underlying results are strong....would you like to take a look and comment?

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bsharman 10th Oct '13 3 of 11

In reply to post #78015

Yes, the unedited version..... with all the lurid details!

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Gostevie 10th Oct '13 5 of 11

In reply to post #78018

Hi JakNife,

I meant the missing chapter on Paul rather than the updates, interesting though they are in themselves.


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Ramridge 10th Oct '13 6 of 11

Re. Seeing Machines. I got interested in SEE a few months back and did some research. Its strength is in a face and eye tracking software and algorithm. Such software has been around for a number of years but not commercialised until now. So their core technology is somewhat replicable & there are few barriers to entry. SEE may have first mover advantage but without patented technology my sense is that they are exposed to strong competition from new entrants. The prospect is undoubtedly huge, in the medical field such as early diagnosis, safety such as in mining and long distance driving. Even my Galaxy S4 smartphone has eye scanning technology to shut down and save battery drain when not used. On balance I decided to pass on this one. But as usual DYOR.

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Ramridge 10th Oct '13 7 of 11

Hi Paul
Guy Thomas's blog piece is excellent. A kindred spirit. Thanks for the link.
Regards, Ram

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MrContrarian 10th Oct '13 8 of 11

Paul may be right that SEE becomes of the the next GoGo stocks but...

there is a lot of research on eye tracking, not least by mobile phone mfrs. The Galaxy S4 already has eye tracking. I don't know how well it works, but even if SEE have a lead, Apple, Samsung, Google & Microsoft won't sit still. My hunch is that there's a niche for 'mission critical' applications where brand strength outweighs unit cost but the mass market will become just another mobile app, or be built into SatNAVs for driving (as an example).

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Funderstruck 10th Oct '13 9 of 11

Paul, I read 'Free Capital' some time ago but not followed his blog- thanks for the link. I took time to scan through his earlier blogs and for me it was a touch too much intellectual masturbation. I have concluded over some time that 'keeping it simple' works for me ,constant evaluation of approach and method is a distraction- that is when one usually misses the obvious.

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steveross2112 12th Oct '13 10 of 11

SCPA, Asbestos claim totally removed, pension deficit still an issue, but being well managed.This company is all about a new management team I met them a few months ago. Healthcare and electronics markets are potential areas for growth. Purchase of WEBTEC looks like good news. Further growth into the electronics market could be further good news. CEO had a good track record a Volex. Valuation looks a stretch agreed, so not a value play.

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Sully8786 31st Oct '13 11 of 11

Hi Paul,

I took a look at the slides from the AGM of today, dont think it'll be too long before they try and tap shareholders for some cash.
Have put a link to the slides for anyone interested...

Company: Dave Sullivan - Talking Stocks
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 Are LON:SEE's fundamentals sound as an investment? Find out More »

About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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