Small Cap Value Report (Fri 19 March 2021) - IDOX, TENG, BOOM, CML, ZANE - Charity Update

19th Mar '21 by Paul Scott

107 comments 12749 reads

Good morning! It's Paul & Jack here with the SCVR for Friday.

Timing - I have to down tools now, to get my first covid vaccine jab. So I'll sign off for the day, today's report is now finished.

Agenda -

Paul -

Idox (LON:IDOX) - Bid talks fall through. Announces a small disposal. Prepare for a bumpy day, as the bid premium unwinds.

Ten Lifestyle (LON:TENG) - Lacklustre update, obviously impacted by covid, since it provides a concierge service. Doesn't appeal to me at all.

Audioboom (LON:BOOM) - signs of life, but still loss-making. I review the FY 12/2020 results. Good outlook for 2021.

ZANE - update on my favourite charity's annual (online) conference, which I attended this week. Thank you to all the Stockopedia readers who support this wonderful little charity that saves the lives of the most vulnerable people in Zimbabwe.

Jack -

Cml Microsystems (LON:CML) - semiconductor developer with mixed historical results, disposal of non-core division and investment in core products.

Paul's Section

Idox (LON:IDOX)

71.8p (pre market open) - mkt cap £319m

Disposal - IDOX has agreed to sell a Dutch consultancy subsidiary for up to a maximum of 8.14m Euros. That’s insignificant to the market cap, so let’s move on.

Bid falls through - a statement was issued last night by Dye & Durham, saying that it does not intend to make an offer for IDOX. The problem with these situations, I find, is that the news is issued by the potential bidder, hence often doesn’t come up on the newsfeed for the target company.

The Stockopedia newsfeed for companies does however pick up third party summaries of news, which is really useful, and at 18:45 last night, a news item cropped up on IDOX, saying;

* DYE & DURHAM LTD - AFTER CAREFUL CONSIDERATION, IT DOES NOT INTEND TO MAKE AN OFFER FOR IDOX PLC

* DYE & DURHAM LTD - CONCLUDED THAT IT CANNOT SUPPORT ACQUISITION OF IDOX AT PRICE CONSISTENT WITH THOSE ORIGINALLY CONTEMPLATED

To my mind that sounds bad for the share price today. It sounds like the bidder has gone through the books, and decided it's too expensive. There was clearly a bid premium baked into the share price, as you can see from…

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JohnEustace

19th Mar '21

More work for lawyers then I think. Again from the ruling with my emphasis:

The definition of a “worker” in section 230(3) of the Employment Rights Act 1996 and other relevant legislation includes anyone employed under a contract of employment but also extends to some individuals who are self-employed. In particular, the definition includes an individual who works under a contract “whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual”.

Qualcomm is under investigation again by the EU for potential anti-competitve practices in the RF chip space. This seems to be almost an annual thing now. They were fined $1.2 bn in 2018 and $270m in 2019. Qualcomm seem to regard paying EU fines as a cost of doing business.

https://techcrunch.com/2020/02...

Tommy H

I think as a constituent of Rishi that I have to accept that I pay tax...

But that I also know the benefits available to those who can afford to pay an accountant...

HI Andrew

Are you investing through funds, so basically have to give Terry Smith or someone equivalent the cash before the day?

Or I think that the other comments are those of us who invest through Halifax Shares, or IG, II or any of the other companies, so you can deposit £20,000 cash and invest when you want how you want?

I am assuming the first hence the struggle. I would note I have about 25% cash, but that is me being nervous and having too many other things on my mind, like waiting to hear from the neurologist has my mother in law got dementia so just wanting to sleep at night.

If you cannot make a choice, I would say just put it into a cash ISA with a building society before the deadline, once you are comfortable (and can sleep at night) you an then transfer it into shares and do what needs to be done.

Tommy

ps. I hold both Cash and Shares ISAs

MiserableJacktPotato

Except we’ve been here before with the condoms.

They have form for taking a potential game changing product and making poor commercial decisions which sees it flop, droop, whatever your favourite term is for flaccid.

Maybe this time it will be different.

xcity

All the discussions about printing money and money trees miss the point.

The important issue is inflation (conventionally believed to be optimal at 2% - but optimum will vary from society to society; might be lower in Germany and higher in Italy). Other things being equal increasing money supply, of which money printing is but one component, will increase inflation. So, since it hasn't, other things can't be equal. One is higher banking reserves reducing the banking multiplier. Another has been an apparently unlimited supply of labour and goods at constant prices.

The issue isn't really left or right politically. The US has been much happier to print money than Europe - Republicans or Democrats; the differences between them being mostly in the how and distribution. Austerity is very German and largely assumed historic equations still held. Not true in Germany over the last decade. Unknowns higher in the UK. Our interest rates came down slower and less far. Bigger loss in the financial crisis; we did print more money than the Eurogroup and maybe it could have been a but more. But probably not a lot 7 or 9 years ago because loss of confidence triggers a flight of money in less than a heartbeat. Currently the international money hoarders don't care, leaving impact on inflation as the only big target. And no-one genuinely knows how to work out the present relationship between the two.

The only thing I believe to be certain is that the way money has been printed (and not printed in the EU) has created gross distortions in the economy which will bite us all in the end.

I’ve found some more detail on the Deliveroo position.

The Deliveroo riders tried to gain union recognition. Deliveroo denied that on the grounds they were not workers. The union appealed to the Central Arbitration Committee which rules on these things. Just before the hearing Deliveroo changed their contracts and that was sufficient for the CAC to rule that the riders were not workers and could not therefore form a recognised trade union.

That ruling was appealed at the Court of Appeals in the first week of February and their judgement is still awaited. Maybe the Appeal Court was waiting for the Supreme Court Uber ruling?

https://www.union-news.co.uk/i...

rmillaree

20th Mar '21

Ref Tesla TSLA
Ark investments have released their latest research note and updated price targets for 2025 for Tesla - bit of a doozy here - they are definitely in the fan boy camp that’s for sure. They have a bear case target of $1500 and bull case target of $4000 that’s a 4$ trillion market cap give or take!!

https://ark-invest.com/articles/analyst-research/tesla-price-target-2/

Some may think there may be an element of jackanory in the numbers - but ark I am presuming are a company that at least deserve the respect for what they have returned for clients to date - perhaps their attitude may be seen by others to be akin to a lucky Texas Holdem player on tilt - fair play to them though for giving us some real numbers to critique when the Tesla bears tend to completely close their eyes to any good news that exists.

I am not sure the Tesla bears who are short and have been mostly wrong so far (that could change obviously) will ever be quick to change their tune but if ark are even half right with regard to their assumptions the clues are here that Tesla are unlikely to completely implode. I would say from what I have seen from the latest beta self drive mode being tested (available to be watched on you tube) the full autonomous driving ability point has already been fully reached given an empty road - it’s simply the hard job of working out how the cars need to react to other vehicles - the edge cases that still need improving and the lack of necessary standardised road markings and signage that would need to be updated to assist the transition to full autonomy - I would say that last 5% of the journey is the hardest part unless the powers that be decide to push the journey forwards by encouraging the transition to full autonomy.

As ever with my own investments I sold out way to early on tesla a couple of years back when they ran into tariff issues and musk was acting a bit of a idiot at the time. Hey ho at the time I sold I banked a nice gain and the shareprice did subsequently half in price before rising tenfold or whatever - I am like the Murphys in that regard

mojomogoz

The greatest showman on earth needs the greatest circus ringmaster.

Ark are interesting and novel in their approach but that doesn’t mean they are right or good.

Look up Amerindo. They too were novel and ‘right’ when so many others were behind the times and dumb. They too had a new ways to rationalise much higher valuations.

Cathie comes from Alliance Bernstein. AB were Sanford Bernstein before the dot-com bubble an old and illustrious value shop. Then during the mania they decided to buy super successful mega cap growth investors Alliance Capital. Of course, worse timing ever as Alliance Capital tanked. AB also managed to introduce a 'quality value' element to their work just at the wrong time to dilute their 'crude' cyclical value approach.

Do you know that Cathie also states that Ark are channelling God's creation/innovation?

simoan

The article is a year old, but yes, run-ins with the EU and legal challenges from competitors (e.g. the Apple patent settlement in 2019) is just a part of the cost of doing business for a dominant technology company with a must-have patent portfolio. It's not done much harm to the share price of Microsoft, Intel or Google in the past though. A $1bn fine is inconvenient but still less than 20% post tax profit.

All the best, Si

Gromley

Maybe. Latest research on effectiveness of Astrazeneca vaccine on South African variant:

Rollout of the Oxford-AstraZeneca covid-19 vaccine in South Africa has been paused after a study in 2000 healthy and young volunteers reported that it did not protect against mild and moderate disease caused by the new variant (501Y.V2) that emerged there.

https://www.bmj.com/content/37...

This is not over, not yet.

I constantly find mmyself shaking my head in dismay at the poor way some of these findings are being reported, including by the experts.

You do NOT contract mild or severe Covid-19; you contract Covid-19 which may progress to be only mild (before your immune system squashes it) or it may progress to become severe (before your immune system can gain control, or worst case it never does).

IF we have a vaccine that gives your immune system a sufficient head-start such that rather that dieing; you feel like you have a bad cold or perhaps even 'the flu' that is still a result in my book. (The bmj article doe not cite evidence either way on this point to be fair);.

For sure, we would all like a vaccine that accelerates the immune response so much that transmission is eradicated, but we do not need that to overcome this virus.

I am frankly baffled by some of the public health decisions being made - some of them seem to me like banning all contraceptive treatments, because they have no 100% guarantee.

timarr

21st Mar '21

Hi Gromley

I'm not sure what point you're making, but it appears to be a different one from that the study showed. To deconstruct that study ...

The AZ vaccine was given to a bunch of young volunteers. The vaccine has been shown to be highly effective at preventing any level of infection in that group. It was not effective at preventing mild infection from the South African variant to the point of being labelled "ineffective". The other vaccines showed reduced effiacy, but did protect some of the participants.

Because the trial cohort was young it would not be expected that any of them would have gone on to develop severe symptoms anyway. However, the fact that the vaccine doesn't stop people becoming infected is alarming, the concern being that if doesn't stop elderly people becoming infected then it's likely some of them will go on to become extremely ill and many will die, even though they've been vaccinated.

This, of course, is why any incident of the South African variant being detected in the UK leads to surge testing in the area. There is genuine concern that this mutation could set the UK's recovery back many months, at least until the autumn, when modified vaccines are available, and perhaps until next year, given wider supply issues.

Being worried about this is different from the ridiculous confusion being exhibited by European regulators who've got themselves tied in knots over the precautionary principle. That says, roughly, do no harm - which is being interpreted in a way that means that possibly saving a handful of people from suffering a deadly thrombosis is being prioritised over definitely saving thousands of people who will die of CV-19 because of vaccination delays.

These two points ultimately coalesce - because between 5% and 10% of all CV-19 cases in France are of the South African variant. Europe's slow vaccination process puts the UK at risk. But this, unfortunately, is the reality of a pandemic, it doesn't respect borders.

timarr

Alexander Shea

there’s a Barron’s podcast from March 5th where Jack Hough interviews Cathie Wood on these forecasts. It’s a good listen :) https://podcasts.apple.com/gb/...

P.S. I thought the Tesla autonomous vehicle pilots had proven disastrous compared to Waymo etc? I’m just a passive observer so perhaps wrong but isn’t the precise problem the fact they didn’t adopt LiDAR technology, and hence cannot detect mobile vehicles/ people around them with any very much accuracy? I thought the driver manual intervention requirements they had were much more frequent than other AVs.

no dog in this ‘fight’ here just interested in underlying tech.

Yes, the evangelism is off-putting for those of an empirical bent - that’s not to say the two can’t be married, just they often aren’t!

Dragon

I'm not disputing the need for repeated lockdowns, I'm disputing the calls for early unlocking.

Because the trial cohort was young it would not be expected that any of them would have gone on to develop severe symptoms anyway.

Quite true Timarr, indeed reportedly in the trial being referred too no-one out of either the vaccinated cadre or those that received the placebo, develop severe Covid. So what has been leaked from the study so far tell us nothing on that point. (It's not clear whether there was any attempt to measure the degree and timing of immune response, although I suspect there wasn't).

However there was also a Janssen study also in South Africa (also not yet published I believe) seems to indicate that protection against severe disease is still present when Janssen takes on the SA variant. As Janssen and AZ are so similar in nature there is reason to hope (and I wouldn't put it more strongly than that yet) that the same is true for AZ.

I do agree though that we cannot afford to be complacent about the SA (& potentially other) variant. I also agree that the European stance has been puzzling and troubling.

P.S. I I’m just a passive observer so perhaps wrong but isn’t the precise problem the fact they didn’t adopt LiDAR technology, and hence cannot detect mobile vehicles/ people around them with any very much accuracy?

go and watch some of the you tube videos and see for yourself - the product is very much working in the real world now. You are right that lidar has some advantages over cameras - I think the Tesla’s do have forward facing radar of some description though - overall though the package seems to be getting to a very high standard - albeit that last 5% of the journey was always going to be the hardest to perfect. Comparing what the cameras see compared to a human driver it seems that the Tesla system is as good as if not better than a human most of the time.

Tesla cars do seem to have a nasty habit of driving into stationary police vehicles though, e.g.

A Tesla operating in Autopilot struck a police car early Wednesday morning in Michigan, officials said via Twitter.
The crash is the latest in a string of accidents involving Tesla vehicles that have sparked criticism and investigations by federal safety officials.
The National Highway Traffic Safety Administration has previously embarked on probes into more than a dozen crashes that were thought to involve Tesla’s advanced driver assist systems.
https://www.cnbc.com/2021/03/1...

22nd Mar '21

Being blunt it’s a work in progress ref accidents - that may seem worrisome but the system is meant to be supervised when used - the linked article mentions one case where an individual was driving with suspended licence and the other mentioned incident it seems autopilot was not involved. I don’t deny though that there will be situations where the autopilot messes up big style here.

The one thing is with Tesla’s they will definitely be learning from these incidents and improvements will be made - if nothing else the authorities should have excellent data to work from here to establish facts.

If we look forward 2-3 years with the advances in processing power and camera capabilities and the improvements that will continue with the main neural net I would expect the worst case scenario accidents will hopefully decrease on a per mile travelled.

There is a fairly balanced Forbes article here that summarises how safe autopilot is overall - I would say the jury is still out but to me as this is all new tech I wouldn’t really expect the results to be anything different.

https://www.forbes.com/sites/bradtempleton/2020/10/28/new-tesla-autopilot-statistics-show-its-almost-as-safe-driving-with-it-as-without/?sh=4b505ae81794

Small Cap Value Report (Fri 19 March 2021) - IDOX, TENG, BOOM, CML, ZANE - charity update

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