Sopheon

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21st Sep '16 by plank

5 comments 5885 reads

Sopheon has come up in my Quality and Value screen today.

It has good rating and I cannot see any press releases in the past few days that have not been factored into the rankings.

It fell 10% yesterday but has risen from 100p to over 300p in less than 6 months.

Am I missing something obvious that screams AVOID.

Thanks

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About the Author

Plank

Premium Member

5 comments

Edinburgh Investor

11th Jan '17

Every time I look at it its shouting buy back at me. It passes almost every data point in all screens I use.

Currently sitting up at 373p now with a P/E of 14.3, still seems like an ok price for a growth stock. Unfortunately I have not had time to do proper due dilligence (still takes me a while as I an still a bit of a novice), since it passed my screens so have potentially missed out on the recent gains (assuming I do decide to buy)

Trigger14

12th Jan '17

I've been watching this one rocketing away too since it came up on a number of my screens. Fails many of my qualitative checks though. I don't understand what it does or whether it has good long term prospects or a competitive advantage - the way it describes itself is off-puttingly jargony. Its profit history and long term share price chart are also all over the place and it is very small cap with not much liquidity to get out if something goes wrong (to me screams AVOID if you want to put it like that) - share price falling for almost 10 years up until last year. Does not look like a great business but rather just having a good spell, unless something has changed but don't think I'm likely to make head or tail of it in a hurry. The recent numbers and momentum are great though so who knows...

Samscvb

13th Jan '17

It appears to be a software company that has tried its hand at several different products and now focusing on a kind of product development / project management software called "Accolade". The company changed its name from Polydoc to Sopheon in 1999 and developed the first Accolade software around 2001.

So something has possibly changed, in so far as they claim to have made a "strategic turnaround" in 2013. The exact nature of the strategic turnaround is not entirely clear because, as you say, it is wrapped up in jargon. (moving from "process automation to enterprise class innovation management". It also seems to have been mentioned after the fact?) Perhaps just significant investment in tweaking this Accolade software and making it a useful product for enterprise customers. 20% revenues spent on R&D, almost $5 million capitalized R&D.

The software appears to have a decent position in the market. The FD says that Accolade on its own has grown at around 20% each year. 2015 annual report mentions the possibility of "further strengthen our relationship with top tier consulting firms, an area we believe will be key to the acceleration of our growth" and the recent "introduction of Accolade Express" which can be sold by resellers in China etc. Last RNS, auditors said, "The Group’s sales pipeline is strong, and the directors are very positive about the prospects for the business". Company said "our sales funnels on both sides of the Atlantic remain highly active and include some substantial opportunities". Revenue visibility 2016 at 9 June: under $17 million; 25th August, $18.4 million compared to $15 million for same time 2015. Final quarter historically strong, with 2015 final quarter strongest in co. history. There is upside for a software company, operationally geared with a market cap of only £20-30 million.

Employees on Glassdoor mention: "Employees are always jabbering about how a big customer drop or failure will trigger a panic" (April 2013) "Stellar IT team. Great culture. Good product. Advice: Enter the small business market with a lite product for stable revenue stream." "Great product" (May 2013) "This is not a must have solution for most companies so there was a constant struggle to grow the business" (Director, 12 Dec 2016). "Good management, products address valid business needs, stable employee base with minor turnover... Narrow market leads to challenging sales, not a high priority for IT spend resulting in longer sales cycles." (Oct 2015) [sales were pushed from 2014 to 2015 before]

There is an active discussion board in Dutch at https://www.beursduivel.be/Forum-Aandeel/260186651/Sopheon.aspx

Edinburgh Investor

16th Jan '17

I also use the glassdoor app on my phone to gain insight, its a great tool.

Samscvb

2nd Feb '17

Just looking through the RNSs again for Sopheon. Does anyone have info on the "DevFactory" holding the other year?

10 April 2015 - DevFactory FZ-LLC reported holding over 5% of company. Around June 2016, sold out and fell below the 3% mark.

Over the same period, Barry Mence and the other directors persistently bought stock. Mence held 1,033,000 April 2015. Within a year he held just under 1.5 million. Myrtledare Corp. Rivomore Limited. (related family holdings) also increased their holdings. Plus the loan stock. There are only about 7.5 million shares currently in issue. Barry Mence is 63 years old and has been Chairman and CEO of "Sopheon" since 1993.

DevFactory FZ-LLC appears to be owned by http://www.eswcapital.com/, "experts in business software, offering seller-friendly, all-cash, high-close deals".

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About the Author

Plank

5 comments

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