LON:TRMR | Tremor - TRMR - General Discussion

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19th Aug '21 by MichaelFBS

48 comments 3288 reads

The stellar results prompted me to start this thread as only a year ago it was most definitely in SCVR territory and I think quite widely held.

I have owned since Dec 2017 and have done more research into this one stock than into any other (because there was for a while a definite whiff of fraud around it).

I am out at the moment so not able to summarise today’s results but will do later.

For those who don’t know Tremor International (LON:TRMR) (and maybe even those that do these are two great Twitter threads on the company:

https://twitter.com/yield_fana...
https://twitter.com/yield_fana...

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About the Author

MichaelFBS

Premium Member

I have been running my ski holiday business (Purple Ski) for 27 years which I started with £3.57 in the bank and sold in June 2018 for a mid-six figure sum, which for me shows that a buy and hold philosophy can work! I split my time between Meribel and Cannes. more »

48 comments

BnB

16th Nov '21

I just caught the last 5 minutes of the IMC call. Scary-looking lot aren't they? Unfortunately I was too late for any grilling on the share sales. Did anyone pick up any pearls?

davidjhill

16th Nov '21

Basically as we suspected it is a share plan put in place on Nasdaq listing whereby the directors can agree to sell some shares in tranches over a 12 - 18 month period but have no control over the price/timing. They said it was for a small portion of their shareholding. It is basically there for them to realise some of their share based compensation but avoids any potential conflicts of interest whereby directors may choose not to pursue something that would make them inside because they wanted to sell shares for example.

So looks like they intend on retaining a good proportion of their shares but we may well see some more sales over the next 12 months that were set in place back in June.

BnB

16th Nov '21

Thanks for that

davidjhill

22nd Nov '21

hmm - staggering that Tremor International (LON:TRMR) is now an £850m market cap with £300m of net cash and an EBITDA in excess of £110m. Puts it on an EV/EBITDA of just 5 which seems inordinately low to me and compared to its peers now sits at massive discounts. Very odd price behaviour.

I did note they said they would start buying back shares as soon as it was perceived acceptable to do so. Apparently it is frowned upon in the US to do that within a certain period after an IPO. However, I'd say they will need to narrow the discount else they risk being taken out at too low a price.

Rusty2

22nd Nov '21

Tremor International (LON:TRMR) buy back shares, to give to directors and then they sell them for a nice profit.

Directors pay is not bad either, when directors pay is more than the profits, I do have concerns.

Is this company being run for the directors or the shareholders?

muzmano

22nd Nov '21

https://news.sky.com/story/sha...

The chairman of Tremor has been told by at least two big shareholders to launch a strategic review and a share buyback, Sky News understands.

Another insider said that Tremor had recently held initial conversations with a major US-based private equity firm about a potential takeover bid, and that it had recently signed a non-disclosure agreement with that party.

mojomogoz

22nd Nov '21

I hope effing not!

Clearly the likes of Schroders and Tosca would like a bid as that gives their large holdings liquidity (even if the bid doesn't complete).

But whether PE or industry bid I'm really not a fan of that route as I believe there's a chance at real good midterm growth story here. A bid is unlikely to deliver more than 30% upside. THAT is lowball bs

Hopefully, this news is the Chairman on cunning maneuverers to bring a bit of attention

davidjhill

22nd Nov '21

crikey that would not be good news. Hopefully, having just IPO'd in the US an immediate move to withdraw from the market would not be considered.

A share buy back makes sense though I think.

Star8

27th Nov '21

both Schroders and Tosca have been reducing their holdings. The implication is that a bid is unlikely (but still possible)

mikebianchi

6th Dec '21

Theory - Campaign selling short to drive down price collecting stops on the way. DIR's have already sold out (Druker $6M in recent times) large holdings convenient eh, crummy price offered based on the past month (come + 12th DEcember), sale wriggles through, Ofer and his mates get rewarded with new share options in the new business, these are sold and they depart = Shareholder stich up complete

What's going on ?????? The price should of responded to a potential deal not fallen surely

mojomogoz

6th Dec '21

Ummm...I reckon that theory is a bit crank. Its probably simpler...

Markets have been in crappy mood with some tech names really selling off under the surface in US and less so UK.

Its on AIM and is a tricky company to understand due to where its comes from and how fast that has been. The company / finnCap do a pretty decent job of relating what's happening but it does take attention and time...plus there are some gaps to fill in particularly in terms of the sustained growth rate from here (no one knows...tho decent odds its high if not quite as high as the last 15 mths).

The CEO is heavily incentivised by share gifts. Too much IMO but undoubtedly he's been at the helm from a low and rough time and has been seen to be the figure delivering something quite spectacular to date. In US tech land...where they want to be and be judged...the comp isn't a head turner. Clearly as he was airdropped into the situation he wasn't going to be able to buy a ton of shares. Note, that he also negotiated his package at time when sp much lower and company appeared doomed according to mkt wisdom etc.

The price action recently perhaps shows where a lot of PIs got on the trade too?

Anyway, you can watch them present at the Raymond James conference today at 16:30 UK time:

]https://investors.tremorintern...

c038644

7th Oct '22

Hi,

Regarding £‎TRMR and the buybacks, I see on the RNS feed today that they now have 42 million dormant shares. When a UK based company does buybacks it cancels them in due course, but not in the case of £‎TRMR. Like most I am quite suspicious (to good to be true!) , so I was wondering under Israeli law could there be any chance of say reclassifying them as ordinary shares and giving them free to the directors? Perhaps at the same point the number of dormant shares equals 50.1% of the total shares in issue?

mikebianchi

14th Nov '22

So thoughts on todays update and what can we expect for the future. Luckily I sold 50% of holding ages ago at good profit but my remaining holding is umm badly dented by todays SP fall

muzmano

15th Nov '22

I wasn't happy with the results yesterday. It seems that revenue is in a negative trend. On the call yesterday that was put down to a reduction in ad spend in DTC channel due to macro economic pressures. I had hoped that share based compensation had peaked but the agm is next month and there are resolutions to grant more share options and to reduce the price of current options. This curtails any future benefit to me. Resolutions here:

https://investors.tremorintern...

Whitbourne

15th Nov '22

Hi everyone, I agree with muzmano that the most concerning thing is not so much the economic cycle, which comes and goes, it is the scale of the share-based compensation. This means two things. First, the share buy-backs have little effect on EPS because new shares are issued as fast as they are bought in the market. Second, there is an imbalance in risk/reward between staff and shareholders. The purpose of options is to share in the company's success. If the share price goes down, then both staff and shareholders should be affected. In short, the purpose of options is to align staff and shareholder interests and that is not happening.

None of us can attend the AGM as this is in Israel. We could however write to Neil Jones and Christopher Stibbs (presumably via finnCap) and share our concerns. I am happy to have a go at a draft if people think this is worthwhile?

mojomogoz

15th Nov '22

Everyone's favourite company is presenting at 3.35pm (10.35 EST) at RBC tech conference. Can get here:

https://tremorinternationalltd...

mojomogoz

15th Nov '22

I agree with the sentiment to some extent...ideally share comp should be lower, in fact people should either found cos or buy in long term as they get promoted and manage them...

However, enough of the romanticism!

1) Tremor's board and major shareholders wont agree

2) Significantly as it would be self-harm

3) Tremor's share comp is arguably modest relative to competitors and recent 'excess' is significantly driven by stellar performance H2 20 to H1 22 by a new mgt team who really changed the direction of the biz from old performance media stuff (that would be walking dead if still the biz focus)

Look at the most successful or best known competitors:

The Trade Desk - its got $23bn market cap! - revenues 9mths ytd of c.$1.1bn and share based comp at $400m

Magnite - $1.45bn market cap - rev 9mths ytd of c.$400m and c.$50m share based comp

Roku - $8.4bn mc - rev 9mth ytd c.$2.3bn and $256m shared based comp

Pubmatic - $876m mc - rev 9mths ytd $182m (I think overstated and need to knock a bit off to get to a Tremor ex TAC comparison) and (only!) $15.2m stock comp

Tremor is $500m mc - 9mths rev of c.$240m and $40m of share based comp

(note the above are in same area but what they offer is all different)

So Pubmatic are the cleanest dirty shirt...with Tremor second? (Note Pubmatic only listed in 2018 so there could be some deferred comp that kicks in? Dunno - perhaps means that current mgt are significant shareholders thro IPO so different comp structure?)

Over last few years Tremor has had the best development in combined terms of revenue growth, profits and real cash generation particularly winning in a profit/cash generation sense relative to competition

If you are a shareholder and genuinely want a better outcome then talk to them about alignment of incentive...but as a shareholder I don't want them to stop the comp...

...now if you could persuade whole of industry to dial it back then I'm game for that.

If comp bugs you so much then sell the shares is best...and don't get into situations where this type of comp occurs.

TBC I would like it not to be like this.

On buybacks, ytd I believe they are at $75m and stock comp is $40m...so there is a positive impact and I believe the only one of the above group...reluctant applause to Tremor?

I'm happy with the buyback in that I think they have done it whilst their shares are significantly to severely undervalued IMO.

mojomogoz

15th Nov '22

PS Tremor does make me anxious...but I swallow it and persist in it. I think its a great opportunity. My analysis may just be fallible tho...it really isn't for the feint hearted or W&Cs

BarrieLomas

1st Jan '23

Directors themselves in the foot

From recent RNS... Directors SELL more than FinnCap BUYBACK on 22nd & 23rd'

Date_________ Source_____ Type ____Volume

22/12/2022 O. I. Druker SELL 70,208

22/12/2022 Y. Carmi ___SELL 16,282

22/12/2022 Buyback BUY ___30,176

22/12/2022 Market Size OVERALL_______ 657,975

Date_________ Source_____ Type ____Volume

23/12/2022 O. I. Druker SELL___51,758

23/12/2022 Y. Carmi SELL ______31,744

23/12/2022 Buyback BUY______33,984

23/12/2022 Market Size OVERALL ___1,043,546

They made the decision to start the Buybackand immediately began Directors sales. Directors sales follow exchange of options from company which increase issued stock. Buybacks are intended to reduce issued stock. Thet are SHOOTING themselves in the foot and helping destroy share price.

Ideally Sales should take place when growth is or has happened NOT when growth is in Freefall

Directors sales for O. I. Druker, CEO, in the past year come to over $6.5 million. He is very well paid.
From 2021 Accounts at 10 Mar 2022 Druker had 2.96 m shares and 4,22 m options. Those options now number 2,28 m having raised $ 6,075,847. Allegedly to pay tax on a salary of £747,146 and Bonus of £845,205. I don’t have any idea of Israeli Tax rates but that looks weird.

Whitbourne

1st Jan '23

Hi Barrie, do have a look at my exchange below with mojomogoz on 15 November, he makes some good points about the competitive position and the market standard for share-based compensation in this industry. As you will see I share your concern that the buybacks and issue of options are pulling in opposite directions.

On your point "Allegedly to pay tax on a salary of £747,146 and Bonus of £845,205. I don’t have any idea of Israeli Tax rates but that looks weird" the tax to be paid isn't on that salary, it's on the options themselves. They are taxable as salary, otherwise everyone would get paid in shares... You are right that the tax on the CEO's cash salary and bonus would be a lower amount.

I am reluctantly concluding that this is correct advice from mojomogoz "If comp bugs you so much then sell the shares is best...and don't get into situations where this type of comp occurs." Currently still holding and will decide what to do during 2023. I'm unwilling to sell at this share price, for obvious reasons.

Happy New Year and good luck to all holders.

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Tremor - TRMR - General Discussion

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MichaelFBS

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