Tuesday, September 20, 2011


I was interested in the suggestion by Geoff Gannon about writing for 10 minutes a day. Here goes - I hope my failing memory, and commitment, will allow me to keep it going.

VOD up 1.1% on announcement of forming a strategic partnership with Conexus Mobile. http://bit.ly/qGSSjX This will allow VOD to expand its presence in Asia. This sounds quite exciting. I first became interested in VOD a few months ago, when I saw it sitting in many manager's portfolios that I admire. I must admit that I didn't really understand the "thesis" at the time, but I'm warming to it. PER is 9.9 and yield is 5.7%. The interesting angle will be a divvie that it will receive from its stake in Verizon. The debt situation of VOD looks aweful when you see a z-score of 0.46. However, I've seen posts on the BBs that have convinced me that the debt situation is OK, in that it's a known issue and VOD are able to pay loans as they fall due. VOD is on a PBV of 0.9. Can't see anyone making a mint out of VOD, but I think investors will do OK.

CTN (Clearstream Tech) up 77% on offer by Bard. I think CTN has a great growth story - they make stents - and were available at a reasonable price. I think I would have preferred that no bid was made, as investors are taken out too early in the game. Bard has received irrevocable offers from 58% of the shareholders. Its not quite game over yet, though, because for 41% of them (the remaining 17% are directors), the agreement becomes non-binding if someone else offers at leaast 93.5pps (10% over the offer price of 85p). If that happens, the Bard offer will effectively collapse, thereby allowing shareholders to get a better deal. There's no downside risk to shareholders as this stage, so it makes sense to hold on. The worst that happens is that shareholders will get 85p in December, as opposed to 81p now. Think of it as a bonus divvie.

PTEC (Playtech) - the online gaming software company. Just reviewing this one, and it actually looks quite cheap. PER 7.8, yield 6.1%, ROE 29%, net cash £56m  against mkt cap of £656m. I heard about this company last year, where Collins Stewart recommended it on Motley Fool. Analyst forecasts look robust. It agreed to acquire Mobenga in July 2011, which will give it mobile sports betting capability. Cheap price and good story on PTEC. Donwside I see is that the returns on capital are too good - so there's a lot of competition wanting a piece of the pie. There are quite a few listed online gaming companies out there, so although the story looks good at the moment, it may be stifled by competition in the future.

PIC (Pace) - STB (set-top box) manufacturer - ah, perennial serial disappointer to all that hold. I acutally think this offers a good risk/return profile, and I think the market is missing some exciting upside potential. It's expanding in Africa, India and Brazil, and its relationship with DirecTV seems quite good. It recently accounced a box where you can watch telly in any room. They've recently announced the "Elements" software platform, which gives broadcasters a lot of flexibility in designing their offerings. A lot of good stuff is coming out from Pace, there seem to be many exciting opportunities, but the market seems to be completely uninterested - seeming to focus just on the missteps earlier this year, and all the doom and gloom surrounding Europe. It's on a PER of 4.9. Downside is debt of £181m due to acquisitions. Net debt is decreasing, so at least we're heading in the right direction. A director also thinks the threat of Google and Apple TV is overstated.

1 comment:

Mark Carter said...


I can't help it, I just love this quote that's doing the rounds on Twitter:

JD Sports boss on BBC News. Channel: "As the riots showed, there is a strong demand for our products on the high street". Genius.