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Just looking in to see how folk are doing here, having been absent for some time.
Sorry to see the share price has fallen right back again. If it is of any consolation, most of the market is pretty dire at present. A lot of the growth stocks are no longer growing by the same amount and many tech stocks are getting hammered regardless of how good they are, GBG including. I would have thought the market GBG are in would be to a degree less volatile. In the past GBG
I bought more too. Higher interest rates not great for tech stocks as they are priced more on future earnings, higher interest rates means future profits potentially worth less hence the drop.
Bought some today...why has this dropped today.
Thought last update was good
Good Afternoon, a promising rns, with hope for the future. The debt already reducing thanks to cashflow. Pleasing to see the sp rising on the back of this. We will have a much clearer idea, of the impact the acquisitions are having, later this year. The 'we are generating a strong pipeline of cross-selling opportunities' is most welcome.
Just done a quick approximate calculation on the dividend prospects, should there be one. Assuming the same level as last year's 3.4p. Then adjusting for the increased number of shares, gives approximately 2.65p.
Keep well
Well done Bigtosh. Pleased at the global emphasis in the update. There could be a rationale for a US business and an Asian one as may be easier to engage with the respective markets.
Hi Doze,
Nice to hear from you. You sold and I bought more at c625p. I think you read this better than me, gratz!!
Anyways, terrific update, only scanned it but the words speak far louder and better than the numbers, which I haven't really checked out yet. I guess I expected something like this (but not quite this positive, I have to confess) because in the past GB has (under Laws at least) always promised low and overachieved but, as you say, given all of the uncertainty in the World atm and the somewhat downbeat acquisition RNS, I really wasn't too sure of what they would deliver for the last year.
I didn't think they had much in the Russian block and that point is made in the RNS so no issues there it would seem. And a decent reaction, as you would expect. Hopefully this will restore confidence and we should see some recovery, how high, who knows but maybe my recent purchases will move into the blue. That would be good. I'll have a closer look at this over coming days.
Take care
BT
Hello Bigtosh, I did take a £1000 profit at 713p just in case the slide continued but my Mother has plenty remaining but is not of an age for waiting longterm. Thanks for your take on the hardware. Ukraine has surely caused a shake up with the software and shrinking of the total addressable market for visa and mastercard and will have to see how fintech reacts and the response if one is required. Uncertainty is a killer for SPs.
Good post, thanks. Anyone have info + links svp post.
Really sad see GB down here, 35% to 40% less than where it was before the new acquisition. Earnings will only be neutral in this current year (FY23), suggesting that there maybe a negative impact last year (FY22). Consolidation, acquisition cost, redundancies, etc I guess all adding up. Who knows? We should get some clarity over the next couple of weeks, depending on when they issue their pre close statement.
Regarding Harry’s comments on product development, I’ve been away from the industry for some years now, since I retired but from what I know GB do invest in product development but it is just that, ongoing development. That is updating, expanding scope and reach, enhancing functionality, etc of existing solutions and applications. They don’t write or develop their own new applications. For companies of this size, unlike, say Alphabet, Meta, MS, Apple, etc it can take at least 6m, more probably 12m and for more complex solutions, a lot longer to bring a new them to the stage of market ready deployment. That’s a long time in this industry.
There hasn’t been a game sold in the last 10 yrs, maybe ever, that was truly finished and ready when it was released. Publishers just push them out into the community and the gamers accept, maybe grudgingly, that they are the final testing regime. If you do that with business software, in this and many other sectors, your reputation dies overnight. It takes time to get it right and to reduce the risk of error or failure.
GB have therefore chosen to mitigate this risk and expand by buying new applications that are already marker tested and carry very low risk. This brings in new, complimentary solutions in new markets, which also gives new opportunities to sell old/new solutions to new/old customers. How much this adds is always speculative but there is clearly some upside and it’s available pretty much straight away, you aren’t waiting a year or longer before you can start to sell. There is a premium to pay for all of this and because you’re buying successful solutions in successful businesses but it’s a strategy that I approve of, which is why I’ve stayed here for so long. Buy it, absorb it, pay down the debt and move on to the next target. It’s worked well so far, fuelling GB’s growth.
That’s my take on this, others I’m sure have differing views.
Not sure why the big drop from 725p, some must have sold out but it does look like someone is buying up stock at these lower levels.Is the same old recycling we’ve seen over recent years or is that just wishful thinking? Anyways, we can only wait and see. I’m in no hurry and will see how this plays out over time.
Take care all, Doze hope all is well with you, take care
BT
Good points and answers my previous post on acquiring custom. The public interface is not GB forte maybe but obviously the crucial element for innovation even if transaction analysis is also required to confirm a likely fraud which is GB forte I think and often perpetrated online maybe. Results will be informative.
GBG have had a good run. Expanding by buying smaller companies, paying off debt quickly. What they failed to do is invest sufficiently in their own product development. The market for identity verification and preventing online fraud has grown significantly but they are losing market share to other companies, such as Onfido and IDNow. Hence the need for the Acuant acquisition. The price paid is likely to have been too much. Fortunately they part paid in shares at a valuation of 725p per share, which at today's sp at just over £6, looks good.
I had been offloading some before the takeover, and did buy some back around the 725p mark but the majority of my current holding, bought under 23p is in paper, deliberately to avoid any panic selling. Not going to sell any more but will look at all updates up to the AGM and Full Year results in June. In order to ascertain the impact of the Acuant takeover going forward. My biggest hope is that management will learn their lesson with regard to spending on R&D. If the Acuant products are boosting revenues they should be ensuring that investment for upgrades and staff retention is made available.
I feel sorry for holders @ over £8. You need to make your own decisions but think End-July will give us a good indication of where GBG are headed.
Looking at the acquisition in a different way. GBG currently have 14 products on offer following the Acuant takeover. If a significant number of existing GB Group customers are already ordering or showing a great deal of interest, in the new Acuant products now available to them. It would make sense to acquire more customers, whose options, in this case from Cloudcheck, are limited.
The next couple of trading updates could be very interesting.
It is easy for GBG to buy up, evidently, but it makes me suspicious that maybe they could have poached the customers easily enough or maybe that is a difficult thing to do in IDV. At least the market is favourable towards the latest deal.
https://www.lse.co.uk/rns/GBG/acquisition-of-verifi-identity-solutions-limited-7zypoaf3ji3v63s.html
Thanks Mezza for your post.
"Bad news is the best time to buy shares.". We have to be very careful with that one, with respect, although I understand thee sentiment. Many will quote Warren Buffet "be fearful when others are greedy and greedy when others are fearful". Not often quoted by Warren Buffet is:
"There are only 2 rules to investing:
Rule 1: Don't lose money.
Rule 2: Don't forget Rule 1".
If you are interested in some reading material, I can recommend books by Robbie Burns, the Naked Trader. He writes in a very easy to read and understandable way. He doesn't give tips for any shares but does outline what to look for in a share, both good and bad and ways to avoid common mistakes. If you Google The Naked Trader, you will find a link to his blog that he writes, about once a month - worth having a read and taking things from there.
None of us should be in a rush to invest. Money is hard earned and all too easy to give away. For me, I would rather wait for the market or any share to bottom out and then for there to be some recovery with a definite change in trend. It means I will miss investing at the bottom which can be anyones guess but is more likely to be successful.
Nothing wrong with being a small investor Mezza. These days I only have one investment and can say I am much more relaxed than when I held far more. My life isn't taken up so much with chasing rainbows and I have more time to enjoy what is far more important. I sometimes wonder if those who post so much so often have a life outside shares. There are more important things in life.
Good luck
CM
There doesn't ever seem like a good time to buy shares. We had BREXIT, covid and now inflation & Russia being idiots. You could turn that around and say bad news is the best time to buy. SP is around the cheapest it will be. You just pay a premium if times are good.
Another strategy is to invest in good dividend paying companies with a predictable SP range. My favourite is Diversified Energy (DEC). Pays +10% dividend every year and the SP stays in a £1 to £1.20 range.
Dear Checkmate
I do appreciate your very in depth reply to my question on GBG. I am a small investor with not a lot of knowledge on the share market, so your knowledge is welcomed. Very uncertain times for the whole World currently which is not a good place to be for anyone. Holding on to see what the near future brings, so thank you once again for your insight.
Good evening Mezza.
Why the share price drop?. Phew, where do we start?. Well, first of all I don't believe the share price fall is GBG specific, I believe it is much more down to the general market retrace and the fear that is around at present. Pretty much all shares are being hit, some more than others. Although I have not been invested in GBG for some time, I do keep an eye on it and have it on my watch list, to keep in touch with posters such as Doze and Big Tosh who have been invested here a long time and have seen GBG go through both good and bad times. Over that long period of time there have been a number of occasions when the share price has fallen back for no apparent reason, often after good results. Each and every occasion the share price has recovered, some times quicker than others.
GBG is in a sector of the market that shouldn't be hit by issues such as supply issues (much more related to retail), or shipping costs - they're not manufacturing anything, they are not selling anything tangible (hard goods).
Rising or the threat of rising interest rates?, well, yes to the degree that if interest rates rise then share prices tend to fall back, but we are talking about historically low interest rates and it isn't as though banks etc. are offering interest on savings to make a big difference.
Inflation? - should the BOE decide to raise interest rates to fend off inflation then I am not sure it will do anything but hinder the economy because the kind of inflation we are experiencing or about to experience is largely outside of what can be controlled by a rise in interest rates. It might lead to negative growth in the general economy which in itself may affect many companies. Companies may draw in their horns on spending and investment.
Conflict between Ukraine, Russia and the West. Nothing to do with GBG of course, but it is leading to a very tetchy market, there is a great deal of worry about. The World is on edge (sort of). We are hoping for an 11th hour resolvement of the issue. Should there be a resolvement then there will possibly be a positive reaction on the markets.
Rise in tax (NI). Should this effect GBG?, no, not directly. But then again this will affect all companies and individuals and this will likely affect any growth in the economy and therefore affect GBG indirectly.
Is GBG overvalued?. How do we judge what is over or undervalued. GBG has always had a high PE ratio (imo), but has always been able to live with that.
Are the markets over valued?. Well, quite possibly looking at Wall Street, not so sure over here. Are the markets looking to correct to some degree and is this not a good time to do it with all the worries?. I am just thinking out loud.
Each of us have their own circumstances and must do what is right for us, but I would caution against jumping into anything right now. What may seem a bargain may be a better bargain next week, or month.
This is a good board.
Why has this Shaare price dropped so dramatically this month? Anyone got views on this?
I agree 640 should be bottom, we are there time to buy
Bought today, I think we're near the bottom, 640p area a possibility, we'll see.
Hi Guys,
Just popped by to say Hi and check on what's been going on.
From the last few RNS's we seem to have a few funds down sizing a tad, not surprising given how they managed the recent aqc. A simple demonstration of to decimate the sp overnight but no point in keep moaning about it, it's done and we have to wait for a recovery, which I'm sure will come in time.
Anyways have a great Xmas and best wishes to both of you and your families. Here's to a better 2022, I see some decent upside in UK equities in the year ahead, let's hope so.
All the best
BT
I think I was on the Jura by the look of that post and fro memory but have you listened to this https://www.youtube.com/watch?v=NNp3b_Iv1Gg . Unfortunately I am a grumpy old man, you have to have a survival strategy! I hope the relatively new CEO is not the greedy variety. Compliments of the season.
Thanks for your reply. I am not very quick to action opportunity and wonder whether I should have switched to TEP on its latest dip and then energy prices boosting client numbers as that is another steady player but with a macro boost then. I hope GBG does follow its usual form as Bigtosh says. Compliments of the season to you.
Hi Guys,
Hope you are both safe and well. CM, I hope you trip south went well and that RR also keeps healthy and safe. It's never easy but cherish the good days when they come. It's nice that she recognises your voice. I used to call my old Mum every day. We had nothing much to talk about; the kids, the weather, my work, etc, etc. Just simple mundane stuff but it's what made her get out of bed every day and it was the calls (and the visits) that kept her going. Keep it up my friend.
Thought I'd have a quick look back here and who'd have thought, only weeks ago that we'd be down around £7? Certainly not me.
Doze, your thoughts on Capitalism and Socialism are a bit much for me this side of a decent glass of Jura but I do agree in principle. AIM in particular is the Wild West. seemingly unregulated, with no teeth whatsoever. Look back at the GBO debacle, fraud perpetrated on a grand scale by the CEO/Board and nothing done at all, so far as I can see. We are nowhere near that here, I'm sure this complied with the relevant rules and regs but it really doesn't look or smell great to me. This is all part of Clarks 'Biggest is Best, to Hell with the consequences' strategy. The Results made big play of the revenue gains in the year, and they were significant. The very muted profit performance wasn't even commented on, strange when the top line was so good. I can't be bothered to check out the Accounts to see where the burn was. The price of 725p was clearly set to ensure this acqn went through but I still don't understand this level of discount at all.
This whole debacle was very badly communicated and handled by the Board, a shambles imo. The first ever by this Company. Long term prospects look very strong and maybe that makes it all right. A couple of funds shed a few here and there but nothing major that I can see.
It's easy to look at this and attribute the movements to general market, Brexit, CV, inflation fears but the continual drop is imo our old friend (whoever they are) simply taking this down again from a new base. They have been doing this for years, cycling up and down 100+ points over a couple of months or so, and this looks like more of the same. So we could drop to 670p or thereabouts. All a guess at this stage but I can't see too many LTH's or even new holders (@ 725p) selling out just yet but I've been wrong before.
Brokers seem enthusiastic about this move from recent statements but what do they know (LOL)? and Director buys are always welcome but does anyone really care in a c£2bill mature company? They don't particularly excite me.
I'm still here long term and will remain so but just feel this could have been handled
Anyways have go, sounding like a Grumpy Old Man, where's that Jura?
Take care guys and in case I don't get back here have a Very Merry Xmas.
Best Regards to you both and to all LTH's
BT
I think that the market that GBG is in, generally bodes well overall. It will take some time for the latest acquisition to bed in I think, maybe longer than others. The share price has adjusted to a large degree but there maybe some more downside which imo isn't a reflection on GBG but more to do with the general market. There is no sign of the so called Santa rally this year, or at least, not to date and time is running out. However a rally just down to it coming up to Christmas means little if anything.
It is difficult to know where any sustained recovery is going to come from and when. It looks quite likely that interest rates will be raised in the U.S shortly to try and curtail inflation being the highest since the 1980s; anyone remember those days apart from me, oh, and BT of course?. If that happens then it is likely to have an effect on the U.S market and therefore more than likely over here too, even if the likelihood of any interest rate rise here won't happen until February as has been aired. Then the nasty stuff might hit the whirly thing due to the repercussions. If that happens then folk may be looking to exit the share market although I don't think any rise in savings rates will make it so attractive to put their money in the bank.
Regarding stock markets; it is too easy to look at what is happening to the FTSE100 and the Dow Jones Index, rather than the broader FTSE250 or FTSE350 and the S and P 500 which gives a much better idea what is happening to the more relevant market for most investors. Many of the FTSE100 are made up of more internationally focused companies and the Dow Jones only represents 30 companies. But of course, what happens to the FTSE100 can help or hinder the other indices.
Any director purchases are good news in that it gives a degree of confidence from those who are at the coal face and in the know. And as far as I know, GBG are not being shorted.
Stay well, stay safe
regards
CM