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Hardly surprising to see the CEO buying another 25,000 shares at these bonkers prices (he now has 2.24m):
Https://uk.advfn.com/stock-market/london/shearwater-SWG/share-news/Shearwater-Group-PLC-Director-PDMR-Shareholding/89222051
..chips now. Expect a cheeky bid at £1.25!
Quck recap and summary on Shearwater - cyber security and software company
FY results to 31/3/22:
+ Revenue (organic) up 13% to group record of £35.9m
+ Adj. EBITDA up 19% to £4.4m
+ Margin maintained at 12%
+ Adj. profit before tax up 24% to £3.0m
+ No debt
+ Cash £5.6m
For this year:
RNS 13/4/22 - Brookcourt (part of SWG) announced a new contract win with a telecommunications company worth potentially £21.0m. Made up of initial 3 year deal worth £12.9m with option to extend for another 2 years for extra £8.0m,.
On this news the share price rose 30% to 145p
SWG (with only 23.8m shares in circulation) is currently valued at 90p/share or £21.42m with cash at end of March of £5.6m and 0 debt). To me this is a p/e of around 5.3x which is ludicrously low for a growing business in cyber security.
Yesterday the whole market was battered down by the reaction to the Conservatives mad mini budget and plans to borrow and spend more; without an OBR forecast. The market makers as always took full advantage, with small caps having their share price bids dropped hard from the outset. Saw it yesterday on level 2 where MMs offering shares at 90p (bid 83p spread 8%) I did dummy buys for 6000 plus shares at 90p and they didn't have enough to fulfil bid. Obviously dropping bid hard spooked a few private investors who binned their share for a pittance.
As soon as we get any good news (either in economy or particularly SWG) MM's will raise this back over 100p.
Buying opportunity for the smart investor
I wouldnt buy at all. The market is too brutal. I would be buying companies with historic earnings & growth and predicable earnings going forward, and leave this until the appetite is back for growth stocks and more speculative.
Looks like Pinocchio was right. Any suggestion as to the right entry point ? 75p ?
Of the 3 cyber stocks tipped in the IC article - IGP, CNS, SWG (I hold all 3). - CNS is taking off. What a great results presentation, and quality company. Worth a look. I dumped OSI today, my reasoning posted over there. Still hold SWG, though reduced it. IGP yet to move, but confident it will, looks a very good company also. Of the 3, CNS and IGP have their own core product, CNS mainly hardware. I think this is helping the growth, where as SWG is just a collection of smaller companies, a little less tangible in terms of growth prospects.
So much for the AGM update. There wasn't one !! Just going nowhere.
I will wait for 85p like pinocchio. Actually 86p so I get in ahead of him !!
Just remember that AGM is next Tuesday 20th Pinocchio, so you are running out of time...
You may get in at 85p, I doubt it though.
Perhaps best to buy now at around 100p, rather than hoping to get in lower, then missing a 40% jump on update / contract renewal / new contracts etc.
Quck recap and summary on Shearwater - cyber security and software company
FY results to 31/3/22:
+ Revenue (organic) up 13% to group record of £35.9m
+ Adj. EBITDA up 19% to £4.4m
+ Margin maintained at 12%
+ Adj. profit before tax up 24% to £3.0m
+ No debt
+ Cash £5.6m
For this year:
RNS 13/4/22 - Brookcourt (part of SWG) announced a new contract win with a telecommunications company worth potentially £21.0m. Made up of initial 3 year deal worth £12.9m with option to extend for another 2 years for extra £8.0m,.
On this news the share price rose 30% to 145p.
So how do I feel that share is currently available to buy at 101.5p?
Well disappointed, but it also shows that sentiment rather than value has led to a high proportion of AIM stocks including SWG being battered down by nervous PIs exiting as they are worried about recession, inflation etc.
I've taken the opposite view which is this stock is an absolute bargain and continued to add, including yesterday at 101.5p
SWG (with only 23.8m shares in circulation) is currently valued at £24.16m with cash at end of March of £5.6m and 0 debt). To me this is a p/e of around 6.2x which is ludicrously low for a growing business in cyber security.
However others no doubt such as Pinocchio will hang in the wings making negative comments and try and get in at a lower price. Fair play if you do, but we all see the potential here of a very undervalued stock, that could easily jump another 30-40% in one morning on another big contract win or just decent update on latest performance.
How is it going Rich ? Still bullish ?
I was intending to buy at 110p but I have re-set for 85p. Even I can see value at that point. Should get there by the week after next. There is a major seller in the background and has been for weeks and weeks.
Saw this on Twitter:
There's approximately 780 companies listed on AIM.
There's now 602 below their 200 day moving average - generally regarded as the bull (above) bear (below) line.
AIM All share hit another low today, -34% down from its high in September 2021.
https://twitter.com/SharePickers/status/1566815066435067904?s=20&t=LHXT0cL1DL9y9P8qp4OFhA
Now is the time to buy cash generative companies in growth sectors, just saying.
RNS confirms AGM on Tues 20th Sept at 11am
Hopefully get an AGM statement RNS out first thing.
Most investors understand that valuations on shares in the current climate is not a true reflection of the businesses. Hence Mcro is being taken out at 98% premium to its previous closing price. You wouldnt expect to have a daily commentary on the value of your house would you . It depends what someone is prepared to pay on any given day. Clearly cybersecurity is a sector out of favour. Hence dark is being taken over at half its year high. This the problem for shareholders, not the business. I spoke to swg last autumn after the disappointing 6 month results and they assured me it would be possible to meet full year targets, Which they actually exceeded. Their main worry was being taken out cheaply. They now have a lot more skin in the game, so any hostile takeover I would imagine would have to be at a similar premium to MCRO at least. Cant see that happening in current climate. They are very happy withe business performance, obviously not the share price. Any director will tell you the sp is not something they control. It will be a relief to get an acquisition out of the way. That is my only criticism that this has dragged on too long. The other thing that would help is if they could get some of the revenue more evenly distributed through the year. This obviously bugs the market when 6 month result1s show as little as 10 million when full year clocked in a record 35 million with improved margins. If it gives you a kick constantly knocking the management for the share price bully for you. Most of us investors and the management find these unfounded comments annoying and pathetically ignorant as frustrating as it is to see the underperformance of the sp which bares no relation to the business performance or its prospects.
Looks to me like this company can issue a trading update any time, going by past dates. They could RNS another contract win any time too, its just one of those investments, that is going to be very volatile, whether you are short or long. Well done for predicting the price, ill give you that, though as far as I can see there hasnt been any buying at £1.10 yet, I think the ask is a little higher. Markets in general are very painful at the moment, and no one wants any of these stocks IMO. But thats the game isnt it. Buy when no one wants it. Way I see it, the company need to beat £35M this year, so if they update the market ahead of this target, I think that puts a floor under the price. I dont think it comes down to mud slinging, or things that happened years ago. Growing earnings and revenue, will forgive all sins. Yes price could go a little lower, but it could also gap up 30% one morning. There is also the chance of a big news story, like a national cyber crime, and this could suddenly be a big winner. Regards cyber crime, its a case of when, not if.
Pinocchio - more twaddle from you. Its not a badly managed company; just delivered record results with no debt and with approx £5m cash.
The share price just reflects today's market where all AIM share are hammered due to sentiment - private investors cashing in assets to pay for bills etc. Clearly if this was taken over tomorrow it would be worth 200p+
And the reason you hang around here is simply to buy cheap shares, then sell into more good news i.e.contract wins etc.
So stop playing the "disastrous company / poor management" twaddle, it gets very tedious.
RNS Reach - a major telecoms business have renewed contract worth over £980k with Shearwater for the coming year.
Unfortunately can't read the link without a subscription.
I listened to the Shearwater Investor presentation a few weeks ago and the ex GCHQ Director explained very clearly the threats of cyber security and particularly how this has ramped up with the Russian war on Ukraine. SWG also made it clear that they are recruiting MORE people due to demand for their services in recovering IT systems following cyber attacks. I guess there's lots of similar businesses in this field, all competing against each other - but its a massively growing market and companies, corporations, public service providers will happily pay a high price to keep their IT systems safe and use specialist outfits like SWG to recover their systems after attack.
Read in to that what you will. I have not looked up this company but the article says that they were not cash flow positive.
They offer rival services to Pentest, and other SWG companies without looking in to it too deeply. At least at SWG there is cashflow and it appears to be at least b/e.
https://www.telegraph.co.uk/business/2022/08/29/cybersecurity-start-up-chaired-former-gchq-chief-lays-10pc-staff/
Like most small caps, there is little liquidity. This ain't a trading stock. The company is strong with good multi year contracts and balance sheet . Buy, throw in the bottom draw adraw review in 12 months. It will either aquire or be aquired. My only gripe is the company does not sell itself to the market. SP should around £2. But you could say that is the market opportunity...
I have not noticed any traction in the small caps for cyber security. While there have been a few buy outs of larger caps, I would not say the sector is on fire. If I am missing the company's that are re-rating 5% a day, please let me know, so I can pile in ASAP. I think that is the problem here, the sector is out of favour for the smaller caps.
I dont see anything wrong with the company, all the financial metrics are going in the right direction. The recent CFO buy mitigates the risk of a raise for an acquisition. I think it is just no one is interested. This is what it felt like investing in uk gas last year by the way.
i have to agree with Pinocchio on this one. I am in here at around £4. I can afford to hold on and see if I can get some money back but when I hit a target i am out. All the fundamentals look good but something it not right. Every time they release something the share price goes down, every time someone sells the price goes down and then no one wants to buy
Good to see the CFO almost quadrupling his holding! Not eactly a huge purchase, but I find any CFO share purchases encouraging, since they're generally by far the poorest paid exec directors and don't usually have independent wealth - and of course they're closest to the business (in theory anyway):
Https://uk.advfn.com/stock-market/london/shearwater-SWG/share-news/Shearwater-Group-PLC-Director-PDMR-Shareholding/88898373
Yeah, I'm hoping he will buy in small tranches as share price rises - just to keep pushing the price upwards to fair value
Had a nose about, he has 25000 options due in 2025, but not many shares considering he has been on board since 2018.
Still it shows that SWG must be good value at this price, since he has waited for the opportune moment. Maybe we will see some other buys over the coming days?
CFO buys 5000 shares at 120.45p. Hopefully he is buying in small tranches and this will be the first of many!!