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I'm really just recontinuing my short from 260 to 119 that I closed a few months ago.
Hyndesight is a wonderful thing in this business.
Most people would love to trade in and out at peaks and troughs, if they did they be very rich.
I'm a trader, not someone who cuts and pastes huge chunks from company reports on every post.
I win some, lose some, that's the game.
The idea is a big win can set you up for life.
AWE is on the run and I'm chasing it down.
Cheers
Barcap
Hi Barcap I'd wish you luck with the additional short but I'm heavily long so I won't.
Instead I'll hope your overall judgement is as poor as your timing. If you'd done this a week ago you'd be well in the money at this point (or at least mitigated the original short).
I'd like to think that the hyper scalers who have entered into what are likely to be mission critical collaborations with AWE have backed the right horse.
Who knows. Time will tell.
Ooened an additional short after the open today
Barcap,
Please don't take my posts personally. They are never intended to be personal.
I don't believe I have called you any names or made any insults?
My bother is that you are in the habit of making claims without backing them up with any real substance.
I will always respect anyone for having opposing opinions but it helps when those opinions are supported with some solid reasoning. Then there's an opportunity for decent constructive debate.
I mean saying things like "Maybe it's difficult for you to see the wood for the trees" might be an opinion you have on me, and that's fine, but it doesn't help anyone. I'm happy that you have enjoyed the chats.
I can think of several convincing and seemingly sensible reasons as to why the market has punished the stock price following the interim results. I can also counteract them with equally convincing reasons why the market has overreacted and got its judgement wrong. I always try to look at a situation from opposing ends before arriving at any conclusions. At the end of the day the market is an unpredictable playing field but usually given time and patience it will eventually value the company on its actual performance.
AWE is still in its consolidation period as it continues to transform the acquired companies and develop its connectivity products. Three major acquisitions in a short 18 month period was always going to have its challenges (some of them clearly not well anticipated by the company) and as a consequence we are seeing the inevitable price volatility. Another 12 to 24 months I expect it will be much clearer to see if they are delivering in line with their 2023 & 2025 guidance figures.
ShearClass,
In regards to your comment about capitalised development expenditure:
As the acting CFO said in the investor call the $24.7m R&D capitalised expenditure relates primarily to the staffing costs involved with the Opto-Electronic products that are being developed for 2024. It was zero the year before because they hadn't started this product development work by end of 2022. Banias labs wasn't acquired until October 2022.
This is an entirely legitmate cost to capitalise and it isn't going to repeat once the product development is completed. By this year's end you can expect this amount to easily exceed $50m to $60m in total. This product development is associated with a non-binding purchasing framework agreement with a hyperscaler where the expected minimum sales over a multi-year period will exceed $300 million. In the agreement there is a max of 2.5% share capital to vest based on product purchases of up to $700 million.
In regards to your comment about there being no headroom for more large acquisitions:
I think three major acquisitions in the space of approximately 18 months is quite enough to be going on with don't you think? The company has made it clear it has no intention nor need to make further acquisitions to accomplish its ambitious goals. Also, I've no idea what you are on about with YoY comps?
Barcap, in fairness BlueRaphus has a point.
"This company WILL FOLD", "I don't wish to commit libel which is why I'll leave at that" - will not do.
Nobody could take this seriously unless it was accompanied by a detailed support arguments.
The SP reflects that up to this point it was 'too much too soon' for AWE as I'm sure many found out to their cost. They do need to make many parties 'whole'. Maybe you managed to profit from it?
However we are where we are and today the company bears little resemblance to the one that IPO'd.
Going forward they are one very few parties in a market with VERY high barriers to entry that can deliver the type of solutions in custom silicon that are required by the data scaling challenges thrown up by current/future IT. Which is why they have managed to strike up collaborations with a number of hyper scalers (who I'm sure have their own very high 'due diligence' hurdles).
For anyone wishing to understand the company the best source of technical information was the capital markets days earlier in the year (no real registration required)
https://www.lsegissuerservices.com/spark/ALPHAWAVEIPGROUP/events/7aadd13f-2514-47e1-8281-baced5bae5e8
Generally the company is very good at explaining their solutions
https://awavesemi.com/investors/results-reports-presentations/
My negative views have always focused on the directors of this company, not the product or business model.
I don't wish to commit libel which is why I'll leave at that.
This company WILL FOLD.
Just a matter of when.
Cheers
Barcap
Weak response Barcap. You should substantiate your negative view. You become background noise if you can't back up strong headline statements with some analysis.
I think where I've lost confidence is with the worsening financial position and surprise that they have been capitalising significant cost which if had been expensed would have resulted in much lower EBITDA margin. A lot has to be taken on faith here, underpinned perhaps by the rapid growth of the end uses cases. But I don't see why they are so clearly in trouble, as you suggest.
BlueRaphus
I've always been respectful to you and clearly said I respect your views on AWE even though our views are at opposite extremes.
It's a shame you can't recipricate my friend and you are clearly rattled by the AWE performance.
We are here to "argue" sensibly about AWE not to make personal attacks.
I'll leave it at that and let the AWE sp do the talking.
Cheers
Barcap
Barcap,
Your posting history is quite something to behold! Your reputation proceeds you!
Yes you posted your views and 'feelings' on the stock on 30 Jan this year.
Merely 6 points (which you openly admit to being alleged).
Five of which are verifiably false and one which only you could know about as you state to have seen 'photos' of their lab!
You started on AWE with a buy at £3.71 on 24 Sept 2021 declaring you'd done your research and that they look real good or similar words to that effect. You said sit tight everyone don't let the crooks steal your shares!
Even as the shorting campaign was well underway you declared "The Tea Lady says it will close 250p and may get to 260p. Pause before another move up!". All of a sudden a few days after you change your tune!
and declare your short at £2.57.
Your declarations on other stocks don't look great either.
You bought Darktrace at £5.10 on 31 Nov 21. Some days later you declared "This ones quite a long haul!"
Indeed it must be a long haul as it sits at £4.16 nearly two years on!
You bought Kainos at £15.73 on 17 Jan 22 and it never rose after then. Today it sits at £11.59.
You called bottom on Ocado at £9.20 on 27 Apr 22. But the price only kept on falling and today is at £6.80.
On AWE you declared it would be 50p by April!
I didn't buy in to AWE until February this year right around its bottom point.
I have no concerns. Of course there's some risk involved here but a very low probability of them materialising.
Like your view on Darktrace (which I have no opinion on) I'm in AWE for the long haul and I am absolutely certain it will still be in existence and thriving in 2027.
I have just re-iterated AWE from my Speculative to Bargepole watchlist.
Barcap, I would be interested in being spoon fed your detailed viewpoint on why this is a short, also it should also assist in market discovery of the right share price for this company (which will be in your interest if you are correct)
BlueRaphus
I remember doing a point by point list of my issues with this company months ago.
I'm not here to spoon feed so people need to do their own research and take a position.
I shorted 260p to 119p which was posted on here in real time and made me a new quality car.
I opened another short at 112p which has proved painful but ultimately I'll make a good profit.
Everyone to their own.
As said, time will tell but there's more to a company value than just figures and promises for the future.
Maybe it's difficult for you to see the wood for the trees.
People always cite a takeover when prices dive.
It won't happen but their technology will be used in the future but not to benefit of AWE share holders.
The adminstrators will sell it off to pay off debts.
As I said, I respect your views but maybe just open your eyes a bit.
In 2027 AWE wont exist even in takeover mode.
Cheers
Barcap
So far as I can recall, you've never given a basis for why you think the company will go bust long term - other than your view that the management are incompetent for which there is no credible evidence.
What will most likely happen long term is that the company will be bought out and certainly at a premium to today's price if not at a premium to the opening IPO price. This will be well beyond 2027 and more probably in the 2030's.
Happy for you to come back to me at end of 2027 on this one and we can discuss again where you went wrong in your determination of the management.
BlueRaphus
I don't base my negativity on just gut but on how the company behaves financially, honesty, news feeds and dealing with investors.
I listed my views months ago which made me see this is a badly run company.
If people are interested then they can trawl my AWE posts but long term this company will go BUST.
As I said, time will tell, so let's just wait and see.
I respect your posts BlueRaphus so totally respect your view.
We are just at opposite ends of the long v short positions which is what trading/investing is all about.
I wish you well and enjoy our chats
Cheers
Barcap
I think what is interesting Barcap, is that this is where I start off too when I first look at an investment especially for long term investment prospects. You could apply a cynical approach rather quickly and rule it out almost straightaway.
My due diligence process doesn't include 'hunches' or 'feelings' however.
For board of management due diligence, I have a check list with 10 areas for close examination with 3 questions in each area. How does yours go?
BlueRaphus, thank you for your notes on the profit after tax adjustments - I will have a proper look at the 2022 accounts and raise specific questions with the board. It is encouraging that (most of ?) these are non recurring in nature. I will post again should anything further of interest result.
Hi Barcap,
I was interested in AWE and bought into the tech story about high speed computing and nanometers etc.
Thanks for your most recent post though, this is now my first and foremost reason for investing in anything!
"I see investment/trading as being built on a pyramid.
The base of the pyramid is ALWAYS... Do I TRUST the board and are they legitimate."
GLA,
Pedro
Hi BlueRaphus,
We are boh dons at this trading game I'm sure.
I see investment/trading as being built on a pyramid.
The base of the pyramid is ALWAYS... Do I TRUST the board and are they legitimate.
If that comes back as negative, then I would never buy shares in that company and maybe short it.
They can throw all the great facts and figures about technology and future growth they like but without the pyramid base then IMHO it counts for nothing.
I think it hangs in the balance whether your views or my views are the correct one.... But that is what investment is all about!
We'll know by Christmas probably.
Good Luck mate.
Barcap
You're welcome Barcap!
I appreciate you may have lots of experience trading bull and bear markets over the years and I don't doubt you may have mastered a skill in picking the right moments to buy or short on stocks.
I'm not one for identifying stocks on the basis of nasty feelings or sniffing out a bad'un, but hey, good on you if this is what has worked for you.
I 've read all your posts on AWE sometime ago now and your explanations unfortunately didn't pass my litmus tests for sound reasoning. I can however offer plenty of criticism of Alphawave. The major one being that they raised nearly a £1 billion at the IPO of which only £360 million went into the company's coffers, the other nearly £640 million going into the selling shareholders pockets. Clearly they had a set a budget they considered adequate to accomplish the long term company goals but which has proved to be well below what was needed. The fact they had to take out a debt facility to complete all their acquisitions is somewhat embarrassing considering how much they were able to raise.
In reality however, I don't think they had originally planned on buying Banias labs and the decision to do so was a change in strategy arising from the fact they identified an opportunity to capitalise on a particular sector within the connectivity space with the largest anticipated future growth trend and that's in Opto-electronics. If they have got this strategy right then they can expect to bear the fruits from this in about 3 years from now, though they will get some revenue from it starting next year. Had they not made that last acquisition, you would not have seen them reporting an operating loss yesterday. Moreover, they wouldn't have had need for a debt facility.
So the crux of the matter really is whether you believe they made the right decision in acquiring Banias Labs and whether their strategy to develop Opto-electronics based connectivity products was a gamble worth taking. To properly understand why this was worth the gamble requires a good knowledge of the trends and of what's happening in the world of data centres, high performance computing and all things AI related.
Was it a cynical ploy to call it LSE?
People may be misled into thinking it is linked to London Stock Exchange?
LSE seems to have a problem with 'less than' expressed in symbols
Thanks for the reply BlueRaphus.
A lot of useful information and very well researched.
I guess my main issue is your views look very positive but I still have a nasty feeling about this company. I've explained them a few times on here but won't bore by repeatiing.
Having traded through a lot of bull and bear markets I can sniff out a bad'un and this fits this company.
I may be wrong but we'll see.
Good luck with you AWE investments
Cheers
Barcap
Seems to happening. Increasingly their direction is trending towards high spec, high value collaborations.
Todays interim presentation : https://www.youtube.com/watch?v=07A8Bpy4iMM
Slide 11
H1 bookings ($187m) primarily in licensed IP and custom silicon, primarily in less than 7nm technology, mostly in AI infrastructure. 4 design wins in 3mn (involves 2 hyper scalers). The fact that most of the bookings are for licensed IP and custom silicon mean bookings will continue to deliver revenue for years to come.
Slide 12
Addressable market x10 since 2021. Expected to grow by 80% over next 3 years. Uniquely placed with a basket of complementary technologies
- High Speed connectivity
- Advanced Silicon (moving into 2nm)
- Chip design capability (seen as essential for advanced silicon). One of only 5 companies currently with chiplet capability.
- Opto Electronics
Slide 22
2023 guidance : Revenue $340-360m, EBITDA $87m
2025 guidance : Revenue $500m, EBITDA $150m
Other
At the forefront of UCIe seen as an enabler for chiplets, in turn seen as an enabler of shrinking dies, in turn seen as an enabler of AI, hyper scaler operations, etc. 60% (last year 20%) of pipeline is in licensed IP and custom silicon involving chiplets.
They believe their only competitor capable of providing solutions in 3mn with comparable connectivity is Marvell. Other players have point solutions.
Generally they believe that data scaling and AI will drive a requirement for custom silicon solutions. Some hyper scalers (a very few) might have the wherewithal to tackle this in house. Most will not / not have the appetite for this. AWE are uniquely positioned with solutions at the very high end to partner with. They do seem to be in the right place at the right time. There is always execution risk but I'd not be betting against them in the long term.