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So much for my lowball limit bid! I am now chasing it in an effort to buy more and gambling that today's biggish jump will persuade a few to take a profit!
So we have a business that was valued at c.550-600p per share pre-Covid when it was investing in 141 new cases per annum, vs a business today trading at 75% discount to that value which is investing in 359 cases(>150% more that 141).
In between those numbers is a justified crater when market shut down for 2 years and a more prudent rebasing of live case values (so arguably the value of the 359 new cases has more upside available than those 141 cases pre-covid).
They've invested ahead of time to take advantage of an expected significant upshift in case load - big tick.
Profit today is partly an irrelavance as the valuation metric here is plumbing in 1.5x more turover above a cost base which has increased maybe 0.5x?
Would be a 900p share in 2019 market. Food for thought.
Current AIM / sub-FTSE 100 markets are at an all time low. They won't remain in the doldrums forever as fund managers seek out value plays.
P.S. - there is a reason FoMo's post was deleted. Even if its true hes spoken to an IP client of Mano, that would be smilar to me making a sweeping assumption that Sainsburys were going to report terrible results because I found a few grapes with mould on in my last shop. Unless the news has come from their CEO, senior management or direct banking partner (which it won't, as if it did they'd be prosecuted for giving out insider information), its best to base any assumptions on what the business actually reports.
Well said Littlejimmy. I saw LSE took his initial post down pretty quickly so I presume their libel unit was onto it pretty fast. Others should report it, as I have done. As you say: utterly despicable abuse.
On a more positive note: I see someone on another board has reported a Canaccord analyst saying this morning that Mano “could be one of the best recovery plays in financials through 2024”.
I thought it was an excellent update. Very much in line with Hardboy’s really superb post below from a few days ago below. If only these boards had more intelligent comment like that and less horseplay from idiotic types like FoMo.
Fomo's despicable "from the horses mouth" nonsense is tantamount to market manipulation. Please note that his words are not to be trusted going forward.
I see no reason ( other than AIM being on it's backside) that MANO have halved. The trading update reads very positively for the future. Anything under 200p is a steal imho
Today!
If this adds another 6 months of uncertainty to this share, that would be a massive bummer. When will it end?!
I’ve just rewatched the webcast where they discuss this, and they seem very confident that such actions would be unsuccessful. So maybe this is just someone having a punt? Or maybe some precedents have come up that make Manolete’s confident stance in the webcast more doubtful. Impossible to say without an update.
https://www.manolete-partners.com/news/view/webcast-manolete-s-md-mena-halton-talks-with-nti-s-neil-taylor-the-issues-and-solutions-with-paccar
....and a look at my existing holding -down 50%- I have stuck a lowball limit bid on to possibly increase my holding by 50%.
Don't expect it to hit my bid!
Reopened not yet resolved
Fomo, is your information suggesting that cases are being reopened, or that cases are being reopened _successfully_?
Thanks again
Thanks for that, FoMo. Also tommy15. But cannot believe this is solely responsible for the massive drop in SP. Mind you, no Director buying in the recent past probably does not help!
“ The Board considers that the prospect of any party seeking to re-open a previously completed Funded Case as highly remote”
Fomo I assume you mean this bit?
Oldbutnowisa
Trying not to get the post removed again, I referenced penultimate para in 1st August RNS re PACCAR judgment and that I am told there is some activitiy that might be considered inconsistent with that statement.
Hope you get to see this before its removed by whomsever doesn't want transparency.
Fomo, must have removed whatever you said here rather sharpish as I am on LSE at least 4hrs each day and never saw it. Shame as I have quite a few MANO thanks to averaging down! Thinking about taking another load, but am worried now.
Tommy. Perhaps we'll get an update as someone has removed my post. What I said was and remains true.
Horse's mouth.
Thanks FoMo, very interesting.
Mind if I ask how you had this confirmed?
This could go a long way in explaining both the price movement and the delay to the TU
Jom, I appreciate you taking so much time to explain why you don't like a share. Most people would do the research, decide they don't like it and ignore it from then on, and it is always good to get some counter analysis on these discussion boards.
I wonder though how much research you've done. You say "I can’t see that this stock has ever really performed." One of the first things most people do when analysing a share is look at the price graph. If you had done you will see they launched at somewhere round 150 (can't remember exactly and can't be bothered to check) and with 18 months it was around 540. 170% increase p.a. If you call that not performing, please point us in the direction of shares that have performed. Business was going well - sales, profits and case numbers were all growing nicely - then came COVID. It will take some time to recover from that blow, but in fact it has given them an extra income stream - looking at all the Government Grants handed out during the pandemic which were received fraudulently or at least incorrectly. And it has also increased the market - lots of business kept going for 2 years when they should be insolvent.
I'm excited about the huge potential this share has. I'm concerned about the drop in share price, but if business is continuing to perform as management predict that should be rectified with the next update.
I think "smoke and mirrors" is unfair. The business model is fairly simple: Mano buys a case for £X, does £Y worth of work on the case, and settles the case for £Z(X + Y). The multiple Z is typically 2.5; the typical time taken is 2 years, so the ROI is ~125% - i.e. very good. The limiting factor is the money they have to invest in cases; the fact that income dried up over Covid was bad not because it affected the numbers for those years (although of course it did), but because it had the potential to shift the growth curve backwards by several years. The borrowing from HSBC and the lack of dividend are both plugging this cash gap which they need to invest in new cases and drive the growth train.
If this share isn't for you, I totally get it. It has performed badly for the last few years; there are risks involved (as evidenced that despite the supposedly strong ROI they have yet to really grow); the accounting model is weird; valuations are hard. But in my opinion, the business model is real, the returns are real, and _most of_ the reasons for the poor performance of the last few years are now behind us. (I say most, because it remains to be seen how the interest rates will affect things; apart from anything else investors moving to safer cash is likely to affect the price; that's yet another factor to keep an eye on here!)
Re "impotence". I take your point here, but insolvency litigation is a large market of which Mano has a small portion (in particular, they have a small portion of the CFA portion of the market, which they are trying to tempt to their funded approach). There is plenty of room for them to grow into, so their inability to create a market for their product out of thin air isn't a big concern IMO.
Also, they do have a lever to pull, which is to be less selective in the cases they invest in. They currently proceed with about a third of enquires made of them; they could dial this up higher - this would be equivalent to a producer of a tangible "widget" cutting prices - lower margins, higher volume. Better business model? Not my call to make; the point is that they do have that option.
"1 to 2 shares every day" - I'm no expert on the nitty gritty of the markets, but I imagine this could be people buying/selling into funds that hold a small amount of Mano, where a small purchase/sale of the fund triggers a teeny purchase/sale of Mano? Maybe it's some kid playing with a toy investing account? As I say, selling one or two shares a day in an attempt to inflate the price is empirically not working, and seems like a pretty weak strategy to run that scam, so I'm not too concerned.
Interest rates / discount rates / NPV - yeah I acknowledge that this is the tricky bit. Mano's accounting model is unusual (and I completely understand if people want to avoid it for that reason; I've got my head around it and made my peace with it), which has made traditional valuation systems hard to apply. I think Mano has also been heavily penalized for not growing at the rate that it initially promised, which I believe is mainly due to Covid and the government completely shutting down their business. While rising interest rates affect the NPV calculation, a) this doesn't capture investor sentiment (which I agree has not been a friend of Mano, but that can change), b) who knows what the rates will be a year from now, and c) higher rates are likely to expose more cases of fraud, and be good for Mano's business. Figuring out the overall affect of higher rates is not trivial here.
I’ve only posted once because I’ve never even thought of investing in a “countercyclical” way.
The deeper I dig into this idea the faster I go off it.
The 4% wasn’t really a direct comparison from a holding perspective but it would certainly influence some institutional investors who may be obliged to pass on a guaranteed rate to their holders / or see their funds redeem.
I’m looking for a lot more than that but I can’t see that this stock has ever really performed.
1 or 2 shares that are being bought almost every day are a serious worry. I just don’t know why anyone would do that. Anyone got an idea why someone would be buying 2 a day? Anyone?
Then there’s the composition of a plc itself and how its share price is arrived at.
Firstly you’ve got sentiment, and this is really quite intangible. For other stocks investors may get “carried away” because they’ve done well for decades, or have a fundamentally brilliant product with a massive market.
In this case there’s never been any serious performance, never mind long term.
As far as generating business is concerned they’re impotent.
Nothing is within their control in the same was as it is with a company that has a “product”, you can’t cut the price or broaden the offering / give incentives which would have a large effect on volumes.
They’re entirely dependent on external factors.
So as I’ve said, impotence is the word.
Then you have the second half of the theory about the “value” of a plc and that comes down to assets and / or revenue and profit stream.
Well the only asset that I can see Mano.l having is the future income from its current revenue stream. Does anyone know what that is over the next 5 years? Anyone?
This is also where the base rate comes in because that base rate gives you an idea how you should discount future incomes.
Let’s say that working backwards their cap value is about £80m and that is solely comprised of an nPV on future profits. But there aren’t really any.
In a low interest rate environment you would apply almost no discount to that. But that income is fixed and we now have a situation where this nPV is an awful lot less so even less than no profit. Less than no profit is a loss.
Cold blood terms therefore, the cap value could easily (and should) tank because they’ve got nothing else but a pre defined revenue stream which doesn’t even look like it covers costs in a hugely inflationary environment.
The only one that appears to have it properly valued is HSBC. They’re lending on an asset basis about half of what will probably come in if they sacked all the staff and put the thing into run off.
Apart from that it looks like a lot of smoke, mirrors bs and hot air.
If even a few people woke up and smelt the coffee it would be over.
Wise words from Tommy.
I was just responding to the question about why would anyone invest in this when they can get 4% guaranteed in a bank. When I said treble to quadruple the current share price, I was just working on the fact that it's high was around 540, and within a year the financials could be better than they ever have been. 4% guaranteed v 50-100% in a year with quite a bit of risk. It all depends on one's financial position and risk appetite.
As for the next update - mid November is when they have released their interims in the previous years. Like Tommy I would have hoped for an update between the Finals & the Interims, specially when business could be evolving so quickly. Maybe a quarter 1 or pre close update would have been welcome. Did they say anything at the AGM? (Can't be bothered to check.) With luck the reason they have not put out an update earlier is they have been so busy making money and handling their expansion that they have not had time.
As Tommy points out, there is risk, and things may not be going as swimmingly as my previous post suggests. But we can only go by what the company tells us (& bear in mind there are serious consequences about misleading markets) and the latest communication was upbeat on the future.
I should say, an alternative - and IMO more likely - sinister explanation for the recent price movement is that someone knows something we don’t about the upcoming TU and is getting out while they can. I’m surprised that the TU hasn’t been released yet - it’s seems that in most previous years it has come out by now - and that delay combined with the price movement does have me concerned. But then again AIM as a whole is performing badly as PIs move their money into safer cash accounts, and possibly took a hit when Sunak hinted at the removal of IHT. And Mano’s price is levered due to the small free float. So who knows.
If it was me, and I was considering getting in, I’d at least wait until after this update. If it’s good news then you can get in to a promising counctercyclical business at a good price; if it’s bad then you dodged a bullet.
Personally, I’m weary of anyone with just one post. Smacks of an alias.
In addition, I value companies on their future prospects as a business - not on their share price. I couldn’t give a nat’s if the SP has tanked. It just means I have somewhere to allocate my new funds.
I broadly agree with Hardboy, although at this point I’d settle for less than a 3-4x gain!
In particular, I don’t think there’s anything sinister about the price movements and the sales. If this was 2 actors attempting to prop the price up I think they would have done a better job of it! The much more likely solution is that someone with a large position wants out, there aren’t many buyers, so they are selling it in chunks that the market can (sort of) absorb. To state the obvious: neither a large holder wanting out nor the lack of buyers is good news, so I’m not being rose-tinted here - I just think genuinely poor performance is more likely than fraud in this case.
I’ve written a few times about why this share has failed to be countercyclical as many would expect. The short answer is that it has been buffetted by bad news (the government literally shutting down its entire business during covid being the obvious one) and as hardboy says there is a significant lag between malfeasance happening and Mano reporting a profit.
For me it’s all about this next update. The previous update seemed to signal the turnaround that we’ve been waiting for, with everything pointing in the right direction. The next update will confirm whether this is indeed the case. For me it’s been gut-wrenching to see this share lose 25% of its value in the month running up to what I hope and expect to be a positive update.