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One thing is for sure, there is a stonking overhang of shares that has come from somewhere. It's 57p to buy, NT to sell. 2 fairly large trades from midday went through at 55.5p, I would guess they are fill or kill sells. I'd say this will get walked down to 50-55p between now and results, after results the rebound could be aggressive if my suspicion around the put option is correct. Time will tell as always.
There has been no change to the listed 204 million shares since the extreme trading volumes of the last 3 weeks. We're all on here speculating, it's a rum state of affairs.
I am not sure if it works that way.
Can the company really issue that amount of shares without informing anyone and dilute the shareholders as well as their own directors in the process?
Also, the companies acquired by Tinybuild ... Yes, at reduced SP, they would get more shares for the money they are due, but as the price is much lower, it doesn't make any difference at the end. If there are many more shares out there, they wouldn't get more rights with more shares either.
Finally, how can these acquired companies bring down the SP without shortselling ( assuming they haven't received the shares yet) ? As far as I am aware, there are no open short positions for Tinybuild. There have never been.
Maybe I am missing something, but it doesn't make sense.
In other words, if this is what is happening, the small investor has been shafted. Investors Chronicle and Questor have both been quiet recently after extolling the virtues of this share.
that is a very very insightful view and comment....very very interesting and think there could be a lot to it.
So in a sense there's more shares, so we've been diluted and onto of that some money being paid out = really not good for us is it. Why did I invest? I've been scalded.
I'm beginning to wonder if what we are seeing is the hedging of deferred consideration via put option contracts or something of that ilk...
They made multiple 'acquihires' during 2021/22 that had a material portion of deferred consideration payable as TBLD shares;
i.e. Bad Pixel on 15/09/21;
"Deferred payments over the following three calendar years will be settled with newly issued tinyBuild shares up to $10.6 million"
Rawmen - 15/08/21;
"The consideration for the acquihire includes both upfront and deferred payments over the following three calendar years, up to a max of $10.2 million, split approximately 30%-70% between cash and newly issued tinyBuild shares,"
Streets of Rogue 08/06/21;
"The consideration will include both upfront and deferred payments over the following three calendar years, up to $6.5m, split approximately fifty-fifty between cash and newly issued tinyBuild shares, subject to certain operational targets being met"
Versus Evil 23/11/21;
"The initial consideration for acquiring Versus Evil and Red Cerberus will be $12.5 million in cash. Deferred payments over the following three calendar years will be settled with newly issued tinyBuild shares of up to $18.8 million[1], subject to stretching financial targets being met. The total maximum consideration is up to $31.3 million."
Konfa Games 22/08/22;
"The maximum consideration for Konfa Games is up to $5.4m, consisting of upfront and deferred payments over the next three calendar years, split approximately in 40% cash and 60% newly issued tinyBuild shares"
I calculate that the maximum deferred consideration payable in tinyBuild shares for these 5 acquihires is £35.8m
There is a clear motive for the sellers to want a lower share price so that they receive a higher number of shares and a bigger share of the company - i.e. the $18.8m contingent liability owed to Versus Evil would be worth 20% of the company if it converted at 40p, vs 7% if it converted at £1...
If this is the case then it would explain the lack of TR1's & the downward share price movement.
That is very reassuring!
similar view here to you Simon...however investor relations have confirmed that it wasn't an insider selling...that is enough for me to be loading up here to be honest. Very few institutions out there who are any good at what they do and could be selling for myriad reasons...however the founders know the true worth of this business and everything in my own research points to this being insanely undervalued now.
Results would appear to be due around the end of March with all the indications that the company continues grow and progress well. However, I remain concerned that we never got an explanation regarding the turmoil earlier in the month. On the basis that the sp dropped by 20% on that day and has remained flat ever since, it would 'seem' that there were not sufficient takers of the sold shares meaning there's still an overhang in the market suppressing the price. I was of the understanding that if someone relinquished such a large percentage of the shareholding that it would have to be announced within a few days. Or does that announcement only have to be declared when the sold shares are eventually picked up by someone else, rather the brokers left with the overhang? There was a 50,000 share trade today....a buy or sell? The graph suggests a sell but who knows? I'm sure ShearClass can elucidate.
I notice that the official shareholdings of the top five biggest investors (including the founders and Netease) have remained the same. Something is a bit odd here. It may be a technical issue but it stops me from adding at the moment.
Interesting point you make about Hogwarts! Fingers crossed for results day. But it can surely only go in one direction.
Good post pdiddy1 which I agree with on the whole, from the research I've done this looks undervalued down here given they own most of the IP behind their games so have a higher gross margin than peers like TM17.
I think when results land on 29th March & show ~$25m EBITDA vs a market cap of £120m it's going to attract interest. For a gaming company with no debt and a solid pipeline to trade at less than 5x EV/EBITDA doesn't make a lot of sense. In fact I think if it stays this cheap it'll be a matter of time before private equity or a competitor take it out.
On Hogwarts Legacy - revenue since it's 10th Feb release has just hit $200m, making it the best performing Warner Bros game of all time by a huge margin. Nothing to suggest people are holding back on game purchasing, although clearly discretionary spending will benefit from an easing in the energy crisis in Europe.
I speak to my circles of friends and family, and generally keep eyes and ears open.... I feel people generally are choosing not to make that purchase of say Hogwarts Legacy at £65...... however, indie gaming market I.e. those like Tinybuild, is still expected to grow. Now, combining that with Tinybuilds cash burn e.g. increased staff overhead I do still hope and think they will issue decent results, even though they said "will be broadly in line". Its not just Hello Neighbour 2 they have released that's for sure! Check the releases out from this year. I do think they will improve in profits and revenue because of their volume of releases recently and have a surprising results day. I also like founder Alex's embracement of AI for improvements in his business. He's taken his business to so many increased levels (no pun in intended) that it will only continue, whether that is kids tv shoes based on his games, and nice future RNS's on how AI will improve his business will only ultimately aid the shareprice to grow, or the other spin offs from the IP they own. All the hallmarks of an improving and growing business.
Thanks for the update Charlie. Please let us know if you hear back from Jaz.
I had further email exchanges with Jaz Salati, head of M&A at TBLD. On the 60 million shares traded on Feb 9, he said 'I don't recognize the 60m number, can you break it down, so I can help you get the correct picture'. I replied that the largest trade was for 7.815 million shares, which alone is nearly 4% of the share capital. I also asked for an update on the company's major shareholders, as the information on the company website is 11 months old. That was on Friday, Feb 17, he has not replied.
They certainly do... Oh and FYI it's 59p to buy and sell today so all trades will show as sells. Dummy trades are from HL.
So we are still none the wiser as to what happened on 8th February . Surely there should have been a TR1 / RNS by now unless all those sold shares are still in the course of finding a home. Shareholders deserve an explanation.
Shearclass......thanks for the insight into the selling/buying scenario you outline demonstrating that some are false sells. I'd be interested as to know how you executed your dummy trades and through what facility. I only ask this as whenever I've tested this a few times over the last week by putting a buy and sell order through at the same time using different platforms (without the intention of accepting) the difference has been fairly predictable at around three quarters of a penny and a penny and has corresponded with the majority of the red and blues on LSE. Admittedly not all but mostly. On a small capitalised share like this on AIM, based on a quiet day, the buy/sell margin is usually likely to be bigger than the one you quoted.
Charlie this is incredibly helpful information....bolsters confidence immensely...not fussed at all if its funds offloading. Large part of investment case is how incentivized the ambitious founder is here.
@Charlie, good work contacting the company & clarifying no directors have sold - one look at the CEO's twitter profile would have told you that though, no chance is he selling at these levels. It's certainly bizarre though given the size of the trades.
@Simon1367, you seem to have fallen into the trap of thinking that red trades = sells and blue trades = buys, this is not the case at all.
A dummy trade 2 minutes ago confirmed that it's currently 59.05p to buy and 59p to sell, so at the current advertised spread of 59-60 every trade will appear as a sell. This is normally done to hold a share price in a set range / prevent PI's from buying (as most do seem to believe the buy / sell categorization on LSE etc, which is almost always utterly wrong.
I am going to send a complaint into the London Stock Exchange, this is shocking behaviour and it is clear that parameter guidelines have been breached. The Guidelines are in place for a reason.
Charlie156 Thank you for your efforts. I would have been very concerned if the founders had sold such a sum.
However I also remain concerned that one is able to trade on AIM such a massive amount of the shareholding and yet a week later we are none the wiser as to what happend and who the new owners of these shares are. Meanwhile the SP has settled at the lower point with a few more people giving up on the share.
Replied promptly
I emailed the company this morning and Jaz Salati tried promptly. They said 'It is the responsibility of the fund crossing a given threshold to trigger a TR-1 release. What I can tell you for sure is that none of the executives has sold any shares, otherwise we would have issued a statement'.
While we await to hear what exactly has happened, no executive sales is reassuring.
completely bizzare!!!!!!! third of market cap traded in one day alone and nothing....mental!!!