Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
https://www.prweek.com/article/1590944/newgate-advises-investment-firm-planned-750m-thomas-cook-package
Guessing this is an Asian client of theirs? Fosum.
https://www.bbc.co.uk/news/business-49013571
Interesting piece by the BBC suggesting many Asian companies are being hit hard by this and in turn exports are falling. If this is true for companies IQE supply to then IQE too could be seeing lower order books. Not just from China Trade wars.
Really not sure why the SP is falling further here. Closed at 53.4p. News from US suggests firms can apply for new licences. Albeit mixed signals from the senate.
No change to shorts above 0.5%. (Last change was 21st June 2019.) Suggesting any short action is happening below this. They could in theory use a number of smaller short positions to influence the share here. Had 2-3 larger trades today that appeared to be sell. 500k, 250k and 200k. With volumes of 1-2m or so a day it woud not be hard to cause SP to dip.
Goose posts are getting a bit tiring now. No need to rub it in here. Many investors have lost 10's of thousands. Directors also lose when the SP falls. Their bonuses are based on meeting certain targets. It's likely many are not meeting the targets this year.
Pretty sure IQE will recover. Market conditions have hit them for 6 lately. Sooner or later the maket will recover as new innovations hit the mobile market. In mean time pressure till H1 results.
The video from Edison I posted 2 weeks ago. No new comments from Edison since then.
Interesting quote from Herald Investment management 2018 yearly report.
'11Herald Investment Trust plcAnnual report & financial statements 2018There has been a wide divergence in performance between stocks. A few have disappointed at the trading level, while others have just been de-rated. The subset of the technology sector that has experienced downgrades has mainly been exposed to volume markets, such as mobile phones and automotive. This has hit the semiconductor sector in particular where increases in capacity combined with lower growth in demand have led to price cuts and margin pressure. This has affected holdings such as IQE and BE Semiconductor Industries, both of which performed outstandingly in previous years. We had reduced our positions, but not enough. However, the appeal of the sector is that it is not homogeneous, and in all markets, there are some that grow. For most of our holdings there has been no discernible weakness versus expectations.'
Further quote.
'UKThe UK portfolio declined 8.7% on a total return basis. The two worst performing stocks were IQE and Bango, which last year were the best. In 2017 IQE appreciated £29.8m and in 2018 it declined £11.5m. Fortunately, we had been aggressively taking profits on rising prices so that during 2017 we had realised cash of £19.2m and profits of £15.3m, and a further £5.1m of cash and £3.8m of profit in the first quarter of 2018 in 27 separate trades, albeit offset by an investment of £2.9m to support the fundraising to ensure they could invest in additional capital equipment for demand expected from Apple. The level of expected demand from Apple has reduced, however, and so has IQE’s share price. The business remains the world leader in manufacturing compound semiconductor wafers, and now has a strong balance sheet. These wafers will be used in the forthcoming 5G phones and infrastructure,
and we expect the demand for VCSELs, which are used in the iPhone’s facial recognition product, to grow albeit at a slower rate now that Apple has demonstrated that the market for £1,000 smartphones is more limited than hoped. As a user I am a convert to the belief that facial recognition will be more widely adopted, but the overall phone price must lower, and it will do so as component prices such as DRAM fall. As an investor focussed on smaller companies in the supply chain of large companies such as Apple, it is evident that it is brutally tough in requiring the supply chain to build capacity in excess of any potential demand, and then subsequently has the whip hand on pricing. '
Looks like they provided 2.9m of the 90m fund raise IQE did. They are down 11.49m in 2018 on IQE. So production increased on a shrinking market.
Itaconix From 4.5-2.5p now. They hold 11.2%.
Tissue Regenix Group plc (TRX) 13.1% stake. Was 6p now 3.8-4p. Woodford has dumped about 4% of his shares in this group. The share was over 10p a year ago. Woodford reduced on 08/07/2019.
Diurnal Group plc (DNL) - Started year at 21p surged to nearly 50p Now at 28p. up 3-4M. Albeit the share was 170-180p in July 2018. 43% stake!
So the H1 results will have a big impact from Woodford dumping shares. He does seem to be doing it gradually. He seems to be focusing on what he believes to be worst performing stocks? I have no doubt he is still selling IP Group stock too. As share is drifting too. I have tried to list all the PLC stocks IP group have.
Modern Water Plc (MWG) - Down from 8p to 1.8p. IPO has 15% stake here. Sitting on a 1.2m loss this year.
xeros technology plc. As of Dec 31 they held 15.9% Plus 1.7% in IP venture fund holding. Now at 10p. Sitting on about 4.7m loss here for 2019.
Applied Graphene Materials plc. 38p now at 32p. Recovered quite well due to some recent news. 16% stake here.
Intelligent Ultrasound Group Plc - Surged on recent news. 7p to 11p. (Albeit in 2018 it was higher than this.)
Mirriad Advertising Ltd (MIRI) Trading 14-15p. Surged heavily due to some recent news. It was 15p or so in January.
DeepMatter Group plc - Trading 3.2p. Surged to nearly 5p in Jan. Does seem to be climbing overall. 10-20% up.
hVIVO plc - Down from 30p to 20p. 1,3m loss.
Avacta Group plc 30p in Jan. Had surged to 45p but now at 27.5p.
Ceres Power Holdings - Seems pretty flat.
Sure there are others. It's their top 20 holdings which could be key here as many of these holdings are worth under 10 million. It's then a case of what they value the holdings that are private. Be interesting to see what deals Woodford does to exit some of these.
Overall I can't find any investment from these that has surged over 20-30%.
Actual Experience plc - down 25% since Jan 2019. Sells today at 150p
Ceres Power Historical Charts - Slightly up. 165-169p. Up 4p.
This is part of the issue here. Many of their top 20 investments are private firns. So you can't see what they are truly worth. Of their top 20 investments only 2 appear to be on stock market. Woodford is involved in too many of these. Which suggests many could be over valued.
The share price was circa 50p in Jan 2019. So it was worth 186m. 7% is worth about 13m. So 4.69m now. So 8-9m loss this year on their investment.
You have not understood that RNS. This is IPO reducing their stake in Circassia Pharmaceuticals. Can you blame them? Share price was 300p in 2016. Now at 17-18p. You can bet IP group have lost nearly 80-90% of their investment here. Pending on when they were first involved. They lost 14m on this group in 2018. I am guessing these losses are much bigger now.
If the firm was worth 335m at start of year it's now worth 67m. So a 32m investment is now worth 4-5m. They are selling these shares at a huge loss. Woodford is involved in this firm too and holds nearly 23-24% of shares. He is sitting on a big loss too. This company has a lot of stale investors.
There is a reason IP Group is down to 70p. For each good investment they seem to have 1-2 other bad investments. They are yet to find an investment that will make them billions. For me Woodford has far too much influence on I Group and it's other companies.
Big issue here is Woodford. Plus Invesco. Both heavily invested here and very much linked to eachother. Woodford problems will supress the value of many firms that IQE is invovled with. Including Oxford nanopore where he has a large stake. This may in turn affect the H1 results as many of these companies values could be lower. Which in turn reduces the value of the IP Group.
Interesting Woodford has been selling here reducing to 13.41%. Might explain the depressed share price here. My guess is he will continue to sell to release capital in his funds. Unless he can find a buyer to take out his position here. Hopefully he will just top slice.
The value is determined by demand. If they can increase orders hugely and ramp up the Welsh facilities then maybe this could take off. They have some interesting technology in the pipeline but right now they need to just show they can make a profit. At present any capital expansion is dead in the water. Plus they lack the funds for this without building up debt.
In terms of Huawei. Has much really changed? Is Huawei still on the blacklist? I doubt much has changed. Doubt IQE will really comment on this till the trade issues are cleared up. What company is really going to risk starting production to find out the US would block it? Risk invovled is huge!! This also explains retrace to 60p.
https://www.phonearena.com/news/U.S.-companies-still-not-allowed-to-sell-supplies-to-Huawei_id117259
Directors have no reason to buy shares. They are given million of shares by bonus schemes. Dr Nelson already has 28.5 million shares. I suspect any rise from their buys would soon be shorted unless they can justify they are finally turning the corner here. Any token buy would look silly. Why buy shares after such a terrible RNS?
Right now just turning a profit is the first goal. Jam tomorrow!
Share went up to 60p based on market strength from a low of 45p. Same for jump to almost 69p as many seemed to think share had gone down too much. Mainly based on Trump news. However we are yet to see how quickly firms start offering new services to them? There is still some risk what Trump may do even if they do decide to resupply Huawei.
Long term if IQE can expand production hugely then you would think profits should start to surge. Pending on margins.
I wonder if they may show a loss for H1. Which could be what shorters are waiting for.
Video below where Mr Pullen answers a string of questions. Suggestions as volumes come margins should improve. Plus more possibilities for their products in 5G. Have a listen.
https://www.edisongroup.com/edison-tv/executive-interview-iqe-2/
https://www.bbc.co.uk/news/world-48810070
Looks like Trump just reversed the ban on Huawei. Do IQE now reverse all changes and shift production back to the US? I suspect many of the changes will now stay in place. See what happens. Many tech firms will still be very cautious here.
'And at a subsequent press conference, the US president declared that US technology companies could again sell to China's Huawei - effectively reversing a ban imposed last month by the US commerce department.
The ban prevented US tech firms from selling to Huawei, crippling the Chinese firm's ability to get critical American technology to help it make its products. '
It's T Rowe Price that is still buying. Increased their overall holdings by 0.46%. They have loaned out 0.61% of their shares. Hence why shares not loaned out is now below 13%.
No move on shorts here above 0.5% excluding the above.
Hard to know where this is going. I kinda expect Oppenheimer to do an RNS to say they have bought more shares. Clearly some funds think this has gone too low. That or many shorts below 0.5% have been closing? Been very little movement in shorts above 0.5%. Unless Blackrock cleared out completely?
Maybe many of the funds investing are treating this as a short term issue and thinking long term. We are getting back to normal volumes here since the TU.
As Scamp points out you don't want to be burned when another shorter or seller kicks in. This share has a habit of surging ahead 15-30p to come crashing back down. Anyone who had guts at 45p could of made a small profit here.
RNS also had this.
'As previously indicated, it was announced at the AGM that Dr. Godfrey Ainsworth retires as a Director of IQE plc.
On behalf of the Board, IQE CEO Dr Drew Nelson extended his thanks and gratitude to Dr Ainsworth for his loyal and dedicated commitment to IQE over many years.'
So maybe time to hire a business person to replace him.
Taken from ADVFN
'There was plenty of charm by the directors and a positive presentation from Drew Nelson. T Pullen provided a explanation of Friday’s news and the take away is that IQE are transitioning from a US to an Asian supply line. Also there are no plans for another fund raising but to increase the HSBC credit facility (not because it’s needed but just prudence reasons)TP expects growth to mean IQE will be positive cash generating but no timetable was given. There is also no plans to leave AIM but will consider if growth determines . Recruitment for an investor relations persons is ongoing but no appointment is close.'
Shorts are down to 8.07%. Blackrock reduced by 0.18% on 21/06/2019. I guess others could still report tomorrow? Seems unlikely. So many shorts below 0.5%. 55-60m shares can't all be private investors? There are close to 120m+ shares on loan.
More details have emerged.
https://www.edisongroup.com/publication/supply-chain-issues-intensify/24463/
Predicting debt of circa 15m in 2019. Which would make expanding production a bit harder.
Lots of talk about destocking. Edison of still modelling 40% photonics growth year on year albeit from a lower level. They still predict IQE should win some new customers in this area.
Right now I can't see any dividend coming here any time soon. You first need profit. Secondly most profits have been ploughed into capital investment. Welsh hub!
I wonder if there will still be an AGM statement? See what tomorrow brings. Maybe a new hire?
The heavy selling this morning appears to have slowed and the SP has recovered slightly. Perhaps volumes will gradually return to normal now.
No news on IQE short positions above 0.5%. Either none have reduced or they are really slow reporting.