Recap and thoughts18 Feb 2024 10:10
I've said it before and I'll say it again - you need a combination of three things to get rich investing; Be smart, Be Patient, Be Lucky.
Time and lack of updates is not a concern here at all; MMAG are in an 'offer period' and takeovers or MBOs take time
80% of shares remain in the same safe hands in which the resided last year; the vast majority have been in the same hands since the IPO at c£2. (A large chunck of Schroder's holding was acquired from Liontrust at a lower price)
The number of shares in publich hands was abour 6% before xmas and now up to 20%; most of which have been bought between 9p and 14p.
I firmly believe that any share price movement at this level is irrelevent for the 80% in sticky hands; the movement is more the smaller public holders who have bought recenty (at sub 20p) or in the last 12 months for anyything between 20p and 40p Increasing or decreasing the price by a 1-3p is quite material and likely to tempt a few into selling or buying.
I'm sitting tight and rememberring all the reaasons why I bought shares here:
- The decline in share price is overdone and is currently 'priced to fail'
- Whilst hard to find direct comparisons for what MMAG may be bought for - there are some similar candidates that have sold for £50 to £150m
- The company has emerged from a challenging two years with stong H2 performance in which: (1) It reduced net debt, (2) grew EBITDA 15% in 2023, (3) Grew Revenue from Consumer Tech by 7.5% in H2 (important as this is their future - as opposed to the CDs/DVDs) and (4) Demonstrated their ability to pivot and adjust their sales mix to manage cashflow to stay comfortably within its Bank covenants.and more rectly (5) We saw new investment from a very successful local entrpreneur who took 1% at 11p in one foul swoop and followed up last week with another 0.5%.
They have not failed - they have momentum from a strong H2 and record black friday
They remain in an 'offer period'
The current share price values the business at just £10m - bargain basement. This is a good business and with a bit of tinkering and when in the hands of someone with deeper pockets it will thrive IMO.
I think there is lots more that can be done to sweat their assets, I believe there will be significant opportunity to reduce Admin costs, Interest costs are expected to come down this year. Finding just £10 per device transaction would go a long way in making MMAG ore profitable.
Nulla nuova, buona nuova
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