Member Info for HunSen

Wow Grappa,
you really are selling up the investment opportunity here - what is the problem with some intelligent discussion about company fundamentals and the revolving door board room? I suspect that you don't understand the company you have taken a punt on and you really are gambling.

You may well be better off on the Euro Millions - I wish you luck with both.

Grappa,

I don't do SP predictions (what are you reading)???

I am looking at something called a "balance sheet", it says they company has no revenue , tangible assets (that is real things) worth £400k and intangible (that's not physical / real things) of £9.2m.
The prices I mention are the per share value of each of the above.

My post was to ask about the investment case here after spotting a post from a group I follow on twitter - looks like I won't get a sensible / intelligent answer.

My bad, I just spotted the placing for £3.5m, which would make their new FCF £2.3m or 0.0016p per share.
Am I correct that the placing has doubled 115% the shares in issue (halving their value)?
New Chairman (good), stepped down with immediate effect within a year (not good) - looks like a revolving door situation for the management team - looks very fishy.
Looks like a train crash in slow motion - is there something I am missing?
ALB

Just trying to understand the investment case for this company, they have intangible assets valued at £9.2m on the balance sheet - does anyone know exactly what these are? (normally goodwill, IP, trademarks)? This is 0.0063p per share.
The tangibles are £400k, I believe that is 0.000275p per share.
Free cash flow appears to be (minus) 1.2p per share.
Future development seems to be based on a MoU - where are you guys seeing the upside here?

ALB

Hi DFG,
just read a tweet which brought me to this board.
I don't fully understand and I don't know the company, but you are asking why the share price isn't 1p plus (a 132% increase) based on supply and demand - it doesn't always work that way. Market makers will hold shares on their books to maintain some availability / liquidity.
The spread on this share is high at 4.65%, a sign that it may start to move soon would be this spread narrowing. Sharepad has no target price for this and the fundamentals look quite poor with no reported turnover since 2015 and that was only £3,000. The company is worth £6m and has -£1.2m in cash.
Like I say, I don't know the company but it looks very speculative and it's oil. Being a £6m company, plenty of scope for growth but that comes with substantial risk.
I tend to check who owns shares I buy, https://www.morningstar.com/stocks/xlon/TOM/ownership but there is no data on this company - suggesting no funds or institutions are investing.
I hope you're not in the red for too much on this one - your gut feel (smelling a rat) may well be worth following.
GL

I may be wrong, but I believe one or more mm will be holding a significant number of shares (there is a seller but not enough buyers). Intra day, the price seems to have dropped, but the mm's only need to guarantee this price for 1500 shares.

I have also made a mistake on this company by becoming too concentrated on this stock. I have also made a mistake by listening to rampers on these boards, we are below fair value due to a seller - but we won't be at 70p, 80p or £2 by the year end.

Remember, the share price is well up on the year, many new funds are invested and have built their investment. Chronocort is the key to clearing the seller and moving the price back towards fair value.

I may be repeating myself, but the management team have always made consistent presentations and I believe they will deliver the plan.
ALB

If you extend the "stock overhang" scenario, if a market maker(s) is buying chunks of 50k at 49-50p, this is going to create very strong price support at 50p+ as the market maker would want a profit - he cannot drop the price (we are seeing strong evidence of support at 50p already).
Apparently, one sign of a stock overhand clearing is a noticeable narrowing of the bid-offer spread, currently 2.04%, again, this is due to the market makers running out of stock. This can cause quite a fast price movement. "When mm stock is running low, there will be increased trade between market makers, finally as the overhang clears, there will be a break out as the first market maker is forced to raise his offer price." (Source: Stock Picking for Profit, Simon Thompson).

As for the scale of the overhang, we can assume it's less than 3m shares.

GLA.

Hi All,
it's very quiet here and we continue to see low trading volumes and a stagnant share price. Remember though, the share price has already seen a 72% increase this year and has potential for more next year.
If there is still a stock overhang, I believe there may well be, this will hold back the price as market makers will have stock held on their books and the seller may well have more stock to sell.
If we are in that situation, it may take many weeks to clear the overhang stock (considering we are only making 10-15 trades a day). We seem to have at least one large sell daily at the moment, if the seller has 2m shares remaining, this may take 40 days to shift.
The problem is, these shares are not being brought, so the overhang will still remain but on the market makers books, the market maker will need to maintain an attractive price to sell these shares.
We may need news to clear the overhang, the next significant news would be Chronocort approval in Q1. On the last major news event we shifted around 8m shares in a week, that should clear the overhang and take care of profit takers at that point.

Frustrating as it is, I think the price will be stuck in this range well into Q1 - the business case still appears to be a sound investment though.

ALB

I don't hold this share but have been watching it for a couple of years after attending a Shares event and watching their presentation. I have to admit, I am not very close to this company at all - just browsing the boards.

This is a really useful tool on Morningstar https://www.morningstar.com/stocks/xlon/ORPH/ownership

There are tabs for buying and selling, doesn't look too great to me.
ALB

Hi Rubbish,
good to hear you are hanging in there! Please read the post I just made at the same time as you. Looking at share trades, I don't think there is a major seller (there were only 4 trades yesterday), granted there are a couple of 10k trades today, but that could be anyone.
Either way, I think you are right to keep your nerve and see what the New Year brings.
ALB

I have just started reading Simon Thompson's book (IC journalist) "Stock Picking For Profit" and one of his "golden rules" is quite relevant to DNL I believe;

"Liquidity counts
Always monitor the share price moves of a company and how sensitive they are to changes in daily trading volume. This is important as prices of some companies can spike on very low trading volumes due to low free floats and the substantial shareholdings of a few investors, which limits the number of shares which can be readily traded.
While this can create accentuated price moves to the upside on good news flow, as soon as investors head for the exit, the downside ride can be equally hair-raising."

I think perhaps we are seeing price sensitivity to even small share sales in the absence of news flow. I don't believe there is some huge seller in the background offloading millions of shares.

For those of you interested, Simon Thompson runs a weekly column in IC on bargain shares and runs a successful annual bargain portfolio in the magazine - well worth reading.

GLA.

Hey Rubbish,

it is frustrating, there is a lot going on in the world and UK, today has been quite mixed, the FTSE is flat despite many gainers and fallers. I think people will be looking to value this side of Christmas in the hope of a Santa rally and a BREXIT deal - it's looking very uncertain though.

I think January, perhaps people will start looking for cheap growth stocks with imminent news flow. I don't think we will see much of a price increase without trading volume - we are barely scraping through 10 trades a day at the moment.

As one of the other posters here said, nothing has changed for DNL so no reason to sell.

Hi Guys,
I have just found Ince on a screen I have been running and it looks very impressive. Is there a link to the recent investor presentation? Was it an audio call?
My only concern looking on Sharepad is that company debt has increased, does anyone have some background on this? Sharepad is indicating a big upside, so I am keen to buy.

ALB

Scored,
You also say "Calvine dont care who they are ", they are paid by DNL and if you look at the disclosure...it is paid marketing.

"This publication has been commissioned and paid for by Diurnal Group and as defined by the FCA is non-independent research. This report is considered to be a marketing communication under FCA Rules, and it has not been prepared under the laws and requirements established to promote the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. This information is widely available to the public."

Scored,
It would be great to let us know how you came up with a price of £2. That would value DNL at £276m - more than Metro Bank, Superdry, AA, Bioventix and Sylvania Platinum - SLP being highly profitable, with a 14% fc dividend yield and sitting on £52m in cash.

I also believe DNL has a great future, perhaps I am missing something in how you calculated your £276m market cap? Could you share your method with us?

ALB

The post compares DNL with a similar US company and points out and questions the difference in valuations - the arguments seem very valid.

"Since both drug candidates address the same market, we believe there is no fundamental rationale for such a wide divergence in valuation between the two companies. Admittedly, Diurnal’s European Phase 3 trial failed to meet its primary endpoint, however, the EMA’s advice and willingness to accept a filing for market approval is supportive of a positive decision in Q1 2021."

Calvine (not independent) have a price target of 99p, Sharepad has a similar 94p target.

GLA

Posted an hour ago...
https://www.calvinepartners.com/post/diurnal-and-spruce-biosciences?utm_campaign=34c39342-3c3c-492d-84b2-71608caa93ed&utm_source=so&utm_medium=mail&cid=361b0d21-3561-415f-8921-1bcc20e4c532
ALB

Hey Bazzaman,

great link, thanks. I have never seen this resource and it is very useful. There are a couple of highly rated funds in the list with far better access to good information than us private investors.

Lets hope they have done all their homework!

I think we will need plenty of patience, I don't think much will happen well into Q1. Chronocort is what will make this a profitable company.

The Eton milestone payment may create a little positive news, but what we really want to see is evidence of sustained revenue growth from Alkindi and later Chronocort. The milestone payment should already be in the share price - but news is news and may bring more investment interest.
DNL revenue has grown (from a small base) for 3 years, 2021 is forecast for a small revenue drop from £6.3m to £5.6m, but I am hoping we can exceed expectations and deliver another year of growth - DNL will then start showing up on "quality" share screens (companies delivering growing revenues). Profits will hopefully follow.

GLA

Hi Tomohawk,

I believe the 200 day moving average is around 53.5.

I agree on the IC subscription and I have just subscribed to Sharepad - who estimate a target price of 141p on SLP.

I would also recommend reading Phil Oakley's (IC writer) book, as with you, a combination of the above has made a significant improvement to my decision methods.

Hi Cteal, Foxrod,
thanks for the reply. Seems like a better day today, the spread is 3% though, but we have a rising price (today) on a rising volume - that needs to continue if the rise is to gain momentum. A few people are chatting about DNL on Twitter.
While volume seems low, 66% of shares are with large shareholders, so that means nearly 1% of the remaining shares were traded today.
Hope to see more of the same and a higher close for the week would be great.
ALB