The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
SGREEN - Those CEOs understood that a tightly held share float meant a higher growth rate of book value per share / earnings per share over time...provided the company continued to post higher earnings figures over time. When we buy shares, we are in fact buying claims on the earnings of the company.... The lower the share float, the higher the earning per share/book value per share. I still stand by my position. I will take step back and watch this debate from the sidelines should it continue...
@Mr Buffett I would say the company is currently worth about $300M to $350M USD or about 10 times sales mainly due their IP, technology leadership, and the various applications of the technology.
@EyeTracking. I appreciate your perspective. There is a lot of truth in what you and most others said. Fundamentals matter greatly. I still maintain share free float matters greatly as well. Have you ever read the book titled "The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success" – October 23, 2012 by William N. Thorndike? If you have not, you should. Book summary from Amazon US is included below. One of the common traits the profiled CEOs had in common was their understanding that free share float does matter and as such they seldom issued new shares but aggressively bought back shares when the company was undervalued. Maybe I did an awful job conveying my thoughts on the importance of a small free share float. If you ever read this book, you may get a better understanding of my stance on the topic.
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In this refreshing, counterintuitive book, author Will Thorndike brings to bear the analytical wisdom of a successful career in investing, closely evaluating the performance of companies and their leaders. You will meet eight individualistic CEOs whose firms’ average returns outperformed the S&P 500 by a factor of twenty—in other words, an investment of $10,000 with each of these CEOs, on average, would have been worth over $1.5 million twenty-five years later. You may not know all their names, but you will recognize their companies: General Cinema, Ralston Purina, The Washington Post Company, Berkshire Hathaway, General Dynamics, Capital Cities Broadcasting, TCI, and Teledyne. In The Outsiders, you’ll learn the traits and methods—striking for their consistency and relentless rationality—that helped these unique leaders achieve such exceptional performance.
Humble, unassuming, and often frugal, these “outsiders” shunned Wall Street and the press, and shied away from the hottest new management trends. Instead, they shared specific traits that put them and the companies they led on winning trajectories: a laser-sharp focus on per share value as opposed to earnings or sales growth; an exceptional talent for allocating capital and human resources; and the belief that cash flow, not reported earnings, determines a company’s long-term value.
@SGreen - When I am looking at a company as a potential investment, I do give consideration to the share float. Ideally, I like for the share float to be below 250M when this investments target is a small (nano) cap. The only reason I took a position in SEE has to do with the fact that the company is severely undervalued. Now if over 80% of the share float was held by II, I would not not care much about it because I know II don't buy and sell shares on a day to day basis. I am hoping for a share consolidation before the company starts to fire on all cylinders. This way there will be not too many shares available for sale in the open market when SEE becomes a stock market darling.
Believe it or not share float does matter simply because ...all things equal, the price per share is affected by the economic principle called Demand. Companies with outstanding financial metrics and with a low share float tend to enjoy premium valuation because there aren't "too" many shares available for sale on a day to day basis. The foregoing is the basis of my dissatisfaction with the 3.4B shares count at SEE. I do however respect any opposing view.
@Wilson63 - You are right. 3B shares for market capitalization of 100M Pounds sounds even more awful.
While news development pertaining to the Fovio/DMS/Automotive business generates lots of excitement, I hope people realize SEE's bread and butter business is/should be the Fleet business. This can be explained by couple of facts: revenue within the fleet business is recurring, the margins on the Guardian subscription are high (+65%), revenue growth within the fleet business is not dependent on new car design wins (there are over 50 millions trucks/Buses on the road as we speak and they are waiting to be fitted with Guardian), and the product is targeted at people who drive trucks/buses for a living. The sales cycle in the DMS/Automotive division is rather lengthy ... probably 3-5 years. Without a healthy and blooming Fleet business, SEE will have a tough time making the transition to a company that is consistently profitable. To sum it all up, the Fleet business should be both the company's foundation for and engine of growth until the other lines of business (rail, mining, aviation, automotive, other) mature.
Ken Kroger never understood that. He always thought of Guardian as a way to collect real life data about driver behavior. On the other hand, Paul McGlone understands that everything starts with Guardian. You want proof on the the contrast in thinking between the two men, take a few minutes to watch the Apr 3, 2019 PI StockTube interview they did together. Paul McGlone is good with numbers (financial management), is both strategically and tactically minded, and is very commercially aware. His bio on the Seeing Machines website says the the following: "During his 10-year career at Australian listed company, Brambles, Mr McGlone held operational and corporate leadership roles including President of CHEP Asia Pacific and Group Vice President Strategy, Planning and Innovation. ****He was the **architect of its global growth plan** which resulted in a threefold increase in the company’s market capitalisation******. I think he and Kate Hill (interim chairman) will make a great team. I hope Kate Hill stays on as permanent chairman. She is a former Big 4 audit partner and is currently a partner at venture capital firm. She should be familiar with the kind of challenges that a company of the size and potential of SEE are facing. As such, she may be well placed to provide considered advice to the management team.
Many companies with amazing products/services fail to realize their full potential due to bad/incompetent/self-centered executive management teams. I believe the worst days of SEE are now behind us. I just hope they will soon announce a 10/15 to 1 reverse split of all shares. 1B shares for a company with a market cap of 100M Pounds hardly makes sense.
Anchors aweigh!
I sold all all my MTFB holdings yesterday because I came to the realization that the company failed (willfully omitted) to disclose material information to investors upon receipt of the CRL. The CRL would have clearly detailed the deficiencies within the NDA.
What did GL & Co tell us? They provided us a rather vague explanation for CRL: "The CRL states that the FDA cannot approve the NDA in its present form and indicates that additional data are needed to further evaluate the risk for liver toxicity before the NDA may be approved." Without additional context, the preceding statement is subject to various interpretations.
In retrospect, had we read the statement very carefully, we should have known a new trial would be required. Because the statement says: "FDA cannot approve the NDA **in its present form** and indicates that **additional data are needed to further evaluate the risk for liver toxicity** **before the NDA may be approved**". Options 1 and 2 were never on the table. This is because neither options would have required additional data prior to conditional approval.
From the day the CRL RNS was issued through yesterday RNS, there were various suspicious practices and behaviors by GL & Co that could have alerted us about the impeding disaster:
- The various bogus NRs about pre-clinical collaborations with Universities and Start-ups
- The various NRs providing a play by play account of MTFB's interactions with the FDA following the CRL. As I indicated in a prior post, most US based companies observed a quiet period between CRL announcement and receipt of type A meeting minutes. There may be NRs on other matters unrelated to to the CRL but there will not be any NR/interviews further commenting on ongoing interactions with the FDA.
- The post AGM interview parade by GL to calm investors after the issuance of the AGM statement which in retrospect conveyed that a new trial would be required: "Additional data likely will be required to address the Agency's concern about a risk of liver toxicity, the size and scope of which will determine the specific next steps". During said interviews, GL made us believe that there were still 3 options on the table. He knew all along that only Option 3 was on the table.
-The inconspicuous inclusion of the liver toxicity results of the Assist trials in the annual report (Form 20-F) filed with the SEC in April in 2019. There was no discussion of liver toxicity results from the Assist trials in annual report filed in April 2018 withe the SEC.
There is information asymmetry between a company management and its shareholders (non-insiders). What happened with MTFB shall serve as a cautionary tail to any retail investor. We have to make every attempt to ask all the right questions (whatever they are) before investing significant sums in any company. We have to parse very carefully statements made my management evaluating them for consistency, truthfulness, realism, objectivity, and conservatism.
I am out of MTFB. I took a big math but c'est la vie. Based on all the research I did, this is an outcome I could not have foreseen. Other companies with drugs causing severe but reversible liver injury were able to walk through the approval finish line by either agreeing to a Risk Evaluation and Mitigation Strategy (REMS) or to a label change or to both.
The fact the company elected not to be transparent in its RNS tells me the upcoming trial will be sizable in scope. I just don't see why another trial will be needed . More than 2,000 people participated in phase 3 trials when you combine the Assist and Revive trials. There was no instance of severe liver injury or liver toxicity leading to discontinuation of treatment. That is none that the public is aware of.
Something tells me that the FDA is dead set on not approving Iclaprim. Too bad MTFB is cash poor or else they could have just taken the FDA to court....
Wishing all current holders of MTFB much success with their investment goals!
This is clearly a scenario I never expected. They met with the FDA and still can't clearly articulate what the liver toxicity concerns are and the nature/objective of the clinical trial the FDA wants them to run????? What was the point of the type A meeting then?
@The.Italian - Yeah man! Watching that PI's interview featuring Paul McGlone and KK was an eye opener. I could tell Paul had a better understanding of the strengths, weakness, and opportunities of the fleet business than KK did. Keep in mind, KK had been there for a decade whereas Paul had been there for just about 6-8 months. Too bad I have a good chunk of money tied up in that lotto of MTFB!!!! We shall find out soon if it's a winner! Provided it is, take some profits off the table then reinvest it in SEE.
GLTAH!!!
KK should have been fired a long time ago. Paul McGlone is the right man at the right time to take on the CEO role. I hope he gets appointed permanently. Today is a great day. I wish I had money to buy more shares of SEE.
My theory: MTFB has been in possession of the meeting minutes for at least a few days. Why they have not issued an NR may have to do with a variety of factors including behind the scenes activity and possible follow-ups with the FDA (I happen to think this is highly unlikely.... the meeting minutes should capture what was broadly agreed to between the two parties ... No, the meeting minutes are not going contain any surprise).
This much awaited NR represents a huge in-flexion point for the company. It has the potential to either bring the company back from near death or to send it into a death spiral. I would rather want to elaborate on a positive outcome.
Let's say we get Option# 1 or 2, they will need to outline at the very least: timelines for resubmitting the NDA and when they anticipate the FDA will render a decision on the rNDA, immediate financing plans and commercial plans. They will need to also prepare for the conference call to ensure they come across as having a clear idea of things the market need to look forward to. So a number of things will need to occur concurrently with/immediately after the NR.
Having said all of that, the company poorly executed their post CRL communication strategy. There are a lot of things they could have done differently. More specifically, they should have never disclosed when they would be meeting with the FDA. By doing so, they have created an expectation with regard to the timing of the NR on the meeting minutes. The longer it takes them to issue the NR, the more volatile movements of the share price are going to be. This is because market participants are going to have all sorts of ideas on the root cause of the delay.
PrivateRyan
You are entitled to be FED UP ! At a 30M market cap, why would anyone care about dilution when the company is running on empty??? The current finances of the company don't allow them to have any bargaining power when negotiating deals with prospective commercial partners. Having sizable cash reserves is a very important bargaining chip.
spike912
Your saying: "You can’t read anything into a webcast imo as nothing was given away at all" is tantamount to saying we all have the sable ability to process information which clearly is not case.
Having said that, I do respect your opinion.
Please take a few minutes and revisit the various NRs from the past 3 months. You will find the answer to your question in there.
If we can all agree that MTFB represents a compelling investing opportunity, then it is fair to assume there are probably a variety of IIs that have been giving a close look at MTFB. The NRs and interview parades we witnessed over the past two weeks were likely designed to renew IIs' interest in the company as it approaches its next inflexion point.
The Feb 14 conference call is the only event where MTFB management discussed "at length" the contents of the CRL. Most companies' webcasts tend to expire within a few months. As new and past IIs are assessing MTFB as a viable investment, they probably inquired about the availability of the recording of the conference call. Plus, there is a possibility that MTFB has been gauging the interest level of the II community with regard to participating in an upcoming cash raise. We all know there is going to be a cash raise.
I actually read the transcripts of the webcast over weekend and found the discussions very informative. In retrospect, there were a number good takeaways that you could infer from the conversation just by reading between the lines...
I happen to think Scott is long MTFB but like to take a contrarian view just because he enjoys seeing people getting all bent out of shape because of his eccentric observations. The fact he is a regular on this BB tells me that he is both financially and emotionally invested in MTFB.
MTFB heard your complaints. The recording of the Feb 14 post CRL debrief is available yet again.
https://edge.media-server.com/m6/p/jjvp5uks
Yanks are relying on the commentary provided within this BB to get to that conclusion. There have been various posts on here referring to some 3 day rule regarding how long AIM/LSE quoted company can withhold material information from the market.... Have yet to see any official language on that ...