Member Info for Koolhead

I think these results will be the turning point. Expect market to cotton in the near future, especially with Canaccord's buy recommendation and 15p target. My 7000 top up up at 7.6 was put down as a sell, so presumably there have basically only been buys today.

Literally spot on. It's now gone from +3% to -5%.

The drop a few days back to 1.20 has acted a classic spring in a Wyckoff accumulation pattern. Coupled with big director buys, the fact that nothing came of the FT article and the auditing delay was nothing to do with AWE's accounts means buyers should soon be in full control. The remaining shorts should be worried. Naya and Tiger played this well but the others could easily get squeezed.

Half the shorts are now closed on this (5% - 2.5%) but it hasn't done much for the share price. I find it hard to believe anyone would be willing to sell at a time when very agressive short sellers are finally closing. Even Ako has reduced their stake a little.

This is a smart move. Presumably a large part of the thinking here is that a physical presence in the US will help get the openfive deal over the line.

Amazing to think that barcap's 'tea lady' could have exerted such a powerful stranglehold over a major player in semiconductor ip. Barcap - in your new role as guru could you put in a large buy and announce a price target of £6.50?

The share price is now totally irrational. Given they still have 400 mill in cash, the company is now only worth 400 mill. If it's forecasts for 2025 are accurate the forward p/e ratio is around 3-4. This is basically valued now about the level of a heavily indebted value stock whose profits are consistently shrinking. You could make a killing buying this now. Whoever is selling at these levels is a complete idiot. Even barcap says he'll buy soon.

I saw it was a UT, but if someone is willing to take on 15million at 1.93 that's a good sign

Just noticed a £15m buy after close at 1.93. That's over 1% of the market value.

I wrote to AWE about the accusations of circularity regarding the CPP and got a personal response from John Lofton Holt:

"On the CPP, we spent a lot of time detailing operations in the prospectus and gave some very exciting details about the CPP (now called “WiseWave”) in our most recent trading update. We will continue to do so as we move forward and execute our quarterly trading updates."

Not exactly a convincing response. My conclusion is that Alphawave is basically paying itself from WiseWave (WiseRoad are also contributing - though when I asked how much he wouldn't say). But, unlike Barcap, I don't think the bookings will fall through. The real question is whether WiseWave can generate enough revenue to justify and keep paying Alphawave for its IP. I personally think it could be a great move setting up WiseWave, but, yes, in the short term, I think the 'bookings' should be treated with a pinch of salt, as it seems to me they're coming ultimately from Alphawave's own cash reserves (via its investment in WiseWave).

I just noticed Barclays reiterated overweight, with a price target of 500, on 20 October, which is a while after the FT article. If this does bounce, and if the shorts start closing, there's potentially a very long way up...

It's also amazing to note the power shorts have over this stock. After the FT article it rebounded from 1.70 to 2.80 and there was a major director buy at 2.55. Since then, every significant fall has occurred after a major new short position. I personally think they're just exploiting fear, uncertainty, and doubt (FUD). They don't appear to have any more negative news to throw at this, but simply by taking out a position they know it'll probably lurch 30% lower! There must be a limit to that, however, and I guess we're approaching it now.

I think we're getting to the point where director fraud is all but priced in. After all, we're approaching 90% of the way from the ATH of 4.70 to Barcap's target of 1.20, despite an increase in revenue guidance. But what if there isn't any fraud? I see much more upside than downside from here. Sure, few people like trying to catch a falling knife, but even if you exclude the China bookings, you've got an absurdly cheap valuation now. Subtracting cash reserves of around 400 million, the market cap is now around 700 million. If we assume full year profit of 20 million (excluding China stuff), that's a p/e ratio of 35. That's comparable to tech companies like GAMA or LTG, which typically grow at around 15%. Given AWE increased revenue last year at a rate of 125% and next year there should be another major increase (even if we exclude the China stuff), this is absurdly cheap now. I just can't for the life of me see why the directors would set up a company with the aim of committing a fraud that would obviously be exposed sooner or later, but given that the company is worth significantly less than what it would be if it had nothing to do with China at all, it looks like that fraud is now largely priced in.

Point taken, you're right that there is a motive to get as high an Ipo price as possible. Though I invested post IPO on the basis of past and future growth so it doesn't change my investment thesis.

We can at least take comfort from the fact there don't appear to have been any analyst downgrades or sell coverage, as in THG and DARK. As it is JPM have 4.50, Liberum 4.20 and Barclays 4.75. If there were something materially wrong as opposed to just insinuations, they surely would have downgraded. As for the fact there haven't been any reiterations of buy ratings, its presumably because like all of us they're just waiting to see how it all pans out.

Worrying about when or whether they get $12 million from the CPP is a short-term detail. What matters is the bigger long-term picture, but you need to be patient for that and, while you may get lucky with a cheaper entry price than today's you may not, and then you'd miss out on the long-term growth story.

A better comparison than Amazon or Facebook are AWE's more established competitors, like Cadence and Synopsis. Their business models are more similar and they're on p/e ratios of around 70 despite much bigger caps of around $50 billion. That's the target for AWE and I think there's a reasonable chance they'll pull it off, presuming only the current growth trajectory continues.

Shearclass - The founders only make 100s of millions if they sell. As it is, they've lost over half their gains as the share price has more than halved, so the idea that they ramped up the ipo price at the expense of other shareholders doesn't hold water.

The RNS clearly states that the IP will be delivered in December, so presumably they will receive payment at that point.

I think this was always going to rise in the absence of news as it's basically an amazing bargain right now. What concerns me slightly is that the shorts might try and throw something else at it, as I don't think it makes any sense to short it on valuation grounds at anywhere near this level. The s/p trend is very favourable for a rise from here though...