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Berylfu, sorry you are so far down on DT, and along with others you must be hurting.

I can’t give any specific advice except to echo SW’s, JayneC’s and others’s that DT is a well managed company, with possibly a great future but still has a long runway. Whether you should invest anymore at this stage only you can determine based upon your own view of the company and your risk appetite. And don’t forget there are other good quality companies out there that will give you a smoother, even if less exiting.ride. I have never been successful buying into a falling stock unless I think the market has got it completely wrong and in many cases it was me rather than the market that got it wrong. Personally I see DT as a speculative stock and it constitutes less than 1% of my portfolio so I only follow it closely because I am curious and I have been charmed by the technology and it’s potential.

For most of my portfolio I prefer the tortoise to the hare, and if they are quality companies they will still beat the index. Look at what qualities that Successfully investors like Buffett and perhaps Terry Smith look for in a company and the try and replicate that approach.

When it comes to investing advice I have learned 3 things from experience. Understand as much as you can about the company you are buying, its offer, its management and its economic moat. Secondly balance your portfolio according to risk, not putting too much into chasing pots of gold, especially before you really understand the market, and finally be disciplined in your approach. Use BBs like this to learn, to gain understanding, but don’t be drawn into the hype and, as they all say, DYOR.

In the many years I have played the investment game I have gained on about 60% of my selection and lost on 40% and of those 40% many ended up bust as they were speculative. Fortunately if all is lost it is only what was invested, while those really successful can go on to make 10-20 times the initial investment so you win. I hope DT is one of the latter but who knows - anything can happen - ensure balance in your portfolio.

Sorry Brightworth, I see the link is not working and I don't know why.

The title is "How to calculate the intrinsic value of a stock (Full Example) by Brandon van der Kolk" That seems to work

I cannot contribute the guessing game regarding the SP and haven't tried to time the market for a long time, because i know I can't. I only pay attention to the very few insights on this BB that allow me to get a feeling as to the intrinsic value of our company from other LTHs and these insights are of value to me.

As an unashamed disciple of Warren Buffet and his disciple Benjamin Graham, who only buy companies if they have a deep and fundamental understanding of the business and can value them, I thought the attached video explains their approach - and my approach - to valuation using DCF analysis in a very simple and informative way.
https://youtube.com/watch?v=I-T-Vyk2txc

This approach will have been used by PH and the other brokers to arrive at their valuation so if anyone is interested in getting a basic understanding of DCF analysis and using it to determine the intrinsic value of a company it is worth a look IMO.

Of course it is difficult to pin a definitive valuation on a speculative company like DT, but without any attempt to do so, I think any view as to it being under- or over-valued is meaningless. In the end with speculative companies like this buying is just a bet - but an informed bet if you have a basic understanding of the company - and one I have been willing take because of my understanding and imagination of where the company could go. But it is a bet all the same, and not for the faint-hearted or for those who cannot afford to take a loss as the future is far from certain IMHO and one of the reasons, for the extreme volatility and the smallest thing seems to spook the market.

Dumped is not the right word IMHO- better to use Exchanged. They were UT auction trades in SETS (on-book) so there would have been an equal number of shares sold and bought even though it was labeled as a sell. The same holds for A trades. It is different from O trades where MMS sell from, or buy into, an inventory so there can be a temporary imbalance between buys and sells.

Excellent JayneC - a bit more understanding, a bit more insight and a bit more conviction - if any more is necessary - that our company and it’s technology is, well, simply brilliant - IMO.

Charles – Don’t get me wrong – I think DCF is the only way to understand the worth or intrinsic value of a share, but one has to understand the assumptions behind any prediction - otherwise in my view a number is just a number. I used this technique to make my own simple evaluation using a discount rate of 10% and a fairly optimistic view on revenues based on current revenue trends and costs and came out with a figure north of £10. This not a prediction but gives me confidence in what can be achieved – and personally I am comfortable that any SP up to that value will give me a good return in the long term.

It is human nature, I guess, to try and find information to reinforce one’s own prejudices/views, and a recent interview by Interactive Investor with Bill Ackman of PHI (who made billions recently) reinforces mine. He wouldn’t be drawn on predicting SPs over the next quarter.

“I never make short-term stock market predictions because I think that’s a really difficult thing to do and the probability of getting it wrong, I think, is high. I think all our businesses are going to report good results, and does that mean the stocks will go up? I can’t speak to the next short period of time, but over time, as businesses report, you know, the (intrinsic) value of a business is the present value of the cash it generates over its life. A quarter report of strong earnings and cash flows and growth over a previous period is suggestive of growth in the intrinsic value of the business. ……… . So undervalued companies reporting good results, stocks should do well ……….Again, I speak over time.”

11-11-11

Charles - I think it unwise to ‘believe’ in any predictions/targets until, and unless, you understand the basis on which those predictions are made. All these so-called predictions/targets by brokers are based upon discounted cash flow (DCF) analysis the main inputs being revenue, cost and taxes (and CAPEX if relevant) now and into the future, and the discount rate you apply. Without knowledge of these data, and an appreciation of the probability of the assumed inputs being relevant, they should all be treated with great circumspection IMHO. To me qualitative and quantitative views of brokers form just a limited part of the overall intelligence on which I make a judgement as to the merits or otherwise of an investment - so personally I remain somewhat surprised that the market puts so much credence on them. Having said that it seems to be that the market is driven more on belief rather than fact.

This is a view on the recent SP commentary in the latest Factsheet of the Buffettology Fund - they are long term holders (ca9m shares) by nature and have held DT since IPO and bought again, I think, in one of the Secondary Placements.

Quote:
As regards to Darktrace where aspersions have been cast about the quality of its R&D and product offereing. I leave you with this thought. Bytes Technology is a software and hardware reseller……. On its results call at the end of the month the CEO said, “ I know Darktrace has been in the press recently, but every single one of our Darktrace ciustomers is renewing and customer satisfaction is very high “ Bytes is Darktrace’s EMA partner of the Year so that’s a material sample size of customers he is talking about. This type of price action is precisely the sort of stock market noise that I always counsel against listening to. I do so again.
Unquote

HKK - Thanks - you give an alternative view which is fine and the nature of debate. It seems to me that Summit usually moves quite rapidly to extradite themselves after “liquidity events” in the 100+ or so companies they have been involved in - but of course who knows in this case. In my opinion it is not a question of if, but when, if Summit does what they always done up until now. Vitruvian was keen to reduce their shareholding at the starting gun and Summit and KkR started the process twice before for reasons that can only be speculated upon.

What the intentions of ML and his wife (16% - the Prospectus states that the shareholding of ML and wife should be regarded as one economic unit or words to that effect) is of course also unknown. But he did sell up out of Autonomy fid he not?

Great to see the sp on the move upwards again but I am mindful that 216m (30%) of the shares are still in the hands of the three VC’s and 111m (16%) in the hands of ML+.

So the question remains when will these be traded, because the VCs will certainly move on if they act according to their normal practice? Both Summit and KKR still have seats on the BOD - as far as I am still aware - so this may have some influence on when and how , and Vitruvian cannot sell before the new year.

We can guess, or use TA, as much as we like to predict the day-to-day share movement, but IMO, it will be these, and other fundamental events, that will determine the short-to-medium term chop in the sea and the progress to windward of the good ship DT.

If you want more detail on auctions this article is quite informative as to when, how and why.
https://aim-watch.com/project/lse-auctions-explained

HKK were these market maker (O) or SETS trades (AT or UT)?

Please correct me me if I am wrong as my understanding is incomplete. My understanding, though, is that for the automatic trades the volume of buys has to exactly match the volume of sells or visa versa, and that this is recorded as a single transaction. So each trade reported is neither a buy or a sell but both. Whether it is recorded as a buy or a sell is not, again in my understanding, not a guess but as a result of algorithmic rules - I thought if a transaction occurs on offer it is called a buy volume and when a transactions occur on a bid it is called a sell volume.

That is fine but it is misleading when compared with O trades where actual buys and sells are recorded separately and there does not have to be an immediate match. They are recorded as buys/sells depending on which side of the bid - offer midpoint they lie so buys and sells give a fairer, if I exact, picture of what it says on the tin IMHO.

Anyway that is how I currently interpret buys, sells and volumes in the two main trading systems. I am open to correction.

Berylfu - I’m not sure anyone can answer your question except to suggest it will be more of the same for some time. Many sellers will be looking for buyers and there will only be buyers if the price is right. Taking a LTH’s view, we need to sit tight, take our sea sickness tablets and ride out the rough weather. As Jayne and others keep repeating we are dealing with a company well managed with good technology so has a lot going for it. There will be calmer waters ahead, but how the SP will progress in the short term I, for one, can only but guess.

Sheltie not aimed at anyone - just an observation. We are all in the same boat trying to understand what is going on and how the game is being played by the professIonals. If we don’t continue to learn we will be taken collectively to the cleaners - which unfortunately some of us currently are it seems.

So far only one secondary placing following the end of lock-up - the latest 3 RNSs cover only that one by Vitruvian - the smaller of the 3 VCs. But, yes, others will follow sometime. So far I am happy we are seeing a managed exit and not a stampede (yet?). Might also be some selling in the market by the so-called 0.5% shareholders.

In my view things should settle down a bit now but at what SP I cannot say.

Mark , it is not a placing - it is a Secondary Placing that is not dilutive to the overall number of shares and carried out in a accelerated book building process (basically overnight).

The process - My understanding is that the appointed underwriter sets a price range and then solicits bids from selected iis. The iis then enter their bids - quantity and price- within this range of prices and when the book Is full - total number of shares bid - it is closed. The end price is the the weighted average of the bids.

Maybe there are experts on the bb who have a more detailed - or more correct - understanding.

Vitruvian currently has 31761750 shares so they are offloading about one third.

In terms of process/regulation does anyone understand the 60 day Lock-up clause for the unsold shares? Does that mean the other two thirds cannot be sold for the next 60 days?
RNS
“Any ordinary shares in Darktrace held by the Seller which are not sold in the Placing will be subject to a 60 day lock-up, subject to customary exceptions.”

Sorry I did not see shelties reply - he could be right and, if so, I stand corrected. If they continue to have insider information it wold certainly be the case but otherwise it is not my understanding.
Employees and directors are in lock-up for an additional 180 days..

Didi888 - they are free to sell their shares like any other SH - during the day using the automatic trading system - (A ) trades - or through MMs - (O) trades - or after hours in auction - (UT) trades. A and UT trades use a system called SETS and there’s no need to inform the market.

Venture Capitalists tend to use secondary placements for large chunks - as twice before - which is a book building exercise but not conducted through SETS (in my understanding). Not sure they need to inform the market - RNSs were certainly needed in the two prior occasions as there was an agreed release from the lock-up arrangement for some shares.