Member Info for MattTheBrave

Sorry BH - this is clearly new news. Before MCRO was simply a preferred supplier, now AWS have a direct financial incentive to give them business. MCRO is the perfect target for AWS as their whole business is working with some of the world's largest companies to maintain and modernise their mainframe structure, and using the cloud (ie using AWS's mainframes) is the highly logical next step.

....it'll probably be down 10% tomorrow on low volume!! ;-)
(I'm hoping that by saying this, it won't come true - of course if it does, I'll buy some more!)

...at 494p. Where it will finish today though is anyone's guess!!

- Single digit PE
- proper predictable growth
- high single digit yield
- Immense free CF generation.
There'll always be risks (regulation, new acquisition) but I believe these are modest compared to the upside. £12 by year end is my forecast.

...above 520p. Lovely stuff!

....although to be fair, if someone offered me £20 per MCRO share, I might take them up on it.....:-)

It would be good news if the stock was on 10x earnings with modest growth. On 5x earnings, as the stock is today, this appears blindingly good, and indeed, if it actually means long-term revenue growth rather than a slow decline, this could be a major transformation for this stock. The warrants would exercise into a stake of about 5% of the Company, but seeing as the ability to exercise is based on business goals of transformation, it doesn't seem like we need to worry about dilution here. A target of £10 for this year certainly does not now seem ridiculous at all, and will be a welcome tonic for those who have been longer term holders, and steadily accumulated into weakness. Through £5 as I write this - nice.

Tyche would have saved himself a lot of money if he'd only listened. Oh well...;-)

Davey - It simply shows you that what has occurred since 2017 was already in the price. The market was prepared to take a lot on trust and forward looking optimism. There was always going to be a period when events had to catch up to the stock price. Currently a trading stock between low 4s and low 5s. At some point we'll hopefully get the 'kicker' we need to push on. I understand Slater has a much reduced position now than it once did, reflecting their view of the lower upside.

Actually, you don't need growth - the stock's on a PE of 4. If the market just thinks that this Company has a long term future incorporating reasonable dividends and debt reduction, this thing will pop back £8 before you know it. The problem is that the market won't trust 1 or 2 sets of figures to believe this - it will need more (perhaps a year) till then, it's a trading stock IMV. Of course if a trade buyer pops out the woodwork, this thing could give you a very quick payback!

Yep - forget the share price in short term, and focus on the yield. TBF we still trade at a small premium to NAV, but this is the smallest it's been for many years, and the stock price has underperformed the NAV by c10% over 1 and 3 years. Portfolio is extremely high quality - 60% renewables, and 15% in social housing, 25% in PFI. The dividend is not going to be cut, so enjoy the yield now, and the capital gains later when the market wakes up.

Chri55 - basically, you're correct. The underlying business has tended to shrink organically (mainframe use not really growing). However, the story has always been about cash generation rather than top line growth. Valanced against the lack of growth is two things:
1. The stock isn't priced for any growth at these levels (in fact its priced for further shrinkage at 4x underlying earnings)
2. The Company is trying to expand into growth areas (Web Services, Cloud, Blockchain), but the extent of success is still not clear.

They can sell when they leave the Firm. They can't need the money given the salaries they're on. Lot's of good research on correlation between insiders selling and stock prices.
RT - odd response, but glad you're happy.

add 'you' to end of first line below - oops.

Quin - you're not tb (thebhoys) ie that comment was made to him, not.

Now, what was written off was goodwill. Goodwill is an accounting item which is effectively explains the difference between the tangible net asset value of the acquired Company and the price paid. This then sits as an intangible asset on the acquirer's balance sheet and is appraised periodically to assess whether the asset/company acquired remains valuable enough to retain the same level of goodwill. If the Company believes that there has been a deterioration in the value of the acquired asset relative to their initial assessment, then they are required to write-down the level of goodwill, and process this through the P&L - so, it's a non-cash item, but it does effect earnings. So, the write-off reflects (and has to reflect) the Company's best appraisal of the asset's current value. AS it's their business, I would contend that they are in the best place to judge - no offence, but certainly better than an amateur investor's view IMO. On that basis, the Company think today that they overpaid by c$3bn,m and for all we know, that may not be the end of it.

Quin - let's be clear, they massively overpaid for HPE due to hubris associated with success with much smaller acquisitions. 2.9bn write-off doesn't lie.

I think the 'we all make mistakes' philosophy is pretty generous Tb. If you are going to screw up, try and avoid doing it on a project which doubles the size of the company!!

Price coming back nicely - I can buy back the 20% I sold on Friday soon! :-)

I believe in the efficient use of capital, and that stock markets ultimately provide this function. I don't see why investors can't bet on overvalued companies in the same way they bet on undervalued ones. No companies go bust because of shorting - they go bust because of poor management/recessions/changing market environments etc. Not quite sure how you short 140% of a stock given that it is only possible to borrow 100% of it - perhaps you could explain that to me?

....nice move today. Perhaps the market's about to remember what a great company this is!

Swanny - Robinhood and IG stopped people (like me!) shorting the stock as well and buying. Anyone buying a stock thinking 'the company details were almost irrelevant' are now the ones nursing huge losses.

Threeputt - Spot on my friend, couldn't have put it better myself!

mickymix - fine - you stick with your view of the world - I'm sure it's built on deep and rich experience of financial markets.....No? As an asset manager for 30 years, mine is. Shame you've spurned the opportunity to learn something.