RE: Cape Town podcast17 Dec 2022 08:01
Some thoughts, and given that like probably everyone holding lvcg I’m underwater, it’s probably best to ignore. It’s really tough out there, has been all year, and you have to navigate through the minefields generally with only scraps of information. The wannabe traders (some of whom see holding shares for over 60 minutes as a long term hold), most ably assisted by the market muppets, are also killing the market. People are free to buy and sell when they want, I just wish some of them would wise up and trade sensibly rather than “smashing the bid” like someone did earlier in the week when they decided to exit their holding having been stung by the shocker of a placing in another share.
Looking at some big trends, It’s not a great environment for any company that needs to raise capital at the moment. Even more examples this week that brokers are demanding big discounts to do it. Also seeing even more companies turning to convertible notes, which however they are dressed up, are generally never good for shareholders. There are also less IPOs being done and more companies not returning, so fewer companies overall competing for investors cash, and you can see that impact on some of the brokers (like fincap) that are losing money and laying off staff. The crypto world isn’t looking great either, so there’s likely IMO to be a reversal of the trend of last year and a flow back into small caps.
So looking at lvcg.
- It’s post-revenue, and that revenue is recovering having been significantly impacted by covid. The loses are also reducing, with every indication that 2023 is going to be a big turnaround year for the company.
- It’s got very low debt, and the cash for growth (of KPOP) is being raised from Jason Lee (a strategic investor and now an insider) who chose to invest £1.5m at more than the current share price.
- Insiders have a lot of skin in the game. The free float is less than 43%. There are no fancy performance metrics or award of share options for Directors, they are incentivised to make the share price go up, and ultimately to sell the company to realise that value (which has already been stated).
- The Board is diversifying, with a new CFO to be added and shortly a new CEO, which when added to the fact there are more bigger shareholders, will reduce the concern that a strong Chairman can control the company.
- Sure the timetable articulated by the Chairman dosen’t always come to fruition, but if you look at the medium term trend it does actually happen. Just 12 months ago there were no KPOP concerts, now there has been one successful festival, two in the bag for next year, and the promise of many more. Plus these are not just one offs, multi year deals are being made.
- Its involved in growing markets and a clear pathway to future growth has been laid out and is being realised. Just £700k profit next year will fully support the current market cap, so it not like the share price is based on unrealistic “hopeium”.
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