Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
Bought today at 5.2p. Very happy with that. The big buyers have been quiet but they were buying at 5.5p & 5.75p. If they restart their buying, this low price will quickly vanish. The amount they bought so far is v big by PI standards but not by US II standards so I'm with Seeing2020 that I think they have a lot more buying left to do. The big buyers might wait before pulling the trigger or go very soon. No way of knowing. It's a game of chicken!
(VW)Investments in battery-powered vehicles, autonomous driving and related future technologies will rise to about 73 billion euros, or half the company’s budget through 2025, VW said Friday. That’s up from 60 billion euros a year ago, or 40% of investments planned at the time.
https://www.bloomberg.com/news/articles/2020-11-13/vw-boosts-tech-spending-in-177-billion-budget-amid-virus-hit#:~:text=Volkswagen%20AG%20will%20reserve%20a,pandemic%20continues%20to%20roil%20markets.
Just had a little tickle at 44p. We've done well to get some shares below the recent fundraise price of 46p. Only positive news since the fundraise (Covid) but price drifting on low volumes. I'm thinking its got to be worth a gamble at this price. Various catalysts in the next year could put a one in front of the share price or a zero after it!
"Who has the quantity to sell to the buyer?" Well, the sells that went through yesterday went through in smaller trades . Adding up the biggest sells, you need a lot more than 7 sells to come up with enough stock to fill these 7 buys. Obviously, we can't know for sure who these sells were but given they were smaller trades, I'd guess at PIs.
Some PIs will be top-slicing/taking profit. SEE2020 makes a good argument about the buyers needing an awful lot more shares than they have already bought and I have reason to believe he is correct. I'd encourage PIs to think twice about selling their shares cheaply.
Buyers still there
A quarter of the shares traded today were accounted for by just 7 trades.
14:12 £85.5k @ 5.7p
14:01 £57k @ 5.7p
13:01 £57k @ 5.7p
12:42 £57k @ 5.7p
09:58 £83.25k @ 5.55p
09:48 £55.5k @ 5.55p
08:37 £111k @ 5.55p
I am confident that all of these large trades were buys based on prices of trades placed at similar times and other factors.
Most of these trades were done with delayed publication which is normal and I'd expect there to be a lot of that around this week.
If you are trying to build a large stake, you might buy in small chunks spread over time, slowly absorbing shares that come onto the market, trying to avoid making too much noise, hoping that this will let you secure shares at a lower price. This could work with the exception that there will be a certain amount of noise when the stake becomes big enough to be notifiable, but even then, your notifiable interest will not be announced instantly.
BUT
This strategy might get kicked to the kerb if:
1) There is more than one person trying to build a significant stake. Your combined noise is too loud, the share price starts to move up, you fear that if you hold off your buying, another of the stake builders will keep on buying and you will miss out. I believe there to be more than one stake builder and I am not caveating that.
2) There is reason to believe that there may be price sensitive news coming soon which could increase the share price. I believe this to be the case and I am not caveating that.
Seeing 2020 is quite right, the buying done on Friday is peanuts and any stake builders would need to buy a hell of a lot more before they have increased by percents of the company. Before starting to stake build, a stake builder would know that there is likely to be resultant share price increases before they have got to big percents. They would have a plan as to what size stake they want to get to and up to what price they are happy to continue buying. They are unlikely to start building a stake unless they are happy to pay the increasing prices they expect to have to pay to get to the stake they want to build.
Price increases potentially force the hand of prospective stake builders to move faster. In my humble opinion, it wouldn't be at all surprising to see some big big days next week, buy you do your own research and make your own mind up.
Good post Timc. One thing I'll be picky about: I think the share price IS headed in the right direction. 30% up v 2 months ago. 40% up v 4 months ago. 65% up v 6 months ago. We've been on a rise since the Covid bottom in March. Still a long way to go upwards IMHO but no one knows for sure. I can predict everything perfectly, except the future.
My 2 favourite extracts (emphasis with capitals is mine):
L3Harris and Seeing Machines will work together to implement this technology into simulators at L3Harris' training centers, and offer the integrated solution to L3Harris' customers into EXISTING and future simulators
Sanjay Kaeley, Head of Product Solutions for Commercial Aviation at L3Harris said: "Working closely with Seeing Machines through this agreement will help to enhance the understanding and measurement of the pilot decision making process within the simulator and, in due course, IN THE AIRCRAFT. It is an exciting development to further support our shift to data in training, leading to an enhanced evidence-based training approach."
Confirmation that they will be looking to retrofit to existing simulators means a much bigger market than would otherwise have been the case.
Non-Seeing Machines person of weight and expertise saying this is heading into aircraft themselves. Adds significantly to how seriously we should be considering aviation as a major major business for SEE.
Easy. The market is full of idiots so shares are not fairly valued. This is why we have managed to build holdings in SEE at price far below what the shares are actually worth. If the market was fairly valued there would be no point doing what we do.
Wonder what those "well spoken chaps" know.
https://www.thisismoney.co.uk/money/markets/article-8701353/STOCK-WATCH-Owzat-Rose-Bowls-Ageas-takeover-target.html
Multiple possible explanations for the recent flurry of RNSs but worth noting that one possible explanation is defence against a hostile bid.
Of course, if they'd actually had a formal bid then they should have disclosed it but I've been in that position before and there are often many stages of "interest" from a prospective new owner that make it quite clear to you what their intentions are while not being formal or explicit enough to require an RNS. In such a case, if you don't welcome the potential offer, or if you just want to push the price up, you get your defence going before things go formal if you can. You lay out your strategy and try to persuade shareholders that you have a vision for the company that will lead to the promised land, and that you are executing on that strategy, so the shareholders decide to stick with current management rather than taking the bid.
I'm not saying there is a hostile bid brewing, just that it is one possibility among many.
Part 2 of 2
Also worth noting that Cenkos have not changed that 16% discount rate since March 2019. Terry made an excellent post today about how much progress has been made by SEE since then and how we have progressed towards regulatory requirement for DMS. This progress reduces risk because it is things that can no longer go wrong… so it should follow that the Beta reduces too.
For illustration. Per Cenkos, if the discount rate falls from 16% to 10% their target price for SEE increases from 7.2p to 18p. Which doesn’t mean I think 10% is the right number and, anyway, I base my own valuation on my own model and not on Cenkos’s model.
No one should take this post as advice. I am merely trying to highlight an apparent anomaly which I think every investor should think about carefully and make their own conclusions.
Part 1 of 2
Hi Lewbo.
Cenkos adopted the 16% discount rate in their 20 March 2019 note.
Cenkos calculated the discount rate as 2.21% + (2.5 x 5.6%) where:
2.21% is the risk free rate of return, typically this is viewed as the return you'd get on an investment in government debt.
5.6% is the market risk premium, the return you would want, in excess of the risk free rate, for an "average " share. This is calculated by looking at a large basket of stocks, looking at their market cap compared to their forward earnings and calculating the implied market risk premium. https://www.statista.com/statistics/664840/average-market-risk-premium-usa/
2.5 is the Beta. A multiple based on how risky SEE is as an investment compared to the average share. Or to be more precise, the risk that Cenkos's forecast for SEE is wrong to the downside .
2.21% as the risk free rate of return is hopelessly outdated. I would expect this to be updated to somewhere between zero and 0.8%. Reducing the risk free rate to the middle figure of 0.4% points would reduce the discount rate by 1.8% points. According to Cenkos's 22 May 2020 note, reducing the discount rate from 16% to 14% would change their price target from 7.2p to 9.5p.
The Beta of 2.5 is where it gets jucy. For an “average” company the Beta, by definition, is 1. If you assign a Beta of 1 to SEE then the discount rate falls to 6% including a 0.4% risk free rate. Not that I am saying you should. It is important here that the riskiness the Beta measures is not the risk inherent in the company of Seeing Machines, the Beta is actually a representation of the riskiness of Cenkos’s forecast of future profits of SEE. And note that this is the riskiness for Seeing Machines Specific Reasons. The risk posed to all companies by Covid-19, China/US tensions etc are included in the 5.6% market risk premium so the general effect of these risks on all companies would not change an individual company’s Beta.
So what needs considering is, how much downside risk is there in Cenkos’s central forecast, for SEE-specific reasons?
Cenkos themselves note:
“we again highlight our expectations continue to leave additional license deals and the entire aviation sector as upside”
Cenkos says on their own assumptions for the Fleet business “We believe these assumptions are now highly conservative”
“We also highlight these forecasts attribute no real long-term value to the Fleet or Aviation business which could be worth at least the same as the automotive business”
Cenkos assume SEE will have an automotive DMS market share of 30%. About which they say “This market share is aligned with projections by Seeing Machines and, in our view, leaves of upside as we believe market share of >40% is feasible.”
So in their own words, Cenkos view their forecast as conservative yet they assign a Beta of 2.5 which would imply large downside risk to the forecast!
Part 2 to follow.