Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
of its potential customer base.
Shares plunged, falling as much as 27pc that day and wiping £1.3bn, or 21pc, off its value - turning around a spectacular rise in six months as a public company.
While Peel Hunt’s sell note was a first for Darktrace and its founder-cum-chief executive Poppy Gustafsson, for Lynch it will have conjured up old ghosts.
In 2008, Autonomy was also on the cusp of a FTSE 100 entry when questions began to emerge. The business software company, founded by Lynch in 1996, had fallen out of the index in 2001 during the dotcom bubble before clawing its way back through steady growth.
Mike Lynch arrives for his extradition hearing at Westminster Magistrates Court on Tuesday, Feb 9, 2021.
Mike Lynch is battling extradition to the US to face criminal charges CREDIT: Hollie Adams/Bloomberg
At one results meeting, JP Morgan analyst Daud Khan stood up and challenged Lynch and finance chief Sushovan Hussain over Autonomy’s numbers. The exchange sparked a years-long battle between Autonomy and a handful of City analysts that lasted until HP bought the company for £7bn in 2011.
“Nobody was negative on Autonomy at the time, I think the best you could get was maybe neutral on valuation terms,” says Khan, who has claimed Lynch attempted to get rid of him by offering JP Morgan work. This was denied by Lynch.
“Mike and [CFO] Sushovan were very good at being friendly with City analysts. I published my note as a sell recommendation, and that started a two and a half year battle with Mike and his management team. They objected wildly to the content I was producing, despite the analysis being evidence-based.”
Khan says he was excluded from meetings for a year and Autonomy entered the FTSE 100. Meanwhile, other analysts turned negative on the stock, including Peel Hunt - the same house that just sent Darktrace shares plummeting.
HP’s takeover of Autonomy led to an $8.8bn writedown and allegations that executives had fraudulently inflated its value.
Lynch’s battle with the City then moved to one with the courts after he was hit with US criminal charges in 2018 and a $5bn civil lawsuit from HP that started the following year. He has denied fraud and is currently fighting extradition to America.
There are no suggestions that Autonomy’s alleged actions have been replicated at Darktrace but the company has struggled to distance itself from Lynch.
“Mike is a visionary technologist and was an early investor in Darktrace but he isn’t involved in the day-to-day running of the company,” Gustafsson said earlier this year.
UBS, which advised Autonomy on its sale, pulled out of the listing, while major advisers such as Goldman Sachs, Morgan Stanley and Citigroup did not take part. Jefferies and Berenberg, which handled the float “did an absolutely fine job,” said one City source. “But it would be a fair comment to remark upon the absence of the usual roster of big names.”
Listing in the US was ruled out, due to Lynch’
Tech investors including Mike Lynch will be free to sell almost £3bn shares in Darktrace in the coming days, piling further pressure on the beleaguered cybersecurity company.
A freeze on insiders offloading shares will expire for the company’s biggest investors on Wednesday, days after Darktrace lost a fifth of its value when a City analyst said it was overvalued.
Mr Lynch, the former Autonomy boss, owns almost £900m in shares through stakes alongside his wife Angela Bacares, meaning his stake is worth more than the $815m (£593m) he made from the contentious 2011 sale of his software company to Hewlett-Packard.
Mr Lynch is fighting extradition to the US, where he has been charged with fraud over Autonomy’s £7bn sale to HP, and also awaits judgement in a $5bn civil fraud trial brought by the company in the High Court. He denies the charges.
Mr Lynch’s venture capital firm, Invoke, has been an investor since Darktrace’s early days.
Other shareholders able to dispose of their stakes include partners at Mr Lynch’s venture capital firm, Invoke, who own another £380m of shares, and major investors Summit Partners and KKR.
Darktrace, one of the biggest technology flotations this year, soared to FTSE 100 status this month after quadrupling in value since its April float.
However, shares fell by 21pc last Monday when broker Peel Hunt said the company was worth half its value and suggested that its marketing was not matched by its technology.
The end of lock-up periods can push prices down by flooding the market with new shares if early investors choose to realise their gains. In Darktrace’s case, it will more than double the number of shares available to be traded.
The company has previously warned that the end of the 180-day “lock up” period could send shares falling.
Darktrace’s prospectus said: “The market price of the shares could be negatively affected by sales of substantial amounts of such shares in the public markets, including following the expiry of the lock-up period, or the perception that these sales could occur.”
Ghosts of Autonomy continue to haunt Darktrace
For Mike Lynch, it will have felt like deja vu.
Darktrace, the cyber security firm Lynch had shepherded from foundation to London listing, was on the cusp of joining the FTSE 100. Shares had almost quadrupled since its April float to value it at over £6bn, placing it among Britain’s biggest publicly traded tech companies.
A decade after minting an $815m fortune by selling his software firm Autonomy to Hewlett Packard, Lynch’s stake in Darktrace was worth around £1bn - a stunning return after backing the company from its early days as a Cambridge University research project in 2013.
But last Monday, two days before it entered London’s blue-chip index, a research note landed in traders’ inboxes. Titled “a reality check”, City brokers Peel Hunt claimed Darktrace was worth half of its stock market value and that its current share price repre
pokerchips lol like a gremlins kind of thing then......
yrabs lol you get on to alexa I'll get on to siri, hedge our bets, ive heard its a thing
can I buy one of these algo bots from amazon for xmas? lol
Just doesn't seem to be the support required to shift this back to a more sensible valuation. Or is this the new sensible valuation given all that's gone on.......wtfdik eh.......
You’d think given how enriched Harry and Lloyd have become on the IPO that they could easily afford to make a positive move
Quite telling that they haven’t, but their non execs have, or is that just my conspiracy radar going off again lol
I did a couple of buys in the 240’s thinking it couldn’t go any lower, and been kicking myself ever since
No further predictions from me!
I'll nip down there warehouse for our prize, and check if the lights are still on......
226, yrabs beat me to 225 ;)
Agree, good news will go far here, until then, and in the abayance of any new II's its gonna be wearisome! However I'm not bailing yet as I do really believe there is a major upside, just testing our patience in getting there.
Back in at 760, but feel that may not be the last of it
Agree, gotta play the game I guess
Jumped at 840 now waiting to buy back in, trying to be patient, such a great opportunity
That'd be good, see what Harry and Loyd said for real......
Imagine being the fund manager at Jupiter UK Mid Cap, 2 largest holdings Hut and Boohoo...........
Content in the times...
Since its founding in May 2018, investors and analysts alike have bought into the long-term growth story at S4 Capital, so HSBC’s bearish report on the marketing group yesterday will, for many, have been something of a surprise. They responded as you might expect, by promptly selling the shares.
S4 Capital’s business model is based on rolling up businesses that add services or presence in new areas, funded half by cash and half through new shares. The group has made 26 acquisitions since its launch and the strategy has served the company well so far: shares in the company have risen almost fourfold since it joined London’s main market.
However, Joe Spooner, an analyst at HSBC, believes there is a likely “volume limit” to all this mergers and acquisitions activity. “If all this signals a need to spend ever-increasing sums on M&A, the question follows as to whether S4 could actually do that on the favourable terms it has achieved to date,” he said.
“As discussed, the acquisition programme has so far focused on small companies. To be able to deploy larger amounts on an increasing volume of small transactions looks eventually unworkable, so S4 would likely need to target more established, larger companies and, with that, likely need to be willing to pay higher valuations accordingly.” The prospect of having to spend more in future sent shares in S4 Capital down by 52p, or 6.7 per cent, at 726p.
General market conditions I'd say, it's a day traded stock to boot so always a bit volatile. Perhaps.
Suffering the malaise in the sector and wider markets. I'd say it was cheap at the 3.50 I bought in at ages ago, but clearly what do I know!
Think it's odd that they want to split the business so soon after initial float. There's smoke and mirrors here, low profit, over valued and a disregard for shareholders. Gotta be better places to put your hard earned cash.