Rainbow Rare Earths Phalaborwa project shaping up to be one of the lowest cost producers globally. Watch the video here.
Bakky,
The domain industry is fairly stagnant with no real growth outside of .com and a few of the leading ccTLDs. The consolidation is gathering pace and will be just a few major players left at the registry level. IMHO MMX doesn't , and never had a future as an independent company , thats why we sold to them in a mainly stock deal, so that we could hopefully enjoy the uptick when that consolidation eventually came. It seems clear, at least to me now, that the China opacity leaves MMX viewed as toxic by the potential acquires who are now either large public companies or PE backed groups looking at IPOs. For them, on their trajectories , there is , again, IMHO, no way they are going to risk blotting their playbooks buy "risking" taking over a relative "toddler" like MMX that may have some skeletons in the closet that rise up and bite them. why would they? risk their highly rated P/E billion dollar valuations and reputations for a +/- $100MM deal?
BB, I would say that IF and its a big IF there has being deliberate wrongdoing, then the institutions will react the same as the Pi's. IF that turns out to be the case I have a whole bunch of opinions about what may need to happen and how to maximize the value of this company once any scabs are pulled off, if they indeed exist
SB, thank you for those kind words... in my dealings with the company it appears that TH and MS keep a lot of stuff to themselves and the rest of management has no clue and/or are discouraged from getting to know more about the "inner workings", esp as relates to China... This is what other potential acquires were put off by duding the review and since and were the issues we identified in our Due Diligence, but based on reassurances and written Warranties we decided to take a flier on....
Bakky, from what I was told, he negotiated the deals, knew the players involved etc and was in contact with them....
BB, yes I was and was strongly reassured that the money was , in Tobys opinion, still 100% collectable and the provision was just an over cautious audit committee move..... again how much of the $5MM was ultimately collected now after 3 years? Was toby being truthful at the time? Hopefully the investigation will reveal all...
1) What is the nature and who are the parties to the “contract” under investigation?
2) Did the management have “side deals” or “agreements “ that were not fully disclosed that encouraged certain registrars to “bulk buy”, perhaps at discounted prices, a certain quantity of AdultBlocks on a “sale or return” basis in H2 2019 with deferred payment terms and then inappropriately book that revenue in 2109 FY figures in order to give revenue/profits a near $1M boost . If so, who was involved and how and was deliberate obfuscation involved?
3) The opacity of the transactions and registrations from China especially in .vip was, I believe, the reason that many would-be suitors were deterred during the “strategic review”.
4) The same concerns gave the ICM vendors pause in early 2018 when investigating and negotiating the terms of the acquisition, in particular the more than $5M in H2 2017 premium sale revenue, booked as revenue and profit but not collected together with hundreds of thousands of .vip registrations that appeared to be computer generated gibberish. Were the same or connected parties involved in both transactions?
5) How could the management give the ICM vendors written Warranties concerning the veracity of those registrations and also more pertinent, give twice , in both May and as late as June 2018 a warranty as to the full collectability of the Chinese premium revenue only to write off $2.1 of the same “warranted “ debt in the accounts to 30 June 2018 some 10 days later. How can a “bona fide” debt become questionable in that 10 day period?
6) Some almost 3 years from the original “transactions” how much of the original $5+ M of the Chinese premium debt has actually been paid and how much still sits on the books?
7) If the answer to 6 shows that hardly any of the money was ever collected, were the original transactions , in fact, fraudulent?
8) Does the .vip zone file still have those hundreds of thousands of questionable “registrations” that all fall due for renewal around the same time but somehow mysteriously seem to get renewed every year? Who is/are the underlying registrant(s) and are they related to the same players involved in the original 2017 premium .vip deals? Have any back door deals been done with these parties to inappropriately encourage the renewal of those names outside the normal conduct of business.
9) Does the .work zone file have similar issues?
10) Has there been a pattern of deceit by senior management stretching back several years which has misled investors and others.
11) If the answer to 10) is yes then there is only one course of action available.
Norrab, thank you for those kind words, most appreciated
Scotty,
my decision was not based on any specialized knowledge of the domain business just more on the economic cycle and the general and likely timing of premium M&A activity within that cycle.... Towards the end of a decent Bull run P/E's get top and many cooperate buyers overpay for targets..... thats what I had hoped for. I think the cycle is now in recession as a result of Covid and M&As will be a discounts not premiums. I had another private business I have held for 18 years which I decided to sell too in December. Sale agreed at $9MM to a roll up operator with VC money. Closing set for 31st March.... Isn't happening now and I told my partner to expect to wait now for 5-6 years for the "train" to come around again for a decent priced exit... Again a very sound underlying business.... is just how the cycle goes.... I have been at this for 35 years : sold 4 or 5 businesses in decent exits... probably bought 35 businesses, not one of them at a premium, all mainly for cash at cheap prices when times were tough.... most things in life are cyclical and it was the realization of what part of the cycle we were in that caused me to decide to sell, nothing to do with the company or the industry itself. I am happy to be on the sidelines for a while....
BB,
Yes undoubtedly online will take an uptick for sure....
the truth is for ALL registries that approximately 70% of ALL registrations whether its .com/net/uk whatever are effectively "unused" so in a prolonged recession they do stand a small chance of being cancelled as people cut all costs. they are generally so cheap that ;culling:" domain portfolios is a very last resort measure to save money , so unlikely but not impossible. its that well spread low cost that actually makes the registry business so recession proof on the whole. Im still not sure why there would be any rush now for any consolidator to jump in and offer a premium in the short term. dont get me wrong I think that consolidation will still come for sure, just when and at what price. the math to calculate if was a good move sell will be pretty easy. at what price is the asset I eventually buy with the 6p I got today compared to the MMX share price at that point in time..... yesterday the S and P closed at 2900... if it goes below 2,000 I intend to buy..... we will be able to compare the s &P index price to the MMX share price in a year or twos time.... I just didn't want to wait any longer as I felt exit was now no longer imminent
from what I gather 2 or 3 institutional investors, and yes that bodes very well for the company. Yes if one of the buyers turns out to be Frank Shilling, Afilias, or the like then u never know....
BB, I had sold 8 million or so on Thursday and the brokers came back saying they could sell all of mine and yes, when I heard the .org news it pushed me to pull the trigger on the lot, although in fairness I would have likely sold anyways... a deal may be likely but at what price? all assets in recessionary times are usually sold at a discount so who is going to pay a premium. again this decision is nothing negative about MMX mores just me , wanting to get into cash at the end of a 10 year bull run, to sit on the sidelines during a bear market and buy again at the beginning of the next bull run. whether I will be on the sidelines for 3 months or 3 years I have no clue. I got in the"market" in a big way last 'round" when dow was 9,000 (had dropped to 6,700) and got out at 28,000 ish in Dec. with interest rates where they are I would take a doubling , never mind a tripling over the next bull run be it starting 2021 or even 2022... 10 years after than and im a very old man then, so will be done done...im not a trader, tend to buy and hold...just try to get timing "about right"... Yes a pity the MMX didn't quite work out, but you win some and draw some ;-) I won't disappear ... I will be around.... I have been half Howard Hughes and Half Hugh Hefner for 30 years , im just channeling more of my Howard Hughes side these covid days.....
Part 2:
I have no further ties with the company but Toby and Michael are both competent and have steered the company away from the rocks into safer waters. I have found Guy Elliot and Henry Turcan to both be very insightful and have a lot of confidence in them.
It was a calculated gamble for the ICM vendors to take the stock element with MMX vs a straight cash deal as offered elsewhere and we did so on the basis that we thought management could turn the business around within a couple of years and sell for a premium.
I think it’s fair to say management delivered on the former and Covid-19 took away the chance of the latter any time soon.
I will still be looking in on the Board and more than happy to answer any and all questions relating to the company and/or the sector.
Sincerely, All my best to each and all of you.. Keep well and safe…. SJL
All,
You will see from the share trades and TR-1 I sent in a moment ago that I am ALL out of MMX now.
I wanted to post here some words to explain the rationale behind my decision to sell and also my thoughts on the company and the sector for what they may be worth now.
Firstly, I would like to state categorically that the decision to sell was formulated and executed over just a few days this week and that I am truly pleased that I was able in short order to execute unplanned sales via the open market, I’m sure channeled by FinnCap for 10% of the companies issued stock at effectively the regular, published bid price. That level of liquidity should give everyone comfort.
I may have mentioned in one of my prev posts here earlier this year, that having merged my private Age Verification business into an FCA regulated business I had also been forecasting a major price correction in the general public markets for some time and viewed them as overheated and pulled some $50 million USD out of stocks in the December/January period straddling the end of the US tax year. I announced that MMX was my only remaining public holding and I was continuing to hold them in expectation of good FY 2019 figures and announcements and a suitable uplift in SP at results time to hopefully be followed by a premium exit in 2020 to one of the several candidates discussed here ad nauseum.
The SP rose to some 8.4p late Feb early march in anticipation and then just got washed away down to 5p in the meltdown before stabilizing back a just over 6p.
I fully expect the wider market to take a substantial fall again from its current levels as I don’t think the wider index levels are justified from prospective earnings, both US and UK. IMHO, as has been shown already MMX will most likely suffer with a commensurate fall should the wider market fall.
I think we will be in a longer period of suppressed valuations and quite a long recovery period, especially for those companies waiting for a premium exit.
I just simply decided on Wednesday to take my cards off the table at 6p and add another $7MM to my cash reserves. Nothing has changed with MMX and its trading prospects to my knowledge and I believe it to be a solid, relatively recession proof business with low cost renewable recurring revenues that will likely continue.
I just no longer feel that there is a likelihood of a premium exit in 2020 given all that has happened these last 6-7 weeks and its effect on the wider global economy. I would sooner be in cash right now and as of today I no longer hold a single publicly traded stock. When I decided to liquidate my portfolio 3-5 months ago, I made an exception to keep MMX as I felt it had very unique strong short term (within a year) appreciation prospects via an exit. Through no fault of its own I no longer feel that is likely.
I have largely enjoyed contributing to this board and I must say that, on the whole, have enjoyed dealing with MMX management.
early days yet, but as to be expected.......
https://domainnamewire.com/2020/04/24/verisign-shrugs-off-covid-19-so-far/
http://domainincite.com/25454-coronavirus-lockdown-is-working-out-great-for-at-least-one-registry
what Buyout18p /Huckster said......
Bakky,
you may well be right.... time will tell I guess, I can't say definitively..
URSU.....Neustar had a terrible record of acquisitions, Agreed is a pity we weren't one they overpaid for..... again you may be correct and MMX gets left on the shelf but I somehow doubt it.... only so many chess pieces on the table and the remaining players can often be spurred into action by one of their competitors taking targets off the "Dance Floor". MMX, Radix, Uniregistry, XYZ, and even Afilias all remaining targets
Godaddy gets into registry business via acquisition :
MMX would be a super easy roll up
https://domainnamewire.com/2020/04/06/godaddy-goes-vertical-with-neustar-registry-acquisition/
Bakky ,
Yep one and the same :-)
YHAL,
Now u really got me going
1) my offices were in Burnt Tree House overlooking Tescos car park
2) my first girlfriends dad was General Manager at British Federal
3) my nan was a cleaner at the Doughty Arms Tipton as it was called before it was Mad o Rourkes :-)
I grew up in a house backing onto the Birmingham New Road ... at the junction with Sedgley Road West
Definitely my “ hood “ back in the day :-)
ATB
Hey All,
Thank you for the kind words of concern from over there. Been a bit pre-occupied on CORVID19 related matters.
Trying to persuade 86 year old mum living up in Dudley not to go out at all etc. Apparently the Black Country is the Epicenter over there?
One of my golfing buddies over here , Bruce died frost on Sunday and another is fighting on a ventilator. Both in their 70's .
At a mere 57 I guess im considered a spring chicken but my bones and joints dont seem to agree every morning these days as a do my morning constitutional 5 miles walk around the (now deserted) Bears Club golf course with my dog...
I have always liked to describe myself as a cross between Howard Hughes and Hugh Hefner and currently I am trying to channel for of the Howard Hughes part.
And getting around to business....... Had spouted far and wide that I expected a market correction sometime before 2021 was out so have been busy liquidating most of my stocks in 2019 with the bulk sold in Dec 2019 or Jan 2020. I had also decided would be a good time to divest myself of my private holdings too and had completed the "merge" of the blockchain age verification business into the London FCA regulated business and agreed a sale fo my home electronics company here in Florida, which had gone through Due Diligence and was slated to close on 31 March.... the ONE exception I had made was my remaining stock in MMX, which as I had mentioned before saw better things and a 2020 , latest 2021 decent exit with upside. Hindsight is a wonderful thing and overall I am very satisfied have dodged the Corona bullet on the majority of my holdings.
I would like to compare the position of MMX to say, my electronics business that now will not get sold to the prospective buyer. That business now faces a fight to survive (it will), as cash call/bailout to make it, plus uncertain times for its staff...
MMX however, is a whole different ball park (better). Small, low cost automatic renewal revenue spread over hundreds of thousands of customers via worldwide distributors. All employees basically work from home already. results were fine... prospects good. Virus has knocked everything sideways , by how much and for how long none of us now. I haven't sold any shares and don't intend to. Company has enough cash to weather this storm and my guess is will be way less affected than the vast majority. just move the timescale a little. with price at 5.5p of course I wish I had sold at 8.5 when we had the chance a few weeks ago, but the company has underlying value which isn't going to change and will be attractive in any market. major holders will preclude any sale at too cheap a price IMHO, including me.
Stay safe my friends!