The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
I think the broker snagged about 4Million of them before the buy price went above my max.
good morning Silver ,
i’m pretty sure the 2 lots of 750,000 for farrow are probably the 750,000 he and 4 other managers at icm were given at the point of the icm deal so aren’t options at all and the other 750,000 RSU s were from his first stint at MMX .
i don’t think we have learned his CEO package yet but i would assume ( and expect) , depending on his salary package a very aggressive option grant designed to nett him a miillion or two is he stewards the comoany well and through a successful exit for shareholders so would expect a 5 figure million option plan to be announced at some stage . the 1.5 will and should look relatively small fry by comparison i expect
I agree on most of your points....
in truth on a consolidation sale the cost base will not affect valuation as would be wiped out post sale therefore ignored . that said the fewer people needed to run the business shows how much on "autopilot " it is and as you quite rightly explain, leaves more free cashflow for dividend/buybacks/whatever...
Also agreed on MMX being target, With frank auctioning his 21 Tlds off etc, not many other small portfolio plays left.
again that said, the potential acquirers will have a very formulaic approach and thats why the "profile" of the MMX registrations needs to be "normalized" as much as possible to maximize the next number when those formulas are applied...
Silver,
is hard to know.... long term I do and have always thought that the asset value of the underlying Tlds exceeded the market cap.
What happens in the meantime, as we have seen is anyones guess.
the catch -22 is until and unless I can assess fully what the plan is and how it is being executed then its still somewhat of a stab in the dark based on simply my industry knowledge and confidence in the (now) known and trusted management.
If I get into a position to see under the hood so to speak then I am effectively barred from trading as would be an "insider", so is a case of "gentleman , place your bets"...
Lets see what the next few weeks bring. For example, we have no idea whether the inventory realize is in fact at a premium price or whether they are just deciding to release more names at standard pricing to generate some buzz and boost up the DUMS with solid revenue producing registration which will have high renewal rates (which is something I would not necessarily disapprove of). I was never big on holding back too much inventory as at the end of the day it isn't Faberge eggs we are selling and also in a sale , no buyer pays you diddly for the perceived value of the unsold inventory.... better to have 10,000 extra regs making you $700,000 a year profit than patting yourself on the back trying to convince yourself how valuable the unsold inventory is...., $700k a year profit will add $8-10 million to the co valuation whereas a bunch of unsold names, won't...
SB ,
back in the ICM days we did have a tiered program in place , with 5/6 levels $149/249/ 349 a year etx fees
for the uninitiated here in the domain world strings are ranked in value terms whether they are N ( number) or L ( letter )
so L is worth more than N and
L is worth more than LL and in turn LLL and so on
so a LL.xxx would be a higher tier perhaps $499 a year ?
share buys : i have left it to my broker
i want to buy up to 80 million shares at current prices as it is a total nightmare under US SEC rules to own over 10% of a “ micro -cap “ “
penny stock “.
i gave my broker instructions to buy an initial 20MM at certain max price points on monday .
if my buys can’t be filled or the price goes up then i simply won’t buy any more , as the upside potential wouldn’t be enough for my interest .
i know the have secured some , as low as 4.31 i think and some more around 4.65 and i will report back in due course when complete or when the exersize is rendered futile if the price increases .
i haven’t and won’t engage with the company until that process is complete as want to maintain my position as a non “ insider “
as ever trying to be as open and transparent as possible
and hopefully the “ inventory release” is presumably premium names which it seems from SBs analysis which can be released and sold at higher than regular prices without having to wait for the 6 month period required for the increase in the standard reg fee :-)
re : AB
i would sooner see then sold in one year increments as it adds more value to the annuity revenue stream on a multiple going forwards that a single cash infusion for a paid upfront 10 year . in retrospect i wish i had had 65,000 registrations bringing in $3.5 M a year reg fees rather than the one off $13MM or so we took .
in terms of MMX buying the UNR tlds , again wouldn’t be so keen on that : most have underperformed and unless they were giveaways i think it would be a distraction the mmx management may not need at this time . i know frank personally and he is a co - investor in another business of mine , so i will get to know what the prices achieved are in due course i’m sure .
looking at the opening bid process suggests vs the TLD values i have given the mmx 32 tld asset spreadsheet i produced a while ago , it will be interesting to see if the auction is a #success or #fail .
also frank is very cunning so it wouldn’t surprise me that by announcing the sale by individual auction 3 months hence whether it galvanizes the obvious aquirors to make an interim bid for the whole bunch .
that would be a game plan i would have likely come up with if the buyers weren’t biting at the end of the rod to date :-)
either way frank has a “ mixed “ portfolio in some ways not that different to MMxs so this could be a good indicator as to the likely future value of the mmx assets
SB ,
i had already restocked my fleet back to it’s pretty covid count with the recent addition of the new 702 HP Hellcat engined 6.2L supercharged Dodge Ram TRX truck ( i know , it’s an american thing ) and also the new 2021 model Porsche 911 Turbo S , so no extra new purchases planned , although they have just launched the Audi RS6 avant over here which may be good for taking the dog to the beach in :-)
re : AB , i honestly have no idea how many of the 65k or so SRB customers will “ convert “ to AB on expiry . it would be a total guess so no point making a stab at it . i’m not even familiar with the AB pricing but once can extrapolate various scenarios but your suggested numbers could well be in scope : i think will be an H2 number for sure .
one would have to guess the company would be disappointed in “only “ a couple of million .
from my perspective , i would be looking at the “ regular “ performance of the business with any such “ windfall” revenues from AB as the cherry on top , rather than trying to make that a central part of the plan , which may less to disappointment.
the key underlying value of the business should be based on the underlying regular registration revenues and if AB goes well then that would be a welcome quantum jump in revenue / profits / valuation .
morning chaps ,
no sadly it wasn’t me who registered that one !
Glad everything is done and dusted . No real pain for anyone , as i believe i had explained was my goal .
have been looking to buy the last few days at these prices but nowt meaningful available , so i may miss the chance to hop back on board in a meaningful way .
i won’t buy at higher prices as the potential upside then just isn’t enough to whet the appetite esp if is low volume .
I still don’t have , and aren’t looking to gain , at this juncture any inside information so i am still playing with the same deck of cards as the rest of you .
i have to admit the trading update delivered better numbers than i had been expecting so good for them !
also pleased they made Tony Farrow permanent . a very capable operator and as straight a shooter as they come , imho .
i didn’t read into the RNS comments about “carrying value “ the fact there would be write offs coming as most of the lower quality TLDS i believe are in the Bal sheet at almost nothing : i took the statement to mean they may look at the TLDs that aren’t covering their costs with a view to selling them off piecemeal to buyers who think they can do something better with them . “ one mans garbage is another mans treasure “ type of approach . that is something that i think may be worth looking at .
meanwhile it seems like Frank Shilling is running most of his TLDs up the auction flagpole https://auction.link/ , which may give us some indication of the true value of the underlying assets .
i’m sure you all saw Ethos take out Arbry at Donuts , a good development .
also noted the comments about AB and it is correct that it is September 2021 that is the 10 year anniversary when the original SRBs expire .
i have missed you guys banter and sincerely wish the best to you all for 2021.
Buyout ,
great summary .
notice was filed with company today so i guess it now is sub judice , so i better had not post any more about the case .
i wish everyone the best for the SP .
there is potentially some upside if everything wrong can get out right .
may see you all later on the same side of the fence again .
my best wishes to all , sincerely .
Stuart
no , just elephantine in size :-)
huckster ,
yes apologies it was another poster who made the comment , not you .
the facts are the facts , despite mine or their spin on them and this case will rightly turn on those facts as it should .
i’m like an elephant ( in more ways than one ) in that i never forget things but am also very forgiving and able to bury the proverbial hatchet and am also as pragmatic as they come .
have the full fight or put some ointment on the open wounds and move on to rebuild this business and present to a purchaser as “ clean “.
why do you think the potential 4/5 purchasers during the strategic review ran away .
i have asked them recently and the universal answer ?
“ we just couldn’t make top nor tail of China and didn’t trust what we were being given as reasoning “
plausible perhaps if it was not at all in your mid or being contemplated on june 18th but only came into view in the 12 days between 18th and 30th .
let’s see the audit trail of correspondence and discussion to see whether was known / contemplated prior to 18 june 2018
BB ,
As i have stated my belief in outright fraud was only really ignited when the dynamic duo were exposed as liars and cheats in the october 2020 rns’s.
prior to then was willing to let bygones be bygones , with the scammers still at the helm , they would continue to lie and cover up what they had done making the proof even harder to get to .
in september 2018 i held 145 Million shares and was still being spun the line that is purely accounting caution and the deals are real and monies will be collected from these “ known and trusted “ parties . lies on top of lies . what am i really going to do , holding $20MM of stock at that point ? shoot my self in the foot ?
i didn’t disagree with the contract impairment provision , was actually the right thing to do : just more of a question of when you knew you were going to do it and whether you could have and should have disclosed it as part of a major acquisition deal
davand ,
spot on
i am not too proud or arrogant to admit when i’m wrong or mistaken .
have eaten many large slices of humble pie over the years
as aside , and perhaps farcically , about 12 months after the deal , MS wrote to us , saying a bill for $20k had arrived from icann that was valid but unexpected and hadn’t been disclosed or accounted for in our financials or disclosures and therefore was subject to a warranty claim and could we send over the $20k.
no suggestions of fraud just an oversight but they wished to claim it under the warranties .
we accepted it as a valid warranty claim but did not pay it as the terms of the warranties stipulated that the no warranty claims could be paid out until and unless the aggregate of such claims totalled at least $100,000, which they never did .
just shows that MS was acutely aware of what warranties meant ...
Silver ,
i think you are , perhaps , inadvertently making my point for me .
firstly if you look at the 2017 accounts mazars basically say they have prepped them to the new iFRS standards and the company knew that from jan 1 2018 IFSR 9 applied .
let’s remember there were $14.1 M of provisions in the june 30 2018 accounts for various impairments .
you only make those provisions at that snapshot in time ie 30 june 2018 if you think they are appropriate at THAT time . if you decide 3 months later to make those provisions you make them in the next set of accounts and / or disclose them as post balance sheet events .
so we have established , i believe that on or before 30 th June 2018 the company knew there were a series of impairments totaling some $14.1 million , relating to items on the prior balance sheet of dec 2017 . hopefully you are still with me to that point . whether it is to do with likely non payment of debts or contract restructuring, whatever it is , for it to be in the june 30th accounts you knew it/ believed it at that point in time .
all fine and dandy ..
except , 12 days prior you gave a party to a major transaction with you written warranties that there were no such provisions or material changes to the balance sheet items since the dec 2017 were produced . that’s the rub . the third party relied on those warranties to enter into a transaction with you .
therefore you had better be able to point to , with a straight face , some earth shattering events that occurred between june 18th when u have the accounts and disclosures a clean bill of health and 12 days later on the 30th june 2018 when you felt that $14.1 Mm of provisions needed to be made .
4 or 5 different items ALL suddenly come to light in a -2 day period ?? really ?
if that is what you are claiming you had better have some pretty convincing evidence to back it up that what you knew on 30/6 was wildly different from what you knew on 18/6.
answers on a postcard please ( crackerjack IIRC)
i hope the penny has now dropped for many who have perhaps struggled to wrap their heads around this
i believe they use first name @mmx.co
tony@
etx
BB ,
i have accepted your criticism about my unconvential style and your comments about entrepreneurs is probably quite accurate : these days , more like Trump than Maggie possibly :-) although a bad analogy given he is getting his ass kicked in court , but i agree with your drift .
one thing i can NEVER be accused of is a lack of pragmatism , quite the opposite in fact . see the writing on the wall , make the best of a bad job , accept your own part in the problem , find a none too painful compromise and move on .
we have kicked this around quite a bit now for several days , the minutiaie of the case cannot be litigated here for sure , let’s see this as it unfolds now
SB ,
Sterling work as ever !
probably close to the companies “ line “ i assume .
a few observations :
1) more than one premium deal in question :
2) isn’t a balance sheet a snapshot of the business exactly that ( frozen in a point in time ) with “ post balance sheet events “ mentioned as such . so if the provision didn’t cristalize until sept 2018 then shouldnt be on the 30 Jun balance sheet , 12 days after you warranted that you knew nothing material on such matters
3) documents and correspondence between the parties , management , auditors etx including any famous TH “ side letters “ would shed light on the exact timing of who knew what and when and what should have been disclosed , including revised payment plans and adherence to those payment plans in the time leading up to the issue and re-affirmation of warranties given .
if you have exonerating documents then cough them up to avert a crisis you know is coming .
4) we know from 2019 revelations that TF/MS have form for not telling the rest of the board or even the auditors the truth .
5) any claim isn’t going to be simply on one VIP contract . numerous other issues , all covered by warranties . when is simply one instance, a generous reading could support the idea of incompetence over conspiracy , when they start to build up in number over multiple issues the pendulum starts to swinh the other way .
all that said , your comments as ever are detailed and thoughtful and you are spot on the whole thing will hinge on the actualite ( sorry no accents on this keyboard ) . i’m happy to have that argument in a court of law and have little option but to do so given the failure of the company to produce a credible explanation ( as you have tried to do !) and / or back that up with any supporting documents ( which were politely and privately asked for ).
6) if you feel confident of your position , even given the alleged perpetrators proven form for deception , is it worth “ betting the family farm “ on the outcome , rather than engage in open dialog and disclosure where the outcome may be , as you refer to it “a goodwill gesture “ rather than potential armageddon .
one of the posters , huckster perhaps without me rechecking , mentioned something about being “ sure if his hand” or the like . no one is ever sure of their hand going into litigation and can be an uncertain outcome. i’m pretty sure of the hand we have and am 100% willing to face the consequences of being wrong / unable to prove . what do i have to lose ? a heavy few bob on legal fees and a tarnished reputation . the companies potential downside if they are wrong is a little more catastrophic i think .
to many , and i see the point , i may be viewed as having gone around this the wrong way by posting here . haven’t we all , as we have gotten older and wiser seen others potentially inflicting serious damage on themselves and tried to stop it ?
again i sincerely appreciate your writings Silver .