4308 days ago
Originally appearing behind the paywall of my Nifty Fifty site, I felt this piece merited a wider airing: I am indebted to the CEO of an AIM listed company for this back of the envelope analysis of the c1200 companies on AIM.
“If one excludes the loss makers within the index, the universe of actually profitable becomes 200. At this point, on those 200, the average PE is 38. If I then cull all those with a PE over 12, I’m immediately down to 48 companies. Picking low risk companies on AIM is going to be tough. That should not be a surprise though hey?!
Can this be true? Amazingly it appears to be the case. Just 4% of companies on AIM are what one might term traditional value buys. Of course, there will be some within that 48 which have other problems but equally, I suppose there will be some on PEs of greater than 12 where PEG analysis shows them to be cheap. But overall it is a pretty poor showing.
Indeed, what of the 80%+ of AIM which are loss makers?
4327 days ago
think equities will go up, but I am bearish. If that sounds like the sort of TA nonsense that my pal Zak Mir spouts I apologise. Let me explain. Equities will go up because the bond bubble is only starting to burst. We will likely continue to see steady outflows from bonds into equities at an institutional level and that will push shares commensurately higher given the sheer mass of capital that is parked in bonds at present. To be more precise, it will push blue chips and mid caps higher as those are the sort of liquid stocks institutions will buy. I am not sure that it will do much for the riff-raff tail on AIM however!
Out of the frying pan into the fire. Are equities good value. The FTSE 100 I propose to ignore as it is heavily weighted towards stocks that are always on low PEs (Banks) and those which are British companies in name only – all their earnings are overseas. Instead I wish to draw your attention to the FTSE 250 Index which, at 12763.64 trades, now on a trailing price earnings ratio of, wait for it, 18.66 times. Towards the top end of its long term levels.
4337 days ago
Normally I would consider that a company that will be loss making unto, calendar 2014 but which at a 493p share price trades on a 2014 PE ratio of 103 would be a slam dunk sell. Wandisco (WAND) is just that company and it cannot be described as a tradition Benjamin Graham style value investment. But before Lucien Miers thinks about shorting the stock, I suggest that he reads on. This is not as simple as it sounds.
Wandisco sounds like a seedy night club in Corfu. I fact I think I have been there. But in fact it stands for Wide Area Network Distributed Computing. Based in the US since its conception in 2005 its patented software allows developers in different locations to work simultaneously, creating a seamless global network. Users at every site where Wandisco is installed have local access to the same data at all times, which means that they can make changes locally and see each other’s changes immediately.
The four key points about this technology are that
