What a difference a month can make -- Envirosuite up >60% since December 15. No news, mind you.
Felling good about taking the opportunity to buy more at much lower prices, and a good reminder that you cant assume the market knows what it is doing (thank god). Although, I should be careful not to do a victory lap -- shares could easily get cut in half from here!!
Still, it's noteworthy that since i started my Strawman position in November 2017, shares have done this:
In other words, not much!!
But the unexpected thing is that over this period I've generated a 35%pa CAGR, on a money weighted basis. How? I bought when shares were well below my valuation estimate, and sold off when it materially exceeded it. The timing with these trades was, for the most part, terrible -- I could have bought at far lower prices and sold at far higher prices. I suck at timing.
But I wouldn't classify this as 'trading' -- just ensuring my exposure made sense relative to what I conservatively estimated the true intrinsic value to be.
I'd like to say it's similar with Catapult -- another one that has been a real test of faith -- which remains 20% below the price I first paid for it on Strawman. My overall CAGR on Strawman is slightly negative, but would have been MUCH better if I was a more aggressive buyer when it was out of favour, and a more aggressive seller when it materially exceeded my valuation. Instead, for some reason I can't explain, I did neither.
Of course, you don't want to play these games with super high quality, high conviction, long runway potential companies (yes, i'm looking at you ProMedicus!) but I thought it worth pointing out the benefit of anchoring trade decisions to a sensible measure of true value. As well as the folly of ignoring your valuation and letting the market drive your decisions..
@Hackofalltrades I think you’re on to something. A quality rating to complement Strawman valuations would be a worthwhile addition to the Strawman platform. It would at least create some discussion amongst members about what constitutes a quality stock.
Without any words and just a few graphs, I think this is what top quality looks like. No prizes for guessing which company.
Competitor?
I recently received a marketing/promotional email with an attached Infographic and Brochure from Acoem (https://www.acoem.com/en/). I was unaware of this company prior to receiving the email from their 'Technical Sales' person.
Below is an extract from their Infographic on the Environmental Monitoring they provide for mine sites - I imagine this have alternative uses and applications, maybe this was tailored for the end viewer/user, such as myself? Unsure.
They come with NATA Accreditation which is certainly a tick in the right direction. For further information I would suggest having a look at their website linked above. Appears to be a French company - and of decent size (and scale) - "our 900+ employees work across 27 offices, 6 manufacturing facilities and 4 R&D centres in 11 countries to provide trusted, holistic data solutions for customers worldwide".
I haven't done a full review yet but found it interesting after previously being contacted by a sales rep from Envirosuite here.
As a note, we don't use either Envirosuite or Acoem products or services on site currently.
Currently hold EVS on SM and IRL.
Btw, does anyone know how Envirosuite got their relief from 4Cs? Last I check they were still burning cash.
Yep, the short answer @JPPicard is that non-profitable companies usually only have to provide App 4Cs for the first 2 years after they list (or have a significant change in the nature of their business) plus any additional period that the ASX requires them to, but not forever. As Pacific Environment Limited (PEL), their last 4C was for the December 2013 quarter and was lodged on 28 January 2014. PEL-FY14-Q2-4C-28Jan2014.pdf
They have not been required to lodge one since, according to a quick scan of their announcements that I just did.
Appendix 4C Quarterly Cashflow Reports are only required for companies that fall into the following 3 categories (under Listing Rules 4.7B and 4.7C):
- They are NOT miners, mining exploration, oil and gas producers, or oil and gas exploration companies (who all have to lodge Appendix 5B or other quarterly reports), and they are also not an investment entity (such as LICs or other investment funds, see note 8 below), and the company WAS admitted to the official list (of companies trading on the exchange) under the "commitments" test in Listing Rule 1.3.2(b) - see note 9 below, or;
- Same thing (not one of those three types of companies listed above who have different reporting requirements), and the company has undergone a significant change in the nature and scale of its activities, and therefore must re-comply with the "commitments" test because the ASX has required the company to re-comply with the admissions requirement in Chapters 1 and 2 of the Listing Rules, or;
- The ASX has asked the company to complete Appendix 4Cs.
Source: https://www.asx.com.au/documents/rules/gn23_appendix_4c.pdf
In categories 1 and 2 above, the requirement is usually for 8 quarters, so 2 years, unless the ASX extends that period, in which case the company falls in category 3 above and the ASX will tell the company when they no longer have to lodge Quarterly Reports. However, the requirement is generally for the first 2 years that the company is listed for unless the ASX extend that period.
The purpose of the "commitments" test (which underpins the requirements to lodge the Appendix 4C for the first two years that a non-profitable company is listed on the ASX) is to prevent entities that are essentially "cash boxes" from listing on the ASX, as explained in note 9 below (taken from page 3 of the document linked to above).
Here's the actual ASX wording, with notes below:
Notes:
Source: https://www.asx.com.au/documents/rules/gn23_appendix_4c.pdf
Hope that helps.
P.S. Additional: It is my understanding that if a company goes from being profitable or operating cashflow positive - as PEL - later renamed Envirosuite [EVS] - were in 2013 - they were operating cashflow positive at that point when the ASX no longer required them to continue to lodge 4Cs - back to being unprofitable or cashflow negative, it does not automatically trigger the need for App 4Cs to be lodged again, although the ASX can (at their discretion) require such companies to begin lodging 4Cs again if they want them to, but the ASX would need to make that request to the company - it is not an automatic requirement.
If the thrust of the rule was to prevent "cashbox" situations, as explained in that guidance note (#23), and the company has significant sales and is obviously operating as a company that is trying to move towards profitability at some point, rather than just sitting on a pile of cash and doing bugger all, then the ASX would be unlikely to request 4Cs in that scenario (IMO).
@mikebrisy I tuned into the meeting too. Yes, I too get a feeling that Jason is perhaps being a little too optimistic, but I want to give him benefit of the doubt heading into H2. As I mentioned though, it is really important we see some sales traction after the comments made in the report.
I wanted to touch on this statement: 'they remain on track towards profitability this year.'
I didnt want to repeat that statement here because I was convinced I must have misheard/misinterpreted. Now that we have both seemingly appeared to hear the same thing, I have NO idea how they suggest they will hit profitability this year. Am I missing something? Are they talking about EBITDA positive?