I think your biggest mistake will turn out to be listening to Eagle 51...........
.......I don't get the impression I'm nearly as much the Pied Piper as resident expert and soothsayer Dave S, who led a few hundred people down the wrong path telling them Imagination Technology couldn't go wrong. Countless posts over several years- each the size of a book - explaining everything (except the results, which were getting progressively worse). Apple depended on IMG which was a core supplier practically impossible to replace....... the sky was the limit. http://www.ft.com/content/931719d6-9fdc-11e7-9a86-4d5a475ba4c5
At today's closing price of 139p, IQE is valued at £1.052bn. If it books a net profit after tax of £20m for 2017 (not sure what it will be but unlikely to much more than this as it was behind the previous year at the end of June) that would put the shares on a P/E of 52.
I've decided not to explain how a company is valued, because the concept of NPV using DCF projections will be impossible for you to understand. But I will say that NPV/DCF is the only true way to value any asset held for gain. In very simple terms (you may still struggle) an asset can only be worth (in monetary terms) the present value of all the cash it will generate over its lifetime. So the owner of a holding of shares in a company that doesn't pay any dividends is reliant only on the share price being higher when he sells than the reverse for a return.
Shares in companies like IQE only ever go up, so your investment is safe because it doesn't have any customers upon which it is fundamentally reliant and the fact recorded profits don't turn into cash doesn't matter. Monty will confirm this - he's AA rated.
Imagination was just the same - ask Dave..........45 people ticked up one of his posts saying they should buy.
Interesting that the noisiest and most offensive posters on here are the ones who never make any contribution to sensible discussions. They simply won't tolerate views that are different to those formed by others they have decided they like - it is plain daft. As for the joke of the decade (the former S&P AA rated fund manager who only looks at page numbers of accounts because he doesn't understand them - hi Monty, take a bow - I doubt Warren Buffett spends his time listening in on conference calls or working out what widget does what in the companies he's considering investing in. He'll of course form his views about future potential but he's probably more interested in the integrity of management, their history of delivering what they have promised, the balance of age and experience on the BoD and - most of all - the return he's going to get from his investment - measured in cash not promises.
I am not saying IQE will fail - the balance of probability is that it won't. It may well already be on someone's acquisition list. WDIK?
There are risks attached to every investment. My view is that these have not been sufficiently factored into IQE - and I don't believe the directors are to be trusted to tell it as it is. They have a chequered history in this regard. Leopards and spots come to mind. In the words of the Sage of Omaha: "price is what you pay; value is what you get". It is my prerogative not to regard IQE as good value. At least I understand accounts. It is clear most on here do not.
The abuse can now start in earnest. You and OBO can lead it Les PC (you might be able to afford a real one soon). Great result for you so far but you're in the wrong street if you're trying to impress me with £180k.........
I think your biggest mistake will turn out to be listening to Eagle 51.
Who may or, may not, have last been seen in Paternoster Square wagging his finger and launching into a long-winded tirade to admonish Elizabeth Frinks bronze whilst lecturing: you don't know how to value a company; 40% in less than 3 weeks? pfft... you are just sheep! If you do not move on now, I will be back tomorrow to show... nay, TELL you how to value a company properly.
I am not very brave and our interests may well be well aligned as I think you, like I, believe that there is a future in IQE. Where we lack alignment is the <thieving robbers> board of IQE. I am probably wrong and there may not be resignations on 20th March but if there are I will close my short and go "all in". If you hold your nerve you have made a good decision in being long and I wish you good luck whatever crawls out of the woodwork in 4 weeks.
You're obviously very brave by paying a margin call on your short bet today, when many other shorters have been panicking and buying back their IQE shares, with the share price going up 12% today as a result.
I admire your bravery, but I won't wish you good luck as our interests are not aligned on this one!
The 720,000 shares at 139p was the daily UT trade, - uncrossing trade,this is reported at 4.35 pm each day and is essentially UT: Uncrossing Trade - This is used for for the single uncrossing trade detailing the total executed volume and uncrossing price as a result of a SETS auction.
The fact that the price in the SETS auction was what it was :-) is a very positive indication fir the SP next week.
Given no weekend macroeconomic calamity , IQE enters into the week with positive momentum and improving sentiment. The Chartists will be all over the stock and its recent very BULLISH turnaround, which will aid the sentiment.
There was little old me , hating shorting hedge - funds, but believing they were run by cunning but manipulative managers who could stoop to using base tactics to support their goals, it turns out of. Purse that those that did NOT take their rich- pickings at sub 1£ and were overly greedy are going to pay the price for that avarice.
In essence those managers have behaved like the amateur private investors , making all the old mistakes
Given the Citi report, the backing of all the covering analysts , The note from their auditors, I believe , the issues that caused the fall in the SP are now behind us. The shorter attack was NEVER based on the potential for IQEs technology and business plan, it was a direct attack on the integrity of the board, it singularly failed, but it did allow savvy investors to load up at sub £1 - thanks Shadowfail and thanks Micky Waters
All have a good weekend, the run to finals and after should be entertaining
I have put a valuation of 80p on IQE. FWIW I am now working on 60p. I have already told you I am short and that I had a margin call at 0800 this morning. The amount required (in e-mail at 0800) would hold my position to 136p, not that that figure was mentioned. Had a very interesting chat with the dealer just now, "that is what the computer does". Or, to put it another way, today's trading and peak price was already known/planned at 0800. I will let you know if I get another e-mail in tomorrow morning, it would be a good sign/reason for bulls to top up.
Seadoc (ps - I also believe in 9/11, aliens, global warming and the price of fish)
Blouson, like you I took on a large number of shares, I have mentioned the number in several posts, during the down leg, the panic, whatever you call it, in recent weeks. I have no intention of doing anything but holding on to these for the long term for what it's worth. I took them on as an investment, not a trade.
I think your comments about placing accurate value are fair. But what I think will drive the value, other than a pure reflection of multiples of earnings per share, analysis of the earnings multiple to expected earnings growth or other measures of momentum that are employed by serious investors, are more subtle and psychological measures - if IQE does become a serious opportunity to invest in the compound semiconductor world post the silicon chip, and assuming most (UK) investors, private or institutional, are restricted from investing in US or European companies, as tends often to be the case, just how far will investors keep running down the tracks to get on board the train?? (if you'll forgive the analogy...)
How many other similar opportunities are there for most investors?? The introduction of the American tech funds obviously also helps the transition from a tradition shareholder base of AIM/Small Cap/UK funds to a wider spread with a different approach and I suspect different valuation criteria. This type of basic psychology, when a company moves into a growth phase which could last for multi years, hard to know at present, often takes over from any simple analysis of valuation. Never underestimate the potential for the behaviour of the crowd IMHO. We've seen it in many companies, but actually if you look at something that perpetuates as opposed to having a share price spike, it is because the company delivers growth over a medium term period. Fevertree has been a massive and incredible share price spike, I'm not sure I've seen one quite like it, I've not followed it closely but to perpetuate I assume the company has been delivering admirably.
I believe IQE has a lot to prove DYOR, but like several other posters here it's my opinion that finding a comparable company in current markets with the broad span of very large growth markets that it's either immediately or foreseeably addressing is extremely hard. That's why I've invested a considerable amount of money in the shares, wisely or not only time will tell.
For those who can't access that web site, here are the relevant comments:
"Citi has a 32 page "deep dive" out that's in response to the Matt Earl and Carson Block stuff from last month."
"And it concludes that the JV accounting, while a bit opaque, isn't dodgy."
"Our analysis so far leads us to make the following observations:
We note that while the company recognized a gain on the revaluation of fixed assets, it was excluded from the adjusted measures provided by the company.
IP license fees from JVs were determined through independent valuation and have been declining. Unrealized profit largely eliminated in 2015 against the carrying value of the investment with no further elimination in 2016. This is valid from an accounting standpoint although we believe disclosure could be clearer.
IQE reports upstream purchases from JVs. These are undertaken at cost & the firm indicates they do not impact IQE's profits. IQE serves as anchor customer.
On JV Investment Accounting, our analysis suggests that companys disclosure could be significantly clearer. However on accounting, we are able to explain most of the developments in relation to IFRS requirements."
"So, IQE needs to improve disclosure. The change of auditors might help there, Citi argues."
"Here's the par summary on investment accounting."
"We have analysed IQEs JV investment accounting to demonstrate our understanding of the impact of initial contributions, trading between parties, equity method accounting for the losses incurred by JVs and further losses that are unrecognized by IQE as the respective JV investments are already carried at zero value. We consider that the companys disclosure could be significantly clearer. However on accounting, we are able to explain the development in relation to IFRS requirements. A few questions remain however on matters of disclosure (presentation of revenue for sales to CSC, and potential disclosure of revenue eliminations not recognized in relation to CSDC of £1m). We also await the outcome of KPMGs audit in relation to whether preference shares might be written down for the further JV losses."
Both the Shadowridingforafall and MuddyingtheWaters reports stank of desperation, I hope they're really feeling the pain but with sewer rats like those I suspect they long since made off with their money, woe betide anyone who took heed of their shoddy aspersions... it's enough to make you believe the shares are worth only 80p.
But sadly I've no doubt the Shadowfalls etc made good while the going was in favour of the short side. What irks me as per previous post is that there is a crossover between a bet that a share will fall, nothing illegal in that, and a co-ordinated effort at market manipulation, which I believe their behaviour represented.
I urge caution of course, in the words of a certain poster, not that my posts are designed to either be encouraging or cautionary, they are how I see things and they stick to the company's prospects, which interests me more than the short term share price, please DYOR.... my cautionary words are IMHO and are hopefully balanced posts which I know are appreciated more than some who post more often (I suspect I'm a couple of times a week) and I thank you all who occasionally express appreciation. [It seems WS doesn't like me, he keeps on posting barbs in my direction, water firmly off duck's back lest anyone is concerned. Our feathered friend seems to like me neither, then again he seems to like very few on here and hasn't done for many years - I'm a newbie, less than a year of posting, so I have missed years of boredom from these people, one of whom was called a charlatan I noted earlier in the week for his hypocrisy in his postings on other companies].
Actually the appreciation myself and I believe most of us genuinely feel, I suspect is for the detailed information we get on where IQE is going from a certain poster who spends his time on the Lumentum/AMS/Himax/Seagate/Qorvo/etc etc etc earnings reports and conference calls. For what it's worth, it was a pleasure to have something interesting to read this week when he posted earlier this week besides 86 sniping posts from WS and Eagle, the latter of whom seems like a particularly bitter type to me, all of which add nothing but frustration to those who want to read this board to gather information. DS doesn't post all this because he's trying to ramp the share price, which will look after itself, he's doing it because he's trying to give people an understanding of where IQE is going in the next 12, 18, 24 months, and that's where it's customers are going with the OEMs, which is what they tell their shareholders and potential investors in THEIR earnings reports and conference calls. Good to hear that the new Newport factory looked a hive of activity, it would be worrying if it wasn't. It will be interesting to see if they are bringing forward clean room and machine investments when they report on March 20th. A lot of that probably depends on Aixtron's ability to deliver equipment... What DS posts is really useful information and far from the madding crowd of market noise re the share price, and it's information most of us don't have the same ability to interpret.
We don't know what the company will say in the March 20th report, other than the quite detailed snippets they've told us already. The analysts' numbers are there to be beaten IMHO, they look too low, not just in 2017 and 2018 but more especially in 2019 and 2020. That's part of the game, don't set expectations too high, but it may also be a reflection of known drags such as the gradual amortisation of capitalised assets/interest on earnings down the line.
My view is that one side effect of the recent hoopla over accounting policies, treatment of jv's, new auditors appointed (quite a poorly timed announcement, if you ask me such things are done after the financial year end and announced around the AGM, but clearly this was a reaction I suspect to the American tax issue that was already underway) is that the existing board AND the recently a
There are two useful figures, stock on loan and declared shorts but although the FCA is told of all shorts they only publicly show positions in excess of 0.5%. The last time I looked the shares on loan were about twice the published declared shorts. Make of that what you can. Latest disclosed position is still 9.1%, I do not think there has been any change in last week but if you have the time do scroll down to the bottom of the FCA spreadsheet and you can see all historic data, well it goes back a bit but not sure how far:
I am short of IQE and have been invited to cough up an extra £1500 today to hold my (tiny) position open. It hurts. Full marks to JC who last time he posted was long and hopefully has trousered my money.
last night I took comfort from the fact that on reasonable volume the sp ended within a fraction of it's daily high and believed that meant a further leg up would happen today. today's close will be interesting from that perspective
As others have explained the short squeeze can be a virtuous cycle and could , with barely 3 weeks till results ( and probably more importantly, 3 weeks before forward guidance on 2018/19 sales etc) see the SP continue to spike ever higher.
It will be a brave short that doesn't at least hedge their position if the SP gets back to 150+ before results because if the forward guidance is remotely like one can read across from others in IQE's sectors ( and thanks to Dave Sweeney for his education) the SP could take another leg up from that moment .
I remain unable to place any accurate value on the company and suspect that most others have similar difficulty. But depending on the detail of the guidance we - and analysts- may be able to start to forecast sales, margins, costs and profits which then enables a debate on value to follow based on those and the pace of growth. professional shorters are not meant to be gamblers- and leaving their positions open at results day without hedging seems a straight gamble.
The big unknown is whether the new auditor may take the opportunity to clear certain decks and increase provisions- which could of course see a big correction. But management should have had comfort before switching auditors that the new ones agreed the key policies, and if not should have made a very different announcement at the time of the change .
So I am proceeding on the basis that the management are not fools, IQE will be doing similarly to the rest of their industry and the guidance they have previously given and that shorters won't wait to see flames before trying to flee the fire. Around 100 I bought a lot more IQE with the intent to trade those ( to hedge my longer term, and much cheaper, core holding). I've changed my mind and am holding the lot long term- or until I have good reason not to.
It lists the short positions held by all funds. Looks like there's still a lot of short stock out there, but I had a note on an app on my mobile about a week ago saying that there had been a significant drop in short stock. Unfortunately, I can't find the link again.
> are we seeing the shorters being squeezed, or sentiment returning to IQE?
The two are one and the same.
9% of the company has been borrowed and sold. In due course, those shares have to be bought in the market and returned to their owners.
For that reason, and I have been saying this all along and one or two have listened, the large and well-known short position is no bad thing. The shares are already sold, and the fact is public knowledge, which means the effect of that short-selling is already in the price. It cannot have any further negative effect.
As these short positions close, and investors see it happen, short-term sentiment towards IQE shares improves, which forces more shorts to close, which improves sentiment further.
That is the imminent next chapter. The muddy waters report was pure desperation, and they are right to be worried.
Les, Good to se you back. Just rememberer ii you sell the whole lot you will have a hefty CGT to pay HMRC. My strategy is to use the annual CGT allowance of 11k with my investments. Provides a nice little annual return which along with divi allowance of 5k is how I manage my balanced investments. IQE will inevitably continue to rise so my strategy is a solid one, being able to retain the bulk of my holdings and benefitting in the growth for the next 10 years. Of course there could be a few hick ups not least a civil war in this troubled and deeply divided country of ours. I will probably join the resistance!
In short, it does not matter a dingos kidney what the shorters do, because once the powerful institutions/investors enter the game, they are as effective as flys in a hurricane.
A pity that WS of all people have gone away for the day, at the start or the week he said 80, I said 130...... see Do the Math.
I was thinking the same myself only a few moments ago. Days to cover before Mar 20 looks comfortable but, a free float ~60% could make for some difficulty. And if most shares are currently in sticky fingers as a consequence of the nervy being shaken out during the ShadowFail/Muddy Waters attack then, hopefully, we might see some decent moves upwards despite lower volumes.
...and if the shorters are being squeezed, and assuming the sentiment on the fundamentals remains neutral, i.e. doesn't change, what does that mean for a the likelihood of a new cycle of short selling driving the price down.
I ask since I freely admit I don't really understand all the mechanisms involved in shorting this stock, or any for that matter
I suppose it was inevitable that the feathered one would return to wind us all up and I have to say Bison you nailed it. I had a go at him couple of years ago as his whinging got to me but ive decided to just let it go over my head now.
Of course, as Eagle will tell you himself, I know absolutely nothing and I feel somewhat embarrassed about that but the thing is I bought several hundred k average 19 and although have sold most on the way up I still have the last 100k for free. Problem is I just dont know when to sell them. Making 180 grand or 90 grand or or shall I just sell up today and take the 120. I just dont know maybe I could use some advice?
I'll retreat now to strum my plywood copy of that famous instrument and contemplate.
I had been away since lunch-time yesterday, see this morning
a huge list of messages - far too many to read, mostly the usual
boring ramps, but also very many insults to those who make
sensible cool-down comments. I shall have to leave you all
substantially to it for a while, as I shall be rather occupied with
a complex property deal.
Love to you all, especially to Monty.
I doubt if many here fully understand the contents of
yesterday's RNS, I certainly do not. Sounds to me like
academics helping one another out on semi-commercial
projects. ICS appears to be run by a husband and wife
team, and capital value of the enterprise appears to
be a few hundered £k.
Anyhow, the RNS has boosted the chat-volume, and
indeed also the share price.
P.S. The RNS is like a stick thrown into a henhouse,
all the hens start cackling (including me).
aab - you're not talking about investing - you're talking about short term share trading Short term share prices are generally the result of sentiment. Fundamentals are what genuine investors rely on to support a company's share price longer term.
Not sure what accountancy exams have to do with anything. It's an understanding of investing basics you lack, whereas I don't. There are some good books on the subject - I suggest you read one or more of them.
I'll return later and tell you how to value shares properly - not that I'd expect you to understand.
Lets all not loose the plot , unlike others, as to why most of us here which is to share views and news about the massive potential this small company has and its future.
I have heard ARM being mentioned as a small company start up in Cambridge. I was lucky enough to know a computer boffin in the 90s who recommended I bought shares in Acorn Computers. It was through him being a geek reading all the computer mags at that time that he knew about the RISC chip design side of the business. At that time Acorn was supplying schools with hardware and like Apple had their own operating system. Both Acorn and Apple were losing massive market share due to the meteoric rise of Microsoft. Based on this guys knowledge about Acorn, I decided to invest. It took knowledge from an expert, funnily also called Dave, to Introduce me to such an opportunity. . The company had to have a product, a USP and there must be a wide market for their applications.
Call it luck, but I stuck with it. Acorn split and for every Acorn share they issued multiple equities in ARM. The SP went through the roof in the late 90s with it reaching £25 and then splitting twice again effectively quadrupling the number of shares. With the sp settling around the £12 mark. It took a further 10 years for them to give their fist dividend and even then it wasnt that great. My interest was sp value. ARM did much more than GSK and Vodafone bought at around the same time. . In fact VOD shares are trading at about a 40% loss and Glaxo only a 10% gain over all that time . So much for Dividend being king!
IQE, for me, had the same appeal when they were tipped in the investors column of The Independent in 2006. Cant remember the name of the investment correspondent but he had an Italian name and really knew his stuff. The ubiquitous rise in use of chips in everything and the wafers used at their core attracted my attention. Drew Nelson was the driving force and through a visionary business plan, shrewd management and tenacity steered the company through an incredibly tough period of the economic meltdown erupting from the banking crisis and years of austerity which destroyed many businesses but not IQE. They survived long enough, like Acorn/ Arm to come through and I have no reason to doubt that We aint seen nothing yet. A little more patience is needed but as DS has widely predicted this could double, quadruple from where it is now. This is not a ramp but a level headed prediction of where it could be in2-5 years time , maybe sooner, who knows. Remember what drove this sp down was shorting based on spinning false rumours specifically designed to influence the market to assist their positions. It worked but had nothing to do with the markets and products IQE are in which have never looked stronger.
So lets try to be a bit more like Dave Sweeney and find out how Lumentum, Skyworks, Macom, Phillips, Qorvo , Apple, Samsung, Himax....... are doing and reflect on their news and what it has in store for IQE.
A sad joke , more about personality disorder v personality disorder, than anything to do with IQE, its great markets and potential
Anyone who understands what IQE actually does will love this link- courtesy of Maxwellsdemon , just look at the estimated growth rates of the VCSEL market- stunning.
The photonics division of IQE probably had triple digit growth in 2017, following a very successful 2016
Given the VCSEL ramp I reckon 2018 could give the potential for a 150% rise YOY, even if the wireless division remains flat , the infrared could imho also attain growth of 100% in 2018, things are looking great in HIGH MARGIN businesses
Firstly please ignore the SELL recommendation. I am stuck with and dont know how to get rid of it.
I think you are being very hurtful to dear old eagle. He is only trying to be helpful to those less intelligent than himself, offering well chosen words to guide you on your way. He perhaps has ruffled a few feathers en route but he doesnt really mean it. The problem is you dont take in what he is trying to say to you, perhaps you give up the ghost before you reach the end of his elongated posts but do try and be patient.
He has made so many friends on the BBs of other companies, check his posting history, that you would not believe..
He and I have had the odd frank exchange on other shares but I love him like a brother. He must be the most wonderful companion for a convivial dinner, you would not have to do anything other than listen.
I fear I may be on ignore and will miss his friendly response. If I am not I think you will enjoy his repost.
I dont hold IQE, maybe I should, particularly as our dear friend is so bearish.
Good luck to you holders.
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