P.S. From time to time I do wonder how much the name confusing with MTG is hurting the company. I suspect quite a bit.
I hear you, but I disagree. In my view, retiring shares would not benefit the common shareholders, since the issue is not too much float or unattractive pricing (the price is fine and the float is OK.)
Why is it important to create dividend. Personally I'd prefer if they used the dividend funds to retire shares.
Thank you for your note. I actually think that things are going well. I prefer this price level and volume because it is possible to stealth-buy.
With respect to your other comment, I believe that the long term alignment with the CEO of Formula and Magic Software is anchored in his compensation agreement, which is publicly available. Short term, it is clear that one of the important criteria is to create dividend.
From listening to the CC, and hoping for some sort of explanation w.r.t. the secondary, it's very obvious that management are focused on whatever it is their majority shareholder wants. If only we could figure that out, we might discover what the heck is going on. Retail shareholders like you and me are in a bit of a pickle. Typically our interests would align but that doesn't seem to be the case here. The share price is absolutely irrelevant to Mr. Bernstein and that can only be because it is also irrelevant to Forty and Asseco.
I had wanted to close out my position but it's difficult to sell shares I know are worth $12.50 for today's ludicrous price, a price that is the direct result of management actions.
I'm tired of the whole situation. I may get on the next cc and ask Mr. B directly if he believes the pps is reasonable and if he considers the recent secondary to have had a bearing on the share price. Perhaps direct questions will get answers.
Management is unfriendly to shareholders and I am not sure why. Maybe they have something to hide or simply don't care. They do care about Asseco who owns 50% of Forty who owns 50% of MGIC. Forty is more of a holding company. Bernstein runs both companies and making out very well. So maybe its both. Doesn't care and is hiding things. The stock is undervalued and maybe someday that will change. That's why I own the stock.
I guess if you're going to be unfriendly to the market, the market will not be rewarding you.
I think a word from management that unnecessary secondaries will never be countenanced again might go a ways to getting the share price revalued. We still don't know what happened to the funds from the last secondary after all this time. That is what I call insulting the Street, and there's nothing to be gained from such behavior.
So coming up on earnings and with five years of stellar topline growth behind us and consistent quarterly profitability (show me another tech software company with that track record,) the question is not what Magic Software will do, but, rather, what it is going to take to get the market to move on MGIC.
Honestly, I don't know. While growing from $75 million in annual revenues to an astonishing $175 million in revenues, the share price has hardly moved, and over the last years it has, in fact, gone down. Classic Buffett case, I guess.
Still waiting, still holding.
Trading hit 234K at noon, an 8 fold increase over the daily average. More importantly, the price was up, so it was buying induced traffic, not seeking induced.
Going to be interesting to see what happens next.
Somebody wake up the referee so we can determine if this is a KO or if the fight can continue! Laying on the mat making believe we're catching our breath is getting old! We need a decision.
Here is the fundamentals data that I could glean from the SandP report and open sources
Fair Value Calc: $8.70 (from SandP -- generally, I find this measure to be accurate)
Current Price: $6.70
Market value: $300 mill.
Cash on hand: $85 million
Acct: receivables: $40 million
Other assets: $90 million -- I tend to initially ignore these as they include intangibles, and, so, really mean very little to me.
Total liabilities: $40 million -- neatly canceling out the acct receivables
So, general "emergency dive" liquidation value: $85 +40 - 40 = $85 million, and, so adjusted market valuation is $215 million on a company that "sold" $165 million in 2014 and produced net operating income of $20 million, up 15% year over year for the last five years. Assuming that the cash value of five more years of operational performance (without dividend, acquisitions and all that jazz and with 10% interest) is $170 million plus the growing $85 million (interest!), we get a value of $300 million or so, leaving only the value of the intangibles, which, of course, includes IP.
So in this snapshot, the question that I see is how much the IP is worth? If its worth the intangible, then SandP is close to dead on with their valuation, and we have a value gap of $100 million or so.