Yes, I get that.
I guess, first, that my assumption was that Discovery was done buying (the normal pattern is to first buy, then announce position). So, if they/it are/is still buying, then the price level would be understandable.
I am not so concerned about the buying on the weakness. If you ignore the somewhat misleading P/E there is clearly medium to long term potential, so anyone with at-risk cash could take a position and be fairly certain that over 18 months, or so, they would be made whole (either because ClickSoftware's spectacular bet pays off or because the company recognizes that the bet will not pay off and, therefore, throttles back on the expenses -- after all, what is underlying ClickSoftware is a fairly healthy book of recurring business.)
I do not believe in the abject nonsense being spewed by in-the-know hotheads. Sure, if ClickSoftware gets sold, then everything will be great (and the "I know, but I can't tell' airheads would look like oracles,) but guessing that there is going to be a buyout and then yelling about it everywhere after you have taken a position is hardly an investment strategy.
I do, however, believe in the long term outlook of ClickSoftware, but I hasten to say that I think it is going to be the usual bumpy up-n-down journey that we have seen over the last decade. And, so, the real question, I guess is not related to the final outlook, but, rather, what the optimum buy point is (is now, at $7.XX, or tomorrow at $6? Or was it last week?)
I have been fortunate to step in at two bottoms on CKSW and exit near the peak, but at this stage I think it is much harder to figure out how things are going over the next 12 to 18 months. After all, Fuji (who believes strongly in the company) does have a point when he relentlessly questions the demographics of the company, but the problem is that the conclusion to his point is ambiguous as it can be either a downwards or an upwards share price.
Thanks. I am not sure that the mere existence of a position relates to the holding up of the per share price. In fact, I think the reverse is true, and that once the buying pressure subsides, the per share price rapidly fades.
Thank you for your note. I understand what you are saying, but I am fairly certain that you are simplifying the dynamics and actions of smallish activist investor funds.
In general, I think that the basic MO for this type of funds is to buy a load, which, in itself, pushes up the price, and then make a lot of noise in the hope that this will push the price higher, and then, when the price is high enough, to slip out the backdoor.
Actual action is rare, I think. Certainly, I think there is little or no correlation between investments by these funds and subsequent trade exits by the invested-in companies.
As an outside investor in CKSW with a "long" position, there is nothing wrong with this approach -- as long as you are not left holding the proverbial bag when the fund exits. From an operational perspective, however, it is is frequently a total disaster, distracting the invested-in companies and causing massive losses (consider JCP, for instance.)
Mechanically, btw, it is fairly difficult to, under Israel corporation law, perform a take-over.
Well, I don't know much about SBC Communications, LLC, which may or may not be an outfit out of Florence, SC, but I am surprised to see that the per share price of MTSL is holding up as well as it is.
My surprise is based only on the fact that the BID/ASK action is overwhelming lopsided, with the selling side being hugely larger than the buying side (until around $1.75 where there is a large BUY block.) The ASK blocks are much larger than the BID blocks and are located at $2.39 or so, with the first BID block (a small one) being at the $2.30 level.
The gap seems to not be closing, which is a bid of a surprise, as well. Normally, this sort of BID/ASK picture would lead to a steep drop in the per share price.
As the earnings date draws closer, perhaps we will see the drop.
Thank you for the input.
I am not sure what way the dividend will go, and I have no idea of how Q3 came out or how Q4 looks, so I can't comment on this.
In a sense I am not sure that it matters either. What is important is, I think, the momentum in net new business and the progress made in the search for an acquisition candidate.
On your comment on volume, I am interested in the daily trading. Typically, the price pattern is relatively tight and following the daily motion it is almost like the same shares are being sold again and again. Often the day ends at the low end of the range and then, next day, opens at the top of the range, after which it moves up and down within the range.
It's does not look random at all, in fact.
Except today, when a substantial drop has -- so far -- broken the pattern.
Certainly makes for good TV!
Now that things finally seems to have cooled down, I thought I might stir the pot up a bit....
Just to summarize firsts: I am a fan of ClickSoftware (company and product,) although I think the ongoing dilution is unnecessary and unacceptable -- and, frankly, clearly not in the shareholders' interests. I found the matter with the co-CEO and what I perceive as gaming the system prior to the annual meeting to be distasteful, but as it did not alter the operation, it is not a showstopper for me. In fact, I was much more concerned that the company was blindsided by the impact of cloud on its business.
The enormous leap that followed the quarterly earnings report was a total surprise to me. The results were definitely looking bad, including the resulting swing of the ttm EPS to be negative (and a whopper of a negative, too,) the dividend suspension, the silly comment about the co-CEO, and the the minuscule results from the cloud business, and, so, I would have expected that the per share price would tank .
I saw all the discussion about an acquisition and the role of the Discovery. But, the acquisition rumor is neither new, having existed since the IPO, nor is it substantiated, and the Discovery purchase is not really notable except in that the price did not tank after the purchases, which were arguably helping prop up the per share price, ended.
So, what is it that is keeping the per share price high right now? Frankly, I would expect it to have dropped to the low $6 range after the quarterly earnings report (and after Discovery stopped buying.)
The volume is "lowish," but, at least for the last couple of days, this has not caused a drop in the per share price. Why is that?
Are there any other ideas than those of acquisition and a large buyer?
And I see dead people coming down the street, and I recommend waiting until they are upon you before you run.
Real good insights, as usual. Well-researched, substantiated actionable, and meaningful information as always. But, wait... Where is your usual "Bankruptcy is imminent", "The management is stealing from the investors", "SEC is about to launch an investigation", "100 gazillion shares have been issued", and "Interpol is moving in to arrest the management" nonsense? Something seems to be missing.
My estimate of the date for the earnings release is November 14th, 2013 (the second Thursday of the month.)
The earnings release in itself is going to be very interesting, but perhaps more interesting is to see what all these momentum traders are going to do between now and the 14th.
You have a point I think.
In fact, now may be a very bad time to bet against Unitek given that they have essentially rounded the corner and ticked off all the marks except the resolution of the securities law suits (which I see as the insurance company's problem.)
The last two missing pieces, the release of Q1 and Q2 results for 2013 and the reset of the S&P rating, happened yesterday and, so, it is all down to operations and debt-service, I think.
I am quite pleased. In fact, the only issue I had was that the rather convoluted "S&P upgrade then withdrawal at issuer's request" muddied the waters.
The market seems to like it all.
So.... finally... Unitek has caught up on the filings, releasing the Q1 and Q2 filings for 2013.
With the increased finance related costs and the cost of the audit the net income is, of course, a mess, but, generally, I was quite happy to see the purely operational numbers holding up:
* Revenues increased $21.1 million, or 21.1%, to $121.2 million from $100.0 million for the three months ended June 29, 2013 and June 30, 2012, respectively
* Gross profit increased $3.4 million, or 18.5%, to $22.1 million from $18.6 million for the three months ended June 29, 2013 and June 30, 2012, respectively.
To the extent that I was worried, my worry was that the top line would drop significantly from some loss of AT&T related business. This did not seem to be the case (quite the opposite -- the AT&T revenues increased,) and the numbers look... dare I say it?... quite good!
Moreover, on a year-over-year half year basis adjusted EBITDA grew significantly and net loss dropped by 50%.
Overall, great news.
I would have to agree with gerarddebache.
Certainly, mechanically it is possible to short UNTK (and with the per share price drop on every piece of news -- even when the news is fundamentally good, you could certainly make some short term money.)
However, you need to remember that, theoretically, the potential for loss is infinite on short positions, and, with the last two 100% run-ups, there is potential for the per share price running away from you.
Another way to look at it is to ask yourself how many other market participants are betting against the company (currently the open short interest is very modest) and determine if this means that others feel the company will or will not reward a short position.
Finally, I am not sure if deciding to bet against a company on the basis of a person that you like taking a job with another company that may or may not be competing with the first company, is a wise strategy. After all, success and failure of a company relies on many factors, not just an individual's performance.
Wow. Another strong posting from you. Thanks for your well-researched, unbiased, and valuable input.
Keep up the good work!
Well, it is an entertaining question... perhaps not a great one, but certainly an entertaining one.
At +20 million subscribers, a reversal of the Simple Mobile/MER Telemanagement Solutions/Tracfone situation would lead to monthly revenues of +$2 million for Simple Mobile (assuming a 50% discount to current price level to compensate for the volume.)
This would yield revenues of perhaps $25 million per year from Tracfone plus $10 million, or so, from non-Tracfone business, for a total of $35 million. Moreover, the $25 million would be high margin revenues, so they could yield more than $10 million in net income (and remember that Tracfone adds almost 1 million subscribers each year.)
Whoa! But, of course, more importantly, it would validate MER Telemanagement Solutions' MVNE solution and, so, would potentially yield more business.
Furthermore, it may validate the solution for the rest of the America Movil group, providing access to almost 250 million subscribers.
Ok, for the record... No, I have not heard this rumor... However, that means nothing, and, of course, it is nice to dream.
The panic after close was fantastic to watch, with the per share price briefly touching $5.
Although, certainly, the latest press release from the company was not positive, it was overall in line with the expectations that the company's operating results would continue to be adversely affected until sometime next year. So, no news there, I think.
What I can't easily "decode" is the following statement: "Overall the number of new on-premise customers we signed in the first nine months of 2013 also increased considerably by 62% compared to last year."
Frankly, I have been tossing and turning, thinking about this statement, so I throw it out to the general populace for comments.
Here is some input:
1. Given what we know about service/maintenance (SM) vs. license (LIC) revenue composition (80/20,) does this mean that this year's LIC are up +50% compared to last year? If so, how can the top-line advance only modestly, if at all (did the SM portion sink?)
2. Or... did the booking size of the on premises (OP) deals fall tremendously compared to last year?
3. If both the number of OP orders and the number of SaaS orders increased between 50% and a 100% compared to the last year, how could the overall revenue possibly sink?
4. With a growth in bookings of between 50% and 100% and the trailing nature of revenues (both SaaS and OP revenues trail bookings for up to a year,) is it possible to prognosticate or extrapolate on the revenues for next year (will revenues, for instance, grow between 25% and 50%?)
5. If ClickSoftware had simply (and only) announced that its net new OP business grew +50% and its net new SaaS business grew 100%, I would automatically expect the revenue number to go up dramatically -- if not immediately, then "soonish" (I would not have a problem with the "bad" net income number since this could be impacted by a range of factors.)
6. Did ClickSoftware lose large existing customers?
Ok. Thanks for the clarification (God only knows how many thumbs up/thumbs down this thread will get before the day is out.)
I actually disagree with you on the execution piece. Well, to a certain extent, that is...
First, I am totally OK with the investment notion, and I like the fact that the company came out early (last year) and told the stakeholders what to expect (although, of course, it was somewhat derailed in the middle of this year.) Second, I have been in an operating role, so I am aware that there are industrywide things that comes from left field, and that you just have to react to as quickly as possible.
So, I tend to cut Clicksoftware and its management team a lot of slack on the execution side (I, however, do not cut the BoD any slack on the options, dilution, and co-CEO issues.)
What I do have a problem with on the operations side is that the company's management appear to have been surprised by the market change and the cannibalization issue. I would have expected them to be on the ball on these issues (in particular the cannibalization issue, which is an internal problem that should have been dealt with decisively.)
Moreover, I noted that someone said that the issue could be as simple as asking the question of whether or not Clicksoftware is worth 190 million dollars or less. I agree with this simplified view and, to a large extent, this value question trumps any temporary execution problems.
And, yes, to my mind, ClickSoftware is worth quite a lot more than the current market capitalization implies (and P/E be damned!,) so I find myself having to just get over the execution issues.
Finally, I just want to point out that while it is highly likely that the buyer was institutional, there is no reason to believe that the seller was *not* a retail investor. In fact, if you, as a retail investor, had followed Clicksoftware and CKSW for more than a decade (and you had tons of faith) there is a lot of ways that you could have accumulated 600 thousand shares.
I am speculating, of course, but it would make sense to me if this was a retail investor getting out (I could imaging that he or she had used the base portfolio as leverage, and had loaded significantly up on the other side of $7.50, and was facing a nasty call.)
Speculation, yes, but it does happen. When you as a retail investor has accumulated a large enough position, you can get a call from a broker for an institutional buyer, who represents a client who wants in. In most cases, if you can't foresee a merger, this is actually the best and most profit-yielding way to exit your large position, and, so, the rest is just details and mechanics.
You wrote: "Per_a.jacobsen - how does a fund go about unwinding their position in a thinly traded small cap?? I think a smaller fund might try a lot of small trades but for soros this represents (I checked some time back) a tenth of a percent of the fund. Anyone who purchases shares has to do so with the thought for Soros this is like me taking ten bucks out of my wallet. He can blow you out without a thought. Its small potatoes to the Soros fund. Whether more funds start to sell I think will depend on guidance for the third quarter. Eventually even soros will lose patience."
Thank you for the note. I appreciate the feedback.
I think you are being a little too focused on Soros (or, more precisely, with Soros' fund (I can assure you that Soros almost for sure has never heard about Clicksoftware, except as a line item in NAV report)).
This leads me to the first point I wanted to make, and that is that the way institutional funds work, is that the money are divided up among managers. As such, there is no way to tell how important a position of CKSW is since we don't know the pedigree and allowance of the fund manager who actually made the decision to buy CKSW. Just as important, we don't know what the NAV performance is of the manager, and, so, we don't know what he or she might feel or want to do.
The second point is that the move of 600 thousand shares in my opinion clearly was pre-arranged, and, so, the only strange thing about it, is that the market followed price down (moving 600 thousand shares in one go does come with an agreed-to discount.) The actual block was never truly on the market, and, therefore, the transaction did not reflect market value and the market should have immediately stabilized. This did not happen, and I think that that is a testament to how jittery the market is about CKSW.
Thanks. However, was the trading around September 12th, not distributed, i.e. consisting of many smallish trades?
To me the trade yesterday smells large-institutional with the one-go, take-a-hit-with-no-regrets, and the timing (after the close of the quarter,) whereas the trading around September 12th seems more like small-institutional and retail.
It could, of course, also be our resident apple grower trimming his holdings.