Monitise, a five bagger in the making?

The Monitise share price got a lift towards the end of last week after it was revealed that one hedge fund manager had come out saying that this one might be a big winner going forward.

Billionaire hedge fund manager Leon Cooperman listed some of his favorite stocks on Thursday and said the biggest winner of all might be mobile banking company Monitise.

"That's a five bagger," Cooperman, who runs Omega Advisors, said about Monitise at the SkyBridge Alternatives Conference on Thursday. "That's the one I would pick to win a contest with," he said on a panel that discussed fund manager's best ideas.

http://www.reuters.com/article/2013/05/10/uk-hedge-fund-cooperman-idUSLNE94900120130510

Fairly confident prediction there. Perhaps one of the better blue sky opportunities out there, but those interested need to remember it has yet to turn a profit.

Buying shares in companies that have a good story.

Back during the heady days of the tech boom it seemed to be quite easy to buy into the latest blue sky company that in no time at all would take off. If a company wanted to boost its share price all it needed to do was say it was setting up a website offering, or going into some area of "blue sky" technology and often the share price would be off to the races.

Those days of more or less putting your money into anything that sounded good and getting a great return in a short space of time are probably long gone, but there is something to be said for buying into a company that has a good story behind it. Even if the fundamentals may be stretched in the present, the hope of delivering something big in the years to come and enjoying the returns of a ten bagger or more is something that most investors perhaps can only dream about.

In one sense this explains the popularity of smaller companies and the traditional "penny shares". In another, the chances of finding a big winner in the FTSE100 is remote and only slightly higher in the FTSE250. It's not that it can't be done, but in the big cap indices you are often looking for something that has collapsed in a market panic and crash, which is still fundamentally sound and then comes back big time.

Back in the financial crash days of 2008 I recall the collapse in price of FTSE100 silver and gold miner Fresnillo. It's IPO price was a little over 500p in 2008, but fell all the way to around 100p in the market crash, today it stands at a little under 1800p. Trouble is, few probably had the bottle to buy when it was 100p, even though it was about as cheap as it is ever likely to get.

So, leaving aside recovery stories in the big cap shares, it is the smaller companies that are more likely to deliver the investing equivalent of a lottery win, although your entry fee in buying the shares will be a lot higher. A few potential blue sky stories that I like in the smaller company sector are IDOX and Monitise which have been mentioned before. Others worth investigating are IQE, Blinkx and Vislink. All have a good story behind them, all have an element of risk and can be quite volatile, they could be big or could fade away if things don't work out. They may not be 10 baggers, but if the good story works out they could be priced a lot higher in a few years time.

Monitise update - placing is on the cards

When I first wrote about this one a while back I made the point that it wasn't one for widows and orphans, today perhaps shows why. The company announced to the market that it is looking to raise £100 million extra capital, it would seem to expand. The statement was full of positives, but the market seems to have taken a dislike to the news falling around 9% so far. Monitise investors might live with that had it not been for the fact that it has already fallen from a recent high of almost 40p to around 33p before today's news. Looks now that it may well fall below the 30p mark.

Mobile banking technology firm Monitise has admitted it is in discussion to raise up 100m pounds. 

The company said it was talking to Canaccord Genuity and certain institutional and strategic investors "to take advantage of significant opportunities represented by mobile banking, payments and commerce". 

Proceeds from the proposed placing would be used to fund new Mobile Money products for financial institutions and payments companies, the firm said, particularly in terms of mobile commerce capabilities. 

The announcement was forced by press speculation into Monitise's plans to raise money. 

Chief Executive Alastair Lukies said the business was seeing enormous demand for Mobile Money services. 

http://www.digitallook.com/cgi-bin/dlmedia/security.cgi?csi=233171&action=news&story_id=20531938

The trading update was also impressive in terms of potential;

Monitise - Full Year Results 04/09 - update 2

AIM company Monitise, previously mentioned here and here are due to announce their final year trading figures in an update tomorrow.  Given the numbers in the recent trading update, the market is probably not expecting any surprises, at least on the downside, when the final figures come in.  As can often happen with smaller companies a good statement can see the share price rise rapidly while a bad one can see it quickly go the other way.

Smaller companies sometimes have the habit of disappointing often at the last minute, there's no reason to believe that will happen with Monitise, most of the news flow has been fairly positive recently. It will be interesting to see if they have anything new to say, additional contract wins, ahead of expectations, etc.

So far Monitise hasn't made a profit, we may well find out more tomorrow as to when that might be.  

Monitise update

Since looking at Monitise a while back as one of those potential growth, but not for widows and orphans type stock, the share price has steadily gone down.  The trend on the longer term chart was down when they announced impressive results, mentioned in this post.  It carried on going down.  Today however, Goldman Sachs announced that the company had been put on their "conviction buy" list with a price target of 60p, which is more than double the current price.  The shares are up around 10% as of writing on the back of this.

Should be remembered that this company doesn't make a profit yet, but it has all the right ingredients to be a growth stock that could take off.  It's one of those DYOR and buy with money you don't mind losing if it backfires type stock. On the other hand, it could pay off handsomely if all things go to plan over the long term for the company.

Monitise - An AIM company worth watching

AIM company Monitise released quite an upbeat trading statement today that this is company that may be worth investigating, putting on a watchlist, DYOR applies.

What I find impressive is the number of key words used in the statement that suggest things are going good for the company.  Robbie Burns in his book The Naked Trader suggests that looking out for key words in statements can give you a good idea of how a company is doing.  Use of the word "challenging" seems to happen a lot these days in company statements so it makes a change to see a more upbeat message.  Be interesting to see if this one can keep its growth potential going.

Monitise Group CEO Alastair Lukies said:

“The Mobile Money landscape continues to grow at an astonishing rate. As a major global force in Mobile Money, Monitise remains positioned at the centre of this huge ecosystem with its platform, skills and partnerships driving another year of phenomenal growth. Our clear and unwavering strategy is to provide our white-labeled, cloud-based Monitise Enterprise Platform to the world’s leading financial institutions and payments companies, helping them retain their rightful role as the consumer custodian in mobile financial services.”

Monitise Group Chairman Duncan McIntyre added:

“Once again the Monitise team has achieved substantial growth in the financial year 2012 and proven the global demand for a truly bank-grade Mobile Money platform. We believe we have both the leading platform and market position so as the landscape continues to evolve and accelerate we must continue to invest to optimise shareholder value.”

Highlights:

• Full-year 2012 revenues are expected to be approximately $53m (£34m)⁽¹⁾, nearly two and a half times the $22m (£14m) reported last year, making it the third successive year that revenue has more than doubled compared to the previous year.
• Gross margins for the year are expected to be in the region of 66%, compared with 62% last year, and on track to hit more than 70% by the second half of 2012/13.
• Total Monitise registered customers are approaching 16m, three and a half times the level seen at the time of Monitise’s full-year results in September 2011. The group is attracting well over half a million new registered customers per month.
• The order book of the combined Group at the end of June 2012, comprised of more than $170m committed minimum orders, plus a further $250m of additional revenues expected from existing contractual arrangements, making more than $420m (£270m) in total.
• Around $75m (£48m) of this order cover is expected to flow through to revenues in 2012/13.
• Total Group revenues in 2012/13 are expected to be in the region of $110m (£70m).
• The Group remains on track for EBITDA break-even by December 2013.
• Monitise now provides Mobile Money services to over 300 financial institutions and partners, including a third of the top 50 financial institutions and of these eight of the top 13 in North America.
• Combined business handles over a billion transactions per annum, as well as payments and transfers worth $15bn on a current weekly annualised basis.
• For 2011/12 it is expected that a move to equity accounting ⁽²⁾  will result in a $3m (£2m) increase in reported full-year revenues to approximately $56m (£36m).

Source - http://www.monitise.com/media/press_releases?id=613