Well, for what it's worth, I thought I'd share my experiences with MCE as a first post.
MCE is my fourth share purchase after an illustrious and lengthy involvement with the share market dating right the way back to May of 2011. I bought at $5.29 at 3:58PM on Monday of this week - the day before the annual report.
It certainly has been an experience watching the share price since.
Admittedly my views on purchasing MCE have been shaped largely by RM, but I really have noone to blame but myself on this one. I was aware that the annual report was imminent, I was even aware of Roger's own comments noting he had not bought in at these prices as he was waiting for further information on cash flow. What it was, in hindsight, was a gamble that a company whose SP had tumbled so far since I was watching it had to be undervalued. I felt sure that a company with a history (all 18 months of it?) of beating expectations would continue to do so, but - again in hindsight - it really was only a feeling.
I had done research on the nature of the company, and calculated both historical intrinsic value on the basis of previous annual reports and then used broker estimates to predict current IV at ~$11.
Really though, all the information was available to me to suggest that such an IV would not be met. Lack of contract announcements was one, previous MCE comments about a high AUD was another:
I also rather glaringly appeared to have not factored in the recent equity raising into my calculations!
When all the information in the AR is factored in - information that I should have looked into better before the purchase - I get a IV of $4.61 for 2011 and $6.31 for 2012 (RR @ 14%)
I have mixed feelings about remaining with MCE at the moment. As noted on RM's blog, MCE's 20% revenue target is dependant on them landing ~$120m of new contracts. According to MCE, they're quoting on about ~$500m of new work, and have historically landed about a third of what they quote. On this basis you'd normally view the $120m figure over the next twelve months to be as easy as pie - but the problem is that they haven't landed anything over the last six months.
The establishment of MCE offices in the US certainly suggests that MCE management see opportunities there to improve market share. And it's entirely possible that the Henderson plant offers an ability to improve on revenue without landing many new contracts.
Regardless though, it really does seem like speculation from here on in. Or perhaps as McCoy Pauley put it this morning, an educated bet?
tl;dr - newbie got burnt on this one.
MCE is my fourth share purchase after an illustrious and lengthy involvement with the share market dating right the way back to May of 2011. I bought at $5.29 at 3:58PM on Monday of this week - the day before the annual report.
It certainly has been an experience watching the share price since.
Admittedly my views on purchasing MCE have been shaped largely by RM, but I really have noone to blame but myself on this one. I was aware that the annual report was imminent, I was even aware of Roger's own comments noting he had not bought in at these prices as he was waiting for further information on cash flow. What it was, in hindsight, was a gamble that a company whose SP had tumbled so far since I was watching it had to be undervalued. I felt sure that a company with a history (all 18 months of it?) of beating expectations would continue to do so, but - again in hindsight - it really was only a feeling.
I had done research on the nature of the company, and calculated both historical intrinsic value on the basis of previous annual reports and then used broker estimates to predict current IV at ~$11.
Really though, all the information was available to me to suggest that such an IV would not be met. Lack of contract announcements was one, previous MCE comments about a high AUD was another:
I note that MCE did hedge a portion of funds - I can't find where I was reading this but I was of the impression it was an amount that this would have likely been used during this FY?
I also rather glaringly appeared to have not factored in the recent equity raising into my calculations!
When all the information in the AR is factored in - information that I should have looked into better before the purchase - I get a IV of $4.61 for 2011 and $6.31 for 2012 (RR @ 14%)
I have mixed feelings about remaining with MCE at the moment. As noted on RM's blog, MCE's 20% revenue target is dependant on them landing ~$120m of new contracts. According to MCE, they're quoting on about ~$500m of new work, and have historically landed about a third of what they quote. On this basis you'd normally view the $120m figure over the next twelve months to be as easy as pie - but the problem is that they haven't landed anything over the last six months.
The establishment of MCE offices in the US certainly suggests that MCE management see opportunities there to improve market share. And it's entirely possible that the Henderson plant offers an ability to improve on revenue without landing many new contracts.
Regardless though, it really does seem like speculation from here on in. Or perhaps as McCoy Pauley put it this morning, an educated bet?
tl;dr - newbie got burnt on this one.