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Robusta fundamental, leveraged investments

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INVESTMENT SOLD

MCE - Matrix Composites & Engineering

Sold 1741 shares @$3.50 = $6093.50

Well MCE was ~ 30% of my available capital and I have lost ~ 30% of that. Some consideration was given to maintaining a small holding but I decided to see how we stand after the 45 day limit (to take a capital loss) and then re-evaluate the situation then.
Not the best result for this portfolio but hopefully lesson learnt and onwards and upwards from here.
Maintained a small MCE holding in my SMSF after selling the lions share today, I think I may have a drink now.
 

I cant help but feel that sometimes your a little to keen to take a loss...even though you did wait awhile to realise this loss, time will tell but there has to be a reasonable probability that sometime over the next 6 or 12 months a better opportunity to sell would arise.
 

Yes it will be interesting to see.... Maybe I should switch the news off - permanently
 
robusta said:
Yes it will be interesting to see.... Maybe I should switch the news off - permanently
Click to expand...

What has changed, in your opinion, so drastically since July wrt MCE? While I haven't loaded up on MCE anywhere near as much as you did, I think you are probably selling out at, or near, the bottom. This is a company that could be back above $6 with a couple of decent orders.
 

I stand corrected, maybe i read the 45 days in the past as advice. Still I do not want the tax man knocking on my door.

http://www.news.com.au/money/invest...loss-share-sales/story-e6frfmdr-1111115524396
 
NEW INVESTMENT

OKN - Oakton Limited

Bought 1373 shares @ $1.455 = $1997.72

Oakton are a IT services business in the same sort of space as DWS, DTL et al.

I like OKN because they have been investing a lot into the business with a eye on the future, if the strategy works out growth should be satisfactory. In the meantime the nice dividend yield should make the wait bearable.

This is the smallest pisition I have taken to date due to one eye on current market volatility and the other eye on taking a position in DWS - at the right price.
 
I already hold DTL, purchased at $10.81 when the market was last down.

I haven't looked at OKN, but SMX, ASZ and DWS are also on my radar.

SMX was down almost 5% today, I held off buying when it didn't "rally" with the rest of the market last month thinking that a retest of $4.50 might be a good entry point and low and behold it is starting to drift back there. If the latter two go down much further they will be at 10% net dividend yield with future growth predicted by the "Expert analysists." Hard to see how you could go wrong in the next 3-5 years barring absolutely disaster?
 

AMP (I think) holds ~7.5% has been selling OKN from 9.5%. Not sure when they will stop but with poor liquidity these days that selling could drive the share price down a few notches yet.

ASZ, UXC, SMX and DWS are all similarly priced and have similar price action. A bit hard to tell them apart (without decent industry knowledge), and the problem is they are all projecting 10-15% growth. They can't all achieve that as together they represent a fair chunk of the whole IT market...

Having said that, I wouldn't hesitate buying a few OKN if the market isn't on a potential edge of the abyss... longer term will probably be right. Good luck.
 

Yes looks like these guys are priced for disaster scenarios - and we may just get them


Have to agree with you SKC it is difficult to pick a clear winner in this sector, it should be a interesting ride.

Other than OKN DWS interests me the most at the moment but I have a eye on all the above except UXC due to lower ROE.
 
robusta said:
Have to agree with you SKC it is difficult to pick a clear winner in this sector, it should be a interesting ride.

Other than OKN DWS interests me the most at the moment but I have a eye on all the above except UXC due to lower ROE.
Click to expand...

UXC is actually the dark horse imo. The low ROE is a result of their field service division which was sold earlier this year at a pretty decent price. This puts them at no debt and just an IT consultancy business with ~$500m revenue. On metrics like market cap / revenue UXC is the lowest amongst the peers.
 

Thankyou, I will have to investigate further. Just shows the dangers of looking at the Comsec figures and ruling a business out.
 
Interesting one UXC, quite poor visibility on what the results will be like given all the one off provisions they made. Management track record from retained earnings doesnt look that great with lots of goodwill on the books but definitely does look on the cheap side. Lots of stuff is starting to look that way if they continue to grow. Big if though.
 

Actually they all tend to operate in the mid/small-tier <$100m contract size market. This segment represents about ~20% of the total market in Australia. The larger end of the market is dominated by overseas consultancies. It would be possible for them all to grow at 10-15% but would of course require that they start winning contracts in the higher segment. So far ASZ seems to be the only one articulating that as a strategy and implementing a plan to make it happen.
 
Do any of these fit under your "recurring revenues" criteria in terms of the way you value stocks?
 
Ves said:
Do any of these fit under your "recurring revenues" criteria in terms of the way you value stocks?
Click to expand...

ASZ and DTL both do to a certain extent, I haven't spent enough time looking at the others to really offer an opinion. I spent a bit of time looking at ASZ, and they are definately trying to move away from pure contracting to a more managed service offering which obviously has more recurring revenue. I've been trying to understand (without much luck) how virtualisation will impact DTL's software business, to me that seems like it could become a vulnerability in the future as more stuff moves to the cloud. Currently it's a pretty reliable revenue stream.

Also, running a cloud service (which they seem to be targeting as a growth area) can also be quite capital intensive (when I'm not using bandwidth someone else can use it, when I'm not accessing my files in your data centre that won't free up space on your hard drive), if you look at the CAPEX of someone like Rackspace in the US, although my understanding is that the companies here doing it are looking to offer it as a service rather than as a utility, so hopefully will be able to charge more.

As sxc said, these are difficult businesses to delineate without a detailed knowledge of the industry.
 
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