2013 Investment Ideas

And start prices before the first day's trading of 2013 tomorrow:

AVG - 99p
BUMI - 275p
CEO - 1240p
DOTD - 15.35p
ECV - 2.2p
ETO - 169p
GENL - 785p
GTC - 45p
IDOX - 54p
LOQ - 390p
OPHR - 505p
SIA - 358p

Will be very interested to see why you have ECV in there. A tiny company that was only worth 2p a share through most of 2012, whilst their one competitor was suspending sales, recalling vehicles and going into receivership. The steering box problem with the traditional black cab is now in the process of being solved and Nissan are about to launch a Hackney carriage compliant vehicle.

But congratulations on moving the price up so far on day one on the back of your selection. (With tongue firmly in cheek in case there is any doubt...).

Haha - not sure any of my witterings will ever move the market! In fact CockneyRebel posted elsewhere over New Year that it was in his five picks for 2013 which I'd suggest carried considerably higher weighting... :o)

A full write-up will follow, but I'll just show this for now from official SMMT figures of monthly taxi registrations (just LTI black cabs and ECV Mercedes Vitos):

Full year vehicle data is released on Monday, when we'll see if the Vito has continued to sell or not.

SM

http://www.london-taxis.co.uk/news

Statement from the receivers running Manganese Bronze that as of 17/12/12 all sold cabs have had their steering boxes rectified, and work will now start on the 600 mainly unregistered cabs, due to be completed by end February. Good time to be buying a new London cab bad time to be selling a competing product when there are going to be 600 cabs in the hands of the receiver to be shifted.

Some material news from Entertainment One (LON:ETO) this morning relating to the proposed acquisition of Alliance Films in Canada. The waiting period during which the Canadian Competition Bureau could object has lapsed, and the takeover can now complete, funded by the earlier placing and bank facilities.  The combination of eOne and Alliance will make the combined group the largest independent film distributor in Canada and the UK, and the enlarged group will have 35,000 film and television titles.

http://www.investegate.co.uk/entertainment-one-(eto)/rns/proposed-acquisition-of-alliance-films-holdings/201301030700067174U/

SP is up 5% to 181p.

http://www.growthcompany.co.uk/news/2142633/entertainment-one-cleared-for-acquisition.thtml

News has emerged from the part-owned co beneath the London-listed, Indonesian coal miner, that has been ravaged by boardroom disputes, Bumi (LON:BUMI), of significant derivatives losses, which are likely to be the 'financial irregularities' that Bumi plc wishes to investigate.

Bumi Resources, the Indonesian coal miner part-owned by London-listed Bumi Plc, lost $632m in the nine months to September on the back of substantial derivatives losses, as the battle over the businesses’ future rages.

Bumi Resources reported $422m in losses on unspecified transactions, prompting the $632m loss that compared with a $176m profit for the same period in the previous year. Operating income fell 60 per cent to $312m.

http://www.ft.com/cms/s/0/d3a1e5d2-55ac-11e2-bdd2-00144feab49a.html#axzz2GubnS4xE

That'll teach me to pick a special situation play in the dozen picks!

SM

I've just posted this brief review of dotDigital (LON:DOTD) over on TMF for my 2013 competition entry, and some brief reasoning as to why the company is well placed for further growth...

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With humble apologies for my DOTD write-up timing as it was up 16% on Friday…

I’ve recorded my thoughts and a few numbers and product details below as a starter, and hope it piques your interest, or maybe someone will highlight a significant drawback with the stock? Anyway, I wanted it out before Monday morning so here it is.

Current share price – 17-17.5p
Shares in Issue – 275,362,065
Market cap - £48m
AIM-listed.

http://www.dotdigitalgroup.com/

What do they do?

In their own words…

“dotDigital is a provider of software as a service (SaaS) technology and managed services to digital marketing professionals. The Company operates in the provision of Web-based marketing services. The Company’s product portfolio includes dotMailer, which is an email marketing automation platform, and dotSurvey, which is an online survey tool. The Company also provides digital marketing services for businesses seeking dramatic growth through integrated, multi-channel engagement, conversion, acquisition and retention. dotDigital’s services include dotAgency, which consists of Website design and ecommerce, and dotSearch, which consists of search and content marketing.”

The company appears to have found a sectoral sweet spot and appears to be firing on all cylinders. During the year the company integrated its dotMailer product with Salesforce.com and the eBay X-Commerce fabric, and translation of its userface into eight new languages. These SaaS offerings bring in 80% of revenues (up 38% on 2011).

Products

www.dotmailer.co.uk – the jewel in the crown, this product provides email and cross-channel marketing automation solutions. Pre-built or custom-built integrations allow the dotMailer platform to share data with client’s CRM, eCommerce and third party applications (such as Facebook and Twitter), improving the understanding of their customers' behaviour to develop even more relevant and rich relationships.

www.dotsurvey.com – new product released in 2012 to existing clients in beta initially, it is an online survey tool with dotMailer integration, with 500 clients signed-up and 2,000 more trialling it (at 30-Jun-12). The dotSurvey product aims to compete with Survey Monkey, a U.S business, which has increased its revenues from $78m to $301m in the last 3 years with just this one product, and is valued at $1bn.

www.dotagency.co.uk - provides expert support services for SasS technology clients and all marketers seeking to increase their online engagement and sales through a more effective website and mobile marketing strategy and presence.

www.dotsearchmarketing.co.uk - provides strategic, bespoke search marketing services focused on helping clients achieve greater online visibility and drive & convert more website traffic and revenue.

Clients

DOTD has approximately 6,500 clients, having added 1,813 in the year to 30-Jun-12 (1,470 new clients in prior year).

DOTD has increasingly targeted corporate clients as they are worth the sales effort, are ‘sticky’ clients, and help to self-promote. The company stated in the 2012 AR that it would expect to earn £40k over the lifetime relationship with a corporate client, compared with £4k from an SME. From the results comes this corporate client list:

”Our portfolio of blue chip clients now includes names such as DHL, Nationwide, BBC Worldwide, Capita, AstraZeneca, Esso, Ryman, Tarmac, Nicole Farhi, Nicky Clarke, EDF Energy, Virgin Train and Betfair.”

Segmental splits

dotMailer + dotSurvey = SaaS Email Marketing Revenues
dotAgency + dotSearch = Services & Search

Are the revenues sustainable? Well, in a word – yes. 67% of total revenue (£8m) is recurring revenue, with 60% of the total (£7.2m) coming from monthly dotMailer income. As this product and the SaaS side of the business is growing faster than Services & Search, then the contracted earnings into the years ahead can be more confidently predicted.

As mentioned above the stock put on a spurt during Friday with above average volume, as I understand it was tipped in both MoneyWeek and TechInvest that day. There should be a trading update in the next week (perhaps Tuesday?), whilst the Interim results should be released in late-Feb.

DOTD increased in value for me by 75% during 2012, but I still believe there’s plenty of potential for further rises (notwithstanding the increase already this year).

Full year results showed revenue up 34% to £12m, PBT up 25% to £2.9m (before exceptionals), EPS of 0.9p and y/e cash of £4m. EPS was hit by the exceptionals figure of £1.2m related to impairment of goodwill. Revenues are forecast to continuing growing by 20%+ in 2013, though the board acknowledge that profits will be lowered by increased sales and marketing spend in the short term to generate top-line growth. Nonetheless I’ve included it in my 2013 picks as I believe it is a company in the right sector providing clever solutions to other firms of all sizes to maximise their own marketing conversion rates – we will see!

I wouldn’t rule out a takeover at some stage either if growth is shown to be continuing and growing…


SM


Other Info

Charles Stanley note Oct-12: http://www.dotdigitalgroup.com/includes/documents/cm_docs/20...

Glasshalfull post Feb-12 - http://boards.fool.co.uk/share-idea-dotdigital-dotd-digital-...

Significant Shareholder holdings

Shareholder % holdings/voting rights
Ian Taylor 18.08
Simon Bird 15.18
New Edge Group SA 10.47
Investec Asset Mgmt Ltd 7.97
Blackrock Inc. 7.37
Legal & General 6.96
Peter Simmonds 5.83

Re Eco City Vehicles (LON:ECV), the December Taxi Registration numbers were released today revealing that LTI failed to sell any of their traditional TX4 black cabs, whilst ECV sold 42 Mercedes Vitos. Therefore, I now have a full 6-year table showing the growth in popularity of the Mercedes Vito cab vs decline in LTI-cab registrations (admittedly from a higher start point - a more buoyant era).

2012 was a record year for Eco City - the trading update in late Jan will hopefully detail how successful the firm has been (and whether they believe they can repeat the success)...

Gosh, it's been two weeks since I last posted on this thread, and as per the start to last year, I've not posted a rationale for the 12 shares selected to outperform in 2013 - apologies, I will attempt to rectify this soon.

I'm still rather pushed for time, but Edmond Jackson on iii.co.uk has handily pulled together the latest developments at my special situation pick Bumi (LON:BUMI), which is approaching the February EGM called by Nat Rothschild's investment vehicle, NR Investments, to remove 10 of the 12 directors and reinstall himself, and concentrate on divesting the Bumi shareholding and going it alone on Berau Coal.

http://www.iii.co.uk/articles/71050/edmond-jacksons-stockwatch-bumi

A key question is the quantum of 'misappropriated assets' that the recent Macfarlane's report established - the report remains unpublished because of privacy concerns in Indonesia, though Nat Rothschild believes it should be released under UK whistleblowing laws, and the Serious Fraud Office have been informed/consulted.  It seems this will run and run throughout 2013....

You wait ages for a post, then two come at once...

Eco City Vehicles (LON:ECV) has issued a Trading Update for the y/e 31-Dec-12:

Summary:

· New Vito sales increased by 71% to 561 vehicles in 2012 (2011: 331)

· Revenue for the year ended December 2012 increased by 40% to £31.1m (2011 £22.2m)

· EBITDA before non-recurring items is estimated to be in the region of £0.8m - £1m (2011: EBITDA loss £0.9m)

· Net debt (being cash and cash equivalents together with long and short term borrowings) of £0.8m (2011: £3.1m)

· Loss before tax from continuing operations and excluding non-recurring items amounted to £0.1m - £0.3m (2011: loss £2.2m)

John Swingewood, Chairman, said: "We are delighted with the continued improvement in performance over the last year and the return to positive EBITDA. This year has also seen a significant reduction in debt, disposal of non-core assets and the consolidation of our controlling position in One80 Limited that earns revenue through intellectual property licence fees from the manufacture of the Vito Taxi.

"We look forward to further increasing our market share, geographical expansion and product and service innovation in the coming year."

With the usual apologies for the delay, I've posted the end-of-January numbers in the header for the chosen dozen stocks versus various indices (I'll work on the gremlins in posting the spreadsheet cells - it doesn't seem to like ETO...).

Well, with quite disparate performance either side of the starting prices, the portfolio is up 5.9%, which is just about in-line (but behind!) the FTSE 100 (+6.4%) and the FTSE SmallCap (+6.2%), and ahead of the AIM AllShare (+3.7%).

Notable movements (of >10%) came from Getech (LON:GTC) and Bumi (LON:BUMI) which were up 33% and 24% respectively. All others were within 9% of where they started.

This graph shows the gains and losses on the initial notional £1,000 invested in each company:

Subsequent to month-end, there was a placing of 9% of Ophir Energy (LON:OPHR) shares at 475p, being a partial sell by Mittal and Och-Ziff, leaving the shares 6% down for the year. Meanwhile, Bumi (LON:BUMI) continues to rise, in line with the ratcheting up of campaigning by the current board to resist the EGM request to replace the Board with a new board of Nat Rothschild's choosing. The shares rallied into Friday's close ending at 378p, up 37% YTD.

The end of February arrived and the results weren't particularly good for the 2013 Folio versus any indices you care to mention. With the FTSE Smallcap up 9.4% for the year, FTSE 100 +7.9% and the FTSE AIM All-share +4.8% the dozen shares selected for 2013 returned a measly 0.7% for the month, giving a YTD return of 6.6%.

Lo-Q (LON:LOQ) was the star performer of the month rising from £4.04 to £5.24, whilst on the flipside Idox (LON:IDOX) fell from 57p to 50p on the back of a trading update that read as a profit warning (though subsequent reports from the AGM on the sameday indicate the mood and tone was more upbeat, with a strong pipeline.

Bumi (LON:BUMI) rose as high as £4.40 but fell all the way back to £3.36 where it started February following the failed attempt by Nat Rothschild to replace the Board at a requisitioned EGM (only three resolutions were passed).  Avingtrans (LON:AVG) produced some solid results, whilst SOCO International (LON:SIA) slipped back after delaying updated reserves numbers.

So let's see what March has in store...

SM

(28-Feb prices and holding values are in the thread header...)

I attended ShareSoc's inaugural Technology Company Seminar last night, and was mightily impressed by the presentation given by dotDigital (LON:DOTD) CEO Peter Simmonds. His depth of knowledge of the market place, vision for the company and the KPIs the firm uses to measure its progress demonstrate the firm is strong managed.

Significant growth is expected from the SaaS products (dotMailer & dotSurvey), which if comes through will see fantastic bottom-line growth due to the operational gearing in play.

In the slide deck is mention of a 'social' tool, dotSocial, to tap-in to that space (though in searching now I see that name is already taken by a US marketing agency...).

He covered the winddown of the search & consultancy businesses and, in relation to dividends, asked for a straw poll of who in the room would expect/like to see a growing tech company to pay a dividend - from where I was sat it was an overwhelming sea of hands in favour. So watch this space as the Board has committed to reviewing its dividend policy ahead of the annual results in early October.

Peter also expressed an interest in presenting again in late October following release of the finals.

That's all I've time for now, but may return with some other thoughts later. All-in-all very happy to hold from what I heard. Hopefully others were suitably impressed too and will chip-in. I can only see a handful of small buys today so maybe others weren't as impressed (or are already holders...).

SM

(thanks also to marben100 for organising, Roger Lawson for opening with a quick run-through of pitfalls to avoid when investing in tech companies, Ed for providing and talking through the data pages of all three companies presenting - and of course to Carmensfella's ladies for the culinary delights (and keeping my wine glass healthily topped-up...))

So to the end of the first quarter of 2013, and the results so far...

The MolbyDozen shows a return of 7.0%, but has been outshone by each of the comparator indices - the FTSE Smallcap is up 11.3% for the year, FTSE 100 +8.3% and the FTSE AIM All-share +3.0%.

Not much to shout about within the portfolio which only advanced to a 7.0% gain YTD from 6.6% a month before.  Lo-Q (LON:LOQ), Getech (LON:GTC) and Genel Energy (LON:GENL) have provided the main gains this month whilst the laggards were Bumi (LON:BUMI) and dotDigital (LON:DOTD).

Hi SM,

Nothing to be ashamed about in that performance - beats my overall 3.8% gain YTD (allowing for hedging losses). Not too much point worrying about quarterly performance, though - we need to keep focussed on the longer run.

Have you taken account of Ophir's rights issue, though, in calculating your performance? Either you should add-in gains from nil-paid nights lapsing or (probably better) assume you sold sufficient shares to allow you to take up your rights. Otherwise Ophir performance will be understated.

Nice article on dotDigital from Liontrust's manager here: http://www.liontrust.co.uk/ProfessionalAdvisers/NewsandViews/LiontrustBlog/tabid/291/entryid/639/Default.aspx

Good to see him engaging actively with dotDigital management.

We have a history of taking an active role in the development of smaller companies which we invest in (not to be confused with an activist role) and the same goes for prospective investments. We first met Dotdigitial’s management team back in November 2011 when the growth potential of the business was clear, but the predictability of earnings and the sustainability of its competitive advantage was difficult to assess due to the ‘lumpy’ or ‘ad-hoc’ nature of its contracts with clients...

Cheers,

Mark