what to do?, page-11

granev and others

i have been following shares for 30 years (since i was 17) and although it has not always been my main source of income it has been at least a great interest for me over that time

i have had many dogs and many 10 baggers. most of the dogs( in industrials at least ) were characterised by: business losing money ; with mining contractors and engineers bad contracts or bad debts; or firms doctoring up the accounts and or directors fleecing the company; expanding too fast is another, and normally when something goes wrong it can bring things ondone . i havent included mining or tech and biotech co's as these are normally very high risk at any rate.

photon appears to have had none of the above bar expanding too fast and most ( not all ) of its acquisitions being too successful! the payouts due to the former vendors were ( somewhat off the radar) and built up to a great extent, especially considering the good performance of some of their acquisitions and the fact the former management didnt know when to stop.

since my last posts i read an article in the oz from one of the advertising execs who is leaving and he said the company was probably one of the most successful advertising and marketing groups in the world!!

i note that even after this issue they have fairly big debts ( app $300m counting the $150m odd deferred consideration ) and amounts due ( that is why i said in another post they are risky ) - i cant understand why while they were doing it they didnt go a bit more and put the issue beyond doubt ( maybe jeremy phillips and other large sharholders wanted to retain some leverage so there was good upside for equity holders! ) . they also have large intangibles but so do many media companies and must have been able to justify the valuations to the auditors.

they have some covenants in there on page 78 re capitalisation which are a worry if the market continues to frown on it!!

why i bought some the other day:

ebitda forcast of some $75m and a market cap of some $120m but remember the debt of some $300m ( even including some allowance for deferred consideration - yes, it is a bit hard to follow and allow for every possibility ) - they have closed the really poor subsidiaries, and some of the divisions have shown great returns - currency movements are now not helping.

yes, i can afford to lose what i throw at them - probably should have bought more avb instead!! i guess sometimes it is hard to walk away, even though i have learnt to take losses before they get too bad - i sold half of what i had at about 1.05 - i should have sold all!!