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fantastic analysis i agree with most of this but... but...

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peterbrah

15 Posts.

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20/04/18

11:18

Post #: 32581615
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Originally posted by goldbear77 ↑

a little from column a) and little from column b)

you are talking about a specific stock like its the only one thats gone through this cycle - when Ive seen literally dozens of the exact same things occur in 2017 alone.

the explorer mining sector sees this practically every day.

time and time again i see this same insanity infecting commentary on single stocks when everyone knows - or should know this is a broad market phenomenon

be realistic - daily market price volume is driven by algos and st traders. buy and hold sit and wait. they arent in the market each day - so they dont shift share price

because of this pre-cashflow stock mgt teams are 'uber' cautious about being perceived as needing capital - because the market cannot be trusted to price the stock on fundamentals but will aggressively price it down for a cap raise - which lowers the raise, increases dilution - undoing a lot of the value creation mgt are trying to deliver

dont be a sophomoric yutz saying BUD is somehow a one off case

they did say they had no immediate need for capital - not that they wouldnt need capital ever. even without the distribution deal the $10m of the oppies + then ~$5m in cash at bank would have required a raise by now even on old lower cashburn

if you cant read a 4C - thats on you, not mgt

the fact BUD then did a roadshow in which it told people it would only raise if it had a monster deal was a clear carrot - but it was such a naked flag to a cap raise i said so at the time as did others

yet the sp rose ~8-9c from memory.

thats sentiment. in a bull market the same pissy small minded rats and mice who cry about low sp now are out ferociously bidding up a stock thats flagging it might do a cap raise because they think its going to fund growth that will drive sp higher

mgt would be crazy not to raise into that kind of heat - it minimises dilution, secures the short term underpinning and funds business development

again - as i said at the time

what is obviously the blurred line is the 'maybe' component. a raise was done by end of roadshow. you'd have to be pretty damn persuasive to convince me that was not a premeditated outcome. ie there was no maybe.

but as i said after - the sp then went 20-40c - all holders had the opportunity to sell out far in excess of the cap raise.

so there can be absolutely no grounds for complaints about the impact of the raise to the business or to existing stockholders

there are tinges of deep grey like that in a number of areas - was cash for an actual cash requirement of the monster or just working capital.

digicel carribean minimum sales commitment gives the inference its a guarantee - when in fact it was not

were interest in 10s of thousands of units real demand or just theoretical sales capacity of 3rd party distributors. not specified and context of prior announcements indicated a good portion was real end user demand

but offsetting that - at the core - other than the 3 month push right for Digicel after intiially saying it was on track - mgt has been clear that
- it shifted from direct to indirect once it saw the scale opportunity + (though this has never been stated) realised what a pita and uneconomic thing it would be to try to do installs itself

- that indirect would take +6 months to start to generate income - because of the requirement to educate, train the sales and install teams, mesh payment/inventory ordering systems, allow for any free trial periodf and then allow for the billing and reporting cycles

- that the product itself has strong and growing batch of case studies of businesses that have adopted the solution

this is what I was referring to yesterday - the company has to get away from that bs marketing mindset and just talk in delivereds - not in teasing.

trading on ambiguity is low rent seeking behaviour that both good and bad mgt teams tend to be forced toward by the market's own behaviours while pre-cashflow.

the core value offered and massive scale of opportunity are still absolutely in tact - with the proviso that investors have to accept that success will vary across individual markets - because cultures/economies are at very different ends of the spectrum and Ohm will meet a burning need in some, an important benfit in others - and in some cases be interesting but not sufficiently compelling to justify the spend or displace other solutions they are using

the company now is on the cusp of building a real and legitimate global business - created by itself out of whole cloth. i cant tell you how rare that is.

the pace of that growth will vary.

i cant recall which product it was, but there's a famous business yarn about a US computer related offering that completely failed in the US on launch - only to become wildfire in Japan - which then saw the US follow and start becoming a major market 3-4 years later

you can never predict quite where wildfire will break out. thats one of the biggest benefits of a globally scalable tech - you have multiple windows into makrets at different parts of the demand curve - but once adoption rises you get to resell the adoption story to laggards

but - if BUD is going to confirm that shift to a business of substance - the trading on ambiguity must stop immediately - so it can grow a reputation as prudent and reliable manager of capital market relations.

I have had a fair degree of exposure in my life to world class businesses/mgt teams both as a consultant and in-house

BUD has all the ingredients to be among them.

But it has to guard its reputation much more zealously - and thats about knowing how capital markets will react before the capital markets know themselves

Ill give you a good personal example. In a pretty frothy time for coal in 2010 I was giving an investor presentation to a group of funds from around the world - in which i went through the company's long term plan to build some mines.

I then added that there were initial conversations being had with a chinese firm that was representing a low cost/low capex small plant installation that could deliver cashflow within 18 months

All true.

the investors then clamoured for details of what the capex, timeframe roi might be - purely on a hypthetical basis

My response was basically' Im sorry. But i know what you gentlemen (as it was all men) are like. if i start giving you numbers - even with a caveat nothing has been decided and we need to do more work - if those numbers dont pan out in 6-12 months you are going to come and blame me for them not occurring. I simply will not engage in that.

Im only telling you this because I want you to know we are an active management team - trying to unlock every possible opportunity we have. But it would simply be irresponsible for me to say any more. The more i talk about it - the more you are going to consider it a probability - and that in my view is far too premature. At this stage I would say its less likely than more."

yet despite that investors raced in and bought the stock and it thrived on that. yet when it was found the chinese solution wasnt up to snuff for a variety of reasons including it produced poor coal quality that would sell at a discount - the company suffered no reputational damage.

Thats how you have to be - you have to know that 80% of investors are small minded ferrets racing from point to point - throwing around harsh comments about mgt and blame on everyone but themselves whenever an investment goes south - and protect yourself against any potential for such mud to stick

in terms of the actual work of building a business of amazing potential - BUD gets an A

but it has some work to do in learning how to communicate in an institutionally appropriate way with markets

investors may often be ferret like in their greed - but they are elephant-like in memory - until the next sector boom comes along

and the quality investors - both HNW and funds - they are constant. and once you burn them they wont be back. and they will tell their friends. and it is actually a small global circle and word spreads fast.

BUD hasnt reached anything like that level of trust erosion.

But the ambiguous messaging must end to ensure it grows a reptutation as a reliable and trusted custodian of other people's wealth

Sales are dollars received - not free trials. Demand is only from actual users - not 3rd party distributors.

You have to act like the company/person you plan to grow into.

all imo

Expand

fantastic analysis i agree with most of this but...

but offsetting that - at the core - other than the 3 month push right for Digicel after intiially saying it was on track - mgt has been clear that
- it shifted from direct to indirect once it saw the scale opportunity + (though this has never been stated) realised what a pita and uneconomic thing it would be to try to do installs itself

feel free to correct me if I'm wrong but didn't Dave talk about this in a webinar? He stated he would target telco companies and shift away from direct sales to allow for larger scaling? He even added telco's look for products they could just bolt into packages and sell. They only realised this after digicel got onboard.

BUD Price at posting: 12.5¢ Sentiment: Buy Disclosure: Held
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