General Discussion / Social Media, page-6184

@AdvAurelius

Great question. And I have nothing but obvious comments in return, sorry.


To start with the most painfully obvious: there are many pieces of information as to why the market gives a stock a particular value on a given day. I’d be foolish to try give a list as if to say ‘here this explains it!’ Some reasons for an SP’s movement are totally ‘out of the blue’, e.g. a Russian invasion of Ukraine benefiting GNC and APA, or supply issues and renewable energy policy helping WHC in 2022.)


I’m no expert (in fact, I clearly got it wrong by buying in at $0.20 in 2019). However, the market chops and changes its valuations all day every day so I take it with a large pinch of salt.


Ultimately, I’m not going to try explain why the SP is so low – I have some ideas but I don’t know with any certainty. I will just make two observations:


1. The decline is partly attributable to ALC’s financial errors. They had to retract their EBITDA guidance for FY23 and for FY24. The CF was mismanaged into a surprise CR. And despite all their revenue growth since FY2017, profitability always remains a few million dollars away.


2. However, there are many other factors to weigh in the mix. A big one that rarely gets a mention is that the SP was just ridiculously overvalued in 2021. We did about $26m in revenue in FY21, had roughly 1B shares on issue (SOI) and in May or June we hit $0.48. So we were being valued at $480b (roughly 18x revenue). Since then, the macroeconomic environment is wildly different and ALC has made few significant announcements. An extended SP decline is not surprising.


In making my ALC thesis, I have little interest in what ‘the funds’ are doing. If funds are significantly buying a stock then the secret is usually out already; whereas I want to be ahead of the curve. Also, funds rarely beat the market (i.e. they have no ‘special insight’) and their size, governance and regulatory red-tape mean they’re usually less nimble in seizing opportunities than you or I. (They seldom get the luxury of patiently waiting for potential and revenue streams to be realised, they usually buy in after it has been realised. Instead they get to fuss with ASIC/the UK’s FCA, or the fund’s board of trustees and clients. They also get to stress over ‘rebalancing’ or index tracking whereas I don’t care if a company’s market cap slips below X dollars. Rather, I can choose the few stocks I like, research the life out of them, and buy and sell whenever I like.)



@grossy66

Thank you kindly.

Re. what you said on how slow public sector procurement is and that the passage of time (2.5 years) doesn’t indicate failure – I totally hear that and would just re-stress to all: ‘have a long horizon’ if you’re interested in ALC!


Like you, if I had time anew, I might have invested elsewhere but I’m here now and that long horizon is key for me. Why?


ALC’s ‘market thesis’ (to rival global incumbents by offering a modular EPR) is going to take several years to either take off or burn-out. Or maybe they’ll plod along in the patient flow space; but only time will tell.


In fact the FY23 Half Yearly webcast gave a sense of how their strategy works moment-to-moment…and it’s a slow process! (see 15:45 https://www.alcidion.com/wp-content/uploads/2023/02/Alcidion-H1-FY23-Results.mp4).



@meetjoeblack

Thanks kindly, always appreciate your thoughts (and thinks it’s great to have ex-holders still commenting here; one isn’t going to lose out by having their thinking challenged.)


I absolutely hear what you’re saying. By the SL acquisition (and entry into the EPR space), ALC’s made a big measuring stick for themselves. (And so far they’re not doing great by it, likely another reason for the low SP @AdvAurelius.)


This ‘measuring stick’ may indeed be a hole that ALC has dug for themselves (in which case it could possibly take me ages to realise).


But as of today, I’m just not seeing the information to make that judgement and I’m doubly cautious about acting on the absence of evidence…especially in such a slow moving industry whilst I am seeing other positive indicators (e.g. a locked-in EPR with South Tees, Dartford moving toward procurement, and smaller wins consistent with the FY23 HY expansion strategy as seen at Stockport and Tameside).


So for now, I’ll continue to wait and see.