Actually about a year ago I decided to take these reports with a ton of salt. Firstly in this scientific arena they have to be led by the nose. The company has to tell them how much of the pipeline they expect to convert , how much revenue that will be and what the future win rate would be. They can try to draw conclusions on the expenses but really its probably a ramp up and a 5 minute review. What the broker / merchant banking arm does is create a viable investment sheet for its clients and clients of other firms.
So why do they do it - To raise the capital. If I posted the BS that comes out during a CR and compared 100 of these to actual you would find (my opinion) that less than 40% even get within a ballpark of what happens. Its just metrics that will get brokers to sell the CR,
In AJX case they have to comment as they got big bucks doing the CR recently and have to keep updating - actually impressed that they changed the cash figure shows someone read the announcement for the rest its just a lot of fluff.
Dont read the reports for anything other than to get a feel for what it is your are investing in. I have one share where they ( not Moelis in this case) put out a great report CR done and dusted share 50% of the CR price in 8 months and the company was achieving its objectives and the share price is now about about 60% above the CR price. No-one doing the report took the trouble to sort out the timing of the contracts turning into revenue so they missed the first half down 50% and then came into the second half and the share took off. The company had explained the timing issue badly but it was in the presentation. All the broker saw was what he needed to help the CR and take the commission...
AJX Price at posting:
59.5¢ Sentiment: None Disclosure: Held
