Disclosure: No quantitative analysis because it?s the freakin' weekend, which also means I can?t be bothered proof reading this properly.
Checklist: Bottle of wine - check. Smokes - check. Better half out for the day - check.
OK let?s roll the tape and do it.
Cons: Damn! It was thin on detail and had no big announcements.
This is understandable for the IP assertion area of the business - key announcements are released as they come to hand and that is about all that would be sensible to make publicly available. It might be 1-2 years for the resolution of current cases which would epresent a good return for a team of half a dozen legal folk. But gee ? for an investor - it is like watching freakin? paint dry. Still the cases are still on course and this team has a pretty good strike rate. I am not sweating yet.
For Nearmap it is an indication that? well? not too much has happened yet. Sales have increased at a steady pace but not yet world shaking and still largely related to the government sector. Sorry folks but is has not happened yet and this is being reflected in the share price.
A presence on the east coast is good (but what is the increase in the cash burn rate) and the beginning of private sector interest does broaden the horizons.
Puttin? this into the broader context of the ASX - short term there are much more exciting prospects around.
My take on this? Traditionally in Australia, investors with a risk appetite get attracted to junior resources stocks, looking for the next Woodside or Fortescue. A friend of mine that smashed out an Ivy League MBA (after finishing his PhD ? geek!) and now works for a silicon valley VC company once very eloquently put forward his thesis on how us skips just prefer investing in dirt over air (over a few drinks of course). We just love pictures of big trucks in outback WA in our investment prospectus documents. There is so much hype around certain other sectors that it is going to take some very impressive announcements (or sustainable dividends) to cut through the noise created by companies like Rex Minerals or McCarthur Coal. The whole Australian investment environment is simply not geared up to invest in a company like IPR.
Expect a lag time between IPR making headway and the SP heading north. Expect some investors exiting in search of some "redder/goldy" pastures. And don?t forget the importance of going against the herd to realize some real returns.
Long-term IPR can outstrip even the ASX darlings as we, my friends, are not limited to what we can find lying around in the dirt.
Pros: Overall strategy execution: Turning IPR from a assertion only business to a business with a steady cash flow is a very good move by the IPR decision makers.
IPR in its former structure was a very difficult story to sell in Australia to really excite the broader market ? IP assertion is just a too volatile and inscrutable to attract any serious money on an equity market in Australia ? private-high-net-worth maybe but instos and mums and pas? never, not here.
Nearmap is a very good fit ? it is almost unbelievable that such a technology just happened to come up for sale as IPR had decided to set out on a diversifying strategy. Also, couple this with the fact that Monsieur Nixon just happens to be an ambitious freak He wants to be a billionaire ? you can just tell this by his choice of shirts. A man with lesser ambition would have taken a cool couple of million profit from the deal and got a McMansion in Perth and the Nearmap project would have languished in the office of some Tech company ? under resourced and overlooked by a senior management team with a short attention span, too many projects (and too many hammocks).
The good news is that, to date, nothing has gone wrong yet in executing this strategy. The reduce in the company burn rate was very wise, Nearmap it clocking up sales and appears to have a great retention rate ? although this is not going to be enough going right for the impatient.
Pros 2: Simon. His appointment in IPR?s position could make or break our investment.
My judgment is ? drum role please - two thumbs up.
1. I love the fact that Monsieur Nixon (et al) has taken a back seat with the Nearmap company business development execution. A great sales person is rarely the person who has developed the product ? and Nixon has recognized this (or was told). We need a Nearmap CEO with experience and new ideas for the B2B and B2C environment (and trust me the two are very different worlds). Thank god the IPR team looked outside of the business to fill this role. Along with reducing the company burn rate I see this as another very impressive strategic decision.
2. He does have the basic skills required of a CEO. a) He presented very well. He knows the jargon and could instill confidence in both potential clients and potential investors. A key skill for a CEO is good communication and he seems to have a natural style that will serve us well. b) He is has his eye on retention. It is such a junior burger mistake? but happens a lot and is an incredible waste of investment in sales? taking your eye off retention. Classic business rule ? it costs you 10% of what it does to get a new one client to simply retain a client so many business fail to realize this simple fact. And then the word of mouth will take care of the rest/
Bottom line ? he has good business ?hygine?. This ?does not a great CEO make? though. I get sick of reading in annual reports CEOs espousing their amazing achievements when in actuallity they have just been doing their job. But I am glad that at the bare minimum Simon passes these lower hurdles.
3. There was good body language between the people up front. I think that the current management team are very happy with the appointment of Simon as they let him talk freely and let him run around on a long leash. If he was on a short one I would start to get concerned. Management teams can have ?post-purchase-dissonance? pretty quickly and make slight corrections to the CEO?s statement, butt in, look awkward when he talks ? bad sign? really bad sign.
4. Simon articulated his focus on getting that base cash flow happening. IPR?s biggest risk is our ?event horizon? - where too much focusing on the blue sky leads to getting sucked into the black hole of capital raising? or worse insolvency. If we can quickly batten down that hatch then the company won?t be forced to make some stupid choices under pressure.
This is my greatest concern and I was reassured to hear that it is front of mind for the senior executive team.
5. Down the track Simon?s European background will be invaluable. This, for me, really points to smarts on the board to appoint him. Europe has a very mature tech scene. If IPR dream of cracking that market they will need experience there or else we would be eaten alive. This fact says to me that this company really gets how to execute a long term strategy.
All in all? I will buy all I can at these prices with a LT buy outlook? there just aren't many companies like IPR... small or large cap.... put simply this company really could make us very rich.
All right then I am gonna wrap this up? with a final comment?
For me investing in IPR is the true manifestation of a properly operating share market ? a company goes to the market to raise funds. It is new and innovative with tremendous promise and a great team. It attracts believers who put in their hard earned (and underperforming) cold hard cash. Even if I loose on IPR I will not be disappointed. Not only do I believed in what IPR are doing but I believe this is a much better endevour for me than leaving some cash in a savings account to help some bank over-inflate a non-productive property sector ? or worse ? making an investment in a company ?cos I think I can flip to a ?greater fool?. To quote the evil empire GS ?we?re doing god?s work? - but you know what? for us this might be true.
Oh, hang on, one last Con ? I think Simon cheated on Movember efforts.
Looking at his twitter page (where he does reference some pretty wanky management crap) he has the goatee happening. Then, hey presto, he just re-manicures his Las Vegas illusionist goatee to come up with his Movember ?tash! Plain lazy!
PS. please respond with the most contrarian thinking you have.
IPR Price at posting:
9.0¢ Sentiment: LT Buy Disclosure: Held
