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Moon Capital - looks like they are a long/short emerging markets type fund. Manager went off on his own after working at Oaktree Capital Management.
Ramius is a pretty well known hedge fund manager.
Just posted some financial info in the IBOX. Shows how nicely margins have improved due to SG&A reduction and R&D reduction. The only thing is that they have cut R&D really thin from a historical basis. Also most of the SG&A reduction comes from reduced marketing.
Thanks. Haven't gone through it fully yet. Seems fairly cheap, but not enough to overcome illiquidity. Wouldn't be able to get in with size, if I were to do a full due diligence.
An interesting tidbit. It's majority shareholder is GungHo Online Entertainment, who is 43.1% owned by Softbank, a major internet player in Japan. Softbank actually mentions Ragnarok in their annual report. Softbank also owns 45.5% of the Online Game Revolution Fund, of which GRVY is a 16% owner. Softbank gives GRVY a huge distribution channel, should one of the new games proves to be a true hit. This also gives them a takeout candidate possibility in GungHo, since they already own a large stake. In fact GungHo previously bought a minority owners stake of approx. 7% back in June 2008 to up their ownership stake to 59.3%. The one issue I have is that as a majority owner and licensor of the games, they pressure GRVY to give them better terms, which would hurt their investment and potentially makes it less expensive to takeover if they have a verifiable hit on their hands. Just nitpicking, but have to throw it out there.
Well it will have to explode w/out me. I got out completely at end of Friday. I was looking for the big one to be this quarter. I have no handle on their expenses and they implied in one of their PR's the growth rate for revs was slowing. The hair surrounding the company was a bit too much for me to take the larger positions I generally like. The company does not have a big enough moat to stay in it that long for me. I just don't see a compelling reason to stay with their product. I could be completely wrong, especially since I thought the company would make 1.9-2.2 cents. Given my belief that the market is overall getting a bit rich, I'm looking for things with some safety valves built in or at least have some uniqueness built in. Good luck.
Sprott recommendation on BNN.
http://watch.bnn.ca/market-call/august-2009/market-call-august-6-2009/#clip200968
Snippet from Seeking Alpha
http://seekingalpha.com/article/155338-sprott-s-peter-hodson-likes-gravity
The cash position is a huge safety valve. It gives me time to figure out how much I like it. The turnaround story over the last few quarters was enticing enough. The potential for the long awaited sequel Ragnarok II makes it that much more interesting. I liked how the presentation laid out the relative valuation (pg. 21). It shows the possibilities compared to their competitors who trade at 5-7 times book value, when GRVY is only trading at book value. If the company regains some of their old luster with Ragnarok II, or bring new users in with Ice Age Online or some of their newly released games like Requiem or Emil Chronicle takeoff than we have a catalyst to bring us to their competitors book value. I think consistent profitability gets us to at least 2-3 times book. One of the expense items I see difficult for them to keep this low is R&D. It is their lifeblood, as they reinvest into their existing platform, or development into new games. It seems a bit low in the most recent quarter and I would expect this to not consistently be the case. The management has done enough to make this a very interesting story, hopefully it will have a fairy tale ending.
This was a nice presentation. Made me a bit more confident when I chose to pile in to the stock over a week ago. This has now grown to an almost 10% position. I was hoping to buy more after completing some further dd, but it has really ran away in the last week. I think this road show has something to do with it. What's interesting is that they have done this presentation over the last three years and this year is the first one where there has been a huge run in price and volume before the show.
Only left with less than a 1% position. Unloaded most for small profit at .27.
10Q posted. Very nice revs, not so very nice increase in expenses. 13k of net income. Well below even my most conservative net income numbers. As the company stated, revenues were well above the minimum of 100% improvement from the previous q.
OT 10bagger: Will do some updates this weekend. I was fiddling w/ it earlier, but got a full time job already ;).
The crazy thing was this this company was valued on a lot of hype in early 2005 based on the SGMS testing of the product. I got into the stock initially at the tail end of 2005 and took a loss by early 2006. Eventually got back into it again in 2007 and have ridden it steadily since than. If the stock can get valued above $2 based on the hype back than, it should certainly be above $2 based on the fundamentals and growth right now.
10bagger - Need an assistant to develop the board? Not sure if you saw my earlier request. I jumped into GRVY with about a 7% position after seeing your post and doing some dd.
10bagger - You need an assistant for this board? I'd like to make this the first board I've actively participated. I'm the one who posted the dd on DRAD about the shutdown on the facility that produces the nuclear isotopes. I had some hopes for DRAD, but that issue seemed too loom like a dark rain cloud.
Not correct. Their first product was Ragnarok. It came out in 2002. It was fairly successful, however their second generation of the product has been plauged with delays. It is scheduled for launch in mid 2010. Ice Age Online is a newly developed online game that will be launched late this year. They're game Requiem seems to be picking up some steam, based on the 2007 launch and the growth of revenues in the established markets for this game. The big hitch will be the switching from the old 2D game of Ragnarok to the new 3D game of Ranarok 2. Considering they've taken this long w/ the release, hopefully they can convert old users to the new platform. Just like how Windows converts old users of Windows to the new Windows platform. The capabilities have to be advanced enough and bug free so people will be incentivized to switch or convert back to their platform. With a large cash cushion, there is some margin of safety. I've positioned myself based on these dynamics.
I actually loaded up a decent size position in this one. The good thing about gamers are they are sometimes a bit fanatical about a particular game. Their big revenue generator is still an old game that is getting past its life cycle. Unfortunately the fans have been waiting a long time for the 2nd generation. That is where the stickiness comes from their gamers. Those that have been playing this long already will more than likely transition to the 2nd generation. Hopefully they can get some new players or some of their old gamer base back. They used to have 3 times the number of users, but the long delays for the new version caused them to lose some users, who transitioned to more advanced gaming systems. Their 2nd generation game will be modeled after some of the top games out there like Warcraft. I think they would have ability to win back some of their old fans. A review I saw of the beta test seemed favorable. Let's hope they can stick to the timeline for release. They are already several years behind. Don't know how that happened, when they had plenty of cash. Sounds like poor project management. I think the risk/reward is fairly good on this one. I'm still parsing through some of the filings, before I commit fully.
Roth finally coming around. They upped the multiple. Wait until they come to their senses and get where we are.
I will dance naked in the streets if EGMI makes NASDAQ this year.
Very disappointing would be a bit strong. I'm not surprised by a relatively flat quarter and to tread water in the promotions business in a recession of this magnitude shows there is some client loyalty to the product. Seems they are being conservative with ramping up. I actually wouldn't mind if they hired some more staff to go after specific markets.
What other growth company is given a valuation multiple that implies less than avg market sector growth?
No negative surprises. Look forward to listening to the call.
I'm pathetic too. I'm sure I would not sell at $3 if it got there today. It would have to go to something fairly ridiculous for me to unload right now.
Roth is being cautious to a fault on this one. They state the multiples for the sector and than give EGMI a multiple lower than the average for the sector for a company that is growing faster than the sector. On top of that they have new revenue streams coming online. Yeah, I really think this company is worth $1.75 right now. NOT! $3 for me.
Thanks for your opinion, but mine differs from yours in the variability in cost. This to me is not a long term hold from current information, though I will say any further drops makes the risk/reward a little more interesting for me from a value proposition.
That's where i disagree. I'm completely speculating, but I'm not so sure all the costs are one time. They did mention increase in customer service costs by 500%. I'm assuming that is including staff, which is not one time. I factored that in a very conservative manner with only a double of revenues, which they said is a minimum. My SWAG for earnings is .019-.022. Still about a triple from .0075. If they can sustain the revenue increase will be the big question.
Your post may be splitting hairs, but the real event is when they post revenues and earnings. They have been fairly forthcoming when they have done well and I wanted to be positioned if they post better numbers than they have alluded to is their minimum. On the other hand I trimmed the last of my exposure to the company at the end of last week through yesterday to a much smaller position because I'm not so crazy about their business.
I left some skin in the game, but not as hot on this one as I was initially. I'm done selling until after I've had a chance to digest the earnings report.
DRAD – Getting out of entire position. Happy with 50% gain. I hope someone will share this info with those on the Motherboard, since I’m just a freebie member.
After larrybaz posted the stock, I did some research and found it a compelling choice on the surface. The turnaround story sounded good, along with the cash cushion and return to profitability. I immediately started a 5% position at avg of 1.51. I was looking to increase my position, after doing some further due diligence. I am now selling because of the issue regarding the shutdown of the Chalk River facility and the Petten facility, which produces about 60% of the output of nuclear isotopes used in the imaging machines of DRAD. They mentioned in their recent 10Q that the Chalk River issue could have an impact on their business. From the 10Q “As of the end of June 2009, there was a significant reduction in the availability of radioactive medical isotopes worldwide. For example, a nuclear reactor in Chalk River, Ontario, which supplies 50% of certain medical isotopes to the United States market, is currently off-line for repairs and will not return to service before late 2009 or early 2010.”. This was not an insurmountable problem, however now the Petten facility is going to be offline until August for routine maintenance. Given the decay rate of the isotopes, this will probably have an immediate impact because new isotope supplies are constantly needed. These two facilities offline reduces the supply of isotopes by 60%. While smaller doses of the isotopes can be given and alternatives can be used, there are difficulties with each. The US has no facility of its own to produce nuclear isotopes, so DRAD will have to import supplies. In this depressed dollar environment, they will have to purchase against appreciated currency. Some of the other reactors are looking at increasing production, but apparently the other reactors can only ramp up to at most 80% of needed capacity. Given all these facilities are 40 years old, the supply chain for DRAD is a bit too unstable for my taste. I’m guessing this will affect next quarters numbers, since the June 30 quarter already experienced part of the Chalk River shutdown.
Took my 10% profit on PWEB. I was hoping for much more, but my position grew to 15% of my portfolio and in my opinion the company had some hair on it where I felt I needed to reduce my exposure. I reduced to my original position of about 3.25% over the last few trading days. I feel the company can deliver on their revenues and probably with some upside, however the risk/reward wasn't as compelling anymore. I fine tuned my initial original earnings estimate and guess the bottom line earnings will be .019. I think the .03 guesses were high because their expenses appeared to be highly variable to revenues. That's my SWAG.
Bite your tongue. We are getting hosed if this is for some mediocre buyout premium. I would personally arrange for a shareholder revolt.
Maybe we're taking a big step up. However, even at $3 I wouldn't be selling with the L/T prospects.
So any others want to go on record for earnings in two weeks? My back of the envelope calc of 2.2 cents is a triple over 1Q09 figure of 0.75 cents using revenues of exactly double 1Q09. Company has stated that is the minimum number they expect to report.
I did a little more digging today and read though the recent 10Q & K. My very rough calc of earnings done mostly in my head, while flipping through the Q on my PDA on the train on the way to dinner. I come out to about a 2.2 cent EPS. I'll do a more robust analysis over the next few days. This is all based on the PR'd info. Wanted to post all this before dinner.
Thanks for that info. If it holds true, definitely more than double EPS. I'm sure there is some cost increase associated, but if they increase revenues 150% and costs increase ONLY 75% that's still a home run in my book. Just what is their definition of limited?
Hope you and Mike made this a decent size position.
Looking back, should have been just as aggressive knowing what I knew. I would have about 65% more shares. My loss.
Hat tip to Mike w/ the double D's.
I was leaning towards adding after I did a little more work this weekend. This piece of news made me think not to wait. Short term looks to be a no-brainer. Just hoping that the modification of the business model did not produce a dramatic change in operating costs. If they are able to enhance the model w/ their existing structure or only a modest increase so they can benefit from the revenue growth, than they will more than double EPS, as many have pointed out. Risk/reward seemed fairly small here and company seems to have been just underappreciated for a while because the lack of any significant earnings even though revenue grew. If the quarter is as expected, than we get substantial revenue growth and earnings growth. Sounds like a volatile mix.
Tripled my position on that news. Might be the dumbest investing I've ever done, because I took a fairly large position and didn't finish my dd. Been too busy. Average slightly below .29 today. Probably brings my overall basis to about .25. Fingers crossed. Hopefully finish looking at this company this weekend.
What's ironic is that the Lord's investments have been in gambling related businesses, however the odds seem to be in his favor because of how his investments have turned out.
Joined you guys on PWEB with about a 3% position. Sold about 40% of my DRAD for a quick flip. Average probably in the low .2's for PWEB. Don't think I'll be adding anymore, done at .26. Looks like some of you have made a nice dime on this already. Like the s/t to m/t outlook, but not sure about l/t prospects until I finish my dd. They don't have quite the moat like EGMI.