TWST: Any names on your side of the Atlantic that you'd like to share?
Mr. McCarthy: In fact our largest holding in the fund at the moment is a London stock called Blinkx (BLNX.L), and that is in video search. As far as we can tell, it's the number one company in that sector. Have you heard of a London stock called Autonomy (AU.L)? It's the biggest software company in London, and it does extensive business also in the U.S. It's a specialist in what they call the "management of unstructured data," a much more complex form of data than that derived from financial figures.
It's into words and text and that sort of thing. Blinkx was started off within Autonomy, and they spun it out three years ago on the London market at a very early stage of the company's existence. Only in the past nine months or so have the company's shares sprung to life. On the 16th of May, they came out with a transformational set of results, which showed revenue up over 100%, with the company just breaking into profit for the first time. It had also become cash generative and for us, that was transformational. We immediately doubled our holding in the stock, and it has gone up over five times since.
It did most of that in the six months after May, but has done little in recent months. Blinkx is a U.K.-registered company, but they report in dollars because they basically operate out of San Francisco; that's where their operational base is. The company is expected to report turnover of $60 million for the year ending this March, and for the following year, expectations are for revenue of at least $100 million. Current market cap is about $450 million.
Admittedly on a forecast earnings basis, the p/e is pretty high, but at least Blinkx is now in the situation where it is actually nicely profitable and generating cash.
