Super Growth

12th Jun '18 by mmarkkj777

33 comments 8033 reads

I bought Tern on Friday, as I noticed they on Stocko that they had been moving upwards.

They gained 25% yesterday and 29% today.

They look like they still have legs. Have been moving my stop loss up, but not too close. Don't want to get stopped out just with the normal volatility.

Worth a look (but DYOA, as they say).

BTW, I'm quite new to Stockopedia, so please don't be cynical. I don't have any motive for this post other than the fact that I want to start to post regularly when I see growth opportunities.

Been trading for 3 years now. mainly value at first, but now a separate growth portfolio.

Happy investing.

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About the Author

Mmarkkj777

Premium Member

I have been investing for a long time, but have become more serious about my investments over the last 3 years and am looking to use Stockopedia tools and info. to help maximise my gains. I have a Portfolio of 14 Buy and hold companies: 3 US, 1 European and 10 UK. I have held one for 20 years and one for 14 years. In the last few months I have added a growth portfolio (at least I hope they will grow!) . It is now up to 6 stocks.More recently Oct 2018, I have reverted to cash for a substantial part of my portfolio (over 2/3rds). I'm now looking for bargains and opportunities to reinvest. more »

33 comments

JakNife

13th Jun '18

Personally I'm short of TERN and I would suggest that short is the only way to be and that the current market is materially dislocated.

1. The company has today confirmed that its assets are worth circa £11m.

https://www.investegate.co.uk/tern-plc--tern-/eqs/statement-re--share-price-movement/20180613124622EIKKD/

2. Stockopedia today notes that the market cap is £100m.

3. One company within Tern's portfolio dominates, that is Device Authority (DA).

You can download the most recent accounts for DA form Companies House, they are materially out of date but suggest little value for na early stage company. Tern recently tried to raise external funds for DA, it failed. Tern has recently had to lend more of its own money to DA and extend the term of its existing loans. This confirms that DA is early stage and not producing cash.

As a final point I would also note that historically Tern has resorted to death spiral funding in order to fund itself.

All in all, this is not a high performance quality or value company albeit there is currently a madness surrounding it that has given it some positive upward momentum.

JakNife

gregatr0n

13th Jun '18

Hi JakNife how did you manage to get borrow on Tern? I use IG and tried via SBet but can't get any. Cheers

JakNife

13th Jun '18

I did it with IG earlier in the week. You have to call them and make expressly clear that you're prepared to take the risk of a "short against inventory". That means that they're not going to borrow stock in the market (it's apparently unborrowable) and they will simply sell stock that they currently hold to match a long position.

mmarkkj777

13th Jun '18

Well, what a day. I made the mistake of adding to my position around 9 am this morning (also placed a stop loss just above purchase price). I think they were around 18% up on the day before the first big drop came.

Its really strange, most of my previous efforts have been buy and hold value stocks or good dividend paying blue chips. This is early days for me for pure growth stocks.

Although I have read Intelligent investor (by Benjamin Graham) and have had relative success with value investing (with a bit of luck), I really knew nothing about using charts. I thought Fibonacci was a Turkish football team. I decided a couple of weeks ago to teach myself the basics and after down selecting a few small potential growth stocks, I ran a few tools over them using the Stocko charting functionality. I didn't think that the first fish I caught would jump right out of the water, snap the line, then dive back down again. I was out most of the day today after mid-morning, so luckily my stop losses sold me out quite near the top (53). I haven't done the maths yet (and two sets of dealing costs) but 70+% up in 3 trading days on the first lot.

I'm going to check out IG. I'd like to learn how to short. Will probably come in handy when the inevitable major market correction comes. Also, I've come across a few stinkers/candidates while doing my research.

I wonder what's next for Tern....

DaviStoVest

13th Jun '18

Tern is a bubble ... pumped by a very competent boiler-room crew and further inflated by momentum investors jumping on board because, whatever the intrinsic value of the business, they feel confident that they will be able to sell their holding on to another punter who thinks much the same way as they do but is prepared to pay just a little bit more.

As long as there are buyers, all is well. When the buyers run out ... pop!

It's a fun stock to trade. But it's a poor stock to hold.

JakNife

13th Jun '18

Albert Sisto:

Device Authority
https://beta.companieshouse.gov.uk/company/04676191/filing-history

Interesting legal case:
http://www.gilardi.com/pdf/hifn1stip.pdf

:-)

JakNife

DaviStoVest

13th Jun '18

JakNife, you are going to have to explain. No doubt there is something significant deeply hidden in those documents but you have to point us where to look for it.

I am aware that Albert Sisto left Phoenix Technologies under a cloud ... but that doesn't seem to be your point.

JakNife

14th Jun '18

DaviStoVest,

Sorry I was given those details by another and posted them late last night before reading. As I look at them now I too am unsure what the point was that they were trying to make other than potentially an inference that isn't strong enough for me personally.

JakNife

mmarkkj777

14th Jun '18

Well, TERN is back up again in a major way today.

Obviously THIS STOCK IS FOR TERNING.

(sorry about the terrible pun, but I'm sure it won't be the last!)

It seems to be meat and drink for the shorters and the longers.

Personally, I've been long again today (I should know better than to go back to a stock I have gained on)
Interested to see what happens in this Yo-Yo stock tomorrow.

AnonymousUser38425

14th Jun '18

Someone above said this is being pushed by a well known boiler room … would really welcome some verification ie naming of this. Personally I invested on basis of the partnerships that have been gestating for quite some time and that are now starting to really come to fruition. Major names and very significant traction in securing the security of connected devices. The valuation is very frothy based on net assets and existing revenues (of the investee companies) BUT in my opinion not on basis of what could be to come. I said above do some real research there is far to much pumping and shorting going on based on nothing but conjecture and blatent manipulation. You might even like what you find … then again !!

mmarkkj777

14th Jun '18

Hi meganxmas,

I agree with most of what you say....but,

I do real research on my buy and holds and I hold many in my investment Portfloio for months/years, but some people prefer to trade and not to invest. There is more than one way to skin a cat.

In fact, I have read a book by a private trader who took great pride in the fact that he paid little attention to Fundamentals, and he made millions (when a million was a very lot of money). You may have read it too by Nicolas Darvas. He would choose sectors that he thought strategically would do well. He then watched for price action. He often did this remotely from all over the place whilst dancing professionally with his sister. Just telegrams from his broker for the daily price of a few chosen stocks. He watched for price patterns (I guess what we would call today breakouts). No access to fundamental data, no pumping. He would obviously dump if the price dropped out of his chosen range (via telegram stop loss info. to his broker), in the same way he would buy if it broke out upwards.

So whilst I fully agree manipulation is totally wrong, unfortunately in the short term, as is oft repeated, the market is a voting machine, an opinion poll, where sentiment (human nature) can drive a price (In the long run they invariably revert to mean and fair value, but it can take years). Some of the big Quants are buying and selling is seconds (or less) automatically. So I doubt if a few private investors in a chat room could have any significant influence on a price.. or could it?

Personally, I only trade long. Never shorted. Don't even have an account.... yet (but I will try it to see if works for me, but it seems kind of counter-intuitive, as I'm mainly looking for good companies to invest in).

Be interested in your reply.

There's always room for various opinions. It's what makes the world go round.........and the stock exchange work!!!!

AnonymousUser38425

14th Jun '18

Mm77 that is a very fair point of view and I can identify with that as long as in so doing don't attempt to manipulate the situation to suck in others. I think there is room for both approaches. Personally don't agree with shorting.

mmarkkj777

15th Jun '18

Tern are up 12% again today. Still very volatile. Cant make my mind up about this stock. Wondering if I should lower the stop (and keep as a safety net in case of disaster) and keep for the mid-long term.

JakNife

15th Jun '18

I have a cardboard box here with a £10 note in. Would any of the Tern shareholders buy it off me for £75?

No? They why buy Tern shares when the company has expressly told you that its assets are worth about £12m and yet the market cap as I type is closer to £90m?

DaviStoVest

15th Jun '18

There seems to be nothing intrinsically worse about shorting (borrowing to sell stock on the expectation it will fall in price) than about borrowing money to go long on a stock you think will rise in value.

The aspect that I am uneasy about is the fact a lot of shorting is done using stock borrowed without the owner's permission. That does seem dodgy ... especially when a successful shorter will be returning damaged goods.

mmarkkj777

15th Jun '18

Hi JakNife,

I'm with you on this approach for buy and hold value stocks, I'm not sure anyone is suggesting TERN are a value stock. If you had a cardboard box that had either a tenner or a £50 note in it, I might give you £15 for it.

mmarkkj777

16th Jun '18

I’d like to make a correction to a statement I made previously on this thread. I said I have never shorted.

Well I once shorted the S&P 500 by buying a short tracker fund. So I have shorted, but don’t have an account to short (yet) and haven’t gone short on any individual stocks.

On the theme of this thread, TERN were up 20% again yesterday. I’m wondering if it is just a bubble that will eventually pop or if there is significant intrinsic value in their subsidiary. Device Authority (DA). Their long term intention seem to be to sell it to a big player for a large profit, and to keep doing similar with others.

mmarkkj777

17th Jun '18

Well I've done some digging on DA over the weekend, not as much as I would have liked due to time constraints.

They seem to have good quality customers, a good product, scaleability via a partnering network.

I'm still not convinced I can turn this into a buy and hold yet, due to the points others have mention above in comments. Namely, is their IP their own and protected (a moat). Will it crash if a sale is not quickly forthcoming.
I'm going to keep my stop loss close(ish) and see if it gains tomorrow, keeping it in my mind as a transitory position.
I'm not to concerned in this case about the very high Mk Cap compared to NAV, as it seems at lot of high growth stocks spend their entire growth life being massively overvalued (against assets and PE). Difficult for me at the moment to get used to this as have been mainly a value investor (not cigar butts, but undervalued opportunities in otherwise sound companies).
I've used some of the profits from TERN to buy XLMedia (LON:XLM) and Proactis Holdings (LON:PHD). to add to my growth portfolio. Got fingers crossed :-)
Mark.

mmarkkj777

11th Sep '18

Tern is really on the move again. Up a lot yesterday and again this morning.

CheshireUK

3rd Sep '19

I have been invested in TERN for the last 18 months, and it’s in my SIPP pot I have called “Whisky”. I have read so many books on investment that I forget who coined this phrase, but it has been used to describe that portion of your Portfolio that provides significant growth, but also the associated risk with a high growth stock. TERN does not score well on the Stockopedia stock rankings as it is effectively a company that owns and nurtures currently high tech companies who are operating in the Internet of Things (IOT) arena.

The TERN portfolio comprise 4 main investments including Device Authority, FundamentalVR, InVMA &Wyld Networks plus two other smaller companies Push Technology and Seal Software.

Over this last 6 months Device Authority have announced major initiatives with some very big companies including Intel and Microsoft . But at the moment we are unaware of the magnitude of these deals to DA’s bottom line. There has been much speculation on what this might be as the IOT industry achieves traction and signs up major organisations/industry’s to secure usage of IOT.

FundamentalVR, deliver VR haptic ‘flight simulators’ for surgery, which has taken the industry by storm, with both major medical clinics and the surgical teaching concerns indicating significant interest.

TERN’s declared objective is to sell DA in what they describe as their realisation Stage 3 . The price they will achieve for DA will be very dependent on the perceived value of DA’s secret sauce to the likes of Microsoft, Intel or other major players within the industry.

My own expectation is that in the short term ( 3 -6 months) I expect to see either a divestment of one of TERN’s portfolio companies , or a statement on the value of contracts placed over the last 6 months with these companies which I believe will result in a multi bag re-rating of the TERN share price.

But as always, I recommend that you all do your own research. And remember that the whisky needs to be mixed with water.

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Mmarkkj777

33 comments

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