I remain calm and collected amidst the heat, M&A activity & as Sage stumbles says Chris Bailey

Versarien – market abuse? Insider dealing? Or just shameless ramping? The Sheriff of AIM writes HERE

Apparently it's been hotter than in Bangkok in London. I am not sure if I really want to visit either...but meetings await in the latter. I am feeling calm and collected though despite the weather and that one of my 'tips of the year' is currently down on an update. More about that in a bit…

Boom: More bad news for Dev Clever - it needs to correct and reissue its interims. Read HERE

I am super calm because the most fascinating news in the large cap sphere is that Cobham (COB) shares are up 35% odd, thanks to a (recommended) takeover bid from the US. I do not think I have even barely scratched the analytical surface on the aerospace and defence stock during my investment career (there are always so many things to look at) but just have a think what yet another UK market takeover is saying about the value that is apparent in the broader UK market. It was a pleasure to be interviewed by Tom in the most recent episode of ShareProphets Radio and one point I made in my ramble there was that the aggregate UK market was trading at its biggest discount since 2006 compared to the broader European bourses. Even adjusting for some obvious macro debates and sector valuation biases, this is too high – so expect more M&A activity from global concerns who see some UK-listed value.

Volex – a buy? Read from Tom Winnifrith & Steve Moore HERE

One of them might be Sage Group (SGE), the accounting software and related name which has performed like a hero for me year-to-date after my 'tip of the year' love in late December. I might have currently lost getting on for half my gains but I remain wholly chillaxed (in contrast to the weather) on this name. The update noted 'FY19 recurring revenue growth to slightly exceed guidance of 8-9%' which is clearly good, but then blotted the copybook with the observation that they 'expect organic operating profit margin to be at the lower end of the guided range of 23-25%'. And the reason for this? Well high-margin legacy software revenue continues to stumble as the company further develops its cloud / subscription, which is clearly the future – as I talked about at the above link and other updates in the interim.

Redemptions Watch: Neil Woodford’s Income Focus fund – still redemptions every day writes Nigel Somerville HERE

Transitioning to a cloud offering can muck around with the numbers and expectations...but the market got too pessimistic on this in 2018 and you can see the full year 2019 to date positive reaction. As always with a structural shift and improvement, it is never a straight line improvement. So I remain long and strong. Crikey, if the UK can punch out a 15% rise in recurring revenue growth, just think what might happen the other side of some Brexit clarity?!!

For Vodafone it is time to be a do-er and not just a talker. Read more from Chris Bailey HERE

Filed under: Sage Group, Versarien, Dev Clever, Volex, Woodford Income Focus fund, Vodafone

2019-07-26 09:47:49

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