Diligent Boardbooks IPO

[robbo24]

Thought I'd thrown in my 2c worth re quarterly numbers predictions. Note I have done very little research on DIL so not sure what the market is expecting. Based on extrapolating the last year of quarterly customer numbers changes forward to Q4 (both YoY and QoQ - and sorry left the exact numbers at home) I get a range of roughly 140 to 145 estimated new customers for the quarter.

Can anyone advise roughly what we believe the market is pricing in at this stage and therefore what a number with SP upside/downside might be??

Cheers

Turmeric won the meat pack

[Harvey Specter]

145 is the magic number today. see where this goes...Looks ok to me. The restatement, costing US$5.1m!!! will have been a huge drain on management time so once that is out of the way, things should get better.

A new data centre in Europe to target growth over there should also be seen as a positive.

[couta1]

Overall I'm happy with what I read gives me no reason to sell mine for a loss this company will come right and go on to better things IMHO

[winner69]

The Q3 number 122 included a rather weak July / Aug but a solid September I am told (so the 122 wasn't too bad, just a result of the distraction from having to restate etc but things back on track)

But 145 in Q$ doesn't reflect that sentiment does it?

[Harvey Specter]

i see a lot of grasping at straws. that $5.1M figure is horrendous. unless that 2nd product comes out soon im staying well clear. glad I kept my cash!The figure is horrendous - makes you wonder what the old CFO, who still works there, thinks of that.

Clutching at straws - I dont think so. Remember this company is profitable, with good cashflow and 97% retention so it is at a completely different stage in the growth curve to the likes of XRO, PEB, WYN.

[winner69]

i see a lot of grasping at straws. that $5.1M figure is horrendous. unless that 2nd product comes out soon im staying well clear. glad I kept my cash!

as said by an eaelier article, growth stocks not performong are going to be severely punished this year. I see outflows of DIL into other stocks now...

and what does this mean Moosie - is that $4.4m a year or does ratably mean spread over years ..... so only $1.1m a year .... or they putting the whole $4.4m in this year to clear the decks

If so Spark's $16m is getting closer to zero all the time ... the $5m and the $4m to come off

From the announcement

In addition, the Company incurred an obligation for previously disclosed and approved compensation of $US4.4 million for the Chief Executive Officer to be ratably paid in 2014, 2015 and 2016, which will also be accrued as of December 31, 2013.

[couta1]

Sorry oe moI thinke thing as I play with the numbers some more :)

If you extrapolate customer numbers forward based on quarterly net new client agreements declining 25% YoY then growth in YoY customer numbers in Q1 each year is as follows is roughly:

2013 63%
2014 29%
2015 17%
2016 11%
2017 7%
Nice number crunching tumeric but i think numbers will start to rise again this year and if things go well in Europe plus hopefully a new product then who knows

[Baddarcy]

i see a lot of grasping at straws. that $5.1M figure is horrendous..

The $5.1 is only for the 2013 fiscal year too, so probably more to come, the quote is "During the 2013 fiscal year, the Company incurred obligations of approximately $US5.1 million"

Though they do also mention they have paid most of it "Of this amount, $US3.3 million has been paid in 2013 and $US1.8 million will be accrued as of December 31, 2013"

[muss1]

I've been waiting for more information about them tapping into continental Europe. There are a huge amount of potential clients there. The next wave of growth will come from continental Europe or a new product. While the growth from the low hanging fruit in USA and UK has dropped there are still significant prospects. It's the transition we are seeing now. In the short term there will be a lull but it will pick up again once they gain traction.

[Baddarcy]

Sorry oe more thing as I play with the numbers some more :)

If you extrapolate customer numbers forward based on quarterly net new client agreements declining 25% YoY then growth in YoY customer numbers in Q1 each year is as follows is roughly:

2013 63%
2014 29%
2015 17%
2016 11%
2017 7%

Percentages can be misleading, i prefer to look at actual numbers, i also prefer the users over the number of clients.

[Baddarcy]

Sorry oe more thing as I play with the numbers some more :)

If you extrapolate customer numbers forward based on quarterly net new client agreements declining 25% YoY then growth in YoY customer numbers in Q1 each year is as follows is roughly:

2013 63%
2014 29%
2015 17%
2016 11%
2017 7%

Percentages can be misleading, i prefer to look at actual numbers, i also prefer the users over the number of clients.

[Monty]

As always I think the back story is important to consider. I like to think about all the jigsaw pieces that are out there.
Sales did drop off. Why? a focus on the restatement by management. but we also know that they have moved into new offices, have employed more staff, are looking at expanding and investing in Europe (and also Asia) and the retention rate remains high.
Restatements - will be completed and a further announcement on 28 Feb 2014 - in addition the Board will be well aware that the share price has taken a hammering and ridden a roller coaster. There will be a desire to slow the roller coaster down and get back on an even keel with steady growth. They will also want the share price to recover. I expect a series of positive announcements in 2014. such announcements will hopefully include details of a nasdaq listing, and new product. A few good runs on the board for the Asian and European markets in terms of market growth will also be beneficial in building share holder confidence and credibility of the board (which has also taken a hammering)

The Pile of Cash - no point in having money in the bank and not having a plan - I would expect to see some announcement on their intentions with the massive and growing pile of money. Cash balances seem to be growing at around $2m or more per month. and accelerating. Can anyone estimate what the cash balances will be in 12 nmonths given the continued sales, 97% retention and reduced costs once restatement is out of the way?

six weeks to go before the restatements. I am looking forward to a positive 2014 with DIL

[couta1]

I've been waiting for more information about them tapping into continental Europe. There are a huge amount of potential clients there. The next wave of growth will come from continental Europe or a new product. While the growth from the low hanging fruit in USA and UK has dropped there are still significant prospects. It's the transition we are seeing now. In the short term there will be a lull but it will pick up again once they gain traction.
I think some on here were expecting too much too soon let them clear the decks and then its onwards and upwards,I posted earlier that I didn't expect to break even on my $7.16 purchase price for around 1-2 years,their retention rate is the jewel in their crown IMHO

[notooshabby]

Just noting that there's a little bit of pre-open bid volume growing. Not looking super frothy though. Probably not quite enough to wipe yesterdays decline. Will be an interesting day to see how the market digests the news, and to see what aspects of the release get reported (if any).

[notooshabby]

I should correct my last statement - as I now see that a large volume of sellers have cancelled orders...

[Xerof]

I bought yesterday and am feeling VERY relaxed.

[winner69]

FCF looks like it was $22.8m ... say $4m of it 'abnormal' / non-recurring / oneoffs / adjustments to profit or whatever so underlying FCF about $26.8m

This is 30% higher than 2012

FCF growth of 30% is what drives the valuation ..... as margins (jaws of the crocodile remember) increase one would think that FCF should still grow at this rate

So $27m plus 30% is $35m in 2014 is $$45m in 2015 is $58m in 2016 so the bank account will be nearly $200m in 2016

Good god .... I see a shareprice in excess of $9

[comatose73]

I took a punt and bought yesterday too, so far pretty happy with that, though will be interesting to see how today plays out

[Schrodinger]

Their failure to correct the past errors quicker is very concerning. A lack of guidance on the full year restatements and putting this out for potentially another 3+ months seems a long time to wait. This is a concern because the ongoing costs could be huge and they could find other "stuff". On the positive, a 97% retention rate is awesome.

Anyone have a SaaS company they know about that went through this process and what is a realistic timeframe?

[zymwh]

I like the certainty the announcemrnt brings to me.

[Harvey Specter]

Doesn't matter to me, its just a bad, bad figure!

My concern has always been, and always will be, growth for an SaaS company. growth still on its way downhill imho.


Wow, here be bulls...Looks like you read that one wrong. Better to do that with the ones you have no money in that the other way around. Care to take a guess for the day?

[Harvey Specter]

Open and 4.75 and up to 4.84 already. Not a bad start especially since most of my holdings seem to have red arrows next to them.

[Harvey Specter]

Sure, although I would argue that extrapolation is more the issue ...
Again just quick number crunching for anyone interested and there may well be mistakes :)Lets extrapolate from Q3. Q4 was a 20% increase so 2014 Q1 should over 170 new customers :)

[clip]

^I agree sparky. Should have gone with my gut and bought back in yesterday but funds were not available by the time I had thought about it. will be looking to get back in today if there is a good pull back.

I presume the restatement will not affect the cash in bank balance, is that correct?

[jonu]

Early BOT seller. This will test things. Interesting to see if it holds up.

[couta1]

I said yesterday that I thought Dil and Sli would move together,looks like they are,very cool

[Schrodinger]

A good result, though not a blow-out-of-the-water one. 145 is ok to good. I would have loved to have seen 155 new clients.

I am more impressed by the US $56.1m USD on hand, which is roughly $68m NZD. They genuinely have wonderful cash-flow. Just superb, really really good. This is a VERY healthy sign.

(http://www.sharetrader.co.nz/showthread.php?5408-Diligent-Boardbooks-IPO&p=451692&viewfull=1#post451692)I am surprised that punters are horrified by the USD $5.1m in restatement costs. Frankly I thought it would be more like $8m-$10, in my post at 5320. (http://www.sharetrader.co.nz/showthread.php?5408-Diligent-Boardbooks-IPO&p=451692&viewfull=1#post451692)

By the looks of it, the market views the results as a positive. Up 10% this morning!

I think we should consolidate above $5.00 before too long, perhaps even $5.50 by mid February. Again, I think people have dramatically oversold DIL over the last few months. People are now realising the company is much better than the panic pants are letting on.

High returns for high risk Sparky... I would expect good numbers

[Xerof]

Couldn't agree more Sparky. My only regret was being offline when the trend change came over the break. But happy to have got some on the retracement back to fill the gap

[couta1]

I'm staying out of this for now, my gut says no and im already gaining on others. I'll leave it to you guys for now. DIL not for me anymore I feel...
You could try SLi Moosie u might get a good gain once there next sales figures come out?

[goldfish]

Im kinda with the moose on this one, growth definetly slowing, no new product yet and even if there was whos to say itll be any good, the expansion into europe doesnt do much for me, theres a lot more competition then when they first came out. They will find it a lot harder there imo.
The restatment still not finished, and it casts a certain light on management for letting it get like this, also why the need to move into flash new offices and hiring of staff with slowing growth and no new product. That also doesnt sit to well with me.
There are a few good things like cashflow etc but i just cant see a positive future for diligent sadly...
I hope im wrong and would jump in again if it changes.
Just how i see it at the moment.

[TimmyTP]

I find the trivialisation here of their focus on Europe curious. Europe's GDP is near-as-dammit the same size as that of the USA and they have penetrated very little ex-UK.

So they are focussing now on doubling the size of their market, for an investment of US$2M and with a US$50M war chest to go and buy the market if required.

Yet the opinion here seems to be that this is trivial compared to the mysterious new product.

It's quite possible that I am missing something here. Is the existing penetration into Europe far greater than the five fifths of bugger-all that I perceive? Do European directors have significantly different demands to those in the US, UK and NZ, that DIL will find hard to meet? Is there a major incumbent in Europe that has a stranglehold that will be hard to break?

Also wondering, could the mysterious new product(s) be "Boardbooks Europe" (and "Boardbooks Asia")?

[MAC]

I think the market liked a slightly higher figure than last quarter, and it has made a slight up tick on the growth plot, not sure that is a change in trend though.

I think it is time now to review forward revenue estimates based on what is now three quarters of lower growth, I like the move into Europe and would like to know more about the timing of a second product, but I think the markets expectation of 45% p.a in forward growth is too optimistic now. The last three quarters seem to be trending down to around half that growth rate.

Having said that I see no reason for the SP not to come back to fundamental valuations once the restatements is final, however that fundamental valuation may be lower now than it was.

5311

[Harvey Specter]

I think the market liked a slightly higher figure than last quarter, and it has made a slight up tick on the growth plot, not sure that is a change in trend though.

5311Nice graph but I do wonder if new customers is the best metric to follow. Surely increase in FCF would be better, especially if normalized for one offs like the restatement and share options.

[Schrodinger]

Yes a large cash pile is on the positive side. I rate trustworthy management highly for companies, especially as I hold mostly for long term.

[Lorne Ranger]

Yes a large cash pile is on the positive side. I rate trustworthy management highly for companies, especially as I hold mostly for long term.

Fair enough too. I think Diligent are trying to address this by going into detail about new appointments to the management team. I would be more concerned about companies that have a reputation for inadequate management but weren't doing anything about it (Im thinking Rakon here, and even Snakk is raising concerns). Basing a verdict on valid historical issues ,but ignoring the progress is one approach.

Otherwise im quietly pleased with the report this morning. It halts the run of declining new sales (though I agree it is yet to prove to be trend breaking), maintains the retention percentages well, and I think there even some excitement to be had about european expansion, which even at 2mil is peanuts to thier bountiful reserves and cashflow. When continental expansion can be said to be a conservative move you know something is right.

Market agreeing so far, although I also suspect some holders might see this as the chance to exit after a harrowing 9 months. Im holding. Not even a rabid Moose can scare me off this one for now, despite his best efforts.

[Hoop]

^I agree sparky. Should have gone with my gut and bought back in yesterday but funds were not available by the time I had thought about it. will be looking to get back in today if there is a good pull back.......

Clip ....gut emotions are emotions...There's a saying "Emotion kills"...you should find an investor strategy that suits you and stick to its discipline ...whether its FA or TA doesn't matter...Anyway Clip looking to buy back??? you shouldn't been out in the first place...

Below is a very simple medium term investor Chart...just a couple of well known indicators and a few lines drawn....easy to draw ...eh?

IF you did this simple TA chart draw, you would've earn't heaps of money IF you abided to the charts buy and sell signals

The major plus with this chart is that it takes away an emotion attached to confusion due to information overload just by being simple....heads up for that principle of KISS..eh?

Its hard to think that investor trading behaviour simplified into this 1 year chart time spans 5180 posts on this DIL thread which 80% of those posts contained unproven opinion and emotional forward projections....talk about information overload!!!!

Notice on the chart..major medium term signals screaming BUY at the beginning of 2014....

Notice on the chart the absentice of major sell signals over the last few days...Hands up those who sold out these last few days...then ask yourself why????..was it due to "buy the rumour sell the fact" which is a positive capital realisation strategy or was it emotion!!!


I don't think so... but you would expect it to come back a little before it hits $5.00!

It may do who knows for sure ...but lets take one step at a time...

DIL did "throw back" this morning to 470 then recovered, this is a bullish activity...however it's today's close that interests me..it has to close above the 475 resistance (break) to create the medium term buy (accumulate) signal (bullish)...Failing to go above the 475 resistance could be viewed as exhaustion forming a short term bearish "watch" (!!) signal.

EDIT:- Note on the chart that the long term investors sell signal triggered at 590,,,,they got out and as yet still out waiting for the long term buy signal to trigger (SMA200 blue line)

http://i458.photobucket.com/albums/qq306/Hoop_1/DIL14012014.png (http://s458.photobucket.com/user/Hoop_1/media/DIL14012014.png.html)

[clip]

Thanks Hoop.. will be saving this post & chart to read back again in future. You are right that I shouldn't have been out in the first place.. though if i stuck to my plan i would be in a better position again. in at 4.26, out at 4.75, should have been back in round 4.40 yesterday. Oh well :) hopefully the other places i have moved the DIL money to shall see me right

[Lorne Ranger]

Thanks for the chart Hoop. But if this charts share price activity and trends, surely it cant account for a "future" variable like a quarterly sales announcement or an expansion into Europe? I can fully understand people exiting in the last week, especially given the trend of the last 3 Qs. If the sales figures had been 125 instead the SP might have suffered and how would that have been predicted by your chart? Surely your chart gives context for possible movement rather than anything more precise?

With respect

L Ranger

[Lorne Ranger]

Can't help but think this info leaked out a few days back ... Another NZX "please explain" coming?

The Euro expansion would be realistically hard to conceal? Mind you I dont know anyone who was aware of it, do you?

[winner69]

Low tides are not for another hour and a half.

So in the mean time, cogitate on this.

April 2013 reported cash on hand: (http://www.boardbooks.com/wp-content/uploads/2013/04/DIL-Q1-2013-Quarterly-Report-April-16.pdf) $36.5m USD

July 11 2013 reported cash on hand: (https://www.nzx.com/companies/DIL/announcements/239321) $39m USD, up $2.5m on the previous quarter

October 11 2013 reported cash on hand: (https://www.nzx.com/companies/DIL/announcements/242252) $47.4m USD, up $8.4m on the previous quarter

January 14 2014 reported cash on hand: (https://www.nzx.com/companies/DIL/announcements/246018) $56.1m USD, up $8.7m on the previous quarter

So revenue is slowing, but cash is increasing at a prodigious rate.... which means EBITDA is likely to be sensational as well. Revenue growth may be slowing, but not earnings....

And at this rate $200m in the bank in 3 years ..... less what they give back to shareholders

[Lorne Ranger]

Can't help but think this info leaked out a few days back ... Another NZX "please explain" coming?

Actually shouldnt they have informed the NZX about the expansion plans sooner? Im not too clear on what is notifiable and what isnt these days.

[Baddarcy]

Low tides are not for another hour and a half.

So in the mean time, cogitate on this.

April 2013 reported cash on hand: (http://www.boardbooks.com/wp-content/uploads/2013/04/DIL-Q1-2013-Quarterly-Report-April-16.pdf) $36.5m USD

July 11 2013 reported cash on hand: (https://www.nzx.com/companies/DIL/announcements/239321) $39m USD, up $2.5m on the previous quarter

October 11 2013 reported cash on hand: (https://www.nzx.com/companies/DIL/announcements/242252) $47.4m USD, up $8.4m on the previous quarter

January 14 2014 reported cash on hand: (https://www.nzx.com/companies/DIL/announcements/246018) $56.1m USD, up $8.7m on the previous quarter

So revenue is slowing, but cash is increasing at a prodigious rate.... which means EBITDA is likely to be sensational as well. Revenue growth may be slowing, but not earnings....

Agree !! Thats the wonderful bit about software companies you can build something for (mostly) one off fixed cost, but then sell the same thing as many times as you like.

The first few sales cover your costs and then each sale after that gets closer and closer to 100% profit, so even when your sales are decreasing your earnings can still be increasing.

[In4a$]

Jeezz, price took off. !!
Back in at $4.80, I guessed if news was good I would get in at $4.50 or about, had to amend my buy 3 times.
Got out last week at $4.56, should have had faith and stayed in, still easy to say in hindsight.
News was good enough for me, not great but enough to help keep the price going. IMHO

[TimmyTP]

Actually shouldnt they have informed the NZX about the expansion plans sooner? Im not too clear on what is notifiable and what isnt these days.
I don't think that would constitute "Material Information" - have a look at section 10.1 here (https://nzx.com/files/static/cms-documents/NZX%20Main%20Board%20&%20Debt%20Market%20Listing%20Rules%20-%2030%20Oct%202013%20-%20CLEAN%20-%20secure.pdf).

[iceman]

And at this rate $200m in the bank in 3 years ..... less what they give back to shareholders

The cash is growing at a very high rate and I am very happy with the announcement this morning. The foray into Europe is great news ad I am sure many Directors already using this in large US companies will also be on Boards of European companies which no doubt will assist the European expansion.
I do not want to see large amounts of cash sit idle in the bank so hope DIL will announce a buyback around the time of their restatement announcement, or put it to good use to grow the business even further !

[Whipmoney]

The cash is growing at a very high rate and I am very happy with the announcement this morning. The foray into Europe is great news ad I am sure many Directors already using this in large US companies will also be on Boards of European companies which no doubt will assist the European expansion.
I do not want to see large amounts of cash sit idle in the bank so hope DIL will announce a buyback around the time of their restatement announcement, or put it to good use to grow the business even further !

The cash is not 'idle', its invested in US treasuy securities and is therefore risk neutral from a valuation basis.

With regard to a buy-back personally what I would like to see is a buy-back of some of those preferred shares that David Liptak's Spring Street Capital hold. This would remove some of the dilution overhang, which should 'in theory' also boost their share-price on their ordinaries.

Any buyback that didn't involve a corresponding reduction in their Pref shares would be risky in my opinion.

[iceman]

The cash is not 'idle', its invested in US treasuy securities and is therefore risk neutral from a valuation basis.

With regard to a buy-back personally what I would like to see is a buy-back of some of those preferred shares that David Liptak's Spring Street Capital hold. This would remove some of the dilution overhang, which should 'in theory' also boost their share-price on their ordinaries.

Any buyback that didn't involve a corresponding reduction in their Pref shares would be risky in my opinion.

Invested in US Treasury securities is idle for me as an investor. Agree with your suggestion of buying back preferential shares first.

[blobbles]

I am a bit scared with how much paper profit I am making this year... Every time I wake up in China and check my shares they are up 10%! Long may it continue, unlikely as that is!

The news I like here is the European expansion. Plus that they are now adding $35 million a year to the cash pile, likely to be 40 mill this year with costs, or 48-33 cps p/y. I sense with their (our?) class leading product they will likely be successful wherever they go. But dammit DIL, go to Asia too! Not like you don't have the cash...

[artemis]

....The foray into Europe is great news ad I am sure many Directors already using this in large US companies will also be on Boards of European companies which no doubt will assist the European expansion...... ).

That is a very good point, iceman, and it would be interesting to know how many of their new clients are from organic growth (ie directors and senior management introducing the product to other boards). I know a couple of senior managers in NZ companies using the product who are moving on. I'd put money on them championing the introduction of BoardBooks in their new roles.

To me an obvious expansion for DIL (once they have conquered the world of course) is into senior management team level. Many of the document requirements are pretty much the same as boards.

[Whipmoney]

To me an obvious expansion for DIL (once they have conquered the world of course) is into senior management team level. Many of the document requirements are pretty much the same as boards.

Bingo. This is where their second product should/will be. The product will have a lower price-point and margins but ultimately it is a bigger market.

[Whipmoney]

Massive volume today (1m+ shares).

Can any of the T/A'ers tell me what a 9-10% rise on such significant volume ultimately means? Obviously at these volumes some of the instos are back in..?

[sharp]

Correct me if I am wront but my understanding is that with the reinstatement issue the the likes of Milford, ACC and the big banks sold (rather oversold) their holdings in DIL - because of course they have certain standards the companies they invest in must meet in order to invest the funds they are managing hence the depressed SP.

Once the statments have been fully reinstated in February 2014, should we be expecting an significant increase in the SP once the money from the fund managers flowing in? Or am I being foolish holding on my shareholding and waiting it to hit the $8 mark again..

[peat]

Big blue candle with tiny/no wick means all systems go tomorrow after high volume day ;)

mine is green has some wick at each end and a smallish body ??

5313

[sharp]

nice gap up on high volume. Should be good for a rise tomorrow. looking for a break of $5 now.

Need the institution boys and girls to get back on to Dil to push is up.

[sharp]

You're right Moosie - looks like it will defintely push beyond $5 this morning..

[sharp]

Big volumes anticipated... Insitutions back on board?

[clip]

thanks for reply Moosie - your PM inbox is full so i could not reply there, may want to clear some out

[winner69]

Interesting paper on valuing SaaS companies .....and difference between cloud and no cloud ones.

Think this is kellblogs banker mate but some pretty pictures and discussion on things that matter

Many of this forum think 10 times revenues is fair/minimum valuation. Maybe we do need to add a NZ premium like I mentioned on the WYN thread

http://storage.pardot.com/12322/55421/what_s_your_saas_company_worth_WP_v2.pdf

[Hoop]

Sellers pretty much non existent below $5. be careful not to be lead into a bull trap on low volume...


Big volumes anticipated... Insitutions back on board?

A lot can happen in a few hours
for the likes of me viewing this thread now for the first time today ....that situation quoted above doesn't exist now.

The Depth below is a snapshot a few minutes ago...It shows no signs of abnormality, Volume so far for the day is higher than average but has happened often so nothing unusual....

So it is business as normal (so far today), typical depth trading of a low liquidity stock (DIL has 83776155 shares on issue with over 50% semi-locked up by corporate/institutional investors)...so you expect the price to jump around a bit on an active trading day.


http://i458.photobucket.com/albums/qq306/Hoop_1/dil15012014depth.png (http://s458.photobucket.com/user/Hoop_1/media/dil15012014depth.png.html)

[Xerof]

Tackled the 200 EMA ~$5.00 first up this morning and failed. This is quite normal and might take two or three attempts to break through, then back test before moving off

The other indictators I use are currently positive - OBV and DMI

[Monty]

thanks Hoop. The chart is very interesting. Can you tell us where the link is which shows depth and real time trades. I would love both come the end of Feb when the restatements are complete (or not complete and another extension is required)

also be useful for other shares I am thinking of investing in.

For what it is worth I think the shares in DIL will bounce around $4.80 to $5.00 for the next few weeks until restatement. I

[Schrodinger]

A lot can happen in a few hours
for the likes of me viewing this thread now for the first time today ....that situation quoted above doesn't exist now.

The Depth below is a snapshot a few minutes ago...It shows no signs of abnormality, Volume so far for the day is higher than average but has happened often so nothing unusual....

So it is business as normal (so far today), typical depth trading of a low liquidity stock (DIL has 83776155 shares on issue with over 50% semi-locked up by corporate/institutional investors)...so you expect the price to jump around a bit on an active trading day.


http://i458.photobucket.com/albums/qq306/Hoop_1/dil15012014depth.png (http://s458.photobucket.com/user/Hoop_1/media/dil15012014depth.png.html)

Great article and some of the topics were talked about a while back in the Xero thread. For me the number one valuation driver is sales as the company does a land grab. There are other important components but it he revenue groath is weak and the company markets itself as a growth stock then I will look no further.

[Whipmoney]

Great article and some of the topics were talked about a while back in the Xero thread. For me the number one valuation driver is sales as the company does a land grab. There are other important components but it he revenue groath is weak and the company markets itself as a growth stock then I will look no further.

Are you suggesting that sales are weak?

[Hoop]

thanks Hoop. The chart is very interesting. Can you tell us where the link is which shows depth and real time trades. I would love both come the end of Feb when the restatements are complete (or not complete and another extension is required)

also be useful for other shares I am thinking of investing in.

For what it is worth I think the shares in DIL will bounce around $4.80 to $5.00 for the next few weeks until restatement. I

Hi Monty
The depth chart came from Direct Broking website (https://www.directbroking.co.nz/)
To view the depth you had to have an account and be a trading customer..I'm assuming that still applies....

[Whipmoney]

A lot can happen in a few hours
for the likes of me viewing this thread now for the first time today ....that situation quoted above doesn't exist now.

The Depth below is a snapshot a few minutes ago...It shows no signs of abnormality, Volume so far for the day is higher than average but has happened often so nothing unusual....

So it is business as normal (so far today), typical depth trading of a low liquidity stock (DIL has 83776155 shares on issue with over 50% semi-locked up by corporate/institutional investors)...so you expect the price to jump around a bit on an active trading day.

http://i458.photobucket.com/albums/qq306/Hoop_1/dil15012014depth.png (http://i458.photobucket.com/albums/qq306/Hoop_1/dil15012014depth.png)

Based on the technicals do you think the downward trends is now clearly broken and/or will there will be re-tests of $5.00?

[Whipmoney]

A lot can happen in a few hours
for the likes of me viewing this thread now for the first time today ....that situation quoted above doesn't exist now.

The Depth below is a snapshot a few minutes ago...It shows no signs of abnormality, Volume so far for the day is higher than average but has happened often so nothing unusual....

So it is business as normal (so far today), typical depth trading of a low liquidity stock (DIL has 83776155 shares on issue with over 50% semi-locked up by corporate/institutional investors)...so you expect the price to jump around a bit on an active trading day.

http://i458.photobucket.com/albums/qq306/Hoop_1/dil15012014depth.png (http://i458.photobucket.com/albums/qq306/Hoop_1/dil15012014depth.png)

Based on the technicals do you think the downward trends is now clearly broken and/or will there will be re-tests of $5.00?

[Schrodinger]

Havent looked that close at DIL to comment on their growth rates and future potential. I was just looking briefly at their corporare governance.

[Snow Leopard]

Big blue candle with tiny/no wick means all systems go tomorrow after high volume day ;)


mine is green has some wick at each end and a smallish body ??

Looks like however many wicks it had and whatever colour it was: it has been snuffed.

Best Wishes
Paper Tiger

[peat]

Probably a bit premature to say that PT.
However historically there is a lot of resistance at $5.00 so it was always going to be a challenge

Green Line support
Orange Line Resistance
5319

to me the candles represent indecision

[jonu]

Could well close down for the day. Wick burnt at both ends? I remember an old "Poldark " episode where they cut a candle as a form of trial for some poor bloke. If the candle went out it was over the cliff with him. Well, candle went out, over the cliff he went, and then someone admitted cutting the wick!

[TimmyTP]

Wont be any significant up tick until bigger money moves in. Downtrend may have been broken bur may now revert back to it? (say it ain't so!)
Nary a truer word was spoken.

What's more, this prediction is 100% more reliable than the results of the next expected restatement, which will be good, bad, indifferent or delayed.

[sharp]

Nary a truer word was spoken.

What's more, this prediction is 100% more reliable than the results of the next expected restatement, which will be good, bad, indifferent or delayed.

Here comes the downtrend. Glad I got out yesterday.

[Whipmoney]

Here comes the downtrend. Glad I got out yesterday.

I wouldn't exaclty call a 1.9% drop a downtrend.. its just general market volatility.

[Balance]

Have written time and again about when the sp will break out of the current malaise, but the same rubbish keeps getting written by others about downtrend, uptrend etc.

Institutions are mostly on the sidelines and until the restatements are out of the way, they will continue to be on the sidelines.

Most of them can sell but investment committees will not allow them to buy.

Real price action will happen in March.

Until then, it's just mostly small players trading in and out, and getting themselves excited.

[winner69]

history tells us a lot of things.

You've said that a lot moosie. I a bit like you that past history seems to have a habit of repeating itself

Even on what probably are two completely unrelated matters on paper - except that investor behaviour is common to both

The DIL shareprice is still tracking the same way as the RAK shareprice.

Balance says nothing much to happen to DIL price for another 6 weeks or so. The red line will flatten out a bit .... just like the black line did for RAK before the big collapse

Maybe somebody is telling us something ... in a spooky sort of way .... that it is all bad news at the end of February ...and that the red line will continue to follow the black line

Of course it won't will it .... just another morbid fascination I have following such things

[Leftfield]

Have written time and again about when the sp will break out of the current malaise, but the same rubbish keeps getting written by others about downtrend, uptrend etc.......

Real price action will happen in March.

Totally agree...... until we have firm facts restating the accounts, everything is just speculation... but hey, that's what share trading is all about!! ;) (Disc not holding)

[Schrodinger]

I prefer reading tea leaves to taking "advice" from TA professionals.

[Schrodinger]

That maybe the case Winner but in reality the fundamentals are stronger for DIL compared with RAK. DIL makes a solid profit and very strong cash flows. There are weaknesses as we discussed before.

Where I think there are clear overlaps with RAK is an increase in competitor pressure after an initial lead. RAK failed to adapt to competition. Does DIL has the management capability to remain the preferred choice.

Know one really has an answer for this however if you believe in the team running this company and their abilities to keep ahead it should be a signal to hold/buy.

[peat]

I prefer reading tea leaves to taking "advice" from TA professionals.


at least we know whether the cat in the box is alive or not

:D

[Schrodinger]

:scared:.............

[winner69]

That maybe the case Winner but in reality the fundamentals are stronger for DIL compared with RAK. DIL makes a solid profit and very strong cash flows. There are weaknesses as we discussed before.

Where I think there are clear overlaps with RAK is an increase in competitor pressure after an initial lead. RAK failed to adapt to competition. Does DIL has the management capability to remain the preferred choice.

Know one really has an answer for this however if you believe in the team running this company and their abilities to keep ahead it should be a signal to hold/buy.

The early posts on the RAK in 2007 aren't that much different what you read now (on several threads)

RAK was very profitable / RAK had great products / great products in a fast growing industry / great management team / when that deal with Nokia comes through its all blue sky / this is a 10 dollar share / 60% annual growth not to be sneered at / valuation comparisons with huge US companies

And then the shareprice started to fall ....cries of oversold / support at x$ ex

Then it stabilised for a while and I told you so .... Back to the highs soon ..... Stil a 10 dollar stock

And we know what happened

Bit spooky

This is no prediction .....just a morbid fascination as to how things might turn out.

[Whipmoney]

The early posts on the RAK in 2007 aren't that much different what you read now (on several threads)

RAK was very profitable / RAK had great products / great products in a fast growing industry / great management team / when that deal with Nokia comes through its all blue sky / this is a 10 dollar share / 60% annual growth not to be sneered at / valuation comparisons with huge US companies

And then the shareprice started to fall ....cries of oversold / support at x$ ex

Then it stabilised for a while and I told you so .... Back to the highs soon ..... Stil a 10 dollar stock

And we know what happened

Bit spooky

This is no prediction .....just a morbid fascination as to how things might turn out.

If you're into applying worst case scenarios to promising companies then you could say this about any company on the NZX.. so why pick DIL?

If it's solely due to a spooky correlation between their charts then odds are this is just 'random noise'.. much like most of your posts lately.

[In4a$]

RAK learnt a few lessons there, cost me $4k

[alistair85]

So what are we predicting here? Sounds like we could be in for a downward trend until the restatement in Feb?

[Xerof]

Yep. Consolidation followed by a rally up to around $6.40 on restatement prior to 28 February. US funds will drive the share price strength, with a little help from on on-market share buy back of around NZD$30m.

Said with some authority B_E, and fits my own lines of thought at the moment. If I was a board member, I would have said at the last delay, get that f'ing restatement done by late Jan, but keep punters expectations further out, then hit them from all sides with an 'early' release, share buyback, new product launch, and some guidance on listing in US

[Whipmoney]

Yep. Consolidation followed by a rally up to around $6.40 on restatement prior to 28 February. US funds will drive the share price strength, with a little help from on on-market share buy back of around NZD$30m.

In your view would the buyback be normal shares or Pref shares (post conversion)?

[Monty]

The Board will know they have lost some (a lot????) credibility over the last 12 months. as much as anything because the re-statements have taken too long. Share-holders are disappointed, confidence is low. the share price has taken a hammering.
But fundamentals remain solid and these fundamentals have been canvassed many times in this forum.

I agree with Brighton Early that the owners will be desperate to turn everything around and what better way than to have a series of positive announcements including more detail on the entry into Europe. (hopefully that is nothing more than a little teaser)

But I am also very interested to know what they are doing to increase the sales capacity (and subsequent increase in sales and new users to higer levels both in actual number and % increases than previous years. What is their plan to get into every boardroom on the planet??

[zigzag]

In your view would the buyback be normal shares or Pref shares (post conversion)?

They would have to be the ordinary shares, as the pref's aren't listed. Post conversion? At this stage - Why would they convert? They get their 11% interest, and they pretty much have control.

[Hoop]

The early posts on the RAK in 2007 aren't that much different what you read now (on several threads)

RAK was very profitable / RAK had great products / great products in a fast growing industry / great management team / when that deal with Nokia comes through its all blue sky / this is a 10 dollar share / 60% annual growth not to be sneered at / valuation comparisons with huge US companies

And then the shareprice started to fall ....cries of oversold / support at x$ ex

Then it stabilised for a while and I told you so .... Back to the highs soon ..... Stil a 10 dollar stock

And we know what happened

Bit spooky

This is no prediction .....just a morbid fascination as to how things might turn out.


If you're into applying worst case scenarios to promising companies then you could say this about any company on the NZX.. so why pick DIL?

If it's solely due to a spooky correlation between their charts then odds are this is just 'random noise'.. much like most of your posts lately.

First thing to understand about a chart...they aren't squiggly random lines ...they are recorded history of price and volume ...within each chart portrays an image of the history of Group (trading) behaviour...group behavioural events patterns usually repeat and have a high probability chance to end with similar outcomes...Each behavioural event (pattern) has a degree of certainty...ie... you can predict with a high degree of certainty when someone is lying to you, the non-verbal behaviour such as face touching or twitching or inability to look into someones eyes..etc..

We hear all the time in the media about emotional behaviour within Share investing.. the two basic emotions greed and fear both sparking off typical behavioural patterns which constantly repeat over and over again.. akin to groundhog day....

So winners comments....From the overlay chart below, its true the charts look spooky similar...Therefore Investors as a group have similar concerns about the DIL company as they did with RAK 5/6 years ago.
The old saying "where there's smoke there's fire" is a feeling "hot wired" into our survival instincts and we as species have the same survival instincts "hot-wired" in, these feelings are felt throughout the group creating unease..the investor behavourial event showing unease shows up as share price volatility ....e.g...the first unrecognised sound (different from expected) and the investors as a group all run down the nearest "rabbit hole"..
DIL chart using candlesticks show these behavioural events rather well with gapping prices and long tail candlesticks...

Chartwise will DIL continue to follow RAK ???....Only if DIL environment stays the same as RAKs, and causes the investor behaviour to continue to play out the same way as RAK did...
such as:-
1....lack of "true" transparancy
2....Not delivering on its promises
3...Blaming other factors..e.g High NZ$...Everyone else's fault,,etc
4...Failure by management to not recognise change quick enough...or to plan now for future changes.
5...Very strong competition within that market and failure to "get on top"

What would break that environment scenario and cause the DIL/RAK pattern to diverge?? .... the delivery of those promised riches....maybe the soon to be released reaudited report could do it...

If the report fails to meet investors expectations then the DIL share has a good probability to continue to follow RAK pattern....

The present chart is telling you to be cautious...especially now around this $5.00 level...Without that re-audit report it does look very sucker rallyish..eh??


Whip money asks "why pick on DIL??? I have explained this above...both are exhibited similar trading behaviour at the moment.

Whipmoney's logic..."If it's solely due to a spooky correlation between their charts then odds are this is just 'random noise'.." Afraid not Whipmoney. All patterns are made up with series of events..when patterns repeat they are considered as highly organised........reoccurring patterns are definitely not random events.

Sorry the chart overlay is rather crude but it tells the story..eh ?

http://i458.photobucket.com/albums/qq306/Hoop_1/DILRAK16012014longtermchart.gif (http://s458.photobucket.com/user/Hoop_1/media/DILRAK16012014longtermchart.gif.html)

[comatose73]

Thanks Hoop. I don't always agree with your position, but I do appreciate the thought you put into your informative posts, and your patience in explaining your view.

[In4a$]

Scary chart Hoop, appreciate your words of caution. Will be watching my DIL holding carefully, at least till next audit report.

[winner69]

Hoop, have you ever read Bulkowski on Stock Noise?

There seems a way measuring 'noise' in a stocks price movements.noise generally happens at changes in trend. Quite interesting.

With DIL there has been very 'noise' on the chart over the last month or so.

Was a bit of 'noise' a few days ago and depending on how you interpret Bulkowski maybe a little noise around the end of December, coinciding with STC 2014 outlook post on DIL.

So maybe there is a difference between idle chatter that adds no value or however who said it and actual 'noise'

One point about that RAK chart is the first step down in price was from Oct 2007 to Sept 2008 coinciding with the collapse of the markets at GFC time. Even RAK being a profitable, well managed and innovative company competing in a fast growing sector with the talk of a NASDAQ listing couldn't keep it's price up when markets went down by 50% or whatever. The rest of their decline is their own making in not meeting the high expectations shareholders had of them.

Maybe you chart is an indication what could happen to DIL if there is another market collapse around the corner. Spooky eh ... Mr P loved using that phrase.

Oh shucks what have I said here .....please forgive me in advance for such idle chatter ....at least it ain't noise the DIL shareprice keeps climbing

[winner69]

To put some balance to the DIL / RAK price movements comparison been racking my brains to try to find a stock that has recovered from a 50% fall of its own making to get back to its former glory.

Plenty around over the last 5 years or so but the 50% falls have generally been driven by total market collapses /corrections- not of a companies own making

Must be a few examples of prices returning to former glory under their own stem - any suggestions (really need to be NZX examples)

If so Hoop might do a good looking overlay chart for us

[Harvey Specter]

To put some balance to the DIL / RAK price movements comparison been racking my brains to try to find a stock that has recovered from a 50% fall of its own making to get back to its former glory.

Plenty around over the last 5 years or so but the 50% falls have generally been driven by total market collapses /corrections- not of a companies own making

Must be a few examples of prices returning to former glory under their own stem - any suggestions (really need to be NZX examples)

If so Hoop might do a good looking overlay chart for usFBU oscillates between 6 & 10
BFW dropped to 50c
42below the same
CNU a work in process

Also have to remember that 50% fall follows much greater than 100% rise in the previous period.

[Whipmoney]

Whip money asks "why pick on DIL??? I have explained this above...both are exhibited similar trading behaviour at the moment.

Whipmoney's logic..."If it's solely due to a spooky correlation between their charts then odds are this is just 'random noise'.." Afraid not Whipmoney. All patterns are made up with series of events..when patterns repeat they are considered as highly organised........reoccurring patterns are definitely not random events.

Sorry the chart overlay is rather crude but it tells the story..eh ?

http://i458.photobucket.com/albums/qq306/Hoop_1/DILRAK16012014longtermchart.gif (http://s458.photobucket.com/user/Hoop_1/media/DILRAK16012014longtermchart.gif.html)

The problem with these so called patterns (DIL and RAK) is that to the naked eye that may look nearly identical however without actually running so quant metrics over the actual numbers (i.e. back-testing) the correlation may appear to be much greater than it actually is.

E.g. I see that the scales appear to be different so the percentage movements are likely to be significantly more dramatic for RAK and secondly if you zoom into to the daily price movements you may find that one is going up while the other is going down even though they are trending the same.

That's why I don't believe there's much merit in comparing two simple unadjusted charts. Show me a correlation co-efficient of 95%+ and then I might start to take interest.. and even still there is little proof by the way of causation.. i.e. two completely different sets of factors were affecting the ultimate share-movements (this we know for a fact).

[winner69]

Whip - my chart is monthly prices

For the period they overlap there is a 79% correlation between the actual DILand RAK prices. That's a pretty strong correlation/ not as good as your 95% but then again whip how many things are 95% correlated in financial markets

To overcome the scale problem if the prices are indexed to the starting price of the overlap the correlation is 78%. So scale is not the issue

The the first big dips down (maybe the only one for DIL) was 51% for RAK and 53% for DIL but DIL did it in 7 months v RAK 9 months

The consolidation period (where DIL is now) for both is about 40% to 45% of their respective highs

You mention causality. There are two different sets of factors as to the actual why but as hoop points out the common factor is market sentiment and investor behaviour - the things that are key drivers of share price movements

Still spooky eh

This is no prediction as to what may happen to the DIL shareprice .....just a morbid fascination with how things often tend to behave the same way.over and over again.

[winner69]

Long weekend for Wellington so it is up to you Aucklanders (and Mainlanders) to keep pumping the price up tomorrow.

Not far to 500 so give it a go .... wellington folk will do the same next week when you out in your yachts cruising the Gulf or the day trip to enjoy the Waiheke vineyards

[blocker3]

Long weekend for Wellington so it is up to you Aucklanders (and Mainlanders) to keep pumping the price up tomorrow.

Not far to 500 so give it a go .... wellington folk will do the same next week when you out in your yachts cruising the Gulf or the day trip to enjoy the Waiheke vineyards

Will do. Next week some will also go to the Coromandel and dock their boats in Pananui . Some may even come south to here in Tauranga. Some will go to Piha.

You enjoy the Wellington Ann weekend. I hope the ex cyclone June stay's away.

Cheers

PS If you get board you can still trade DIL

[clip]

ACC SSH notice

For this disclosure,—
(a) Total number held in class: 7,127,653
(b) Total in class: 83,776,155
(c) Total percentage held in class: 8.508%
For last disclosure,—
(a) Total number held in class: 7,977,963
(b) Total in class: 83,776,155
(c) Total percentage held in class: 9.523%

[goldfish]

So they have stopped averaging down in a downtrend...good idea, pity they just didnt do that in the first place...
Or do people think it was a good idea at the time? I thought it was almost always a bad idea or am I wrong? Thoughts?

[Xerof]

Too funny, now they are selling into an uptrend

[goldfish]

Too funny, now they are selling into an uptrend

Uptrend? I see a small downtrend at the moment, if they sold on jan 22 thats 7 days into a small downtrend heading kind of sideways?

[clip]

Yeah I was thinking it is trending back down now? crossed the 5/10 day MA looking at past 1month/3month, crossed the 10 day looking at 3month, bollinger bands squeezing.. have i got my TA right, are these indicators of a downtrend?

[goldfish]

I think so, but im kind of learning all this so I could be wrong, usually am :) be interesting to hear from a pro?

[Xerof]

Never a straight line.

A series of higher highs and higher lows since the bottom was found constitutes an uptrend. Don't be distracted by the daily noise.

most likely its merely back-filling the small gap to 450 area, and/or forming a bullish flag formation.

not advice to buy or sell, just my usual observations on PA

[goldfish]

Never a straight line.

A series of higher highs and higher lows since the bottom was found constitutes an uptrend. Don't be distracted by the daily noise.

most likely its merely back-filling the small gap to 450 area, and/or forming a bullish flag formation.

not advice to buy or sell, just my usual observations on PA

Wasnt 500 the change of trend? With 450 the support?

[winner69]

Never a straight line.

A series of higher highs and higher lows since the bottom was found constitutes an uptrend. Don't be distracted by the daily noise.



Agree with you there Xerof

Taleb pointed out that one needs to stresses that we must learn to live with the fact that the majority of daily changes are purely because of noise.......and I liked this quote “The wise man listens to the meaning; the fool only gets the noise.”

[winner69]

Just as well auckland and Australia on holiday tomorrow. Majority won't be interested in the share market.

Will give everyday a breather to get over the global sell off late last week and hopefully everything will return to normality by Tuesday morning when the big players get back

[alistair85]

What's going on with DIL today??? Not looking good... Anyone have any ideas why?

[winner69]

What's going on with DIL today??? Not looking good... Anyone have any ideas why?

Some would say no worries ......just noise

Then again when I posted that DIL chart on it (DIL was price rocketing away) I had a bad feeling that maybe it would do a Challenger and blow up .....aniversary of the Challenger tragedy is Jan 28 .....tonite in the USA .....maybe something in that

And Xerof's uptrend is close, if not already, to being broken ....ominous sign

Then again we may have been sucked in again and seduced by a reasonably positive announcement the other day

[Xerof]

Well, firstly I bailed a few on Friday at 465 to put trading cash on the sideline

I think it is just noise, but watching that last low for any further cascading

still hold a small number

until we get THE news it will be driven by general market sentiment IMO

[alistair85]

Just need that news to hurry up and get here!! This is the one out of my entire portfolio I am very nervous about and not sure how long the nerves can hold out for...

[alistair85]

If I felt that way, I'd sell it immediately.

Sometimes with great risk comes great reward. I do know there is a lot of upside to this company so am willing to hold, until after restatement that is anyway.

[couta1]

Just need that news to hurry up and get here!! This is the one out of my entire portfolio I am very nervous about and not sure how long the nerves can hold out for...
Hang in there,your in good company,I've been sitting on a big loss since last August,good things take time they say:cool:

[Whipmoney]

I pray for all holders of DIL (and the market in general) that there are no more delays. Starting to enter the critical time period so nervousness us natural here and those that want to run will take the nearest tiny exit (they are getting smaller by the day...)

I think the chance of a delay is unlikely given the additional resource and after several previous delays they were pretty firm in penning in the 28th.

To be honest in the end it won't really matter as either way I think there will be a significant correction when the results finally come out.

[Harvey Specter]

No offence, but is tge restatement really a straw man here?Disagree. WHile I agree growth is a huge factor, just look at the shareprice drops when the restatement, and the delays were announced. While I dont expect it to go back upto $8, I think there will be a correction once the restatement is know (provided it is just ~5% and timing only).

[winner69]

Yup - SPOT ON. As an impartial bystander the multiple delays to the restatement caused investors to flee (for various reasons). IF the restatement comes out confirming what DIL has said re revenues then logic would suggest there will be a significant upward correction, IMHO of course ;)

How many have fled for good ..... reputation wise DIL stuffed .... some just cant be bothered with companies like that, no matter how good the proposition might be.

Often those people think its happened before (in DIL case many times over the years) so probably will happen again

[Harvey Specter]

"Provided" being a big one there! It would be very disappointing if they were found to be misleading the market - as a US company, they would need to be vary careful about being sued.

Re track record, you may be right. The correction will not be as great as it could be as it will take time for investors confidence to return given the multiple errors over the past 2 years. Add this to investors waiting to see confirmation of the growth (temporary hickup due to distraction or start of a worrying trend?). As such, the correction may be less than it should be but the SP growth over the following year +, being greater than it should otherwise be, creating an opportunity for those willing to place trust back in DIL before it is earned (high risk potentially compensated by higher return).

Disc: Held since $2 (I think) and recently topped up on a low, then topped up a bit when it went really low, so up overall but down on a 12m basis. Expecting confirmation of minor changes to accounting profit and expect growth to justify there flash new NY offices. Fingers crossed.

[Whipmoney]

All things being equal and the market being forward looking, why would the sp correct when we know a ~5% divergence will happen and cash remains the same? Growth is the issue here. The sp corrected a bit upwards because of the higher quarterly growth, but the market needs to see another quarterly or two before the sp can continue upwards imho.

No offence, but is tge restatement really a straw man here?

Firstly you are assuming the market is rationale when it isn't.

Secondly, whilst growth is a factor I now believe the restatements are more important as the insto's are currently sitting on the sidelines as generally they have a mandate that precludes them from investing in shares with questionable corporate governance or where there is opacity in a firm's financial performance (as demonstrated by the exit of Milford).

Thirdly, I think your number of ~5% is wrong. It's more likely to range between an 8% to 13% (adverse adjustment) for each of the last three financial years. Given that the revenue is simply bumped back into the deferred revenue balance this has no effect on cash-flows / DCF.

Fourthly and probably most importantly, whilst the quantum of sales growth and cash balances is somewhat of a known (confirmed for the latter) I think the market will be pleasantly surprised by the margin growth which is loosely evidenced by a declining correlation between sales and cash growth (cash growth is outstripping sales growth, particuarly if you add back the US $3.3m already paid towards the restatement expenses).

Only time will tell (and this will hopefully be confirmed on the 28th) but I am taking a sizeable bet that DIL will correct upwards following the release of the restated accounts.

[Harvey Specter]

How many have fled for good ..... reputation wise DIL stuffed ..Once (IF) it makes it on the news saying share price has doubled (rather than another accounting error) the Lemmings will return.

Or, who really cares if those small Investors never return if new big US investors start buying up for a Nasdaq listing. Pre stuff ups, this was a 95% probability, now only 50%???25%???

[Whipmoney]

It would be very disappointing if they were found to be misleading the market - as a US company, they would need to be vary careful about being sued.

Re track record, you may be right. The correction will not be as great as it could be as it will take time for investors confidence to return given the multiple errors over the past 2 years. Add this to investors waiting to see confirmation of the growth (temporary hickup due to distraction or start of a worrying trend?). As such, the correction may be less than it should be but the SP growth over the following year +, being greater than it should otherwise be, creating an opportunity for those willing to place trust back in DIL before it is earned (high risk potentially compensated by higher return).

Disc: Held since $2 (I think) and recently topped up on a low, then topped up a bit when it went really low, so up overall but down on a 12m basis. Expecting confirmation of minor changes to accounting profit and expect growth to justify there flash new NY offices. Fingers crossed.


If DIL don't post their restatment on or by the 28th then much like the market I will be sorely dissapointed and will potentially seek an exit and a lower re-entry. I am rather confident that they will meet this deadline however (given the additional resource) and I'm willing to bet that no expense will be spared in meeting this deadline.

As far as track record goes I don't think the market will care as it has a very myopic view of the world and I would suggest that once a corrective run-up starts, people will forgot their past grievances and pile in in order to chase a quick gain (maybe a Moose or two..?).

Any investor who sits on the side-lines/their high-horse post restatement simply because they're discounting the SP for having a historical revenue recognition error (which has since been addressed) will likely find that they have missed the boat as the rest of the market will be seeking to maximise their profit opportunities.

Just my two cents though.. I look forward to being proven right one the restatment comes out (will hide in my cave if i'm wrong!).

[Hoop]

I dont use SMA - I much prefer EMA as it better reflects current pricing trends not historical ones. Using a 200 day EMA shows a much more interesting picture - which is that the recent price rise failed at the critical 200 day MA which is $5 (not $5.75). But you are right, either way long term investors are still awaiting a buy signal and a genuine break out rather than a "fake out"....

KW:) I try to not have any preferences overall as some stocks behave better with certain indicators than others....I must admit, I failed to check lately with ema200, I got lazy as the sma (ma)200 was doing a good job around mid-July dip and the September sucker rally, in theory DIL being a very noisy stock lately I thought ma200 may have had an edge over ema200. ...also ...it is at the top of the drop down menu when selecting indicators on Big Charts:mellow::p... yeah ema 200 did a good job this time and is helping identify what breed of animal this latest rally is (was?) so you've convinced me that using EMA is now a better option.

.... since the last few days many indicators are showing (but not conclusive yet), its more likely DIL is not in a cyclic reversal rally back to bull market cycle but experiencing another sucker rally within a continuing bear market cycle...

Adding another couple of days to your chart KW is seeing DIL shareprice currently testing the ema50 at 4.40 ( the ma50 at 4.05...) as some other sell signals have triggered off this ema50 at 4.40 has become important and must support..for this rally to have any legs and be classed as cyclic reversal rather than another sucker rally.

So I probably confused many readers here as which MA to use....both methods are valuable as all indicators have specific jobs and it's wise never to rely on a single indicator use 4 or 5 (not too many)
and let the indicators confirm each other....There are leading and lagging indicators..All MA indicators are lagging indicators with EMA being more sensitive than SMA to the "now" situation ...so with a very noisy stock SMA filters out more noise than EMA...KW prefers EMA I prefer using either one depending upon how schizophrenic the stock is...Each TA investors have their favourite indicators mine is DMA and that triggered a sell signal late last week...

For people that can't put the faith in TA.....they should assume each rally in a bear market cycle as a sucker rally......Google & Read up about Bear market investment strategies (https://www.google.co.nz/search?q=bear+market+investing+strategies&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&gws_rd=cr&ei=DBjoUrfzOOajigfe14Fw)...DIL is in a bear market cycle so providing good practice for many... because at some point in the future the NZX50 will tank...its easy to win out in a bull market using the Buy and Hold strategy but it takes skills to win out in a trendless or bear cycle periods..Those who are not flexible (due to income tax declarations) and therefore trade less frequently hence adopting a buy & hold long term strategy it's best to stay out of bear cycles so not to give all the gains back to Mr Market and simply wait for a "genuine" cyclic reversal back to Bull cycle... this is where the EMA200 or MA200 become important indicators for those long term cyclic decisions

[Whipmoney]

For people that can't put the faith in TA.....they should assume each rally in a bear market cycle as a sucker rally......Google & Read up about Bear market investment strategies (https://www.google.co.nz/search?q=bear+market+investing+strategies&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&gws_rd=cr&ei=DBjoUrfzOOajigfe14Fw)...DIL is in a bear market cycle so providing good practice for many... because at some point in the future the NZX50 will tank...its easy to win out in a bull market using the Buy and Hold strategy but it takes skills to win out in a trendless or bear cycle periods..Those who are not flexible (due to income tax declarations) and therefore trade less frequently hence adopting a buy & hold long term strategy it's best to stay out of bear cycles so not to give all the gains back to Mr Market and simply wait for a "genuine" cyclic reversal back to Bull cycle... this is where the EMA200 or MA200 become important indicators for those long term cyclic decisions

Money can be made in either market as long as you are buying stocks that are "under-valued". Despite your thoughts above we value investors actually relish bear markets as they provide a great opportunity to find value (which is harder to find in an over-inflated market).

Ironically I find sometimes that i'm happier when stocks go down (as in the case of PEB around 55c and DIL at $3) as this provides invaluable opportunities, and contrarily I am dismayed when stocks shoot up too far too fast (like PEB) as their is no longer much point in accumulating and it is time to sell out.

[Hoop]

Money can be made in either market as long as you are buying stocks that are "under-valued". Despite your thoughts above we value investors actually relish bear markets as they provide a great opportunity to find value (which is harder to find in an over-inflated market).

Ironically I find sometimes that i'm happier when stocks go down (as in the case of PEB around 55c and DIL at $3) as this provides invaluable opportunities, and contrarily I am dismayed when stocks shoot up too far too fast (like PEB) as their is no longer much point in accumulating and it is time to sell out.

Flawed logic mate....I don't like owning any stock that goes down and averaging down without confirming buy signals is dangerous...especially "cheap" shares.
An example below (this chart has no relevance to DIL) it just shows why buying under-valued oversold shares can be a totally wrong thing to do....The whole point about TA sell signals is that it gets one "out" of a possible future bad outcome...if that outcome doesn't happen and buy signals return then no damage done just treat the small loss incurred getting back in at a higher price as a insurance fee in keeping your capital intact from that risk of the "big C"

http://i458.photobucket.com/albums/qq306/Hoop_1/feltexpartchart.png (http://s458.photobucket.com/user/Hoop_1/media/feltexpartchart.png.html)

[Whipmoney]

Flawed logic mate....I don't like owning any stock that goes down and averaging down without confirming buy signals is dangerous...especially "cheap" shares.
An example below (this chart has no relevance to DIL) it just shows why buying under-valued oversold shares can be a totally wrong thing to do....The whole point about TA sell signals is that it gets one "out" of a possible future bad outcome...if that outcome doesn't happen and buy signals return then no damage done just treat the small loss incurred getting back in at a higher price as a insurance fee in keeping your capital intact from that risk of the "big C"

http://i458.photobucket.com/albums/qq306/Hoop_1/feltexpartchart.png (http://s458.photobucket.com/user/Hoop_1/media/feltexpartchart.png.html)


Lol a bit of a straw-man there when you post a completely different stock chart. I can't even see the time interval so its hard to critique and without knowing the true picture (from the fundamentals) as my buy-in at $1.60 may represent an excellent investment if the stock closes at $4.80 only 12 months later.

Is my logic flawed? Possibly... but then again I seem to remember the chartists talking about down-trends, sell signals and warning of the dangers of averaging down just days prior to PEB's first announcement (i.e. before it tripled) when I was in they were out.

If you really want to dis-prove my logic then maybe you want to go on the record and compare your 12 month performance against mine? I'm more than happy to post my trades and sizeable percentage return (I can tell you its above 50%...)

Show you mine if you show me yours...

[Schrodinger]

Flawed logic mate....I don't like owning any stock that goes down and averaging down without confirming buy signals is dangerous...especially "cheap" shares.
An example below (this chart has no relevance to DIL) it just shows why buying under-valued oversold shares can be a totally wrong thing to do....The whole point about TA sell signals is that it gets one "out" of a possible future bad outcome...if that outcome doesn't happen and buy signals return then no damage done just treat the small loss incurred getting back in at a higher price as a insurance fee in keeping your capital intact from that risk of the "big C"

http://i458.photobucket.com/albums/qq306/Hoop_1/feltexpartchart.png (http://s458.photobucket.com/user/Hoop_1/media/feltexpartchart.png.html)

News flash: you both are right depending on the circumstances

[Hoop]

That is one nasty as hell chart. Excuse my youth but what happened to Feltex?

Well done my 4 legged friend..you can go to the top of the class:)....yes it was part of the Feltex chart....that 1.60 drop wasn't the only big C the worst was yet to come... Notice how the MA's kept the medium and long term investors "out" and safe

http://i458.photobucket.com/albums/qq306/Hoop_1/Feltexchart.png (http://s458.photobucket.com/user/Hoop_1/media/Feltexchart.png.html)



News flash: you both are right depending on the circumstances

the above is the hindsight
unfortunately hindslight into the future is a luxury we all haven't got...so we don't know the true future circumstance....but we do have indicators which can show increased risk and help keep you "out"

[winner69]

Hoop I see no pyramids on that FTX chart

[Hoop]

If you really want to dis-prove my logic then maybe you want to go on the record and compare your 12 month performance against mine? I'm more than happy to post my trades and sizeable percentage return (I can tell you its above 50%...)

Show you mine if you show me yours...

Hmmm...OK
you win!!!
I had to write off $ six figures on 31 March 2013 with Pike River Coal disaster.. PRC was my biggest stock in my portfolio at that time...

I could've used that PRC example instead of Feltex....I ignored my discipline's sell signals and paid dearly with the unthinkable happening...It takes a very large percentage gains from my other stocks to recover and get back to 0% ...for the record I'm ahead of 0%.

[winner69]

Haha Hoop, I have an even better one for you LOL
Note the two sucker rallies in Jan 2012 and May 2013. Anyone with an ounce of TA sense would have been out in August 2011.
5405


KW - not fair comparing a spec explorer which promised so much with a solid earning software company which promises so much .... maybe it is the promising bit that is a worry

[Hoop]

Hoop I see no pyramids on that FTX chart

My deduction from my flawed logic would suggest that Belg and the entire population of Egypt wouldv'e been "out" of FTX and preserved their wealth

[Schrodinger]

Hmmm...OK
you win!!!
I had to write off $ six figures on 31 March 2013 with Pike River Coal disaster.. PRC was my biggest stock in my portfolio at that time...

I could've used that PRC example instead of Feltex....I ignored my discipline's sell signals and paid dearly with the unthinkable happening...It takes a very large percentage gains from my other stocks to recover and get back to 0% ...for the record I'm ahead of 0%.

Its not the "sell signals" that made PRC a dogs breakfast investment but terrible management.

[warthog]

There you go DILers - you now have more info.

https://nzx.com/companies/DIL/announcements/246510

[Whipmoney]

So aside from the revenue recognition error (previously disclosed) then I guess we can assume that this is the only other material item that has been be identified in the process to date. A process which I also note should be close it its conclusion..

Not too bad really! There's no effect on revenue/cash-flow/cash on hand and the company has a strong enough balance sheet to easily absorb the hit to equity.

I guess this is also a hint that they are close to the end of the process.

[winner69]

So aside from the revenue recognition error (previously disclosed) then I guess we can assume that this is the only other material item that has been be identified in the process to date. A process which I also note should be close it its conclusion..

Not too bad really! There's no effect on revenue/cash-flow and the company has a strong enough balance sheet to easily absorb the hit to equity.

I guess this is also a hint that they are close to the end of the process.

Good news then whip

[Schrodinger]

So aside from the revenue recognition error (previously disclosed) then I guess we can assume that this is the only other material item that has been be identified in the process to date. A process which I also note should be close it its conclusion..

Not too bad really! There's no effect on revenue/cash-flow/cash on hand and the company has a strong enough balance sheet to easily absorb the hit to equity.

I guess this is also a hint that they are close to the end of the process.

If this can be ring fenced then yes. Just as long as they arent inflating themselves to look good this should work out.

[psychic]

Help me out here....
If it was recorded as an asset , it doesn't appear in the balance sheet I'm looking at unless it is bundled in with "cash and equivalents". If this is the case then cash has been overstated right?
Not sure I understand the transaction at all. Are they saying this $6.8m was owed by a shareholder but that it was repaid in shares/ cash? Does this all relate to say Sodi options etc?

[winner69]

Help me out here....
If it was recorded as an asset , it doesn't appear in the balance sheet I'm looking at unless it is bundled in with "cash and equivalents". If this is the case then cash has been overstated right?
Not sure I understand the transaction at all. Are they saying this $6.8m was owed by a shareholder but that it was repaid in shares/ cash? Does this all relate to say Sodi options etc?

They got 3.1m cash in 2012 and shows in their cash flow statement. Money in the bank

The value of this note (changed over time) has been shown as separate line on their balance sheet a an asset. Seems like it should have included under equity

It will change the p&l as impairment expense has gone through the p&l instead alan adjustment in the equity account

Stupid accounting systems eh but as DIL say you can't rely on anything they have stated in the past

Still 50mill in the bank ...that's the main thing

Nobody will worry about this noise when DIL is 8 bucks by Xmas

[Jay]

Only 8 winner, I was hoping for more and by Xmas - long way off! :)

[notooshabby]

They got 3.1m cash in 2012 and shows in their cash flow statement. Money in the bank

The value of this note (changed over time) has been shown as separate line on their balance sheet a an asset. Seems like it should have included under equity

It will change the p&l as impairment expense has gone through the p&l instead alan adjustment in the equity account

Stupid accounting systems eh but as DIL say you can't rely on anything they have stated in the past

Still 50mill in the bank ...that's the main thing

Nobody will worry about this noise when DIL is 8 bucks by Xmas


Hopefully they are separating this announcement and releasing earlier because it is the only material negative discovered in the restatement / review and they want it to be perceived as good news out there when finally announced..... BIG assumptions though.... Still what do they say, assumption is the mother of all ....... sound investment decisions hopefully....

[Whipmoney]

They got 3.1m cash in 2012 and shows in their cash flow statement. Money in the bank

The value of this note (changed over time) has been shown as separate line on their balance sheet a an asset. Seems like it should have included under equity

It will change the p&l as impairment expense has gone through the p&l instead alan adjustment in the equity account

Stupid accounting systems eh but as DIL say you can't rely on anything they have stated in the past

Still 50mill in the bank ...that's the main thing

Nobody will worry about this noise when DIL is 8 bucks by Xmas

It was recorded as a 'receivable' and therefore was recorded as an asset which inflated equity. According to the disclosure the receivable was actually collected through a combination of cash and shares.

I do have a hazy recollection about reading this in the FY09 or FY10 annual financials and I believe what happened was that Services Share Holdings LLC had shares in DIL and borrowed from the company against them. At some point in time they struggled to repay the loan so a portion of their shares were reclaimed by the company as consideration for debt relief.

I don't think it will go through the P&L as an impairment, rather it will simply be an adjustment to equity. If it does go through the P&L its likely to be in the 2012 financials (the year it was retired) and therefore won't have any bearing on FY13..

[Toasty]

I guess it goes without saying that you now can't rely on past information. Its still a bit unnerving to read this in print. I'm no expert(obviously) but this seems a reasonably large line item to "misclassify".

I wonder if the Directors are sweating yet? At what point does all this mismanagement cross over into dubious activity and what else is in the pipeline.

Disc: I don't hold but got lightly singed late last year and was waiting to get my revenge by buying low. Makes me nervous.

[Whipmoney]

I guess it goes without saying that you now can't rely on past information. Its still a bit unnerving to read this in print. I'm no expert(obviously) but this seems a reasonably large line item to "misclassify".

I wonder if the Directors are sweating yet? At what point does all this mismanagement cross over into dubious activity and what else is in the pipeline.

1) This isn't what I would call "mis-management". Remember these accounts were signed off by an American auditor.
2) Reading through the text this does appear to be a rather complex transaction/arrangement and therefore its more likely that Deloitte simply want to change the classification in order to protect themselves / comply with IFRS etc / generate fees.


From the FY09 Accounts:
Note receivable from affiliate, net of valuation allowance: $1,661,791

8) Note receivable from affiliate - The note receivable from affiliate represents amounts due from SSH LLC, the Company’s predecessor entity, under a Promissory Note and Security Agreement dated October 1, 2007 (the ―Note‖).
The Note bears interest at 5% per annum, which is payable in arrears on the first day of each calendar quarter, commencing April 1, 2008. SSH LLC elected, under the terms of the Note, to defer each of the first four quarterly interest payments through January 1, 2009, which were added to the principal balance and bear interest from the date the payment was due. The loan matures on October 1, 2010, when the entire principal balance and all accrued interest will be due and payable. It was originally secured by 25,000,000 shares of the Company’s stock which were pledged as collateral by members of SSH LLC. At December 31, 2009 the number of shares securing the Note is 21,678,597

At December 31, 2009 and 2008, the contractual outstanding loan balance was $7,161,791. At December 31, 2008, the Company recorded a $5.8 million valuation allowance and a corresponding charge to impairment loss in order to write down the Note to the estimated fair value of the underlying collateral.

Repayment and Amendment of Note Receivable – In February 2010, the Company entered into an agreement with SSH, LLC, which is conditioned upon stockholder approval at our annual stockholders’ meeting in June 2010, in accordance with NZX rules. The agreement provides for the repayment of approximately $1.0 million in cash to the Company in partial prepayment of the outstanding Note. The agreement also calls for partial prepayment of an additional $3.1 million by the surrender and cancellation of 11,650,000 Diligent shares which are held as collateral for the Note. The repayment of the remaining outstanding principal of $3.1 million (which, subsequent to the surrender of the 11,650,000 shares, will be secured by 5,205,597 shares of Diligent stock) will be extended by two years to October 2012 and the interest rate will be increased from 5% to 6.5% and payments will be due annually, as opposed to quarterly. If approved by our stockholders, the additional cash of $1.0 million will provide us with further liquidity.

From the FY10 Accounts:
Note receivable from affiliate, net of valuation allowance: $1,875,685

The Prepayment and Amendment Agreement with SSH LLC provided for:
The sale in February 2010 by SSH LLC of a block of 4,823,000 shares of the pledged stock to a third party for US$0.24 per share, for a total of US$1,157,011 (after commissions), which would be applied to the interest due for the period from January through May 2010 ($146,581) and prepayment of principal ($1,010,430). The proceeds of this sale were placed in escrow pending stockholder approval of the agreement.
The prepayment of an additional US$3,075,676 of principal through the surrender of 11,650,000 pledged shares to the Company at US$0.26 per share,
The extension of the maturity date on the Note from October 1, 2010 to October 1, 2012, and
Effective in June 2010, adjustment of the annual interest rate from 5.0% to 6.5%, payable annually on January 1 of each year, in arrears.

was contingent on the receipt of an appraisal attesting to the fairness of the transaction to the shareholders unrelated to SSH LLC. The agreement was approved and the proceeds from the February 2010 sale which had been placed in escrow were delivered to the Company on June 8, 2010. After the transaction, the amended Note had a contractual outstanding principal balance of $3,075,685 and was secured by 5,205,597 shares of the Company’s common stock pledged by the members of SSH LLC. In a series of transactions in December 2010 and early January 2011, SSH LLC sold an additional 275,000 shares of the Company’s common stock pledged as collateral for the Note, as permitted under the Note agreement to fund interest payments. As a result, the number of shares pledged as collateral for the Note has been reduced to 4,930,597.

A portion of the outstanding loan balance of $3,075,685 is reserved on our balance sheet by a valuation allowance of $1,200,000, resulting in a net receivable balance of $1,875,685. The Note is considered to be collateral dependent, as SSH LLC’s primary means of repayment is through liquidation of the underlying collateral. At December 31, 2008, the then-outstanding loan balance of $7,161,791 was reduced by a $5.8 million valuation allowance, which was based on the estimated fair value of the underlying collateral at that time. As discussed below, in the fourth quarter of 2009, the Company recorded a recovery in the value of the Note of $300,000 and a corresponding decrease in the valuation allowance to $5.5 million. At March 31, 2010, the Company recorded an additional recovery in the value of the note of $3.2 million, and at September 30, 2010 the Company recorded a further recovery of $1.1 million, as described below.

[Harvey Specter]

Its a shame they didn't confirm the timing of the restatement. That would have given me a bit more confidence.

[winner69]

Its a shame they didn't confirm the timing of the restatement. That would have given me a bit more confidence.

They said by 28 Feb a month ago ....nothing to the contrary so by Feb 28th it is ...no worries, today's announcement positive in this respect

But then again they might not know yet so just keeping their mouths shut until they do know .....um.....maybe today's announcement negative in this respect

Do you really expect to se all this finalised before Feb 28th?

[Whipmoney]

Impartial observer again, but with respect to what you have said winner I would have thought this was a bit of a negative. Given all the uncertainty regarding the hole DIL has gotten themselves into with the restatements surely this was a prime opportunity to reassure the market that everything is on track to meet the Feb 28 deadline (assuming this was true that is)? I'm surprised they didn't so makes me wonder....

Obviously i'm a little biased here but I think people are reading into this too much. Personally I think this is a case of the less they say the better in order to protect them from liability.

Lol given that their accountants have already looked into the matter of their complex promissory note arrangement (balance sheet item) then I'm confident that they've already completed the first and most important scope of their engagement, namely the revenue recognition criteria (P&L).

Clearly the end is in sight!

[klid]

I can't see how it's positive in any way shape or form.
Close to when they're meant to be publishing everything and OH WE FOUND A BIG ERROR!
Have to tell the market... and what about that upcoming date!? Better not mention it, cos we probably need to push it out a bit again :S.
I hope not though!

[winner69]

They say ............eliminating impairment charges and recoveries of impairment charges related to the note from its income statements

So 2008 loss reduced by $5.8m when impairment recorded

So 2009 profit adversely changed by $0.3m, 2010 by $4.3m and 2011 by $1.2m being the impairment recovery taken to profit

Whew ...nothing in 2013 so all honky dory and hopefully the bank balance has been recorded correctly

Wonder how they getting on with the reclassification of r&d and development costs ....could be interesting.

[Xerof]

Quite right there W69, the pedantic beanies all over it. As you say, all comes out in the wash by end of 2012, so no dramas for 2013 at all.

I took the announcement as affirmation of the re-statements being on track, and bought back the shares I sold last week, off buzzo bumble.......

I think Whip's probably right in saying they might have finished all the prep work on sales recognition, moved on to other items now, and hopefully, writing up the commentaries

[couta1]

I'm down 20 odd % on MRP,TTK and SNK but DIL leading the pack at 40%,even my Xro entry point looking a bit sad with that up and down like a barometer,hanging tight but testing the patience I must say,lot of money tied up in this pack

[winner69]

spose we don't count todays fall seeing the volumes were pathetic and some bot was in action

Tomorrow an up day eh

[Xerof]

Every candle counts, and it closed on its low

dont follow what I do!

i just want to be in for the EOY 8 bucks......

[klid]

Didn't read that carefully this bit though

""It is not currently anticipated that the accounting corrections required in connection with the reclassification of the note receivable will impact the company's timing to complete its previously announced restatement."

[alistair85]

The problem I'm thinking is at the rate and direction the sp is travelling now by the time the restatement comes out it'll be worth bugger all and all the news will do is push it back up to where the sp is now!

[winner69]

The problem I'm thinking is at the rate and direction the sp is travelling now by the time the restatement comes out it'll be worth bugger all and all the news will do is push it back up to where the sp is now!

Have recalculated the linear regression line to include all data since the collapse in the share price started back in the middle of last year. Channels still exist at 1 standard deviation (what many TA people use) which is still a pretty tight channel. You stats guys know what 1 standard deviation means

Yes Alistair DIL is behaving a bit like the previous time it show signs of breaking out big time - that flattish period about 560/570 in the middle of the line ..... and then it collapsed big time ..... is another big time event about to happen .... you never know .....maybe back to the trend line and as moosie says that has a 3 in front of it ..... but heck could go back to the bottom channel line which acts as support ..... now that would be interesting

But what a load of rubbish these things are .... it only reflects punters sentiment so must be rubbish .... and just as much rubbish the last 2 days down has coincided with the anniversary of the Challenger blowing up ...should never have posted that rocket chart

Still hope 8 bucks by Xmas ---- this downtrend has to stop sometime .... doesn't it?

[robbo24]

Have recalculated the linear regression line to include all data since the collapse in the share price started back in the middle of last year. Channels still exist at 1 standard deviation (what many TA people use) which is still a pretty tight channel. You stats guys know what 1 standard deviation means

Yes Alistair DIL is behaving a bit like the previous time it show signs of breaking out big time - that flattish period about 560/570 in the middle of the line ..... and then it collapsed big time ..... is another big time event about to happen .... you never know .....maybe back to the trend line and as moosie says that has a 3 in front of it ..... but heck could go back to the bottom channel line which acts as support ..... now that would be interesting

But what a load of rubbish these things are .... it only reflects punters sentiment so must be rubbish .... and just as much rubbish the last 2 days down has coincided with the anniversary of the Challenger blowing up ...should never have posted that rocket chart

Still hope 8 bucks by Xmas ---- this downtrend has to stop sometime .... doesn't it?

Winner69, you're being remarkably cryptic.

I preferred it when you were "yay" or "nay"!

[Hawkeye]

http://www.nbr.co.nz/article/diligent-turns-another-accounting-headache-bd-151212

I know you all know about the info in the article, but the article is not the publicity they are looking for......

[iceman]

http://www.nbr.co.nz/article/diligent-turns-another-accounting-headache-bd-151212

I know you all know about the info in the article, but the article is not the publicity they are looking for......

This is absolutely not the publicity they or us SH need at the moment. However this is an accounting error that was done under the watchful eye of a previous Accountancy Firm. It has no material effect on cashflow or revenue. The restatements are also expected to have zero effect on cashflow. It is clear from the sharp changes in SP up and down that there are some very nervous speculators on the register that are heavily affecting the SP. Also these bloody BOTs are very annoying and make it hard to figure out what's really going on. DIL management has a lot to answer for which they will hopefully do at the end of February, once and for all. I sure as hell hope they will also come up with some positive announcements at that time, as has been speculated on this thread, to ease the tension we SH no doubt all feel. I continue to like DIL as a company long term though and did double my holdings while it was under $4 recently. Time will tell whether that was a disastrous decision or not.

[warthog]

Winner69, you're being remarkably cryptic.

If you can't figure out who the chump is ...

[winner69]

good day on the US markets

Panic over .... DIL and everything else) up up and away today

[Blue Horseshoe]

spose we don't count todays fall seeing the volumes were pathetic and some bot was in action

Tomorrow an up day eh

Noticed bot action when buying a couple of day's ago, do you think they are trying to hold up the share price or trying to drive it down and buy lower, making for a bigger margin on the predicted upside.?

[Whipmoney]

The problem I'm thinking is at the rate and direction the sp is travelling now by the time the restatement comes out it'll be worth bugger all and all the news will do is push it back up to where the sp is now!

I don't think it works like that mate..

Despite all the charts and gimmicks, the instos are what matters and the instos value stocks based on DCF analysis, and less so, trading multiples.

The instos are also the ones sitting on the sidelines as they don't have much hard info to work with, so presumably if the re-statements are fairly trivial in a cash-flow (DCF) sense then the instos will place a value of say $5.50 which will invariably lead the price to being bid up to this level.

My best guess is that (assuming the restatements are minor) the price will gap up on the day of the release, probably followed by another good day or two of trading as people clamour onboard.

[klid]

Someone sell 1,396 at $4.40 plz?

[Balance]

Someone sell 1,396 at $4.40 plz?

U will get them - only retail investors buying, instos can only sell until restatement come out.

[Balance]

Someone sell 1,396 at $4.40 plz?

See, you got 'em.

DIL is easy to read at present - soon it will become harder but more exciting!

[klid]

See, you got 'em.

DIL is easy to read at present - soon it will become harder but more exciting!

yep im happy

[robbo24]

May you live in interesting times my friend ;)

For a brief time today my daily MACD suggested we might be in for a little turnaround leading into the restatement. In the last hour of the day this was put to bed, but not by much.

Let the game begin.

[alistair85]

I still think it will continue on a downslide until closer to that 28th restatement date. I wouldn't have thought the "possibility" of restatement a month out could solely raise the SP.

[Whipmoney]

I still think it will continue on a downslide until closer to that 28th restatement date. I wouldn't have thought the "possibility" of restatement a month out could solely raise the SP.

Potentially but I wouldn't pay it much credence as its mostly noise from small investors who are sitting on the fence.

Any insto already holding is likely to stay in and any insto who is considering buying will be on the sidelines until the announcement so its a plastic bag in the wind in the mean-time.

[Whipmoney]

Why would you not pay it any interest Whip? if you're out you're going to want to get the best price possible. As I have said before, this kind of fall on low volume is usual for DIL as an announcement looms. Unfortunately, if the restatement is still a long, long month away, people exiting before hand are going to drive the price well down as buyers are in control again. Seen it happen many times before and any money says it will happen again here. Ignore the downtrend channel and downward growth at your own peril! These are the only things the market can work with until we get solid numbers...


It's quite simple really Moosie:

At this particular point in time/price I think that there is far more upside than downside with regard to the re-statement issue.

You are right in that the price may fall over the next few days/weeks in the lead up to the announcement (which as we know is expected on or before the 28th of Feb) and whilst from a TA perspective it may make perfect sense to sell out and capitalize on a slightly more depressed price by buying back in cheaper just prior to the restatement I would wager that this also has its risks.

Firstly, the announcement could come at any-time really and therefore there is a sizable risk that you could be left out of the stock upon announcement and would therefore have to buy back in as on its upward accent. I know that you trade the trend so wouldn't really be concerned about this, but for a Value investor like me I could miss circa $0.50c (~11%) of value as the share gaps up immediately after announcement. So why take the risk when it is easier to remain patient and do nothing? It is only 28 days after all.

Secondly, how do you know that the price hasn't already bottomed out at the $4.35 level? If that's the case then there is nothing to gain by exiting the stock and everything to lose with regard to the upside.

A perfect example of this is PEB which was in a down-trend/channel from the 12th of Sept (54.2c) to the 15th of Oct (46.8c) (approximately a month) until this trend/channel was shattered by two very significant announcements leading the stock to break $1.50 in only a matter of days giving holders a staggering gain of ~220%+.

If my memory serves me correct (and I don't mean this as a personal attack) but you were out of the stock at the time of announcement and therefore were likely to have missed some considerable upside. This was an invaluable lesson for me as I learnt that whilst TA does have some predictive merit, FA is far more crucial for a serious investor.

So given its roughly a 28 days (possibly sooner) and by a similar rationale I see it as safer being in this stock than out. Worst case the stock retraces further and i'm either stuck holding it for a longer-term or will have to consider exiting at a lousy 20% return.

----------------------------------------------------------------------------------------------------------------
Patience - Grand Agent

It's the hands free, hurt you virtue
Patience, I been chillin where you make your mistakes friend
I mean I be building where you renting your space see
I'm clean, all I ever had was my horses was for the reign.

[Whipmoney]

Cheers Whip. Yup I was out for PEB buy bought at first announcement and joined the upside. Unfortunately, TA doesn't account for announcements being released, but we do know when it has to be released and where the sp is going in the mean time. Unfortunately, we don't know if DIL will delay yet again though, which would mean a significant gap (and not the way you want it to go!). With DIL caution is very much needed as the price going up again is far from guaranteed (the market "should" be forward looking). Imho if you bought near $3 its worth holding until the restatement as they still have a significant buffer there, but anyone holding near current sp should rightfully be nervous.

disc - out until this saga is ovrr and the company can prove it's worth trusting again. still on watch list and hoping positivity is the only thibg ahead :)

No worries. I'm looking at it as a "Grey Swan" i.e. a free-bet with some potentially good upside.

You're right in that TA can't predict announcements (which are often the impetus for upward SP movements) I do see it's merits in minimizing losses when a stocks on the downtrend. You guys certainly opened my eyes with regard to exiting DIL and it continued to plummet following the announcement of the re-statement saga..

If I hadn't of listened to you I would still been stuck in DIL at levels around $5+ which would have led me to miss other opportunities.

[winner69]

Grey Swans ....learn a new phrase every day, thanks Whip

Here is what the Financial Times says about Grey Swans

However, the slew of bad news in markets since the financial crisis suggests unexpected events with a major impact are happening increasingly frequently. This has led some analysts to start using the term grey swan to describe events that, potentially, are as catastrophic as black swan events but that are likely to happen more frequently.


On that definition you wouldn't want DIL restatement to be a Grey Swan event


http://lexicon.ft.com/term?term=grey-swan

Pity that poor company that had four grey swans

[alistair85]

I would be very interested to hear what Sparky thinks about this whole thing.. I'm fairly sure he's holding DIL.

[Xerof]

Wear a tall hat like a druid in the old days
Wear a tall hat and a tatooed gown
Ride a white swan like the people of the Beltane
Wear your DIL long, babe you can't go wrong

[Whipmoney]

Grey Swans ....learn a new phrase every day, thanks Whip

Here is what the Financial Times says about Grey Swans

However, the slew of bad news in markets since the financial crisis suggests unexpected events with a major impact are happening increasingly frequently. This has led some analysts to start using the term grey swan to describe events that, potentially, are as catastrophic as black swan events but that are likely to happen more frequently.


On that definition you wouldn't want DIL restatement to be a Grey Swan

For the record The definition of a "Grey Swan" isn't / shouldn't be restricted to a down-side event.

Nicholas Taleb who coined the term "Black Swan" refers to investing strategies based around Black Swan events, i.e highly unpredictable/improbable events that will have a big impact (upside).

So by definition a "Grey Swan" is a slighly more predictable/somewhat improbable event with a big impact (either up or down).. In this case I was referring to upside!

[robbo24]

Who is FMR LLC?

[cmcd040]

fidelity investments http://en.wikipedia.org/wiki/Fidelity_Investments

[winner69]

Fidelity Started buying at the highs back in june/july and averaged down and become a ssh in September

So lightening up ....or have they gone further and sold the rest of the 4.8% (only need to dispose the trade that takes them 5%)

Shucks ......I hope they don't know anything

[robbo24]

Fidelity Started buying at the highs back in june/july and averaged down and become a ssh in September

So lightening up ....or have they gone further and sold the rest of the 4.8% (only need to dispose the trade that takes them 5%)

Shucks ......I hope they don't know anything

FMR says FML and get their money back... Or, they know something in which case we tell the FMA.

[winner69]

Ouch, not the best buy/sell appensix in the world! Good to see their still holding a significant amount though. Even the big guys get it wrong sometimes (as of today that is...).


We don't know about the 4.8% ......they might have sold that as well. Only need to disclose the trades that took them under 5% .....the rest is their own business

[robbo24]

Fidelity Started buying at the highs back in june/july and averaged down and become a ssh in September

So lightening up ....or have they gone further and sold the rest of the 4.8% (only need to dispose the trade that takes them 5%)

Shucks ......I hope they don't know anything

FMR says FML and get their money back... Or, they know something in which case we tell the FMA.

[Xerof]

Fidelity Started buying at the highs back in june/july and averaged down and become a ssh in September

So lightening up ....or have they gone further and sold the rest of the 4.8% (only need to dispose the trade that takes them 5%)

Shucks ......I hope they don't know anything

bought much higher as well

the only thing I can see them 'knowing' is how not to trade, by buying into downtrends, then selling into new uptrends

If I recall JPM had another similar experience from near the $8 mark as well

only Milford seem to have truely got this one right, so far

ps I wonder if they (fmr) are buzz-o-bumble the bot?

[Whipmoney]

the only thing I can see them 'knowing' is how not to trade, by buying into downtrends, then selling into new uptrends


Yeah but from my understanding, not many instos use TA when analyzing investments, rather they rely almost solely on FA.

[Whipmoney]

Buy buyer block at $4.50 (44,800 shares).... something coming?

[Whipmoney]

Roadrunner, you sold the Porsche???

Must be a pretty nice porche at $200k+.

Might be some insto window shopping.

[Loneranger]

I was quite surprised that even the announcement recently in regards to another error that they have found on the book did not seem to affect the SP too much. It did not affect the current business operation i guessed. So this stock seems to hold up well so far.

[Xerof]

.... something coming?

Unless they turn out to be phantoms, I do believe it's called a resumption of an uptrend:sleep:

[Whipmoney]

Terrible execution paying a premium in a downtrend, big sellers savagely mauled that one. Resumption of downtrend again now most likely. Probably an insto very happy right now...

If its an insto that bought in then i'm sure they won't be overly concerned about the premium/down-trend as its likely to be a value play. Makes sense I guess, particularly if the rises above $5 post restatement.

[Whipmoney]

Instos know better than to just lob a huge bid on market when the market is going the other way though, especially when thin! This was an individual too enthusiastic not to miss out on something...

How do you actually know that Moosie? I know for a fact that many NZ instos completely disregard the technicals, rather they simply compare the price of the stock against their instrinsic value.

[klid]

Yeah and is ACC an "insto"?

[Whipmoney]

I like to think people playing with money actually know what they're doing. Didn't we agree instos/funds were out until the restatement as well?

So now you're disputing the effectiveness of the Value (Fundamental) investing?

Because as far as I understand it there is far more empirical evidence to support Value Investing as a successful investment strategy compared to that of technical analysis.

[Whipmoney]

Of course I'm not disputing it! A combination of both is by far the most effective. On a lack of news though I have found charting far more effective. Doesn't mean people won't take early positions and get ahead of the gun but I'm saying the path of least resistance is still downward via no news/market sentiment/charting. Hopefully the restatement will place DFC back as the leader of valuation, but growth also still troubles me...

I guess it's a question of scale as the larger you get the less relevant the techincals will become as you're actions will start to influence the price. Hence this is probably why the instos often disregard the technicals.

The other reason I guess is that when you're buying several stocks (presumably all under-valued / at a discount) then those stocks will be in a range of different trends and have differing indicators and therefore on the whole and in the long-run these should net out.

[Harvey Specter]

I guess it's a question of scale as the larger you get the less relevant the techincals will become as you're actions will start to influence the price. Hence this is probably why the instos often disregard the technicals.Even if you dont follow technicals, if you are buying/selling a large amount, you don't do in one big bang, you do over time so you don't influence the shareprice that much.

'luckily' I dont have the problem.

[Whipmoney]

Even if you dont follow technicals, if you are buying/selling a large amount, you don't do in one big bang, you do over time so you don't influence the shareprice that much.

'luckily' I dont have the problem.

Unless you're desperate to get into the stock because you suspect an announcement?

Hence my initial query (post #5844)....

[Jay]

Yes H S
Unfortunately I do not have that problem either

[Xerof]

Unless you're desperate to get into the stock because you suspect an announcement?

Hence my initial query (post #5844)....

you're on to it Whip. Price action and behaviour tell the story. Watch for some positives next few days, is my guess

forgive Moosie for his churlish counterarguments, he is troubled by snakes and can't find the ladders

[Whipmoney]

I'm waiting at the bottom of the still elusive ladder Xerof ;)

The ladders there Moosie, you just need to reach for it!

[Whipmoney]

I've been told that before and been severely burnt! I'll stick to my guns and be waiting for confirmation ;)

Remember Moosie, the Market isn't there to instruct.


http://avenircorp.com/wordpress/wp-content/uploads/2013/09/Benjamin_Graham_and_Warren_Buffett_on_Mr._Market.p df

[Whipmoney]

I understand Mr Graham all too well, but I have my planwhich I will stick to. I think we're both using different gauges for where DIL will go in the future as well.

Horses for courses, market forces ;)

I get that you have a plan and its good that you're sticking with it.

I guess what I don't understand is that as a 'technician' / TA'er then if you think the market has priced in all available info then wouldn't that mean that any concerns the market had about the company's growth trajectory have already been priced in?

As far as growth goes we have seen the new client acquisition numbers so by logic the market is already aware that the FY13 revenue growth figures are going to be within a certain range (depending on the $ per contract/user).

As such I can't see how the restatement would bring much (if any) downside as if anything the numbers might be higher than expected due to improved margins.

This is what leads me to believe the whole restatement sage (expected Feb 28th) is tantamount to a free bet.

Sure there could be some retracement if the market isn't satisfied however on the whole I think it will simply confirm what was suspected and the instos will jump back in given greater clarity.

[Whipmoney]

I still have serious misgivings about management and how things have been done, as well as "surprises" that may still be lurking. Caution is my rule on this one. Good to see you have a plan as well :)

In terms of nasty surprises I would presume these would have to be disclosed (once found) under the NZX Continuous Disclosure rules as per the previous announcement and my gut feeling is that they are largely in the clear.

I guess I could be proven otherwise however it seems rather late in the game for anything else material to suddenly crop up.

[Harvey Specter]

In terms of nasty surprises I would presume these would have to be disclosed (once found) under the NZX Continuous Disclosure rules as per the previous announcement and my gut feeling is that they are largely in the clear.

I guess I could be proven otherwise however it seems rather late in the game for anything else material to suddenly crop up.I think nasty surprised from the restatement are over as you suggest. The question is has the lack of disclosure while they have been restating hidden something negative, either slowing in growth, increased costs, decreased margins etc. I dont hink it has but with over 6 months with no full info, who knows.

[Whipmoney]

I think nasty surprised from the restatement are over as you suggest. The question is has the lack of disclosure while they have been restating hidden something negative, either slowing in growth, increased costs, decreased margins etc. I dont hink it has but with over 6 months with no full info, who knows.

If you map their cash accumulation (net of one-off costs, e.g. restatement costs) vs new licence numbers I think this suggests that margins are expanding favourably.

In terms of growth I think this is largely understood by their acquisition numbers however I guess its a question of the breakdown between revenue and deferred revenue. Either way both are positive on cash-flow though and if margins are improving then FCFF growth may be higher than expected.

[Roadrunner]

Roadrunner, you sold the Porsche???

Haha!yes sold the Porsche a while back mate(Post 5502)but you were right when you suspected it was me buying this morning!Since the last posting I`ve been heavily into PEB again and it was a fruitful exercise.I didn`t intend getting back into DIL for a couple of weeks,to be honest, but like others have commented I`ve been noting how they have held firm despite negative markets and some not so good news.I`ve made the call that the 430`s were the bottom and feel that as we get nearer to the restatement sellers will dry up and the buyers will come to the fore.You are right,accumulating steadily is a sensible ploy but trying to buy a decent number is not that easy when trade is thin.I happen to believe that post restatement the SP will be somewhere between $5-$6 and that a few cents here and there wont matter in the bigger picture.Even if the SP retracts again in the next few weeks and Dilly goes cold I believe the upside far outweighs the down longer term :)

[In4a$]

I'm with you roadrunner, although not in such a big way. Back in with 2k DIL today, be surprised if price drops below yesterdays level for to long.

[000831]

Bought 10000 shares today, I am coming

[Xerof]

I am coming

good on ya, but no need to get so excited :eek2: you may be a bit premature......given it was our man RR who rattled the cage this morning

[000831]

good on ya, but no need to get so excited :eek2: you may be a bit premature......given it was our man RR who rattled the cage this morning

I am expecting around 20% gain within 3 months on DIL. Back to research on SNK. Thanks

[zigzag]

Bought 10000 shares today, I am coming

Whatever turns you on. I try not to get that excited about my investments!

[RTM]

Well....it depends on the investment eh ? I have invested a lot of time in my wife....


Whatever turns you on. I try not to get that excited about my investments!

[Harvey Specter]

SO what happened with RR? Did you not read post 5866 ??

[iceman]

SO what happened with RR? Wasn't he the guy that re-mortgaged the house and sold his Porsche to invest in DIL when it was about $6 or $7 ?? So did he actually go through with it? and still holds?? It's an interesting story of someone going all in....An update on the story would be much appreciated :)

All in post 5866 above !!

[Whipmoney]

Bought even more on Wednesday. Holding circa 100,000 shares I believe???

He'll do pretty well if it breaks $6.

[000831]

typical bottom graph, break $4.80 first, time time time

[000831]

Also I assume this means we can put to bed the speculation that the "big buyer" at $4.5 actually knew something was in the making?? There was speculation I believe that an insto was buying and/or someone knew an announcement was in the making.... where as in fact it is someone doubling down who was already massively in the RED....

check #1398, he bought DIL over 3 years, as the price was below $2

[000831]

Yup for sure, but it's average price that is key. This is the post of interest which I am referring to:



The SP was $5.35 at that time. Then I note that his last update suggests he has gotten back into DIL so I'm just wondering what happened in between.

god! speculation like that........... I wish that he sold the house and car and bought the DIL three years ago..............The share price is not increasing for ever. When the bear comes, he could lose all the investment. Wish wish wish he could cash out at $6.00.

[Whipmoney]

The SP was $5.35 at that time. Then I note that his last update suggests he has gotten back into DIL so I'm just wondering what happened in between.

If he bought in heavily at $5.35 and then another 40k shares at $4.50 then he will do well if/when it hits $6.

[Roadrunner]

Yeah for sure and good luck to him, I do hope it works out!

Thanks guys,just thought I`d clear up a few things!Yep,I did sell my only house last year(now renting) and bought DIL.I believe around 57000 at 5.75.Unfortunately a few updates and restatement issues meant I took a bit of a hit(around $60k give or take).I sold half of my DIL initially(and most of them eventually), took my losses on the chin and was fortunate enough to make up most of the lost ground on PEB with the SP climbs and rights issue etc.Also by moving back into DIL around Christmas I caught a good bit of the January climb and was back out and into PEB before the slide back to where we are now.I sold the Porsche in early January...it took a while!As I mentioned I sold PEB for a smaller gain and bought 44800 DIL last week....along with 5700 on Friday to go with the 12200 I already held.I currently hold 62700 with an average buy price of 446 and hope to buy a few more in the weeks ahead.I am confident that DIL will be back on the front foot after this restatement carry on has been finally sorted :)

[robbo24]

I'm with ya RR, good on ya mate.

[Whipmoney]

I think the Share price has rallied slightly in support of Roadrunner.

[robbo24]

Hey guys...

Very little has been said on the broken downtrend channel.

I charted DIL today and saw a possible uptrend formation but is very unlikely as volume is extremely low. I see a consolidation channel forming between $3.25 and $5.00 with a "fair price" between $4.00 and $4.50.

Anyone else seeing this? Restatement is a known catalyst for buy/sell signal ahead.

Exciting times!

A few months back I posted some academic research papers which are a bit more specific about restatement behaviour, I think the general thing to take away from it is that without certainty of information then no prudent investor (those looking after other peoples money) will dive right in. When you take that away then things certainly turn around, I'm interested to see where restatement is the catalyst for selling and under what circumstances. Any examples from other stocks? There's tonnes and tonnes of companies that had to restate 2010, 2011 and 2012 reports :)

The range of 325 to 500 is very wide in scope, I can see what you mean but I doubt its significance.

I am intrigued by your proposition that a rise in price on small volumes is a big problem... Usually you're defending stock by saying the drop in price is on small volumes therefore it's not a problem at all. What's your reasoning on DIL? OBV appears to be going up for now.

That daily MACD chart, that's what interests me at the moment... RSI is not showing oversold and Fast Stochastic is showing a movement towards an acquiring market...

Just what I've gleaned from YouTube, nothing to rely on.

[Whipmoney]

A few months back I posted some academic research papers which are a bit more specific about restatement behaviour, I think the general thing to take away from it is that without certainty of information then no prudent investor (those looking after other peoples money) will dive right in. When you take that away then things certainly turn around, I'm interested to see where restatement is the catalyst for selling and under what circumstances. Any examples from other stocks? There's tonnes and tonnes of companies that had to restate 2010, 2011 and 2012 reports :)

The range of 325 to 500 is very wide in scope, I can see what you mean but I doubt its significance.

I am intrigued by your proposition that a rise in price on small volumes is a big problem... Usually you're defending stock by saying the drop in price is on small volumes therefore it's not a problem at all. What's your reasoning on DIL? OBV appears to be going up for now.

That daily MACD chart, that's what interests me at the moment... RSI is not showing oversold and Fast Stochastic is showing a movement towards an acquiring market...

Just what I've gleaned from YouTube, nothing to rely on.

Robbo I think you answered your own question when you asked why is a rise on small volumes an issue? - it isnt...

You stated earlier that no prudent fund manager can invest in this due to the lack of clarity. So surely once there is clarity and assuming the stock is still 'undervalued' then the instos should jump back in regardless of the technicals (which they disregard).

Personally I think the stock is under-valued and varios analyst reports are pricing it at above $5.50 so right now I dont really mind what the technicals are doing or what the stock is doing as its just noise.

I also don't see much downside from the restatements as the stock has been heavily discounted already, and there are still several upside factors (e.g second product, nasdaq, new markets).

Just my 2 cents though!

[Whipmoney]

So, consolidation here. If your like Whip and are optimistic i say buy in abd hope there are no nasties in there!


A few assumptions obviously here but presuming the restatement process is almost wrapped up, then one would suspect that if anything nasty was uncovered (outside of that previously disclosed i.e. Revenue recognition and more recently the related party receivable) then one would imagine they would have to disclose it to the market as they did in the case of the related party receivable?

I know what you're saying though and its a painful wait! Hopefully some good news soon.

[000831]

patient, hold for two/three months, it will reach $6.00. No doubts

[Snow Leopard]

...Anyone else want to comment on the downtrend channel? Winner?

What/which downtrend channel ?

Never happy to use a linear price scale over a significant price range. But here is a pretty picture to look at:

5449

Best Wishes
Paper Tiger

[Whipmoney]

What/which downtrend channel ?

Never happy to use a linear price scale over a significant price range. But here is a pretty picture to look at:

5449

Best Wishes
Paper Tiger


I struggle to comprehend the logic of this regression analysis...

[Whipmoney]

Yup, me too. can you explain PT what regressions you are running to get those four lines? I thought a linear regression channel was a regression line of best fit through your chosen data (i.e SP regressed on a linear time trend) with upper and lower channel lines (which run parallel to the regression line) on either side based on some std. dev multiple. I cant quite work out how you guys (moosie with the green one) get lines that are not parallel??

Well I understand what linear regression is however I fail to see how a linear regression model of stock prices over time has any predictive merit.

Also I fail to see how "time" can be a suitable explanatory variable in the case of stocks.

[robbo24]

Yup, me too. can you explain PT what regressions you are running to get those four lines? I thought a linear regression channel was a regression line of best fit through your chosen data (i.e SP regressed on a linear time trend) with upper and lower channel lines (which run parallel to the regression line) on either side based on some std. dev multiple. I cant quite work out how you guys (moosie with the green one) get lines that are not parallel??

Or has whipmoney jumped the gun in assuming you guys are conducting linear regression channels? for us TA rookies is a downtrend channel something entirely different??

Cheers

And here I was thinking PT was taking the piss.

Shows what I know.

[Snow Leopard]

And here I was thinking PT was taking the piss

Well done!
Paper Tiger

[Snow Leopard]

What/which downtrend channel ?

Never happy to use a linear price scale over a significant price range. But here is a pretty picture to look at:

5449

Best Wishes
Paper Tiger

A joke that you have to explain is a joke not worth telling but for those of you who wish to worry about this:

Winner has been drawing you nice regression analysis of the decline of DIL using a linear price scale and whatever Standard Deviations made the data fit. I always thought that he was having a bit of fun.

The cryptic bit of my post (i.e. the bit between the beginning and 'Best Wishes') was to say,
I do not believe that a regression analysis is/was particularly useful here, the data does not really fit at all.

Best Wishes
Paper Tiger

[robbo24]

Good on ya PT, I guess I should frequent the DIL thread more often to put things in a little more context. I am laughing though (maybe not for the reasons you originally desired :))

Maybe winner is having fun, and I have (like today) been way to slow to catch on.....

I asked winner69 about this just as DIL was pushing through the upper .7 std line, and he changed it to .75 and made a new graph.

The most recent one was 1 std lol.

To see his explanation look at posts around early Jan when DIL pushed thru $4...

[robbo24]

03-01-2014, 05:16 pm


updated chart with linear regression channel shown.

The top of the channel for today is 418 so a bit of a way to go.

Robbo - the lines are recalculated periodically to fit latest data and the days are trading days - that probably explains why your lines came out at about the 400 mark the other day

anyway close to the top channel line ..... A break out to come .... Or a sell signal like a few previous occasions. Chart don't predict do they.... But one would think that something has to give sometime soon.

[silverblizzard888]

Anyone see this article?

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11200055

The extract looks interesting "Today Diligent is a proud member of the NZX50 with a market cap of over $370 million, with 2013 revenues of $80 million and with the consensus forecast for its 2014 revenue being $100 million. Additionally, Diligent is very profitable. It is sitting on over $65 million of its own cash. This cash pile was built by profits and is growing by over $10 million per quarter."

[Xerof]

OK, cheers. That doesn't make sense to me, but I presume winner knows what he is doing. Or am I still being very slow to catch on that this is all a big piss take??

Far be it for me to judge the motives for W69 to keep altering his Regression Channel to keep the downtrend intact, but I certainly took it as a piss-take, as evidenced by not having a go at him at the time. I just quietly maintained my stance that the downtrend was broken.

PT's piss-take also raises a few issues about drawing trend lines... the basic rule is join two points, with a third intersection providing validity. Some will say, if that breaks, just wait and draw a higher trend line by connecting the two new points.... trouble is you keep doing that until the line becomes an uptrend....

PT's bottom red line is definitely NOT a trend line, the green one is the one I would have safely called as a broken downtrend line, (I suspect a steeper new line would be what I used personally) and the top red one is an "oh well, the last one broke, lets wait and see if this one holds" As for the blue one, well......

Having said that, not many chartists rely on trend lines.....

Anyway, I made the call that the boat sailed weeks ago, and ignored the mockery and denial posts. Until something else happens to change my mind, I remain long. I did miss the initial break, being in the Oz outback at the time, so got in quite late.

take it or leave it. DYOR

Yes, nice left hook from BH

[Theracay]

Im not a chartist, but visually it looks like a case of the fan principle.

[winner69]

Not taking the piss here guys

Those linear regression channel lines I do are based on Raff Regression Channel methodology

A Linear Regression Line is a straight line that best fits the prices between a starting price point and an ending price point. (This is why as time goes by the line changes to fit the new data points)

The Linear Regression Line is mainly used to determine trend direction

The channel lines are evenly spaced parallel lines above and below. The width of the channel is based on the high or low that is the furthest from the linear regression line. This means all the prices are (unless discretion has not been used) contained in the channel.

The channel lines are not trend lines as described by Xerof.

Once established the upper and lower channel lines represent support, resistance or reversal points.

An uptrend reverses when price breaks below the bottom channel line. A downtrend reverses when price breaks above the upper channel line. Price breaks can also represent overbought or oversold conditions.

I use these charts to monitor long term trends. In DIL case to monitor the downtrend to give some signals when it could be a buy (breaks above the top channel line) but more importantly to remind NOT to buy during the downtrend no matter how irrational the market might be. In SUM and RYM (charts on those threads) I use it to monitor a multiyear uptrend with a view to signal when that uptrend has ended.

Linear regression channel charts are NOT PREDICTIVE, They only represent past action and signal trend changes.

Below is an updated chart representing all the data points from June 2013 to today. DIL is trying to break out above the upper channel line. The down trend is still intact but just .....A TREND REVERSAL COULD BE ON THE CARDS

[winner69]

Going back a few weeks here is the rocket ship chart of DIL

That was the chart that represented all the data points up just after Xmas I think. (Bit different from the one above but both a legitimate based on different time frames)

Breaking above the top channel was a signal the down trend was probably broken. That was when I bought some more. .

If I was looking at buying DIL today I would probably look at the chart in previous post and wait a few days to see what happens

[Xerof]

Winner,

1. I know your lines aren't trendlines

2. Why did you not stick with your conviction (on the threads at least) I gather you went long and still are?

3. After breakouts, there is usually always low volume back-testing, which we have seen.

4. We look to be off to the races.....

5. I accept your non-piss-taking word in this instance ( only):)

6. I have just done a bit of reading on Raff, and withdraw comment 2. As I (think) I understand why the channel lines moved wider. Not suited to shorter term trading in your opinion?

[winner69]

What you say is correct .....if you followed my loose explanation religiously and channel lines were redrawn as events happen in most cases there would be no breakout.

To be honest I don't update these things everyday. Maybe every few weeks or when it obvious things might get be getting close. Doing this is updating prices while leaving the old lines in place. Like the rocket chart.

I think Raff waits until a trend has been established and then does the channel lines which he extends into the future (extensions) and tracks prices from there. Thus the overbought and oversold comment when prices go below or above for a period of time.

I have also seen some who uses a constant channel width (x std dev) without using the max gap.

So my way is a variant with a certain degree of discretion to suit my needs of monitoring medium to long term trends., not being a short term or day trader. The only charts I do at the moment are RYM, SUM, DIL and DLX. ....all long term trends.

Generally it is easier just to look at the 100MA and 200MA lines. Its just my maths background and interest in playing around with numbers I do these things the long way in excel

Not a true / real TA practitioner, more a trend and cycle follower

What were your ideas?

[Whipmoney]

I like the idea of regression channels as one of many tools to assist in buying and selling of trending shares.

I don't..

As W69 has already pointed out this tool is little if any predictive value, as such what value does it have? Sure you can say that it provides a good summary of past behaviour and support/resistance etc however if you do rely on this tool then you may actually miss out on a break-out that could be predicted from the fundamentals alone.

An anecdotal example is PEB. The share was down-trending for days/weeks/months and then a massive break-out occurred over three days upon the release of news. TA couldn't predict this, Linear regression couldn't predict this. The fundies did as they were buying in anticipation that the company would make traction in their commercialisation process.

The problem (as I see it) with Linear regression is that its simply plotting a linear regression of Stock prices over time, and time is not a great explanatory factor for the movements in the independent variable (stock price). As such, time alone doesn't explain the trends and therefore the associated trends/ standard deviation lines have zero predictive merit.

Furthermore one should be very careful in attributing standard deviations (a measure of volatility) to stock prices as this inherently assumes a normal (bell curve) distribution when we know the stock market movements/prices/returns are far from normally distributed (as LTCM found out in a costly mistake).

In my mind you would simply be better off just plotting a few key fundamental events over the stock chart. This will give you a fairer idea of what drove the fundamental sentiment...

5458

[winner69]

OK so I've had a bit of a rough attempt at it and attached my image below.

I've chose to base the trend on data from 20 May 2013 to 8th Jan 2014 (this is subjective of course). The regression channel is based on a 95% confidence interval around the forecast. Based on my subjective model as you can see in the graph attached I would have concluded that the downward channel was broken roughly 5th Jan 2014.

Interested to learn a bit more about this so if anyone cares to share thoughts that would be much appreciated (I may well have buggered something up ;))

5457

Well done turmeric. Looks similar to my rocket chart eh done about the same time.

If anything I am a "fundamental" investor and generally only invest in companies I know something about and after doing some "fundamental" analysis. Great doing Cash flows and Economic Value Added model a and even working out intrinsic values and all that. However my experience is that those sort of things give you some comfort that you are on the right path BUT at the end of the day sentiment is what drives shareprice. Accordingly one needs to monitor this sentiment and it just happens that a tool like these channel charts are useful. For myself who prefers to be a long term trader but whose first principle is not to give all profits back to the market they are particularly useful. Just as useful from keeping you out of a down trending stock, no matter how great it is on fundamentals

Suppose every one to their own ways. We are always learning

[winner69]

I don't..

As W69 has already pointed out this tool is little if any predictive value, as such what value does it have? Sure you can say that it provides a good summary of past behaviour and support/resistance etc however if you do rely on this tool then you may actually miss out on a break-out that could be predicted from the fundamentals alone.

An anecdotal example is PEB. The share was down-trending for days/weeks/months and then a massive break-out occurred over three days upon the release of news. TA couldn't predict this, Linear regression couldn't predict this. The fundies did as they were buying in anticipation that the company would make traction in their commercialisation process.

The problem (as I see it) with Linear regression is that its simply plotting a linear regression of Stock pricghes over time, and time is not a great explanatory factor for the movements in the independent variable (stock price). As such, time alone doesn't explain the trends and therefore the associated trends/ standard deviation lines have zero predictive merit.

Furthermore one should be very careful in attributing standard deviations (a measure of volatility) to stock prices as this inherently assumes a normal (bell curve) distribution when we know the stock market movements/prices/returns are far from normally distributed (as LTCM found out in a costly mistake).

In my mind you would simply be better off just plotting a few key fundamental events over the stock chart. This will give you a fairer idea of what drove the fundamental sentiment...

5458

Nice chart whip.

But it is time series chart - plotting price over time


In your own words - ( simply plotting ......Stock prices over time, and time is not a great explanatory factor for the movements in the independent variable (stock price). ) then this chart is just as useless as turmerics one?

Like your idea of noting major announcements. My chart had the dates if those announcements highlighted as a prompt as the reasons.

Irrespective of what your views are and the pros and cons of using std dev that DIL chart did show a sustained price downtrend that was contained in a pretty tight channel - that must signify something.

No doubt we will continue to disagree but I can live with that.

PS As a matter of interest I did run one of these on PEB (on that thread somewhere). Kept me out for many months and when things did happen I probably missed out on 4 to 5 cents of the rise from mid 50s to where it is today. I can live with that in the context of risk management.

[airedale]

If price and time are major talking points, then a "point and figure" chart would get to the point.:mellow:

[winner69]

If price and time are major talking points, then a "point and figure" chart would get to the point.:mellow:

...with the announcements highlighted

[winner69]

P&F shows consolidation around current levels

Can't seem to capture image from Clever P&F App on the iPad ... ratkin help please

Would have shown you all then .....yes time means nothing eh, just another variable

[blah]

Interesting how the Diligent thread has diverged and starting talking about regressions.

Not too familiar with time series regressions /econometrics (perhaps should have paid more attention to the boring lecturer who I couldn't understand), but I'll thought I'm chime in anyway:

1. Time series analyses poses many problems, and hence why many academics dedicate their entire lives trying to figure out ways around these. Key thing is stationarity: assuming the future is distributionally similar to the past. Then there are issues around serial correlation etc. Heaps more which I would never understand.

2. Any time series regressions run should be internally valid (provided enough rigour was put in to ensure this), meaning that it should hold true with the data that was used. To extrapolate the model into the future, out of sample, is always dubious and raises questions about how alike the future is with the past - which is assumptuous at best.

3. Tumeric questioned earlier about whether the regressions need to be re-run with the introduction of new data, as a new trend could be formed with new data. While regressions would still need to be re-run with new data, I believe moving-average models at least partially control for pseudo-changes-in-trend within the existing dataset, where the 'trend' is defined to be over a certain period with the most recent data.

4. I believe ARMA (autoregressive moving average) and ARIMA (autoregressive integrated moving average) are some standard models that overcome most of time series problems. If anyone knows anything about these (ie not myself), I'd be interested to see how it goes.

5. Someone mentioned that time does not make much sense to be an explanatory variable. More correctly interpreted is that he does not think there is any intuition that supports time as an explanatory variable. This is based on the premise that he thinks time does not explain stock prices over time. Fair enough, but others might think otherwise. If the data does indeed show time to significantly explain stock prices, perhaps it indicates there is something wrong with the model, or with the premise. If there is indeed a deterministic time trend (that is indeed there for whatever reason), it is silly to say it's not there even if there is no intuition to support it.

[lowrolling]

Not too familiar with time series regressions /econometrics (perhaps should have paid more attention to the boring lecturer who I couldn't understand).

Was it Mohammed Khaled?

[Hoop]

OK so I've had a bit of a rough attempt at it and attached my image below.

I've chose to base the trend on data from 20 May 2013 to 8th Jan 2014 (this is subjective of course). The regression channel is based on a 95% confidence interval around the forecast. Based on my subjective model as you can see in the graph attached I would have concluded that the downward channel was broken roughly 5th Jan 2014.

Interested to learn a bit more about this so if anyone cares to share thoughts that would be much appreciated (I may well have buggered something up ;))

5457
Yep that how I do it...unfortunately, the charting software isn't clear about adding SD and LR channels... a lot of charting software won't let you do it at the "now" and relate back, without supplying the program with a compicated way of adding an earlier cut off date.. so yeah I can your dilemma and confusion with your earlier attempts.

Well done Turmeric...
Notice your breakout (buy) point just before the 8th January ..Its the same time as my detailed chart (to be posted below)...shows you the value of Linear Regression Channels..eh?

[Hoop]

If you ignore the visual clutter this is simple chart using basic S&R lines and trend lines ...It's a noisy chart because I added my thoughts to it as well as some educational stuff resulting from the various trend breaks...
Whipmoney..... Turmerics L&R channel break....Gotta be value !!!...a great entry (buy) point......eh? ...it's a very strong signal!!!! (confirmed by other TA indicators and charting methods)

The more buy signals that fire off from the various indicators and disciplines the stronger that "bullish happening" is, so on the 3rd January the bullish candlestick (buyer tail) appeared and on Monday the 5th January DIL took off upwards firing on on all cylinders...

Since the major break DIL is now having a breather..this is a worrying time when a bottom has been established and there has been good gains ....but DIL still hasn't got to that point that it can be called a bull market (higher highs and higher lows)...It still could be a good sucker rally within a Bear market cycle and its nearly played out....so caution is needed..

With the technicals showing a worrying neutral with short term price rises...accumulation should not an option so close to a major resistance (risk)..It may seem stupid and illogical to many but buying/accumulating at $5.10 is a safer option than buying at $4.90

Current price $4.60 up 2c

http://i458.photobucket.com/albums/qq306/Hoop_1/DIL12022014.png (http://s458.photobucket.com/user/Hoop_1/media/DIL12022014.png.html)

[winner69]

When I was really bored once I played around with seasonally adjusted prices. Mainly to remove things like the Santa Effect, sell in May and take summer off sort of things

Quite interesting and even though it showed slightly different trend lines it was useless really as you can't buy seasonally adjusted prices and who would believe me if I said DIL was up 12% this month when seasonally adjusted

Seasonally adjusted numbers always interesting - like today's card transactin figures from Stats NZ January sales were DOWN 0.5% in seasonally adjusted terms (really bad and the economy softening they say) but in actual terms were 6.4% UP on Jan 2013 (wow that's some increase so things must be pretty good in retail land eh). I'd rather have the 6.4% story.

Never mind time means nothing and stats are just lies any way.

[Leftfield]

Chalkies interesting article today has some interest for DIL investors.

http://www.stuff.co.nz/business/opin...y-in-money-out (http://www.stuff.co.nz/business/opinion-analysis/9710256/Money-in-money-out)