Diligent Boardbooks IPO

[Baddarcy]

I wish I'd been alert that day that - what was the rumor that went round on twitter - I think it was that the US president had been killed or something similar. Markets took a quick nosedive till it was proven to be false.

You would have been alert alright, given twitter wasn't invented until 2006 :-)

[baller18]

T

Balance - He is serious

Just a gambler who thinks he is to a cert .....wil be doubling up soon ...and he/she gets the you know what when the share price falls and we fail in our duty to reassure him that all is ok

But then again the market needs punters like baller to add a (tiny) amount of liquidity

I have to admit i am a punter and a gambler at this stage, and trying to learn the in's and out's. Trying to not be a speculator and on becoming an intelligent investor.

I have been lucky so far, invested in a few stocks over the last 3 years, ANZ, NAB, WESTPAC, FBU, FSF all during the times when the stocks were cheap. However, I shouldn't say cheap because at the time I didn't know the intrinsic values of the company and at this moment I prob still dont understand the intrinsic values.

However, I am trying not to gamble anymore and rather learn the in's and out's. This is how I use to think when i put money in shares, all my friends are into doing up cars. In my view, car depreciates, money is gone, putting it somewhere where I might or might not have a return is better than money going down the drain through depreciation. Thats how I justified my investing at the time and still now.

So apologies for asking stupid questions and I fully appreciate the answers members have informed me with.

I am in the process of being a speculator and becoming an investor!

[winner69]

Well done baller ...we will help out now

[Mobius]

Here's a prediction for you all: John Billington, QC acting for Brian Henry, will have no trouble winning the case, and the FMA will look utterly incompetent.

[Lorne Ranger]

Here's a prediction for you all: John Billington, QC acting for Brian Henry, will have no trouble winning the case, and the FMA will look utterly incompetent.

Ha you could almost guarantee an equally pointless 3-5% gain on the day it is won too!

[False Profit]

These shares go back and forth more than a fiddler's elbow. Now they're on the way up again. I've got $20k waiting for when they go back to $6. That'll pay for xmas this year.

[CJ]

These shares go back and forth more than a fiddler's elbow. Now they're on the way up again. I've got $20k waiting for when they go back to $6. That'll pay for xmas this year.$20k will buy you a great christmas as I dont see it getting that low again this year.

I expect the financial reporting issue to end up being a non event.

[Hoop]

you and hoop can reminisce about the month you nearly bought DIL at xmas time then! be lucky to get them at $6 or under again. good luch anywhoo :)

Hi Moosie...The NZX Bull market cycle is at a very mature stage and the risk is increasing.....About Mid -May I commenced selling up and realising my capital gains ....I then "de-risked", by changing my investment strategy from "all in" (low% in cash) longish term (sailing) to investing with compulsory sell out on shorter term sell signals (rowing) ...this is a lower risk strategy discipline, with my higher % of cash I'm alternating in different currencies.

In keeping within my lower risk "rowing " discipline parameters ... DIL hasn't performed good enough to get onto my radar screen....my return (est 15+%) at the moment far exceeds DIL...actually since my change in strategy DIL has fallen 20% in shareprice...
I'm very happy with my active investing atm and Direct broking are even more happier with me...:cool:

Am I envious of you exhausting all your cash buying up "cheap" DIL shares?....Nah
Hope it turns out to be a goldmine for you Moosie
All the best, mate
Hoop

[Mista_Trix]

Hi Moosie...The NZX Bull market cycle is at a very mature stage and the risk is increasing.....About Mid -May I commenced selling up and realising my capital gains ....I then "de-risked", by changing my investment strategy from "all in" (low% in cash) longish term (sailing) to investing with compulsory sell out on shorter term sell signals (rowing) ...this is a lower risk strategy discipline, with my higher % of cash I'm alternating in different currencies.

In keeping within my lower risk "rowing " discipline parameters ... DIL hasn't performed good enough to get onto my radar screen....my return (est 15+%) at the moment far exceeds DIL...actually since my change in strategy DIL has fallen 20% in shareprice...
I'm very happy with my active investing atm and Direct broking are even more happier with me...:cool:

Am I envious of you exhausting all your cash buying up "cheap" DIL shares?....Nah
Hope it turns out to be a goldmine for you Moosie
All the best, mate
Hoop

So only being young in age and young in knowledge on this subject. What does the change from bull to bear look like. An overall falling apart, where everyone (sometimes slowly) runs away from all stocks. Or a move to value. Or a move to Divs. Or something else entirely??

Thanks :)

[Mista_Trix]

So only being young in age and young in knowledge on this subject. What does the change from bull to bear look like. An overall falling apart, where everyone (sometimes slowly) runs away from all stocks. Or a move to value. Or a move to Divs. Or something else entirely??

Thanks :)

I take it nobody really knows, exactly how these things play out :-S

[False Profit]

Hi Mista T. Your question is asked and answered many times over on this site. Have a look at "investor strategies" (I think). Read as much of the posts as you can from all the various NZX listings. There's more info in these than you can shake an accountant at. Happy hunting.

[lastmoa]

Hi Mista T. Your question is asked and answered many times over on this site. Have a look at "investor strategies" (I think). Read as much of the posts as you can from all the various NZX listings. There's more info in these than you can shake an accountant at. Happy hunting.

Or I could suggest something called ....... a Book

[Lorne Ranger]

Reasonably happy with the days outcome. Burst of support at the end of the day helped, and reinforces support at the 6.30 mark, pushing RSI back over 50. Good considering the "bad" press. Basically I don't mind if it just holds steady until the QR comes out.

(Disc: My Mother bought 10k worth today, gulp, suddenly there's more than just skin in this one.)

[janner]

"despite all my rage I am still just nicholas cage"

An Actor.. or A Player ??

[janner]

(Disc: My Mother bought 10k worth today, gulp, suddenly there's more than just skin in this one.)

Mothers are the best thermometer a son can ever refer to.. ??..

Hope that your mother knows the difference between C and F.. boiling point.

Disc. Non holder.

[winner69]

ALLEGED MARKET MANIPULATION OF SHARES IN DILIGENT BOARD MEMBER SERVICES, How ever you look at this it's not a good look.

Griffen - just to remind us that the financial market exist for the greedy and rich and that many of the chosen ones are fraudsters and ex bankrupts and generally there is only one person in the world and that is 'me' - stuff anybody I may hurt in the process.

They will get their comeuppance one day

[Baddarcy]

"despite all my rage I am still just nicholas cage"

Err....Rat in a cage.....thought you were a moose?

[Lorne Ranger]

Your mum understands tech shares?

She had received some suggestions, but the decision was hers. Must be transferable skills.

[Silverlight]

Wow, the allegations aside, some of the comments shown are extremely optimistic. Some comments maybe taken slightly out of context :p

At $XX price "they'll realise how foolish they were to sell"
"I've got $20k waiting for [XYZ stock]... That'll pay for xmas this year."
"be lucky to get them at $XX [price] or under again".
"Chicken Little ... sell your shares to me."
I am a gambler " if it goes below $XX again, going to pick up some more.."

DIL has gone from $1 to $6 in 2 years, up 600%! I not reasoning against any persons analysis on their outlook, or the context in which holders have DIL in their portfolios relative to their risk profiles, but a lot of these comments could easily be heard at the wild enthusiasm end of an overvalued asset.

The moon maybe the next stop, but taking a step back and pausing for thought, warning lights sound. Maybe already priced in with the pull back from $8.

[Major von Tempsky]

Diligent.bubble.com

Memories, memories...

Poseidon (Australian mineral bubble), 1987 Ariadne, Equiticorp, the Dot com bubble, Enron, the GFC bubble, the Diligent bubble...

The best and only time to get out is when enthusiasm is at its height, while you are still alive i.e. now.

So when is it going to pay a dividend? What is its prospective P/E and gross dividend yield?

[baller18]

Time will tell everything...

[Major von Tempsky]

Are the taxi drivers, barbers and pub goers discussing, buying and recommending DIL?

Anyone remember Rakon....

[baller18]

Are the taxi drivers, barbers and pub goers discussing, buying and recommending DIL?

Anyone remember Rakon....
Oh my im a newbie, and even I know you cant even compare Rakon to Dil.

2 totally different companies on different wavelengths man

[Silverlight]

Wow, the allegations aside, some of the comments shown are extremely optimistic. Some comments maybe taken slightly out of context :p

At $XX price "they'll realise how foolish they were to sell"
"I've got $20k waiting for [XYZ stock]... That'll pay for xmas this year."
"be lucky to get them at $XX [price] or under again".
"Chicken Little ... sell your shares to me."
I am a gambler " if it goes below $XX again, going to pick up some more.."

DIL has gone from $1 to $6 in 2 years, up 600%! I not reasoning against any persons analysis on their outlook, or the context in which holders have DIL in their portfolios relative to their risk profiles, but a lot of these comments could easily be heard at the wild enthusiasm end of an overvalued asset.

The moon maybe the next stop, but taking a step back and pausing for thought, warning lights sound. Maybe already priced in with the pull back from $8.

I missed the best one, "my mothers just bought in".

No disrespect intended to anyone's mum (or mums; marriage bill), or their apt analysis.

[TimmyTP]

I have to say that, for anyone who enjoys baseless banter, the last page or so of sparring makes entertaining reading. Thanks all for that.
In the meantime, looking out for the next announcement or a meaningful piece of news, for some juicy new facts.

[baller18]

Be good, if people are going to critique Dil, can the criticism be constructive please?
This will help inform us holders, potential buyers, people who want to get our or whoever, rather than just bashing Dil :)

[Major von Tempsky]

This really is getting funnier and funnier, a good subject for a Roger Hall play, if any of the taxi-drivers, barbers and pub-goers have heard of Roger Hall....

Of course you can't compare DIL with Rakon (different companies ha! ha! ha!), but then you couldn't compare RAK with Enron, with Equiticorp, with Ariadne...

I beseech thee, in the bowels of Christ, has anyone paused for a split second in their DIL hyperventilating, multi-orgasmic seizures to consider that it would be very easy for a competitor to suddenly arise that could do the DIL function faster, cheaper, better?

[Theracay]

I feel a bit more reassured with holding Dil as they've at least shown increasing profits and are actually making money.
And they have good positive cash flows and cash on hand which are actually from operating activities and not just from issuing share capital.
They have low receivables so their customers are at least paying. So I don't feel too worried about this company.

Would anyone like to give an opinion on their $9mil deferred revenue? Given the nature of their business, it's not much to worry about, right?
Thanks.

[CJ]

Would anyone like to give an opinion on their $9mil deferred revenue? Given the nature of their business, it's not much to worry about, right?
Thanks.Without looking, I assume that is a subscription paid up front, but not yet earned. EG. if you receive $12 for a year subscription in the last month of the year, how much belongs to that year, and how much needs to be deferred till next year.

Dont ask DIL as they have no idea, hence the accounting issues they are having. Note: I think they have used a month count, rather than a day count test.

It is cash in the bank, probably with no right to a refund, only an obligation to continue providing the service for a period of time. Nothing to worry about.

[BigBob]

I beseech thee, in the bowels of Christ, has anyone paused for a split second in their DIL hyperventilating, multi-orgasmic seizures to consider that it would be very easy for a competitor to suddenly arise that could do the DIL function faster, cheaper, better?

Here's a random selection...:

BluePrint BoardPad from ICSA: http://www.icsasoftware.com/boardpad/boardbooks/?gclid=CPagsLSLzLgCFYkgpQodrlwA-g

BoardVantage: http://www.boardvantage.com/product/director?gclid=CI7057eLzLgCFcXApAodrAcAQg

BoardBook: http://www.boardbook.org/

Accellus: http://accelus.thomsonreuters.com/solutions/board/boardlink?id=701E00000006Bdh&ls=GooglePPC&lsd=BoardLink&gclid=CNuf3vuLzLgCFcFfpQodIRoATw

BoardEffect: http://www.boardeffect.com/?gclid=CLmgnpmOzLgCFYZZpgod800AsQ

Pervasent: http://www.pervasent.com/board-portal/?_kk=ipad%20board%20portal&_kt=813a8266-fc44-490d-a2ef-64d945812851&gclid=CIKVn76OzLgCFSoqpgodPzcAqQ

DirectorAccess: http://www.directoraccess.com/board-portal/ipad.php

Now, I have to admit that I have not looked into any details about any of these competing offerings, but I bet you they are all SaaS solutions and that will all claim to have "outstanding security and client service"....

Disclosure: I do not hold DIL, mainly because I don't believe they offer nothing special and as such have no real competitive edge - especially in the brave new world of SaaS....

[Mista_Trix]

Competitive edge is an interesting one though. We use Xero at my work for all of our workflow monitoring. It would be incredibly difficult for us to switch products without overhauling our processes and monitoring mechanisms, so we're hooked, without necessarily meaning to be, not saying its either a good or a bad product, just that your in it until they mess you round sufficiently and you look for another provider.

I imagine DIL is the same. Boards don't want to be changing the way they interact with their reporting and business controls too frequently, so long as DIL have got them in, and don't mess them round, they'll likely keep them. They don't particularly need much of a comparative advantage, just to get people in and then keep them there.

[sideburns66]

I imagine DIL is the same. Boards don't want to be changing the way they interact with their reporting and business controls too frequently, so long as DIL have got them in, and don't mess them round, they'll likely keep them. They don't particularly need much of a comparative advantage, just to get people in and then keep them there.

Hence their 97% customer retention rate.. although one would hope that this is not just due to customers being 'hooked' or 'trapped'. But then again, BigBob says they 'claim' to have outstanding customer service.. yet DIL have actually won awards in this space.. I am unaware if any of their competitors have..?

[Banksie]

Here's a random selection...:

BluePrint BoardPad from ICSA: http://www.icsasoftware.com/boardpad/boardbooks/?gclid=CPagsLSLzLgCFYkgpQodrlwA-g

BoardVantage: http://www.boardvantage.com/product/director?gclid=CI7057eLzLgCFcXApAodrAcAQg

BoardBook: http://www.boardbook.org/

Accellus: http://accelus.thomsonreuters.com/solutions/board/boardlink?id=701E00000006Bdh&ls=GooglePPC&lsd=BoardLink&gclid=CNuf3vuLzLgCFcFfpQodIRoATw

BoardEffect: http://www.boardeffect.com/?gclid=CLmgnpmOzLgCFYZZpgod800AsQ (http://www.boardeffect.com/?gclid=CLmgnpmOzLgCFYZZpgod800AsQ)

Pervasent: http://www.pervasent.com/board-portal/?_kk=ipad%20board%20portal&_kt=813a8266-fc44-490d-a2ef-64d945812851&gclid=CIKVn76OzLgCFSoqpgodPzcAqQ

DirectorAccess: http://www.directoraccess.com/board-portal/ipad.php

Now, I have to admit that I have not looked into any details about any of these competing offerings, but I bet you they are all SaaS solutions and that will all claim to have "outstanding security and client service"....

Disclosure: I do not hold DIL, mainly because I don't believe they offer nothing special and as such have no real competitive edge - especially in the brave new world of SaaS....

Well that's very positive that DIL have managed to carve out a market, return a profit and achieve a 97% customer retention rate in the face of all this competition. They must be doing something right.

[BigBob]

Hence their 97% customer retention rate.. although one would hope that this is not just due to customers being 'hooked' or 'trapped'.

Yes, that works for retention, but does not really give them an advantage for acquisition. Also, if you are "hooked" into another provider you're just as unlikely to move from them to DIL....

Another thing to keep in mind is that as SaaS offerings mature and as organisations become more savvy with regards to using and procuring SaaS services, one of the main considerations customers will have is their exit strategy, and as such SaaS providers will be evaluated on the level of "freedom" they provide....

[Mobius]

Having been a Diligent insider for a decade (out now), let me tell you why Diligent is destined to go beyond $20, and quite quickly.

Diligent clients and Boardbooks users are the happiest company directors in the world. Every single work day there would be more directors on the phone, telling me how amazing Boardbooks is, how incredible the Concierge Level Support is, how much time and money it saves, and how convenient it is to sync as many sets of board papers as you like, onto an iPad which fits in a pocket inside a brief case. The sheer number of unsolicited emails from the world's busiest directors, praising the product, the Account Management teams and the Support staff were an embarrassment of riches to choose from for inclusion in the the quarterly and annual reports.

I listened to a constant stream of directors saying things like "If someone tried to take Boardbooks away from us, there would be a revolt", "Boardbooks completely changed my life as a director", "I've never experienced anything as good as Boardbooks support", "I sit on the boards of 4 other companies, and I want to get those boards onto Boardbooks too", "Your staff are tremendously helpful, and deserve congratulations", and "The iPad app is the greatest thing since sliced bread".

Then there's the Admin side, where clients vastly reduce the number of person hours required to get out board papers, can reallocate staff, and always deliver the materials, and any changes, instantly.

There is no genuine competition to Boardbooks, and Diligent frequently takes clients from other companies selling similar services. The competition's sales people have even jumped ship for Diligent! There's many very good reasons for that, not least of which is the fact that Boardbooks is the ONLY product squarely targeted at the board papers, the directors themselves and the actual board meetings. It is a very simple product on the surface, so it takes very little to learn, and no time to master. (Underneath it is very complex, with millions of lines of code across the various platforms.) Boardbooks has everything a director needs, and nothing they don't.

Technically, the product is superb, with more than adequate security to satisfy the world's most demanding organisations.

Having been involved with Boardbooks from the start, in every aspect of the production and delivery of the software and services, I can tell you for sure, that Boardbooks is a world-beater, provided the company can simply do what it has been doing, and can scale to half a million users without exploding.

It would "only" cost a few millions of dollars, and 2 years of time, to develop a similar product from scratch - but it would have to work around the software patents held by Diligent - some of which are quite broad. So, making some software to do the same thing is not easy, or quick - and it is not the toughest part. You can't have a customer until you have a product, and your product is at least 18 months away, if you start coding today. And it will be rubbish, because you didn't spend 10 years developing and honing it. Would YOU like to try to sell a "beta" (or heaven forbid, an "alpha") version of this new software, right after the Boardbooks guys have presented? Yeah - good luck with that.

Boardbooks is a very, very good product to go up against.

The cost of Boardbooks is extremely small compared to other expenses within a company, and it saves money. The product is embedded deeply at the very top of the business, and the clients love it.

What better story do you want to hear?

Yes, the company is not perfect, and has made some mistakes, but this does not reflect the underlying business, or product, or the success it has enjoyed and always was going to enjoy. That is why I bought shares at extremely low prices, when everyone was telling me I was mad. They didn't get to listen to the stories told to me by directors every single day.

If you doubt the story, just ask yourself this: Would YOU invest in a start-up company going up against Diligent and Boardbooks? o_O

[baller18]

Hey mobius, half a million users?
By users you mean the same as customers?
At present, they have 58,000 customers

[baller18]

We should send an email to buffet to suggest him to use boardbooks, imagine berkshire hathaway behind DIL! lol
But then again, buffet doesnt invest in tech stocks...

[winner69]

We should send an email to buffet to suggest him to use boardbooks, imagine berkshire hathaway behind DIL! lol
But then again, buffet doesnt invest in tech stocks...

Seems more like a service company than a tech company IMHO

[zigzag]

Seems more like a service company than a tech company IMHO

Dil operates on a saas model. ie SOFTWARE as a SERVICE. Don't forget service is a large part of what Dil is offering!

[BigBob]

I listened to a constant stream of directors saying things like "If someone tried to take Boardbooks away from us, there would be a revolt", "Boardbooks completely changed my life as a director", "I've never experienced anything as good as Boardbooks support", "I sit on the boards of 4 other companies, and I want to get those boards onto Boardbooks too", "Your staff are tremendously helpful, and deserve congratulations", and "The iPad app is the greatest thing since sliced bread".

That's what people said when they first got e-mail, when e-mail used to be something special. Now it's just another SaaS commodity....

[CJ]

Dil operates on a saas model. ie SOFTWARE as a SERVICE. Don't forget service is a large part of what Dil is offering!Software as a service, not software and people as a service.

They are more expensive than a normal SaaS for that reason (compare to XRO, Salesforce etc pricing). If you just offer software, it is weightless in that to supply more customers, all you need to do is rent more servers/bandwidth.

[iceman]

Thanks Mobius for sharing your detailed views and knowledge of the company. I think most of us on this forum that have invested in DIL, many quite significantly, have done so because the company has runs on the board, has a good proven product that the users like, extremely high retention rate, high growth rate including possibility of another product, high positive cashflow (and cash in the bank) and the rumoured chance of a NASDAQ listing.

The company has however been caught out too many times with sloppy administration which has effected investor sentiment as Hoop and others have been saying and warning us about. We shouldn't ignore their warnings as this loss of faith in the company has seen the SP slump and all of us losing as a result. Some unrealised losses and some have "panicked", sold out and suffered realised losses.

I still have absolute faith in DIL and have been quietly accumulating/adding at recent SP levels but I sincerely hope that we will get no further damaging news from or about the company, whether historical or not. We need a good quarterly and either (or both) a dividend or NASDAQ listing announcement in the near future and I am sure the SP would skyrocket again.

[baller18]

One thing I wanted to ask, does repetitive sloppy administration translate to bad management?

[winner69]

One thing I wanted to ask, does repetitive sloppy administration translate to bad management?

Good question

Generally yes. Most experts would say a culture thing that is often hard to change/improve

Doesn't say they are not good at doing things .....but general management practices could be seen to a bit suspect.

[Balance]

Thanks Mobius for sharing your detailed views and knowledge of the company. I think most of us on this forum that have invested in DIL, many quite significantly, have done so because the company has runs on the board, has a good proven product that the users like, extremely high retention rate, high growth rate including possibility of another product, high positive cashflow (and cash in the bank) and the rumoured chance of a NASDAQ listing.

The company has however been caught out too many times with sloppy administration which has effected investor sentiment as Hoop and others have been saying and warning us about. We shouldn't ignore their warnings as this loss of faith in the company has seen the SP slump and all of us losing as a result. Some unrealised losses and some have "panicked", sold out and suffered realised losses.

I still have absolute faith in DIL and have been quietly accumulating/adding at recent SP levels but I sincerely hope that we will get no further damaging news from or about the company, whether historical or not. We need a good quarterly and either (or both) a dividend or NASDAQ listing announcement in the near future and I am sure the SP would skyrocket again.

Latest 'bad' news, played up by the media with comments from analyst who have never ever analysed the stock or recommend it as a sell or buy ever, have nothing to do with DIL but with Brian Henry - who was by then out of DIL in every way save as a shareholder.

So sentiment towards DIL is affected. So be it.

Says more about Brian Henry and FMA than it does DIL.

Brian Henry as he was very economical with his past, and FMA because it is on the prowl to make its presence felt.

Meanwhile, whatever happened with its investigation into the unauthorised raid by George Kerr/PGC on the cash in Perpetual Cash Trust?

[zigzag]

Software as a service, not software and people as a service.

They are more expensive than a normal SaaS for that reason (compare to XRO, Salesforce etc pricing). If you just offer software, it is weightless in that to supply more customers, all you need to do is rent more servers/bandwidth.

OK. I get a C- for written expression, but the message is still valid.

[baller18]

Good question

Generally yes. Most experts would say a culture thing that is often hard to change/improve

Doesn't say they are not good at doing things .....but general management practices could be seen to a bit suspect.

I am more concerned about their management, more than anything else...

Yes, the bad news and all doesn't changed the story of the business, but if problems from the accounting side have been a repetitive problem and have been developed into a culture at Dil, then their management really needs a kick up the back.

How management is run translates to how the business is run, might not affect it in the short hindsight, but in the long run, could have more than slight impacts. If this is the case, then all the people who have sold out because they are losing faith in the company, have valid points.

[Snoopy]

Having been a Diligent insider for a decade (out now), let me tell you why Diligent is destined to go beyond $20, and quite quickly.


Purely from a potential investor perspective, why did you leave?

SNOOPY

[baller18]

I think the culture, as such, has also overseen margin gains, client retention and explosive sales growth.
This is the same management who maintain a 97% client retention rate and who also won a major service award, a "Stevie", which suggests they know what they are doing.

Their ex CFO has moved on from the role. Clearly he accepted responsibility for past mistakes, or at least, for those which were solvable by him. There is a new CFO now, who is busy sorting out the issues as well as dealing with DILs impressive growth.

Thanks for the confirmation SPC, it was the only part I had a bit of concern with.

[baller18]

Hey guys,

Please tell me if this is correct, I am trying to workout the intrinsic value for Dil.

Earnings Per Share After 2 years = Current EPS X Rate of EPS Increase, assuming a 10 percent growth for EPS (this is realistic right?), therefore, 0.2 x (1.1 x 2) = 0.44.

Therefore EPS X Average PE ratio over the last 6 years which is around 30, would give an intrinsic value of $13.2.

Even if the average PE ration over the last 6 years was 20, we would still get an intrinsic value of $8.2.

Have I done my calculations right?

Apologies, I know this might be a bit off topic.

Once again, thanks heaps in advance!

[winner69]

I think the culture, as such, has also overseen margin gains, client retention and explosive sales growth.
This is the same management who maintain a 97% client retention rate and who also won a major service award, a "Stevie", which suggests they know what they are doing.

Their ex CFO has moved on from the role. Clearly he accepted responsibility for past mistakes, or at least, for those which were solvable by him. There is a new CFO now, who is busy sorting out the issues as well as dealing with DILs impressive growth.

Sparks - as I said before whatever the culture they have done all those things. I agree with you.

But the leadership team (head honchos) and the board do leave a lot to be desired when it comes to governance (real management). Culture maybe not so good at that level eh?

Ok let's blame the CFO. But what was his boss and the board doing to see things were being done properly? Same could be said for the other transactions hat have come under scrutiny.

Maybe some of old habits of Henry et al are still around?

All I know is that is very hard to change culture. Maybe the doing stuff side is ok but the governing side lets the side down. Baller asked a good guestion. My response was what it was and as such some risk factor has to be applied when assessing value.

[Xerof]

Fair call but (despite some of these revelations being quite recent) it's all rear view mirror stuff, on which plenty of corrective action is already in progress - new CFO, new auditors, board shuffle and focus on a bit more governance, etc etc

The BH issue is also historic, and reflects the fact the guy is entreprenurial, not bureaucratic in nature

time to move on, great buying at these levels, with stops below 5.40 IMO

[baller18]

Hey SPC,

Thanks heaps, how come you are using 11c and not the current 20cents for EPS?
Is it because you are taking into account of the current EPS, as one year out of the 5 year growth rate?

Thanks

[winner69]

eps at 13.57 seems a popular choice (DB and ASB etc)

See yahoo has 13 forecast at 10 ..... 2 analysts consensus

[zigzag]

Page 50 of the 2012 ann. report - check Redeemable Preferred Stock. There are 32,667,123 outstanding. You guys really need to get your heads around this, or it will come back and bite you in the bum. And not just in terms of your ratio calcs, but it also effects future dividends, buybacks, takeovers and control of the company. i.e. Spring Street and Carroll Capital virtually control this company.

[zigzag]

Fair call but (despite some of these revelations being quite recent) it's all rear view mirror stuff, on which plenty of corrective action is already in progress - new CFO, new auditors, board shuffle and focus on a bit more governance, etc etc

The BH issue is also historic, and reflects the fact the guy is entreprenurial, not bureaucratic in nature

time to move on, great buying at these levels, with stops below 5.40 IMO
Exactly! Well said Xerof.

[baller18]

If looking at the fully diluted IV SP at $7.29, then it wouldn't be a good buy at the current SP would it?

If going purely by intrinsic value..

[zigzag]

I think it's pretty well valued at the current price. With these high growth companies a lot comes down to confidence. I don't try and over-analyse, but prefer to acquaint myself with the basic facts, meet the people involved, and then make a judgement call.

[JohnnyTheHorse]

I'll throw in my projections...

For FY2012 I had a valuation of $6.20. This was based on a 5 year growth rate of 37% (this is not a pie in the sky figure, I have extrapolated revenues to determine this). For FY2013 I have a valuation of around $10. We are halfway towards that, so my current risk free valuation is $8.10. EPS has been calculated using 100 million shares, to average out options not yet used. The growth rate does not take into account a new product, which I imagine will significantly add to revenues in around 1 year. They are also sitting on around $50 million, so you could add an extra 50 cents per share to those values if you really wanted to.

So, the verdict? Currently undervalued!

Disc: DIL is one of my major holdings.

[goldfish]

Release the quarterly already!!! we so need some good news with this, theres been like five bits of bad news in a row. Good support at 630ish though i cant see it dropping past this in a hurry, famous last words maybe lol

[zigzag]

I'll throw in my projections...

For FY2012 I had a valuation of $6.20. This was based on a 5 year growth rate of 37% (this is not a pie in the sky figure, I have extrapolated revenues to determine this). For FY2013 I have a valuation of around $10. We are halfway towards that, so my current risk free valuation is $8.10. EPS has been calculated using 100 million shares, to average out options not yet used. The growth rate does not take into account a new product, which I imagine will significantly add to revenues in around 1 year. They are also sitting on around $50 million, so you could add an extra 50 cents per share to those values if you really wanted to.

So, the verdict? Currently undervalued!

Disc: DIL is one of my major holdings.

Try using 120 million shares if you want to be a bit more realistic. Also read the notice of meeting. There must be 150 pages of lawyers and accountants speak, I don't understand half of it, but I bet it wasn't cheap. By now they will have also used up tax losses, and I think US company tax is fairly steep. The Quarterly report will be the next trigger for any share price movement - hopefully upwards.

[Baddarcy]

The Quarterly report will be the next trigger for any share price movement - hopefully upwards.

Still a bit of a wait to go yet, the quote from the update on the 12th was " The Company is working to provide its Second
Quarter 2013 Update within the next thirty (30) days." which takes though to about the 12th of August.

[Baddarcy]

already been over this. latest they can report is the 9th (next Friday). if that's "a bit of a way to go" then I would hate to see what long term is!

That begins with a 'F' and ends in 'ages' !! :-)

[baller18]

lol...
If the quarterly results are excellent, I predict SP will go up by 20%.
Thoughts anyone???

[baller18]

44% from the moose!
Fingers crossed!!!

[Mobius]

Boardbooks "users" are those who have a login to use it. At ~58,000 now, Diligent has only scratched the surface, of easily obtainable business. What limits Diligent from expanding faster are technical things: implementing vast numbers of clients and training the users (almost every Boardbooks user gets a 1-on-1 training session of about 20 minutes duration), getting enough (well) qualified Account Managers and Support staff, ramping the hardware to support a rapidly growing user base, managing the software release deployment process across thousands of clients, managing the various code bases of the various platforms. Quality Assurance loads tend to expand exponentially as complexity and platform numbers increase. The number of ways a complex software product can misbehave can often exceed the number of atoms in the universe, or 10^80!

At one point, I knew every Boardbooks user on a first name basis, and I can easily see a day when Diligent announce their 500,000th user - but the road to that point is by no means crystal clear.

What IS crystal clear is directors' continual love affair with the product, inbound sales calls from companies wanting Boardbooks NOW, and the domino effect of deliriously happy directors spreading the word.

The company always KNEW the domino theory would apply to Boardbooks; once a critical mass of users was achieved, the outbound sales calls dwindled as an ever-increasing number of companies simply wanted to buy. The power of word of mouth is beyond compare, and the Apple iPad was the "Killer Device" for the "Killer App". Diligent would not be where it is today without the iPad.

The combination of powerful tablet and Boardbooks offline access (Sync and read/mark-up later, when not on the 'net) coupled with an Ipad app which essentially took the paper board package and replaced the paper with a screen, while retaining ALL the historical user actions such as margin scribbling, highlighting, page corner turning, sticky notes, and page indicators, means the difference between the iPad app and the physical board papers is almost nil. Except that 20,000 pages of Board papers weigh nothing, are more secure than paper, are updated instantly, and available anywhere, any time.

This is extremely compelling, and directors who see Boardbooks in action want it. End of story.

In my view the world is Diligent's to lose and it doesn't have to beat anyone to get there.

[baller18]

Well imagine the SP if it got to 500,00 users!!!

[baller18]

looks like our big trading fundie has been bought out at $6.39. I see some nice clear highway up ahead now...
U never know my man moosie, another big seller could come in anytime... lol

[baller18]

hahaha too funny!!!

[Snoopy]

Hey guys,

Please tell me if this is correct, I am trying to workout the intrinsic value for Dil.

Earnings Per Share After 2 years = Current EPS X Rate of EPS Increase, assuming a 10 percent growth for EPS (this is realistic right?), therefore, 0.2 x (1.1 x 2) = 0.44.


Yes your 10% growth rate in earnings per year would be at the conservative end of reasonable
But, no your calculation is not correct.

A 10% increase in eps over two years is calculated as follows:

0.2 x 1.1 x 1.1 = 24.2c



Therefore EPS X Average PE ratio over the last 6 years which is around 30, would give an intrinsic value of $13.2.

Even if the average PE ratio over the last 6 years was 20, we would still get an intrinsic value of $8.2.

Have I done my calculations right?


You are looking two years out into the future and basing your share price expectation on that? If so then I think your analysis is reasonable. However you have used incorrect earnings estimates as per your model.

EPS x 30 gives intrinsic value of $7.26

Or using a PE of 20

24.2 x 20 = $4.84

A PE of 30 implies quite a high growth rate. But given the point Boardbooks is in the product cycle, it could perhaps be justified. What you will have to put into the equation at some point is multiple deflation. At some point the PE will shrink from 30, probably to something like 15. The bullish will say you don't need to do that because new products will keep fueling growth. However, since at this point there are no follow up products and it is extremely unlikely they will be profitable out of the box (look how long Boardbooks took to make a profit) I would suggest caution when laying down what you think the future earnings base figure should be.

baller, I think your back of the envelope value calculation method is reasonable. But what is shows is that DIL is very fully priced already, and as an investment you are unlikely to make much buying in at today's prices.

SNOOPY

[baller18]

Hey Snoopy,

Thanks, you are right its 24.2 cents if based on 10% growth but how come all the intrinsic value calculations have multiply the growth by 2? Such as, (2 X (subjective growth rate)+8) x 11c, then multiplied by 4.4, then divided by 6). Or the calculation method I provided as well.


Yup PE of 30 is quite high, so I worked the intrinsic value of P/E at 20 as well.
Thanks heaps!!!

[Mista_Trix]

Thanks for the equation discussion guys, this helps those of us that don't quite get how to figure this stuff out (but are keen to learn) with some hooks to hang the information off.

[winner69]

Hey Snoopy,

Thanks, you are right its 24.2 cents if based on 10% growth but how come all the intrinsic value calculations have multiply the growth by 2? Such as, (2 X (subjective growth rate)+8) x 11c, then multiplied by 4.4, then divided by 6). Or the calculation method I provided as well.


Yup PE of 30 is quite high, so I worked the intrinsic value of P/E at 20 as well.
Thanks heaps!!!

That graham formula essentially saying that DIL should be trading at a pe of 108 before applying the risk factor (interest) to come back to 88. The earnings being current earnings

Baller - graham came up with 2 times growth after many years of observation and no doubt a lot of maths.

[baller18]

That graham formula essentially saying that DIL should be trading at a pe of 108 before applying the risk factor (interest) to come back to 88. The earnings being current earnings

Baller - graham came up with 2 times growth after many years of observation and no doubt a lot of maths.
So in snoopy's calculation of 24.2 cents do we multiply it by 2 from graham's formula right? If we multiply it by 2 doesn't it increase the growth from like 10percent to 200???

also if PE ratio is at 108 and 88 wouldn't it be not realistic...

[winner69]

Baller - try playing around with numbers and equations yourself to get a feel of what they mean.

Like sparks DIL I've calculation gave 871 ( based on eps of 11 and 50% growth)

Looking at this another way. The eps 11 at 50% over 5 years gives 84 cents. The 871 of sparks would mean a pe of just over 10. Oops doesn't sound right does it - bugger the 871 is the price today and not 5 years time isn't it. Maybe we have to est/calculate a price in 5 years an then discount back. Oh bugger I feel a dcf coming on to come up with a valuation.

But then again DIL might be so special that no realistic methodology can be used ....so my theory is let the market decide and hold as long as the price is trending up. The market will decide when enough is enough (maybe one of those blow off thingies of hoops)

Do you think it will ever get to 50 bucks sometime in the next few years?

[baller18]

Hey winner,

once again, thanks for your time, i will definitely do more calculations to get a better understanding and feel

50bux? Hmmm... If it gets to 500000 users? Lol

[winner69]

Tease!!!:)

No way

It only reflects this 50% growth rate that has been touted

If share price keeps pace with growth of 50% pa that's pretty close to 50 bucks in 5 years

Just keeping the euphoria going

[winner69]

Baller - now you thinking long term here's a question for you

As the US. market is now in the third, mature, late-stage, overvalued, overbought, overbullish, Fed-enabled equity bubble in just over a decade (Words of Hussman) and will likely to see a 50% or more drop in the market what will you be doing when DIL starts heading to 3 bucks?

Sparks not allowed to comment because we know he will be averaging down

[winner69]

and what happens to you winner when you realise the US market wasn't overbought like everyone has been crying about for years and it continues on its merry way and you're stuck at the station while DIL steams north of $10? this is assuming you have no DIL stock right now of course...

My plan with DIL has already been stated ..... nobody knows what they worth so let the market decide and when the market decides enough is enough sell them using the stop loss criteria I posted a few weeks ago (the one I didn't follow when the share price collapsed 23% and hasn't recovered.

I doing very OK at the moment with DIL ... only the last lot I got is under water still (Just)

Nothing has changed in my approach ..... one day the markets will go down again and I want to keep as much as the gains as possible so I can start again from the bottom of the next cycle.

And I know not all shares go down when the market collapses ... maybe DIL is strong enough to withstand any collapse that may happen but invariably will be affected to some extent by market sentiment

[Mista_Trix]

... maybe DIL is strong enough to withstand any collapse that may happen but invariably will be affected to some extent by market sentiment

Which at the moment isnt sitting too pretty - what with all of the issues.
Lets just hope it all doesnt collapse before its properly recovered to the point that it sounds like most people bought in at, or beyond.

[winner69]

already noted before DIL marches to the beat of its own drum. erase the accounting issues and the company is almost a bellweathet (see how it and XRO performed during the last correction).

oh how quickly we forget history's lessons!

From May 1st the NZX seems to have outperformed DIL quite a bit .... marching to its own beat eh

And the recent correction was only that a correction .... one of many little ups and downs in the secular cycle ..... what would happen if we have a major correction

Be prepared in case ....lest "we forget history's lessons"

[winner69]

looks like an up day today

[Mista_Trix]

From May 1st the NZX seems to have outperformed DIL quite a bit .... marching to its own beat eh

And the recent correction was only that a correction .... one of many little ups and downs in the secular cycle ..... what would happen if we have a major correction

Be prepared in case ....lest "we forget history's lessons"

What's your cash ratio? Are you in 'prepare for the whack' mode yet?? :-S

[baller18]

Baller - now you thinking long term here's a question for you

As the US. market is now in the third, mature, late-stage, overvalued, overbought, overbullish, Fed-enabled equity bubble in just over a decade (Words of Hussman) and will likely to see a 50% or more drop in the market what will you be doing when DIL starts heading to 3 bucks?

Sparks not allowed to comment because we know he will be averaging down

Trying to lock in my gains like you said and definitely start from the bottom again, if fundamentals haven't changed and everyone's spooked by the markets, more buying opportunities. Once again, when to time our buy order and sell orders is the crucial part ill have to learn from.

[winner69]

What's your cash ratio? Are you in 'prepare for the whack' mode yet?? :-S

For the portion of my wealth allocated to equities it is about 90% invested at the moment .... sold 1/2 the DLX I had on weakness and not reinvested. No reason to sell others at the mo - I'll let the charts decide that if the 'whack' comes

[Jay]

Slightly off topic, but w69, you mentioned you use ATR as a stop. Do you use the same multiple all the time if so what or curve fit it based on previous price history

[goldfish]

I must say i am kind of surprised how bullish most seem to be with this stock. I know its a great company etc but that doesnt always mean its a great investment. Its just dropped a lot in the last few weeks over nothing that fundamentally affects it, it has still dropped though, i managed to time it right and bought in at 560 but if it drops to 600 again ill sell and look at getting back in when it stabilises again. I guess im just saying a bit of caution needs to be used with any stocks. Hope im wrong and we all get rich but the longer this quarterly report takes and it stays on its slow downward trend, the more nervous i get.

[winner69]

Jay usually 3 but if a fair bit off volatility use 4. A bit of back testing doesn't do any harm

Also break the rules (discretionary) by giving it a day or two and hope any break below the stop is a blip. Usually taking a long term view so don't want to do too much in and out stff. Over time been beneficial that approach.

Like any stop losses doesn't overcome the big drops after a halt for instance ....but often there has been a weakening leading up to that happening and bad news has been signalled by the market.

[winner69]

I must say i am kind of surprised how bullish most seem to be with this stock. I know its a great company etc but that doesnt always mean its a great investment. Its just dropped a lot in the last few weeks over nothing that fundamentally affects it, it has still dropped though, i managed to time it right and bought in at 560 but if it drops to 600 again ill sell and look at getting back in when it stabilises again. I guess im just saying a bit of caution needs to be used with any stocks. Hope im wrong and we all get rich but the longer this quarterly report takes and it stays on its slow downward trend, the more nervous i get.

Agree ... The market is trying to tell us something eh

How stupid the market is only time will tell

[CJ]

https://nzx.com/companies/DIL/announcements/239122

Wow....Its a Prime Brokerage account so they are holding as Nominee for others. I wonder if they are recommending to their clients (ie. lots of rich people) or if it is just on behalf or one or two hedge funds?

http://www.jpmorgan.com/pages/jpmorgan/investbk/solutions/fixedincome/primebrokerage

[CJ]

Nothing like playing with other peoples money eh? Not necessarily. I use ASB Nominee account as they require it for security over Margin Lending. I make all the decisions.

Likewise Hedge funds use the Prime Brokerage accounts (from what I quickly read) so be able to go long or short easily.

[MAC]

Wow yes, very much so. It would be fascinating to know what their entry spread was like.

I could well imagine that JP Morgan would be a supporter of a NASDAQ listing also.

[RTM]

Appendix A if I am reading it correctly gives some idea of slightly more than 1/2 the purchase.
$17,906,940.23
2,435,819
$7.351506918 per share.
Can anyone confirm this is correct ?

[baller18]

Makes me feel better knowing I bought it cheaper than the big dogs

[MAC]

Baller, you may wish to take further confidence that a major player like JP Morgan have just now completed a 5% accumulation, suggesting that they have recognised value in DIL, are holding, and have not sold into recent noise driven SP weakness.

[Toasty]

Moosie moosie moosie, please relax. Assume cross legged position, place hands together, close your eyes, and chant over and over the traditional Buddhist financial prayer "tay kova komin".

breathe as well. Very important to breathe.

I totally agree with the breathing thing. I have been doing it for 46 years and so far no sign of death. My plan is to live forever and so far its going well.

[zigzag]

Christ, thank you so much Sparky, I have been holding it for nearly a month now!

Woo-Zaa :)

Just what have you been holding Moosie?

[baller18]

Who thinks the quarterly will be released tomorrow or fri?

[CJ]

I would give them maximum allowable (e.g. next Friday, August 9th)My guess is they would have scheduled a Board Meeting at the last possible date well in advance to give everyone as much time as possible.

[Toasty]

They are probably having trouble getting the board papers together....

[CJ]

They are probably having trouble getting the board papers together....It really is a hassle having to print them all out, compile them and courier them to each director, especially when they are based in different countries! ;)

[Cricketfan]

They are probably having trouble getting the board papers together....

Yes too bad they are too big to use their own software...

[Mobius]

Just to remove confusion: the Diligent board use Boardbooks.

[Beetle]

I am a little confused as to why the market hasn't reacted favorably to the news of JP Morgan's holdings.. Would have thought the SP would have been bolstered by this piece of news.

[Mista_Trix]

I am a little confused as to why the market hasn't reacted favorably to the news of JP Morgan's holdings.. Would have thought the SP would have been bolstered by this piece of news.

Stocks are down waiting for the Fed to signal whether the run can continue or if its game over for the time being.

[Lorne Ranger]

Stocks are down waiting for the Fed to signal whether the run can continue or if its game over for the time being.

I wonder given its current state, whether the DIL SP could manage a boost with good QR news, even if the Fed does signal a wind down for QE.

[Balance]

Stocks are down waiting for the Fed to signal whether the run can continue or if its game over for the time being.

Switch into cyclical stocks in US underway.

That's what a wind down by the Fed mean.

Like sailing a yacht, you have to change tack when the wind shifts - simple.

DIL is in its own space really - agree with STC.

[Rastas]

Ouch... down to $6.15 now. A positive news announcement would be a great thing right about now! Waiting is obviously not my forte.

[baller18]

Support at 6.15 now...

[robbo24]

Ouch... down to $6.15 now. A positive news announcement would be a great thing right about now! Waiting is obviously not my forte.

Chill out man... Look at the volumes of the trades that bring down the SP... Proportionally insignificant. Look at the 2 year chart, the SP jumps up on big volumes and drops on small volumes...

Just wait and see what happens.

[Baddarcy]

Chill out man... Look at the volumes of the trades that bring down the SP... Proportionally insignificant. Look at the 2 year chart, the SP jumps up on big volumes and drops on small volumes...

Just wait and see what happens.

Why be calm... when we can PANIC arrrrgggghhhh :scared:.... sorry just to be clear, why am I panicing, as far as I know nothing has changed????? :cool:

[robbo24]

why be calm... When we can panic arrrrgggghhhh :scared:.... Sorry just to be clear, why am i panicing, as far as i know nothing has changed????? :cool:

because 2269 shares sold at $6.15. Contact the fma.

[Baddarcy]

because 2269 shares sold at $6.15. Contact the fma.

Good call... I will !! As soon as I can stop PANICING.... 2269 shares arrrrrrgggghhhhhh

Sorry its been a bit slow the last couple of days, have to resort to amusing myself.

[JohnnyTheHorse]

It's just Brian Henry up to his old tricks I suspect. Leopards never change their spots.

[Baddarcy]

hmm just noticed this advertised on LinkedIn, I wonder what they are planning on marketing to their existing customers........
-----------
Company Updates
Diligent Board Member Services

Diligent Board Member Services is hiring: Database & Direct Marketing Manager in Greater New York City Area
-----------

[JohnnyTheHorse]

Nothing new in the article, but this is still a good read: http://realbusiness.co.uk/article/22483-charlie-horrell

[Toasty]

Bingo! thanks for that baddarcy.

glad I spent the day driving to wellington, that is a boring day on the market! driving tomorrow as well, so will probably be even more boring as XRO shareholders throng wellington streets celebrating their customer numbers while DIL is forgotten.

I'll be out thronging and celebrating but every so often I will think about DIL and look sad, but only as proportional as my DIL vs XRO holdings.

[False Profit]

I bought into XRO and sold out nicely. Now have a heap of Dil which I add to more frequently than, perhaps, I should...

Might be persuaded to get back into XRO after the AGM. 120+% growth in a year is nothing to be sniffed at.

[baller18]

I bought into XRO and sold out nicely. Now have a heap of Dil which I add to more frequently than, perhaps, I should...

Might be persuaded to get back into XRO after the AGM. 120+% growth in a year is nothing to be sniffed at.
Could make another quick 5-6% intra-day profit from XRO...

[CJ]

There are a few people concerned about DIL having to restate its revenues.

To add a bit of perspective:

http://www.bloomberg.com/news/2013-07-31/ibm-says-sec-investigating-its-cloud-computing-revenue-figures.html

Even Big Blue struggles with it. To quote the article:


“This is a murky area where the rules aren’t really established,” Cusumano said [Professor at MIT]. “Companies treat cloud-computing revenue in different ways.”

About half of publicly traded software companies since 1990 have had to restate revenue because of misclassification of sales and product returns, or because they categorized ongoing payments for tech-support services as a sale of a product license, Cusumano said.

[MAC]

Thank you CJ, that does provide an insightful perspective.

[RTM]

605 101,000 12:46 SP
Above from Direct Broking site....seems to be a reasonable volume @ 605c....what the SP signifies I am not sure.
But a little concerning.


Chill out man... Look at the volumes of the trades that bring down the SP... Proportionally insignificant. Look at the 2 year chart, the SP jumps up on big volumes and drops on small volumes...

Just wait and see what happens.

[baller18]

605 101,000 12:46 SP
Above from Direct Broking site....seems to be a reasonable volume @ 605c....what the SP signifies I am not sure.
But a little concerning.

Dil has definitely been on the decline for the past month...
The only thing I can relate to is the market reacting to the account issue, but what is the market telling us???
It should correct itself sooner or later, however, it has been declining

[baller18]

hmmm.. will dil go below $6 again???

[baller18]

If you are buying, then encourage it! Put your order in at $5.95 and see what happens....
Definitely in the process, however, it looks like it could drop a tap bit lower before the quarterly, it has been doing it everyday...
Have you been accumulating sparky?

[RTM]

Hopefully they are cheap at 606 or so !

[RTM]

Don't frighten me Moosie......I've seen what happens when you snakk on something !
Have a good weekend.

after Friday next week it will seem very cheap ;)

[hilskin]

LOL I hope you're right on this one moosie. I finally climbed aboard this puppy this week and will be watching with interest.

[goldfish]

I was going to sell at 600 but think i will wait for the quarterly due this week. This slow downward trend on tiny amounts traded is annoying though.

[MAC]

It may be that the market (traders) would like to see a healthy SP close at primary support before going higher. I'm in DIL for the long term so don't particularly mind. Having picked up a parcel at 5.50 a couple of weeks ago I would welcome another opportunity later in the week.

4677

[baller18]

I was going to sell at 600 but think i will wait for the quarterly due this week. This slow downward trend on tiny amounts traded is annoying though.
Patience goldfish, i bought in at a much higher price than the current SP.

[JohnnyTheHorse]

I was going to sell at 600 but think i will wait for the quarterly due this week. This slow downward trend on tiny amounts traded is annoying though.

Well I suspect it it will either bounce off $6 (as people like nice round numbers like that!) or the 200dma slightly below that. It is currently very oversold and in a short term downtrend (downtrend resistance at around $6.30). I will be watching those points very closely, with the idea to load up with some more.

[goldfish]

I got in at 565 i was going to sell at 650 but wanted to see what quarterly said, im in it for short term so my strategy is different from yours. I should have sold at 650 then got back in now good old hindsight eh.

[goldfish]

Selling down on extremely low volume is quite silly. The only ones selling right now are those who bought at $6 or below on that off-chance. Buyers are in control price wise, don't pander to
Indeed thats one of the reasons why i have changed my mind about selling atm.

[RTM]

Never knew moose could see into the future ! Hope your right Moosie.

[Rastas]

I'm an all seeing, all dancing Moose with big hypno eyes that see all.

Everything stacks up for me, I'm just waiting patiently for them to release the hounds!

Nothing wrong with being an optimist! Here's hoping :)

[Dej]

ah, the usual shedding of buyers right before release time. except those $5.xx buyers have a real chance of picking up some real cheap shares this time round. nostalgia!

Going to try pick up some more at these levels moosie? I may have a nibble, anything below $6 is my buy point.

[goldfish]

Buyers thin now, getting more nervous every day. Hope it hangs in there.

[tosspot]

My gut feeling tells me quarterly will come today and it will be mostly business as usual. YOY growth rate between 65-80% and share price will end between 6.40-6.50

[Balance]

My gut feeling tells me quarterly will come today and it will be mostly business as usual. YOY growth rate between 65-80% and share price will end between 6.40-6.50

DIL must have a definitive answer by the quarterly release to its accounting issues - otherwise, it is lights out as far as some of the fund managers*are concerned. They do not like to be in a stock tainted by accounting (and legal) issues.

The delay since June of resolving the issue and Chairman's evasive comments at the AGM are major negatives as far as some investors are concerned.



Taken too long to sort out what are accounting issues - cannot be that complicated unless DIL's legal documentation and agreement with clients contradict revenue recognition - eg. Cash belongs to customers only after service completely provided.

Let's see what happens.

[RTM]

Agree its taken to long to sort out the accounting issues. Take a look also at Mobius's posts...2164 & 2122.

In particular from 2122

"What limits Diligent from expanding faster are technical things: implementing vast numbers of clients and training the users (almost every Boardbooks user gets a 1-on-1 training session of about 20 minutes duration), getting enough (well) qualified Account Managers and Support staff, ramping the hardware to support a rapidly growing user base, managing the software release deployment process across thousands of clients, managing the various code bases of the various platforms. Quality Assurance loads tend to expand exponentially as complexity and platform numbers increase. The number of ways a complex software product can misbehave can often exceed the number of atoms in the universe, or 10^80! "

Yes....it sounds like a great product. But if there is a company culture of sloppiness as seen by the financial issues, and if this translates to their product and control of code and versions and platforms etc etc then they could well have a tiger by the tail which is going to make it hard to sustain significant growth. Its a hell of a lot easier with a finite number of customer who you know personally.

Yes,,,I have a few of these.

[nextbigthing]

Just reading through the interesting stuff from pages 143 on about intrinsic value calculations etc.

Given current eps of approx 10 cents and a share price of approx $6 for arguments sake, the return is terrible, 1.67%. So obviously anticipated growth is factored into the shareprice, as per the valuations. And this expected growth is what majorly effects the shareprice.

But how do you calculate these growth rates? Figures anywhere from 10% to 80% etc are being mentioned which are wildly different reflecting peoples different opinions.

Obviously no one can be 100% sure as to the exact growth but with it being so vital to the price, it would be nice to know how people are determining the expected growth rate!

Cheers

Nextbigthing

[MAC]

Looks like any other product cycle plot to me. Would be nice to overlay a second product but DIL seem totally determined to keep their investors in the dark on timing and details.

4681

DISC: Still supportive, patient ,..... and holding

[nextbigthing]

Read the new announcement, gives new client numbers

Hey Moosie,

I was writing that post while that announcement came out and hence hadn't seen it.

But the question I'm asking is what techniques are people using to anticipate future growth. Eg if you were trying to estimate growth prior to this announcement to use in calculations!

Cheers

NBT

[newtrader]

Read the new announcement, gives new client numbers


During the second quarter of 2013, Diligent signed a total of 173 net new
client agreements, as compared to 216 net new client agreements in the second
quarter of 2012.

Growth of new clients are slowing down?

It would be nice if someone had some better numbers available.

[baller18]

Damn, down to 5.85, looks like we might see $5.5... Killing me...

[baller18]

No problem. Sorry, just a little exasperated, was expecting relief this week, but alas, the market giveth and the market taketh away!

Seems the market doesn't like it, as usual, even though it has been restated for the FOURTH time that overall revenue is NOT affected.

Now seeing a double bottom formation happening in the $5.45 range.

I think the market might be more concerned with growth?
Really mis-timed my buys...

[robbo24]

Damn, down to 5.85, looks like we might see $5.5... Killing me...

DIL still have their 97% retention rate... Good clients, good reputation, growth isn't that damn bad.

You might get a nice chance to top up some, baller18.

[baller18]

next buyer at $5.60....

[Baddarcy]

No problem. Sorry, just a little exasperated, was expecting relief this week, but alas, the market giveth and the market taketh away!

Seems the market doesn't like it, as usual, even though it has been restated for the FOURTH time that overall revenue is NOT affected.

Now seeing a double bottom formation happening in the $5.45 range.

Suspect the main issue is the below line,

"New sales in non-U.S. markets continue to be strong while we have experienced slower new sales growth in the U.S. for the second quarter."

Thou continuation of the uncertainty around revenue won't be helping, even thou as you say Moosie, it doesn't make a blind bit of difference to anything. Thou it is starting to sound a little Enronish to me, isn't that they they did counted all revenue from a contract at day 1 even if the contract ran for 25 years.....(just to be clear....im teasing !!)

[baller18]

Yet FSF goes up with bad news lol...

[MAC]

I'm with you Robbo, it would be a challenge to count the number of NZ50 companies with consistent growth rates like DIL on one hand. SUM, ATM, etc.

The fundamentals for DIL have not changed, as painful as these delays in reporting are, the profitability and future of the company remains sound and intact.

I don't agree with the view of some that a few stuff up's on the part of a few accountants demonstrates generally poor management or is indicative of technology performance.

As CJ pointed out in an earlier post it is actually very common for SAAS companies to wrangle with the timing and appropriation of specific revenues. It seems to be an industry wide issue not necessarily just a DIL issue.

[baller18]

Yup, aint going to panic... Been through too many announcments which has dipped the SP down, whats one more going to change...

[baller18]

Wonder how long the quarterly will be delayed till now?

[robbo24]

The numbers still reflect a strong investment in my view.

Client growth for the first half of 2012 was 421
Client growth for the first half of 2013 was 374

A decrease in new client growth of just over 10% compared with the same time last year.

But what I ask is: What is the net profit per client?

I would fathom a guess that economies of scale predicts that as client numbers increase the value of each client increases in terms of profit. Perhaps higher than just over 10%, who knows.

Based on this assumption, revenue controversy aside, I am of the view that the numbers are actually pretty good.

[baller18]

a 10% decrease in new clients doesn't really count as sales stalling...

[robbo24]

Their pile of cash is still there, still growing and it seems the cost to date of the revenue controversy has been identified in the announcement today too:

Diligent continued to demonstrate balance sheet strength during the second
quarter. Diligent's cash balance increased by $US 2.5 million in the second
quarter of 2013, resulting in total cash balances of $US 39.0 million as of
June 30, 2013, after payment of U.S. 2013 estimated quarterly income taxes of
$US 1.8 million and final costs relating to the Special Committee process and
related remediation activities of over $US 1.0 million.

[MAC]

Prospective HY13 NPAT growth of let’s say 75%, with an SP of $5.50, on a diluted capital base of 124M shares, provides a diluted PE of 55 and a PEG of 0.75.

Fair value in itself, even without consideration to the prospect of a new product roll out with an existing sales force and direct exposure to 2200 x 10 = 22,000 company directors let’s say.

[MAC]

Crumbs Belgarion, ....... that’s more bearish than the view from an Eskimo's front porch;

4682

[robbo24]

... TA looks bad.

Belg is just preparing a post to quantify this comment, surely...

[RTM]

Hey Moosie....I need to reassess my portfolio.....can you let me know what you have so I can avoid those stocks please ? Thanks, RTM.:D

[baller18]

lol - yes buy SNK that the moose is out!

[RTM]

So no HNZ ! Phew...didn't want to have to sell those.
All the best.

[Dej]

DIL and NTL. Avoid both like the plague, and buy SNK now that I'm out!
Im in NTL still moosie, long time now, still got my support :-P

[GRIFFIN]

Jeepers looks very thin on the bid side.

[MAC]

Have any other long term shareholders firm views in regard to DIL returning some or most of the US$39M in retained earnings ?

It is our cash after all !

I calculate a special dividend of, let’s not be greedy, say US$30M to be worth;

= 30,000,000 / 0.78 forex / 83,776,155 shares on issue = NZ$0.46 cents per share

It would seem that loyalty as a shareholder is worth more than ever at times when the company is asking us to be more patient than ever;

How many of you say ‘YES’ to a special dividend upon HY13 results announcement ?

[robbo24]

Jeepers looks very thin on the bid side.

American investors might wake up, log in and take advantage of the slightly weaker NZ dollar to get on the DIL action.

[CJ]

How many of you say ‘YES’ to a special dividend upon HY13 results announcement ?I would be interested to know if they could do this tax efficiently.

For US shareholders, it would be taxable income and I dont think they have imputation so would be double taxed.
For NZ shareholders applying FDR, it would be exempt income (?) but you wouldn't get a credit for the tax withholding (?)
For NZ shareholders not applying FDR, it would be taxable income with no imputation credits so would be double taxed. Foreign withholding tax credits would all be non claimable for some people making it even worse.

An on-market buy back, especially at a time like now when there is a (hopefully short term) share price slump on the other hand would be a good idea.

[MAC]

I think possibly you misunderstand me. I’m not suggesting that a special dividend and future growth are mutually exclusive. I absolutely support DIL growing and pursuing further products and opportunities.

I am though suggesting there is amply allowance for both a special dividend and for growth, or for a share buyback as CJ suggests. Cash retention on the DIL balance sheet has risen to very high levels indeed.

As we understand, DIL have increased development staff over the last year suggesting a second product is already well underway, yet the cash mountain still grows on the balance sheet.

DIL already have an enormous global sales force in place, along with good training staff and good technical support staff also, yet new sales of the existing product are dropping off.

I’m not suggesting they will all become idle, but that a second product delivery should not require much, if anything, in the way of additional cash in this area either.

[MAC]

It's not common for a board to solicit a takeover, they normally oppose. When I look I don't see any shareholders of a significant stake positioning for a challenge, the larger holders are 10% or so.

DIL could consider an acquisition, but honestly with all that proven innovation in house to draw on, I'd rather we saw efficient internal product development and a cash dividend or a buyback.

Not sure what you mean by achieving cash normalisation, cashflow's are steady, little volatility.

[Balance]

It's not common for a board to solicit a takeover, they normally oppose. When I look I don't see any shareholders of a significant stake positioning for a challenge, the larger holders are 10% or so.

DIL could consider an acquisition, but honestly with all that proven innovation in house to draw on, I'd rather we saw efficient internal product development and a cash dividend or a buyback.

Not sure what you mean by achieving cash normalisation, cashflow's are steady, little volatility.

What I am picking up from a broker :

Market concerned about cash generated being less than US$5m. Expected more.

[Balance]

I'm guessing that is in regards to new sales? How can they state that when they have given us no new revenue figures in the first place?

Guess the market wants the board to start telling us about this new product!

Moose-me-ole-mate - there are a couple of analysts covering the stock and I suspect they are looking at the cash generation and wondering why the cash is lower than what they were projecting?

[baller18]

Moose-me-ole-mate - there are a couple of analysts covering the stock and I suspect they are looking at the cash generation and wondering why the cash is lower than what they were projecting?
Hey balance, how do they know when DIL haven't released the quarterly yet?
Is it based on their projections?
Thanks

[Balance]

Hey balance, how do they know when DIL haven't released the quarterly yet?
Is it based on their projections?
Thanks

Based on their projections.

Thing is that DIL could have spent more on R&D and product development in the last quarter - but no infor at this stage.

Market hate uncertainties - first rule of understanding markets!

[baller18]

Why is there no input from sharetrader members who went to the AGM meeting? They were all giving in their thoughts before and during the AGM... Where's all the love for DIL gone? Hmmmm

[CJ]

Increased R&D costs plus all the advisor fees to sort out the stock options and accounting issues would have an impact on cash flow, as would the taxes mentioned in the release.

Not enough info to fill in to their spreadsheets so the analysts are playing it safe.

[Blendy]

I was at the meeting, and follow this thread every day. I have nothing of value to add at the moment, so just happy lurking and enjoying reading the commentary. I am still in for the long term.

[baller18]

If worse comes to worse, the quarterly does not meet our expectations, wonder where would he SP be heading to then??? Then it'll pick up again with the new product...

[Balance]

Quite a few did voice concerns on here. In hindsight (which is always 20/20), perhaps they should have been heeded?

I remember someone mentioned to me that the Chairman was evasive on accounting issues.

[winner69]

Moosie - last 5 qtrs cash flows exc the financing bit ( ie operating less investment) have been 3.3m 5.1m 5.3m 6.5m and 3.1m (mar12 to mar13)

Only 2.5m this quarter ..... Even without doing a chart I can see a trend here and it is not all that good ... Like all the way up and now heading down.

No wonder analysts getting a bit worried eh

Market been saying something for a while ...maybe the market is not as stupid as you make it

Shut my eyes and have pretended this has not happened as stop loss was breached earlier today ...maybe tomorrow is a different day else will bank all the profits and move on to something else

[MAC]

Very little commitment though in the 6% drop today, very low volume on 220k shares turned over, I would not be surprised to see it come back somewhat at the close and tomorrow.

[Jay]

Yes it is a long way back to $8 from here
I wish they would you hurry and up release the info then we can see where they are

Long term portfolio still showing close to 100% gain, short term one well hmmmm...

But it at least in part every time theyt mention the same issue the price drops again.

[Xerof]

the Chairman was evasive on accounting issues.

Yes, body language displayed at an AGM says more than the Chair's published address.


Shut my eyes and have pretended this has not happened

200 day moving average broken today, but wait for close to confirm. This just adds another reinforcement to the broken uptrend I mentioned a while ago, up at ~7.60ish (Broken uptrend is a glass half full way of saying downtrend)

Someone also mentioned Morgans SSH notice recently as well, and wondered why that wasn't a positive for the stock. Prime Brokers often 'borrow' stock, slap a HFT BOT onto it and sell it - very hard to beat Alogo's, they are written by the masters of the universe - not accusing in this particular case, just sayin.....

[lastmoa]

Increased R&D costs plus all the advisor fees to sort out the stock options and accounting issues would have an impact on cash flow, as would the taxes mentioned in the release.

Not enough info to fill in to their spreadsheets so the analysts are playing it safe.

All in all, I find the report positive enough. There is an increase spend on R&D for which have not got any news release from. Seems a down-down for all tech stocks, such is the volatility in this arena. DIL shaking out some players - not high vols though so not a biggy.
All in all, patience should be rewarded in near(ish) term.

[JohnnyTheHorse]

There are going to be some pretty big accounting and lawyer fees coming up I suspect. In my view management should show some accountability and should not be claiming any bonuses this year, just so that shareholders aren't the ones left suffering.

[CJ]

All in all, I find the report positive enough.Agree ... but there is still a lot of uncertainty so no surprise the price didn't bounce up.

[winner69]

A comment under an article in the NBR .... is this just an overpriced PDF reader

Maybe the market has been seduced/sucked in by the hype which is essentially that?

[Lorne Ranger]

A comment under an article in the NBR .... is this just an overpriced PDF reader

Maybe the market has been seduced/sucked in by the hype which is essentially that?

Given the retention rate and the quality of companies using the product, you would have to be aggressively cynical to come to that conclusion. Kicking a company when it's down seems disingenuous.

I hold DIL, and XRO, and Im sure im not alone in detecting an air of uncertainty when its uncertain that there is any! Exactly WHEN revenues are capitalised doesnt seem a big deal to me, given the revenue is unchanged. BH doesnt seem to have done much wrong, and what he did was years ago. DIL board know they have to get the next QR figures correct so dont rush them out til theyre ready, as is their right. As with XRO the NZX market just seems to consider tech stocks in general as too good to be true, while overseas markets seem more comfortable with tech stocks, and this is reflected in their SP. Some of the comments on this forum seem to be willing DIL (and XRO) to fail, it's bizarre.

So "the market hates uncertainty", I can't argue with that given the reduction in SP in recent days and weeks. But I have been surprised with the ferocity that some analysts seem to attack companies that objectively seem to have more going for them than what seem minor issues, and probably in other stocks would not have created more than a day of wobbling and providing some short term profit for lucky traders.

Still learning I guess, as if that ever stops. Tech stocks seem a greater lesson in group psychology than in business sense sometimes.

[CJ]

A comment under an article in the NBR .... is this just an overpriced PDF reader

Maybe the market has been seduced/sucked in by the hype which is essentially that?PDF's have been around for 20 years and been an open standard for over 5. If it was that simple, people would be using that already. A combo of pdf and Box maybe, but not just pdf ;)

[winner69]

PDF's have been around for 20 years and been an open standard for over 5. If it was that simple, people would be using that already. A combo of pdf and Box maybe, but not just pdf ;)

Councils through the country seem to arming their councillors with ipads to cut down on paper use .... and to make meetings more efficient.

Seems to ba na ideal market for Boardbooks .... efficiency and security and all that good stuff.

The Wellington City Council have started doing something recently. The Porirua people started last year. From what I have heard about the Porirua way is that the councillors use their ipads and just access documents through a dedicated portal ... no mention of any special software.

Wellington Councillors with ipads at an council meeting ... that would stretch the talents of John Morrison ... what a thought

[zigzag]

There are going to be some pretty big accounting and lawyer fees coming up I suspect. In my view management should show some accountability and should not be claiming any bonuses this year, just so that shareholders aren't the ones left suffering.

The latest release puts the cost at over one million so far!

[ddrone]

Do we have a precedent (dangerous question..) for how the market takes restatements that are positive for the current period?

As they have insisted multiple times the audit and restatement will "not affect the total revenues ultimately earned or to be earned", in order words the picture hasn't changed, just the timing of it's presentation.

I could be way off track but from that I deduce, each periods earnings will be increased by the reduction in the prior period. In effect this means that (for arguments sake) if Q1 was $15mil but this was overstated by 5% this 5% gets deferred to Q2 (or later depending on the change in recognition). So, assuming we had a positive Q2 this will be increased further by the deferred from Q1 (or in fact even earlier if the deferral is larger). The net effect being that Q2-13 may "look" substantially better to the market when compared with Q2-12 even though there is no "real" change.

It becomes pretty obvious that for the sake of comparatives this is why prior periods must be re-stated but it means to some extent we lose a like-for-like comparison in the market as prior reactions weren't to "real" numbers.

Assuming the Q2 is positive and substantially different, how much reliance can we put on the markets intelligently understanding this positive result as being only partly attributable to actual revenue (the rest being wrapped in recognition changes)? The way I see it, if the market is ill-informed and breathes a big sigh of relief and barks with excitement we may have a somewhat unfounded rise in the share price. Of course the same question applies to what happens where the results appear worse than they actually are..

[ddrone]

Bingo. Hence why we need to be patient and wait.

So you're implying the market is uneducated then? Given what's been disclosed an educated market would have very little reaction.

[Mista_Trix]

Having been the president of a staff association presiding over 250 members, I can see why this stuff would be useful. We were forever taking member submissions, that would require voting, that would require reading before hand, that would then require action points, appropriately minuited, raised, seconded then passed. Myself (president), the Vice president and the Secretary had a hell of a time figuring out exactly what we were doing and what the outcomes were, especially on busy days where you were dealing with issues from multiple portfolios (arms; remuneration, staffing, disputes, moral, engagmenet, climate etc).

It would often be a messy, 'so have enough people actually read this so we can pass it' ... 'which one were we meant to be reading?'. And we were only a committee with a couple of hundred thousand dollars and 200 members. I can only imagine the pain of a multiarmed and facited thousands of staff strong organisation.

This type of this would have been sooooooo helpful.
That is all :-S

[Lorne Ranger]

So you're implying the market is uneducated then? Given what's been disclosed an educated market would have very little reaction.

I would suggest that the reality and certainty of a real QR, and a new product to boot, might help put some of the seemingly less important detritus into perspective.

But who knows, maybe the Vice chairmans PA will be caught with a gigolo and a coldsore and the whole tumble will start over.

[iceman]

Have any other long term shareholders firm views in regard to DIL returning some or most of the US$39M in retained earnings ?

It is our cash after all !

I calculate a special dividend of, let’s not be greedy, say US$30M to be worth;

= 30,000,000 / 0.78 forex / 83,776,155 shares on issue = NZ$0.46 cents per share

It would seem that loyalty as a shareholder is worth more than ever at times when the company is asking us to be more patient than ever;

How many of you say ‘YES’ to a special dividend upon HY13 results announcement ?

Thanks for your many recent and good posts MAC. Like you I am a long term shareholder in DIL. I did some profit taking (40% of holding) about 2 months ago but have been adding again in last 3 weeks so DIL is now my biggest holding. My average buy price on current holding is $ 5.91 .

The ongoing situation is very disappointing as it brings great uncertainty and has been allowed to drag on for too long. As Mobius pointed out in one of his posts, internal controls have possibly been restrictive on even faster growth and obviously the Company´s accounting and management has been left wanting dealing with this fast pace of growth as well. They now have to show us they can fix it and not let this happen again.

I am not concerned about the huge growth slowing a little. It is more important that internal controls keep up with the growth to ensure that growth is sutainable and more importantly, that our very pleasing retention rate is maintained. I don´t want to see growth resulting in a lower retention rate and dissatisfied customers.
Our cash on hand is also increasing fast, even with the extra costs related to this latest hiccup. Another product, when introduced, will be a game changer.

We can not overlook the fact that DIL has 3,075 Boards, 64,000 users, 294 Fortune 1000 companies, 530 NYSE listed companies, 39% of the FTSE companies and 35% of the ASX listed companies as happy customers.

So I remain a patient (albeit somewhat disappointed in the short term) investor with a very positive view on DIL´s future.

I also agree with you that DIL could and should reward us loyal shareholders with either tax efficient dividends, or more likely a buy back of shares. Now is the time to do that with SP at current level and would be a vote of confidence and faith in the Company from the Board itself.
So I am in the ¨YES¨ camp.

[nextbigthing]

There seems to be a lot of talk on the thread about a new product. Has the company made some sort of hint previously or are people just reading between the lines with the hiring of extra development staff or something else?

[modandm]

think some posters are missing the wood from the trees on this one. The accounting issue is a worry yes, but growth is slowing too. With the penetration DIL has in the US the rapid growth phase is over. Rolling out globally will be much more difficult.

Tech is a bit of a new thing for most NZ punters - but from looking at the US you quickly see how volatile the sector is and how should the market start to sniff growth slowing, or competition/substitution/pricing pressure emerging stocks quickly derate down to bargain basement multiples.

*disc have watched XRO, DIL going up, and stayed on the sidelines - sticking to what I know and can evaluate

[nextbigthing]

Moosie - thanks will look into it.

Modandm - my opinion exactly. The price is based on growth and this will be hard to sustain at those levels. A new product could be a different story.

[Balance]

FirstNZ have a $6.70 forecast for DIL with a rerating due whwn the accounts are restated. even if those sideliners don't believe our statements on here, at least believe a trusted finance house! glad my average buy matches up with it at a minimum ;)

Not sure about FNZC being a trusted finance house but they certainly have covered the stock very well - all the way from 20 cents to current levels.

So they do have credibility on their side.

[Whipmoney]

The chairman explicitly spoke of a new product at the AGM.

NOTE: likely to be a version of the boardbooks that expands down the company food chain providing the ability to amend and publish data , rather than an all new piece of software focused on a vertical market eg health or real estate.


Could it be a Boardbooks 'Lite' that is both cheaper and more suited to the not-for-profit and medium/large business markets (as opposed to corporates/listed companies) or alternatively, a software suite aimed both management and executive directors? I imagine that latter would be attractive to holders as there are literally hundreds of thousands of companies out that there DIL could potentially get this product into.

[modandm]

Growth is slowing? But of course growth would slow - its been coming off a period of enormous growth. But drilling down into the figures, we can still see some very impressive figures thus:

How much is new revenue likely to be? They got around $32400USD per new client in 1Q2013, so if they got 173 new clients, then we can expect new revenue of around $5.6m USD, on top of existing revenue of around $15.135m USD in Q1.

What is cumulative revenue likely to look like by years end?

The statement from yesterday says they have 2183 boards as clients. Assume they sign up another 325 clients by the end of the year, and if each board is paying $32400, then total company revenue per year would be expected to be around $70.7m USD.

That compares to revenue of $43.7m USD in 2012.

I don't know about you, but approx 62% revenue growth sounds good to me. They should be on track then to make around $15m USD in earnings (NPAT). That works out to $19.23m NZD, on currency of .78c. On an EPS basis, that is 16cps (with 120m shares used, or if using the non-diluted figure around 23.4cps)

And then, there is a second product likely to come on stream in a years time.......

Rough figures, and revenue restatement will yet change matters, but on a comparison with previous numbers, I think it looks pretty good.

yes the growth is still impressive - but it is slowing. The fact is the stock is trading at a pretty lofty valuation - so like I say the slightest concern and you will see the stock de-rate, which it already is. I wouldn't pay more than a PEG of 1 for this stock, I'm no expert (I admit I don't know or understand it well enough), but given the strong growth its already had I would reckon a valuation more around 25x FY13 earnings would be appropriate.

Using your EPS (diluted of course) gives a price target of $4.00. Lets see.

Finally when a company starts talking 'new product' in tech land it usually means they are starting to see a ceiling developing in their core business. Not suggesting DIL is anywhere near being ex-growth yet, but in 2-3 years time - it could well be.

[Balance]

yes the growth is still impressive - but it is slowing. The fact is the stock is trading at a pretty lofty valuation - so like I say the slightest concern and you will see the stock de-rate, which it already is. I wouldn't pay more than a PEG of 1 for this stock, I'm no expert (I admit I don't know or understand it well enough), but given the strong growth its already had I would reckon a valuation more around 25x FY13 earnings would be appropriate.

If you want an idea of how a growth stock like DIL is supposed to behave, have a look at Sky TV.

Sky TV always traded at very high multiples and bled cash for a long long time. Its sp had the occasional hiccup on the way up but maintained its uptrend - because of confidence in its business model.

Customer retention, low churn and ability to increase charges without impacting on customer numbers - these are the key issues investors must focus on.

Can DIL do it?

Answewr that question and you have your answer as to whether DIL goes back up to $8.00 and above, or has had its best days behind it.

[Mobius]

Having been the president of a staff association presiding over 250 members, I can see why this stuff would be useful. We were forever taking member submissions, that would require voting...

Did I mention that it takes about 30 seconds to create a voting document within Boardbooks? You can have as many voting items as you like, and you set whatever parameters you like when you set it up: how many votes required to pass, and it even accounts for special "independent director" votes if that is part of the company process. The administrator can see the status of any vote, and is notified as soon as a vote either passes or fails. Users have the option to vote For, Against, or Abstain. There is also a feature which accounts for conflicts of interest, and hides relevant documents from those people.

User signatures are attached directly to the actual Board papers themselves, when they vote "For". All users can also see the status of each voting paper, and when they log in, they can see a list of voting items, and can easily address them individually.

As to some idiot intimating Boardbooks is "PDF + Dropbox"? That's like saying a 777 is "Aluminium + Carbon".

I have to also jump in here and say what everyone else has entirely missed: we now have 6 quarters of growth where the new users added per quarter exceed 6,000. That is clearly the current limit Diligent can train each quarter. It was so when I was there, and our problem was not getting the clients, but being able to implement them as quickly as they wanted. Remember, 6000 p/Q is 67 new users per day, 7 days a week.

New Client numbers are NOT a reliable metric to measure sales. Some clients have 5 users. Some have hundreds. We can easily see that DIL has stayed at the maximum implementation rate, and therefore, we KNOW that the reduced client numbers include at least one, and possibly two very large client implementations. If KPMG (for example) were signed and had 1,500 users - well, that is 25% of the entire training capacity for a quarter - with a single client.

User Numbers are what you want to base your estimates on, because we know DIL are not discounting. Someone else can do the math for average user-price, and then work it back to sales - and excluding "installation fees" you'll have your sales figures. Also worth noting that "installation fees" are largely based on the number of users - so if you implement 6,000 user p/Q then the income is the same, regardless of how many clients you actually signed.

Isn't this obvious?

At 64,000 users, Diligent is now on an almost straight line graph of user numbers - and please take a look at the cumulative sales graph, to see what adding 6,000 users p/Q does to the overall profitability. Goodness gracious; can you name another company, in profit, with USD39M in the bank, 97% retention rate, with expanding operational margins, no competition, with fabulously rich and influential users who LOVE to talk about the product?

[bonne vie]

Diligent statement yesterday " The company will properly capitalize certain costs associated with software developed for internal use. These costs were previously expensed" The Research and Development expenses 2011 & 2012 totalled $3.8m but the value of the "certain costs associated with software developed" is itemised. If these costs are significant and therefore effectively expensed at 100% in lieu of I guess 33.3% (3 years life) then the profit will have been overstated and therefore taxes possibly underpaid. While the possible additional tax would probably not be substantial in comparison to cash held - the question is how does the tax departments (NZ/US) treat this - do they accept re instatements and payment of any additional tax due or can there be penalties etc, is this a new liability?

[CJ]

As to some idiot intimating Boardbooks is "PDF + Dropbox"? That's like saying a 777 is "Aluminium + Carbon". I take offense at being called an idiot, I clearly made the statement tongue in cheek. I even used this symbol ;). And for clarity, this comment is ;)

Thanks for the clarification re customer numbers and users. I assume there is some fixed cost and then a variable cost depending on number of users. Which is more significant?

If training is the limitation, being ~6000 new users a quarter, maybe they need to follow XRO lead and hire more staff. Hopefully the lower cashflow that seems to have spooked the analysts is due to training new staff in this area.

[ddrone]

Without looking at the financial statements I would imagine that any such tax adjustments have already been taken into account. The re-statement would effect the "accounting" profit, which doesn't necessarily equate to effecting the tax profit.

[Whipmoney]

Diligent statement yesterday " The company will properly capitalize certain costs associated with software developed for internal use. These costs were previously expensed" The Research and Development expenses 2011 & 2012 totalled $3.8m but the value of the "certain costs associated with software developed" is itemised. If these costs are significant and therefore effectively expensed at 100% in lieu of I guess 33.3% (3 years life) then the profit will have been overstated and therefore taxes possibly underpaid. While the possible additional tax would probably not be substantial in comparison to cash held - the question is how does the tax departments (NZ/US) treat this - do they accept re instatements and payment of any additional tax due or can there be penalties etc, is this a new liability?

Whilst i'm no expert on tax, as far as I understand it, Tax accounting and financial reporting are two seperate matters and whilst the company might be required to capitalise software development under IFRS/US GAAP for reporting purposes this may have no bearing/impact on their current taxation treatments.
Furthermore if there was an issue with their tax treatments (re: capitalisaton vs expensing) then surely this would have been raised by the IRD/IRA already as opposed to the SEC/FMA who are more concerned with their revenue/expense recognition from a financial reporting perspective..

[MAC]

Despite the delay in resolving present matters, I would encourage holders to continue supporting DIL in seeking to correct their accounting thoroughly rather than releasing results sooner and risking further ongoing discrepancies. These exercises seem to be common with technology companies within the SAAS sector and we should anticipate that Deloitte as a global player have much experience to assist DIL in putting in place clear and confident forward guidelines for SAAS revenue treatment.

Revenue growth for board books peaked back in Q2 2012 and it is not new news that product delivery follows a cycle and ultimately stabilises to provide consistent revenue streams. This aspect will be ‘priced in’ by the larger DIL investors and funds.

The low volume trading over the last couple of days is of interest. Large moves in SP with low volume trading seems to suggest that fund managers are not moving the price and may probably be comfortable with the status quo. The volatility seems to be driven by small investors perhaps with some degree of residual panic or more likely just fatigue.

I’ve adjusted my single product fair value for DIL based on yesterday’s data to $7.80. Once resolved and reported, I would not be surprised to see a confident uptrend more or less immediately initially back toward the $7 mark.

Patience will be rewarded, ….. still gazing at all that cash though too and wishful for a div or buyback.

[CJ]

Whilst i'm no expert on tax, as far as I understand it, Tax accounting and financial reporting are two seperate matters and whilst the company might be required to capitalise software development under IFRS/US GAAP for reporting purposes this may have no bearing/impact on their current taxation treatments.
Furthermore if there was an issue with their tax treatments (re: capitalisaton vs expensing) then surely this would have been raised by the IRD/IRA already as opposed to the SEC/FMA who are more concerned with their revenue/expense recognition from a financial reporting perspective..Correct. Accounting treatment is only one of many tests to determine whether a expense is capital or revenue for tax. Probably cost them another $15k+ for Deloitte to write them an opinion saying that though.

[baller18]

Will we see the SP at $5... Sighs....

[MAC]

Looks like we are back to primary support levels $5.45, a good flush out today on low volume, I'd still like to see a close at these levels to say we are done though.

[lascar]

Will we see the SP at $5... Sighs....

My average buy price is 5.5. Still have faith in DIL. Let wait and see.

[baller18]

Was thinking to play a dangerous game, with selling and then buying it back it a much lower SP and would've accumulated more shares... But once again, if I only knew where to catch the falling knive...

[Balance]

You don't lose or gain anything until you press the big, red "sell" button baller. If it depresses you that much I suggest taking a 2 week vacation from the computer and locking yourself out of your trading account. I am confident $5.40 will hold as it is huge support and sellers are very weak. In 2 weeks time you could be jumping up and down with joy. Roll with the punches and stay in there, riches do not come to the impatient ;)

Big seller trying to get out - i would say $5.00 is where it bottoms out.

[Mobius]

CJ - I somehow did not absorb your smiley. Please accept my sincere apologies.

To your question; Pricing for Boardbooks is predominantly user-based, and it also includes things like the number of Boards, and Committees - but these are modest compared to the total bill. The "Installation fee" is (perhaps) negotiable, and may reduce slightly for larger implementations, but basically also boils down to how many users. If you can calculate what the average price per user has been for the past few quarters, that will give you are pretty accurate Q3 sales figure, *I believe!*. (YMMV) In any event, it is more indicative than client numbers in any quarter.

Client upgrades are now a significant income stream for DIL, with clients putting more committees onto Boardbooks. The cost-of-sale on each of these is essentially zero. Each new user pays a "Setup fee" which easily covers the cost of setting them up and training them. These client upgrades expand over time, providing DIL with a lovely, and growing, annual earner.

--------------

Here's some idle speculation for you: Given the capitalising of "certain internal software products", might one not be tempted to think of a partially automated iPad training app, which reduces the time taken to train a new user by as much at 70%? Such an internal software project could allow 15,000+ new users to be added each quarter, with no increase in staff numbers. Training, to me, still appears to be the bottleneck on growth.

[Hoop]

My reading of the DIL thread has been a great read...I have been totally fascinated and further educated with this textbook investor trading behaviour and shareholder psychology over these last few months.... showing the rapid unrelenting rise of DIL to dizzy heights ..the eventual reversal pivot point ($8.20)... and its resulting fateful day two weeks later (20th June 2013) when all the TA bells whistles and sirens all sounded off all at once screaming sell when Mr DIL Market suddenly brokedown totally exhausted from the huge demands that the investors had expected from him... the price fell from $7.95 to $7.55...

Technically speaking even yesterday's break of the MA200 around $5.80 (oblivious to most on ST due to the fundamental noise) showed up like a beacon on the 15min chart see interactive chart (http://www.sharetrader.co.nz/showthread.php?5408-Diligent-Boardbooks-IPO/page129) (which is still operating on post #1926) (http://www.sharetrader.co.nz/showthread.php?5408-Diligent-Boardbooks-IPO/page129)...Notice the daily large increase in trading frequency followed by fundamental buying of "cheap" shares late in the day...Today at $5.40 short term support break .. those yesterdays "cheap" shares already look expensive... another example of why one shouldn't be buying so soon after a sell signal is triggered (MA200 break)....

I'm now have great interest in DIL of how this scenario is going to be played out over the next few weeks/months.....

[Balance]

Think we may be seeing Mr JP Morgan in action.

Support holding just below $5.40. I'm still shocked how much this issue has rocked DIL.

DIL's bad move here is to use a legal firm to advise them on how to issue statements to the market.

Just tell the truth!

[baller18]

My reading of the DIL thread has been a great read...I have been totally fascinated and further educated with this textbook investor trading behaviour and shareholder psychology over these last few months.... showing the rapid unrelenting rise of DIL to dizzy heights ..the eventual reversal pivot point ($8.20)... and its resulting fateful day two weeks later (20th June 2013) when all the TA bells whistles and sirens all sounded off all at once screaming sell when Mr DIL Market suddenly brokedown totally exhausted from the huge demands that the investors had expected from him... the price fell from $7.95 to $7.55...

Technically speaking even yesterday's break of the MA200 around $5.80 (oblivious to most on ST due to the fundamental noise) showed up like a beacon on the 15min chart see interactive chart (http://www.sharetrader.co.nz/showthread.php?5408-Diligent-Boardbooks-IPO/page129) (which is still operating on post #1926) (http://www.sharetrader.co.nz/showthread.php?5408-Diligent-Boardbooks-IPO/page129)...Notice the daily large increase in trading frequency followed by fundamental buying of "cheap" shares late in the day...Today at $5.40 short term support break .. those yesterdays "cheap" shares already look expensive... another example of why one shouldn't be buying so soon after a sell signal is triggered (MA200 break)....

I'm now have great interest in DIL of how this scenario is going to be played out over the next few weeks/months.....
Hoop, I am not experienced as you.. Do you base your buys and sells from charts?
If so, do you know any good textbooks/books which I can look at?
I have been trying to study the terms Bollinger bands and etc... Is there a book/textbook which explains chart analysis in great detail?
Would like to increase my knowledge in all aspects of trading...
Thanks heaps

[Mista_Trix]

lol, mindset now moved over to the long-term Hoop. Although the bells, sirens and whistles may have gone off, the story has not changed and I am still happy to hold and wait for the traders to reverse flow and start going back up stream. Looks like you get a second chance on this sucker. Be glad to have you onboard the DIL train soon if ya like ;)

Balance, the truth WILL set you free eh?!?!

How long-term is long-term though. There is now an increasing likelihood that the shareprice will not catch up before we reach the top of the market and the party all comes crashing down. Given shareholder confidence is pretty shot on this, I don't see people jumping into it when this happens, even if it does 'march to its own beat'.

DIS: Hold DIL, average buy $6.28. Contemplating the future.

[MAC]

Not offended Hoop, always appreciate your input and insight, agree with you also that it is an interesting watch, technology stocks seem to attract a more volatile demographic of investors.

Do keep an eye on all that ‘fundamental noise’, the SP will always oscillate about fundamental value over time. In a short while, looking back, all this will just be another blip on a chart.

[baller18]

I still don't understand why are investors and the market so spooked by the accounting issue?
Is it because of the management? Like winner said previously, is it the culture of this reoccurrence of sloppiness has lead to investors to assume management is not up scratch..
Like sparky mentioned before, this management has delivered and meet expectations of excellent results.
If its not the correlation relationship between bad hiccups of accounting issue to bad management, I don't quite understand what else could impact the SP so much, if the fundamentals and the story of the company hasn't changed.

[baller18]

haha well lets get some botulism in these boardbooks!

[Balance]

US investors have seen it all before - SaaS and Cloud based companies restating revenues due to auditor requirements.

This is a newer phenomenon for NZ investors, so fund managers will be spooked somewhat.

Relax - whatever will be, will be.

[Baddarcy]

thanks for the post Mobius, nice to hear about the internal workings of DIL, as we are often left to speculate

[Hoop]

I still don't understand why are investors and the market so spooked by the accounting issue?
Is it because of the management? Like winner said previously, is it the culture of this reoccurrence of sloppiness has lead to investors to assume management is not up scratch..
Like sparky mentioned before, this management has delivered and meet expectations of excellent results.
If its not the correlation relationship between bad hiccups of accounting issue to bad management, I don't quite understand what else could impact the SP so much, if the fundamentals and the story of the company hasn't changed.

Mr Market put DIL on notice back in June ....At $8.00+ share price being at stellar proportions Mr Market also demanded that news be delivered at stellar proportions......DIL failed to deliver......simple really

The complex part is figuring out after the hype what is "normal"

[Monty]

Here's some idle speculation for you: Given the capitalising of "certain internal software products", might one not be tempted to think of a partially automated iPad training app, which reduces the time taken to train a new user by as much at 70%? Such an internal software project could allow 15,000+ new users to be added each quarter, with no increase in staff numbers. Training, to me, still appears to be the bottleneck on growth.

I for one like idle speculation, especially from an (ex) insider. The ability to lift training which seems to be capped at around 6,000 to 15,000 (250% increase) per month can only be good for everyone involved.

[MAC]

It is quite a six month range isn't it Hoop, 5.40 through 8.20, lots of volatility but that's not uncommon for tech stocks I guess. Fantastic if you are a trader I'm sure, also fantastic if you are an investor looking for either an exit or an entry point as you may choose.

In terms of the fundamentals, valuations have been steadily increasing for the last couple of years, I see fundamental valuations continuing to rise.

Revenues on DIL’s first product cycle continue to grow and will stabilise, we know there is further product development in the pipeline, they've more cash than scrooge, and an impressive technical and sales force in place to facilitate forward growth, and in terms of marketing, they have access to literally thousands of international company directors.

The answer to what is normal, is, ...... nothing has changed.

[robbo24]

4684

I'm not really a chart kind of person - but it looks kind of like that old comparison between XRO and DIL plays out here too.

Since the revenue issues came to the forefront there was a transposition to a step down from XRO but in fact the daily trends follow that of XRO quite closely.

But hey - call my bluff, I don't know hardly any of the terminology or theory behind this kind of thing.

[Mobius]

It would be a challenge to create a training app which works well, but the payoff for such an effort could be massive. If I look at how internal resource could be applied to the training issue, it seems like a natural fit, and a great return on investment. HOWEVER, a significant part of how Diligent develops relationships is through individual 1-on-1 training sessions with 95+% of all users. Diligent will not want to lose their highly and distinctly personal touch in this area - but an introduction to the company and Boardbooks, given by a trainer, coupled with a training app install, and a self-directed training session could conceivably kill two birds with one stone, and allow much faster ramping of client implementations.

I must impress upon you however, that this is PURE speculation.

But, whatever the bottleneck to increasing new users is, you can be sure the board is looking closely at possible solutions.

My take on the relatively flat new user numbers for 6 quarters now, is that this is being treated as a consolidation phase, where the company tests different systems and processes, in order to see what the best way forwards is. Whatever systems the company puts in place, they must scale well, and reduce the workload, without relying on hiring masses of people.

Remember, Diligent saw exponential user growth for a long time, and developing robust systems, that scale well into the future are a key aspect of Diligent's growth strategy. It is hardly surprising the company has "paused for breath" (is 67 new users a day "pausing"?) and not attempted to expand its operational side ahead of its ability to manage that expansion well. The worst thing for Diligent, other than a big, public security breach is botched expansion plans, which damage the reputation of the product or the service it offers.

Diligent consistently scores all 4s and 5s out of 5 for every aspect of its implementation and training systems; ensuring these scores are not sacrificed in the pursuit of pure throughput is vital for the business. I am extremely happy Diligent has been taking careful stock, and lining up all ducks, before pulling the trigger on further expansion.

[JohnnyTheHorse]

Although a share buy back would make sense right now, they have said that they wont be reviewing that until next year. Along those same lines though, seems like it would be a good time for a company (if there are actually any with DIL on their radar) to launch a takeover attempt (probably wouldn't be ideal for shareholders though).

[winner69]

4684

I'm not really a chart kind of person - but it looks kind of like that old comparison between XRO and DIL plays out here too.

Since the revenue issues came to the forefront there was a transposition to a step down from XRO but in fact the daily trends follow that of XRO quite closely.

But hey - call my bluff, I don't know hardly any of the terminology or theory behind this kind of thing.

Pity about the step down then eh

Doing from +1200% to +800% is some step done - even XRO not done that

Maybe it was one of blow tops or whatever that hoop mentioned and we should be comparing to the RAK chart

[audiav]

Milford have sold out

http://www.milfordasset.com/wp-content/blogs.dir/1/files_mf/activegrowthfundupdateaugust2013.pdf

First post from me, hopefully one of many

[Whipmoney]

Milford have sold out

http://www.milfordasset.com/wp-content/blogs.dir/1/files_mf/activegrowthfundupdateaugust2013.pdf

First post from me, hopefully one of many

Milford was the selling bot? I remember it chipping away at 6.07...

[Dej]

Milford have sold out

http://www.milfordasset.com/wp-content/blogs.dir/1/files_mf/activegrowthfundupdateaugust2013.pdf

First post from me, hopefully one of many

Pretty much cashing up and looking for the next 7 bagger. No harm in that, but if you want to follow their investing style then invest in WYN.

[CJ]

Milford have sold out

http://www.milfordasset.com/wp-content/blogs.dir/1/files_mf/activegrowthfundupdateaugust2013.pdf

First post from me, hopefully one of manyI knew they had been selling down but didn't realise they had sold out completely. Time will tell whether they are right or I am but I take comfort in that I have invested in WYN, which they have been heavily backing.

[baller18]

Only if I was lucky enough to get in at 16 cents...

[baller18]

haha yes sir!!

[Corporate]

US investors have seen it all before - SaaS and Cloud based companies restating revenues due to auditor requirements.

This is a newer phenomenon for NZ investors, so fund managers will be spooked somewhat.


This isn't an auditor requirement. It is compliance with accounting standards.

[Balance]

No biggie them selling out, they made a good decision over the period of their investment to start selling at $8. Huge returns, only people I would ever consider giving my money to.

Sell down today probably driven by Milford's comments in print as well as on radio.

Looking they say for the next Diligent - well, Ecoya isn't going to do it for them.

Doubt Wynyard Group will do the same.

Meanwhile, I think post Milford selldown, DIL will back back up towards $10.

[JohnnyTheHorse]

Sell down today probably driven by Milford's comments in print as well as on radio.

Looking they say for the next Diligent - well, Ecoya isn't going to do it for them.

Doubt Wynyard Group will do the same.

Meanwhile, I think post Milford selldown, DIL will back back up towards $10.

Don't forget Moa! That is waaaay overvalued. They are one of the best fund managers in my view, although they do take some positions that leave me scratching my head.

[Dej]

Don't forget Moa! That is waaaay overvalued. They are one of the best fund managers in my view, although they do take some positions that leave me scratching my head.

Covering all the bases :t_up:

[winner69]

yes, they arent the golden boys they used to be but they are a fairly accurate gauge for the winds of the market. i see their largest holding is now EBO, a very wise choice indeed. only time will tell if they got this one right on the timing front, but they did just cash in a $12.5M return for 3 years investment. not bad in my books! sometimes you have to take the money off the table and let others have a go ;)

As long as the others are not "the greater fool"

[Balance]

yes, they arent the golden boys they used to be but they are a fairly accurate gauge for the winds of the market. i see their largest holding is now EBO, a very wise choice indeed. only time will tell if they got this one right on the timing front, but they did just cash in a $12.5M return for 3 years investment. not bad in my books! sometimes you have to take the money off the table and let others have a go ;)

Diligent has delivered stellar returns for Milford in the last 2 years - pushing their return averages up.

Mao, Ecoya, BurgerFuel and Wynyard Group are 4 big bets by them now. No signs of any stellar returns in the making.

What intrigues me is their analyst comments that 'Diligent is now too risky for their clients' - really? Compared to the four mentioned above?

[Balance]

lol, too risky. and it wasn't too risky at 16 cents with massive losses, yet it is now on superb growth, growing margins and a massive pile of cash? what is wrong with this countries investment community, seriously? can anyone answer that? I really wonder sometimes!

if I had to pick one of those it would be burgerfuel (best burgers ever, still growing very rapidly with profits). close second would be wynyard. MAO sounds too communist and my farts don't stink enough to buy scented candles from ECO.

You are too much, Moosie!

I have a healthy suspicion that Milford is trying to talk down Diligent's price so they can buy back in at lower levels.

In this forum, some call it down ramping?

[baller18]

Hey guys, diluted EPS is 8 cents, however, isn't owner earnings per share a better measurement than EPS?

Just been going through my notes from the books I have been reading...

Cheers

[CJ]

This isn't an auditor requirement. It is compliance with accounting standards.auditors are there to ensure accounting standards are adhered to so I think you are splitting hairs.

[CJ]

Diligent has delivered stellar returns for Milford in the last 2 years - pushing their return averages up.

Mao, Ecoya, BurgerFuel and Wynyard Group are 4 big bets by them now. No signs of any stellar returns in the making.

What intrigues me is their analyst comments that 'Diligent is now too risky for their clients' - really? Compared to the four mentioned above?i wasn't surprised they were selling down but were that they sold out completely. BurgerFuel and WYN both have potential though.

[baller18]

Just to clarify - that's 8c US.

http://www.boardbooks.com/wp-content/uploads/2013/03/Diligent-Board-Member-Services-Preliminary-FY12-Results-Announcement.pdf

9,141,295 divided by 120,015,175 = 7.6c USD.

Divide that by the 0.82c exchange rate as at the announcement, and you get 9.3c NZD per share.




Hey Sparky,

Isn't owner earnings = net income plus depreciation minus capitalexpenditures?

if owner earnings is at 9.3centNZD like you mentioned, is this a good rate compared to the SP?

[Xerof]

hmmm, doubt if their average recent sell was $6.02, that seems like get out at any price for a fund manager. if they did it would lower my opinion of them considerably.

They were distributing in the 7's on the way up, appear to have got a whack out at 8.18 on the day it topped, and have since sold the rest at 6.07 average. Perhaps they were responsible for that large spike down to 5.30 a week or so ago, don't know for sure, but thats a typical move to bring out buyers for the bounce-back (dead cat bounce, which takes out their final offers)

As Hoop mentioned - seem cheap on the day, but are expensive the next

Pretty good outcome for them in my book. No need to lower your opinion of them Moosie

I sold the day after the trendline break (left you guys a strong hint of trouble on July 12) and like Gaynor, (I think Balance is right in saying they will re-enter at some stage) I too will be looking for signs of a reversal. None yet.