TSK - TASK Group Holdings

[Baa_Baa]

Ok so now things have quietened down a bit, let me share with you my confidence in VML, I really do think they are and will continue to achieve great things.

But I thought to myself, you have to be seriously in, to be anything more than a journeyman. So I'm in, and in big time for me. I'll even keep buying up the price curve when cash comes available, but I wanted to up the ante, to really feel the courage. I haven't used leverage, I haven't mortgaged the house.

These past couple of days I doubled down on VML with some selective buys. Amidst the price volatility there were some good buying opportunities, depending on whether you think this is the beginning of something extraordinary. I sold some quality shares to do it but I think VML is worth the sacrifice. I decided that it's better to back my judgement pending the company's full year announcement, rather than be disappointed by not being fully invested when the results come out.

As a minor shareholder I'm still a rounding error on the big picture but as a friend of mine who bought a tech software accounting company at under $1 says, "go large or go home", the money tree in his garden has changed his life.

I hope to look back on this as a wise decision.

All the best
BAA

[sommelier]

I think you'll find that in the NZ tech space share prices tend to ramp prior to results, and depress quickly after results, as small time speculators (us) realise how absurd our growth multiples are. In the last two years most results announcements in this space have been preceded by other positive news (sometimes pretty weak), putting a fire under the dream of success and generally ending with the stock overbought. While we can invest based on hopes and dreams - and such speculation can float the price of these stocks (VML, SNK, ATM) - the cold, hard, and generally disappointing numbers are repeatedly a wake up call. It makes sense to trade VML based on the timings of announcements, the possibility of success (with McDonalds in particular) and the possibility that ASX speculators are even more insane than we are.

It does not make sense to trade VML on the basis that the SP will increase after the results (which is likely to be the second week of June).

If the results are SPECTACULAR and show an ARR of (hypothetically) 10x FY2014, then we are looking at $5m of revenue with a corollary loss of that is likely to be at least that amount (see FY2014, with $512k revenue and profit of -$2m). The question then is, at 2.5cps (mCap $36m), what do the fundamentals say about this company? The NASDAQ currently has an average (historically high) 23x p/e. If we used this as a basis for assessing our growing tech company, then we would need a PROFIT of $1.5m to justify the 2.5cps price. And that's if the number of shares remains static, and it has already been indicated to us that it will increase.

The reality is that growth is rapid, exciting, and promising, and there is a good chance that this company will be very successful in a niche tech space. This is what should motivate your trading strategy. Backing your judgement pending the company's full year announcement looks to be a poor strategy based on the trading patterns on this type of stock on the NZAX in the past few years.

The people who make the most money off this stock will likely be the traders that happen to time their trades extremely well, especially around announcements. The people who lose the most money will have a similar strategy. If you notice a huge spike after an announcement, keep a very close eye of the weighted average price, and if you think its approaching the top of it's "hype value" curve, sell some.

For me it makes up a far-too-large 15% of my portfolio, but as I think I got in at a really low price I'm gonna hold it for at least 2-3 years, hopefully enough to snag a 10 bagger based on much more robust fundamentals.

DYOR.

[Mic]

First time post, can someone please explain what impact if any the listing on the ASX will have on the NZ market?

[robbo24]

First time post, can someone please explain what impact if any the listing on the ASX will have on the NZ market?

Look at the interrelationship between NZX:XRO and ASX:XRO, for instance. One generally follows the other, usually taking into account exchange rates. XRO is usually dominated by the NZX price.

Sometimes ASX algo-bots and high frequency traders decide to give new listings a workout (like ASX:PYL or ASX:MJP). VML might get a shareprice boost but not for any rational reason. In the case of MJP, as an example, yesterday the founder and director Glenn Martin disclosed that he had sold 300,000 shares at 71 cents, even after that announcement the bots took it up a good 20% for the day.

VML might get some capital from an IPO, might get some weird and wonderful gains, but by no means are either of these things guaranteed

PS - good points somellier, I wonder what the FY results will look like given that at the end of the year VML was scrounging around for some capital at 1 cps to keep afloat!

[Harvey Specter]

First time post, can someone please explain what impact if any the listing on the ASX will have on the NZ market?

If you value the company based on fundimentals, then nothing. The markets should both be equal (forex adjusted) or else there is an arbitrage which someone would take advantage off.

But market sentiment can be different on different exchanges, and different investors etc means the theory doesn't always match the reality.

[Wallace D]

First time post, can someone please explain what impact if any the listing on the ASX will have on the NZ market?

Hi Mic,

The impact will be that the company will have received extra funds to accelerate their growth, they will attract more institutions that will be around to gather up the stock when it is undervalued, and their will be a lot more liquidity in the stock, probably on both sides of the Tasman as the company proves it's fundamentals.

As far as the Share price, it will always level out or there abouts. If their is to much price difference (FX adjusted) then someone will arbitrage (buy and sell simultaneously in different markets resulting in a low risk profit, perhaps look up the definition).

I hope this helps, DYOR, and always pay your taxes if you trading.

Cheers,

WD

[Wallace D]

If you value the company based on fundimentals, then nothing. The markets should both be equal (forex adjusted) or else there is an arbitrage which someone would take advantage off.

But market sentiment can be different on different exchanges, and different investors etc means the theory doesn't always match the reality.

Hi Harvey, I was typing when you posted this, nice to have some quality imput.

WD

[Wallace D]

I think you'll find that in the NZ tech space share prices tend to ramp prior to results, and depress quickly after results, as small time speculators (us) realise how absurd our growth multiples are. In the last two years most results announcements in this space have been preceded by other positive news (sometimes pretty weak), putting a fire under the dream of success and generally ending with the stock overbought. While we can invest based on hopes and dreams - and such speculation can float the price of these stocks (VML, SNK, ATM) - the cold, hard, and generally disappointing numbers are repeatedly a wake up call. It makes sense to trade VML based on the timings of announcements, the possibility of success (with McDonalds in particular) and the possibility that ASX speculators are even more insane than we are.

It does not make sense to trade VML on the basis that the SP will increase after the results (which is likely to be the second week of June).

If the results are SPECTACULAR and show an ARR of (hypothetically) 10x FY2014, then we are looking at $5m of revenue with a corollary loss of that is likely to be at least that amount (see FY2014, with $512k revenue and profit of -$2m). The question then is, at 2.5cps (mCap $36m), what do the fundamentals say about this company? The NASDAQ currently has an average (historically high) 23x p/e. If we used this as a basis for assessing our growing tech company, then we would need a PROFIT of $1.5m to justify the 2.5cps price. And that's if the number of shares remains static, and it has already been indicated to us that it will increase.

The reality is that growth is rapid, exciting, and promising, and there is a good chance that this company will be very successful in a niche tech space. This is what should motivate your trading strategy. Backing your judgement pending the company's full year announcement looks to be a poor strategy based on the trading patterns on this type of stock on the NZAX in the past few years.

The people who make the most money off this stock will likely be the traders that happen to time their trades extremely well, especially around announcements. The people who lose the most money will have a similar strategy. If you notice a huge spike after an announcement, keep a very close eye of the weighted average price, and if you think its approaching the top of it's "hype value" curve, sell some.

For me it makes up a far-too-large 15% of my portfolio, but as I think I got in at a really low price I'm gonna hold it for at least 2-3 years, hopefully enough to snag a 10 bagger based on much more robust fundamentals.

DYOR.

Great post Sommelier, not sure I agree that the fundamentals are useful for valuing VML at the moment, and I also don't think the people that will make the most money off this company will be the traders.

Appreciate the rest of your considered opinions though.

Cheers,

WD (holding)

[Schrodinger]

If you value the company based on fundimentals, then nothing. The markets should both be equal (forex adjusted) or else there is an arbitrage which someone would take advantage off.

But market sentiment can be different on different exchanges, and different investors etc means the theory doesn't always match the reality.

Will be interesting to watch but generally with higher liquidity the stock will move more and provide more opportunities to either enter or exit. i.e good/bad news will be more accurately reflected in the SP.

[Bilbo]

Have a smallish holding - around 850K shares, $19K at current sp, which I have accumulated over the last 4 months at between 1.1 and 1.8. I really like the company and its prospects and thinking about doubling holding over the coming months, but the specter of capital raising is putting me off. What is everyone's opinion on how the next CR will be done? Are all shareholders likely to be offered a piece of the action, or do you think it will be eligible investors and connected parties again?