Author Topic: AHZ  (Read 871 times)

galumay

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AHZ
« on: August 01, 2018, 07:47:43 PM »
AHZ Amedeus is held both in our personal portfolio and the SMSF, its been a high conviction investment for me, I have continued to add to our positions as the lumpy path of the company continues, sadly the current CEO Wayne Paterson has just about destroyed the business with ridiculously high executive salaries and poor control of costs, poor capital management bordering on fraudulent and ridiculously ambitious forecasts for earnings and growth that have been completely missed.

The business in now in a postion where it will be lucky to survive to the end of the calendar year, if revenue growth manages to stay at its current rate (unlikely), revenue will be about $10m next quarter, operating cashflow predicted to be about -$12.5m so a further burn of at least $2.5m cash. I will be surprised if there is much more than $1-1.5m left. They do have recourse to $5m undrawn borrowings, but once they have to dip into the debt further while cash flow negative its just putting of bankruptcy. There is no hope of a capital raising, after the disastrous one ealier this year, which was possibly fraudulent and may well lead to a class action by shareholders, no one is going to put their hands in their pockets again.

The only hope for the business IMO is for the ridiculous executive salaries to be slashed, given the poor job to date they should be doing it for free until the business recovers, all other costs will have to be tightly controlled and just pray that revenue can continue to grow, preferably at better than 30%, and maybe, just maybe AHZ will be able to claw its way back to survive. Although a bad outcome for shareholders the other quite possible outcome is the business is sold to a more professional and larger bio tech business to bring the products to market.

7/8/18 thoughts for today, I have been reflecting on where I went wrong with $AHZ & @CEOPaterson. Looking back I should have sold out in June when the lack of management integrity became obvious, a hastily arranged CR rushed out just before failure of contract review & negotiations was announced. That should have been the red flag, anytime you become see evidence of management's values not being aligned with shareholder interests, sell! I let my emotional convictions about the product rule over the intellectually obvious.

For posterity here are my ealier notes from the older thread,

Share - AHZ

Rationale for buying - initial 2 positions pure speccy, small position size ($2k) reflects the fact they are not paying a divvy and may collapse if results arent as good as hoped. Huge upside if their products take off in europe.

EXIT STRATEGY -

Change in view of future prospects

if money can get a better return elsewhere with better growth              potential.


NOTE - Made my first stupid and rash decision, looking for opportunity after the market downturn in reaction to US lockdown I jumped in and put $10K into them, my thought was to look for a short term trade to try ROE’s strategy. This was poorly thoughtout, while the price had dropped, it was still higher than either of my earlier positions, i didnt calculate what price i would need to make a suitable profit, its crazy to use this strategy on a speccy, massive risk, too bigger a position. Must sell as soon as i can cover entry.

mentally i think i just was desperate and impatient to try a new thing - the trading idea ROE had explained for me, in the end i was so impatient i just jumped on the first possible way to apply it with no proper consideration. PATIENCE.

Lesson - main mistake was FOMO (fear of missing out)

TYPE - Spec

HY 2015 update - all good, moving towards being a profitable company, next result should tell the story, bought for SMSF

FY16 update On track for profit in 2018. awaiting vaccine trial results Q4

End 2016 update as above.

H1 2017 UPDATE - the good news keeps coming, revenues growing, losses shrinking, still on target for profit and hopefully take off!
« Last Edit: August 07, 2018, 03:51:04 PM by galumay »