Category Archives: Uncategorised

Seeing Machines gunning for automotive market with spin-off

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Seeing Machines (AIM:SEE), the Australian software company specialising in eye-tracking technology using innovative algorithms, looks set for a significant uplift in its share price with confirmation that it is launching a spin-off in the US dedicated to serving the automotive sector by the end of June.

The stated intention is that the company will follow the Mobileye trajectory and eventually IPO in the US, a prospect which is likely to have both institutions and shrewd investors clamouring for shares over the next few months.

Despite recently announcing a maiden interim profit, its share price had been held back by concerns that it would need to raise more funds in order to serve demand for its world-leading technology.

However, in an exclusive interview with Ken Kroeger, CEO of Seeing Machines, he revealed that the company is set to raise between US$50m to US$100m setting up a spin-off that will focus exclusively on the auto industry and develop a new hardware module.

This should produce 3 main benefits:

  1. It will take development costs out of the overall business.
  2. Enable Seeing Machines to move up the value chain by developing hardware (which will be manufactured by a third party). So, instead of getting $10 a car profit, it will be able to get between $25 to $35.
  3. Enable it to work with more Tier 1 suppliers and OEMs.

As part of this Seeing Machines has signed a memorandum of understanding with Takata, that officially ends its exclusivity deal with Takata.

The new company will be called ‘Fovio’ and is expected to be launched by the end of June this year.

Ken Kroeger, CEO of Seeing Machines explained: “It will be a separate, US-based company. It will have about 40 people and take about 35% of the cost out of the parent company. The US company will own 100% of the Australian subsidiary that would house around 40 employees. Seeing Machines, and the current shareholders  will not have to reach into their pockets and write a substantial cheque but will own a substantial portion of that business.”

When pressed as to what “substantial portion” meant, he explained that is how he had to refer to it.

He added: “That business would be completely set up to start its march towards an IPO on the US board, mirroring Mobileye’s journey. It would have a separate board, separate management and we are in the process of recruiting a CEO in the US.”

As to the backers, he revealed: “The investors are at the big end of town (sic), we already have term sheets and they range from automotive OEMs, through the silicon companies into some of the other strategic industrial partners that we want.”

The new module is expected to come to market in late 2018, early 2019.

Until then, Seeing Machines will be continue working with Takata on delivering its software, as Kroeger explained: “The good thing is that we continue working with Takata. It is a new agreement not a divorce, so in the interim we will keep on delivering with Takata.”

Seeing Machines and Takata will be working on another 15 models for the same OEM that it has been working with to deliver a model that will be go into production late this year to be on sale next year. In addition, it is working on another 3-4 requests for quotations expected to happen this year.

That OEM is rumoured to be General Motors and the model that will first use Seeing Machines driver monitoring software, as part of it Supercruise feature, is said to be the Cadillac CT6.

The writer owns shares in Seeing Machines

Crimson Tide issues earnings upgrade

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Aim-listed Crimson Tide, issued a very encouraging update today in which it detailed that it expects to beat profit expectations for the year ending 31 December 2015.

It noted: “Profit before tax will be higher than market expectations and significantly higher than for the previous year.”

In addition, analyst Eric Burns at house broker WH Ireland raised his profit forecast for the stock from 2.25p to 3.5p and changed it from a ‘Speculative Buy’ to a ‘Buy’.

The outperformance was due in no small part to the massive win with Tesco that I wrote about on this blog some time ago. (17 September RNS in which Tesco was not named).

In a detailed note out today, Burns confirmed that he expects it to start paying a dividend this year, which coupled with earnings upgrades should lead to a further re-rating of the stock.

He wote: “Forecast risk exists due to the phasing of new customer rollouts (with Tesco being an example of upside risk as it was rolled out faster than anticipated) but recurring revenue is building (65% est of our FY16 revenue forecast) and provided TIDE can continue to build its subscriber base there could be material upside to the shares trading on 12.9x our new FY17 EPS forecast. In our view, the introduction of a dividend in the current year (which we now forecast) will add to the shares’ attractions.”

The EPS for FY16 is estimated at 0.11 putting it on a forward PE of 15.8, dropping to a PE of 12.9 with EPS of 0.22p for 2017.

However, I expect upgrades for 2017 as Tesco and Nestle sign up more users to its subscription-based software as a service.

Just to reiterate, Crimson Tide is a fast growing, profitable, operationally-geared company with great scope for growth. It has no debt and plans to pay a dividend. What’s not to like?

I’d be very surprised if more small cap funds don’t start piling into this very soon. Indeed,  given the illiquid nature of AIM stocks and the fact that the shares are tightly held, this could easily double again in price within 18 months. It is currently around 3.5p to buy.

Of course this is my personal view and not a recommendation to buy. You should do your research before ever investing in a stock and never invest more than you can afford to lose.

The writer holds stock in Crimson Tide.

A global stock market crash is coming

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Those of you tempted to believe that this week’s ‘Black Monday’ was an aberration should note that a huge, global stock market crash is likely to be with us pretty soon.

China is exporting a tidal wave of deflation to the US (an economy already in trouble) and as it hits things are going to get very bad indeed.

Forget the market soothsayers employed to talk up the prospects of the stock markets. Their analysis is wanting, their predictive powers non-existent.

You’d be better off following the analysis of the three men below. Compared to the vast majority of commentators they are market oracles. The message they have to impart is sobering.

Professor Steve Keen

No less a figure than economist Professor Steve Keen, who predicted the 2008-09 Great Recession, explained in an interview last year that the US was headed for a long period of stagnation. It is due to the build up of private debt (among both corporates and the general public).

Economies across the globe have been fuelled by the growth of private debt and, given the already high levels of debt, further growth cannot be sustained for very long. That is why the ‘recoveries’ in the US and UK are below trend and stop start.

Because of this reducing private debt not public debt is the issue that should be concentrating the minds of our politicians and economists. Hence QE for the people, which reduces this burden makes a lot more sense than QE for the banks.

Until now, all QE for the banks has done is:

  • encourage banks to continue speculating with cheap money from tax payers
  • created asset bubbles in areas such as property, stock markets and bonds where this money has been invested
  • encouraged ordinary investors to take on excessive risks in order to get decent returns
  • blinded the public to the way they are being fleeced by the political-financial elite that rule over us and finance this Ponzi scheme.

It is a pity that until the arrival of Jeremy Corbyn the Labour Party leadership failed to explain that the bank-bail out was the real reason the UK public debt ballooned. 

In any case, austerity in the present economic climate is madness, the wrong medicine at the wrong time.

Mitch Feierstein

Mitch Fierstein is the author of Planet Ponzi and a hedge fund manager. He knows the system from the inside out and is one of the sharpest commentators on the manipulation at the heart of our financial system. At the very least you should follow his twitter feed. The insights fly out of him like sparks from a Catherine Wheel.

Often only when going over his comments in detail do you become aware of the really deep knowledge he is imparting. For example, the most recent revision to US second quarter GDP, indicates that the US economy is doing fine growing fine with an annualised rate of growth of 3.7% revised up from 2.3%.

However, as Feierstein pointed out in a tweet yesterday (August 27th) US Gross Domestic Income (GDI) increased at an annual rate of just 0.6%.

This is what Shadowstats had to say on the matter in a note published yesterday: “Not only was that revision unbelievable, it also ran counter to the indication of stagnant economic activity seen in the initial estimate of second-quarter 2015 Gross Domestic Income (GDI), the theoretical and a practical equivalent to the GDP. The pattern of GDI stagnation for first-half 2015—not the faux surge in second-quarter GDP—is consistent with better quality monthly reporting seen in series such as industrial production and real retail sales.”

Albert Edwards

He’s been labelled a ‘bear’ by many bulls. Yet he accurately predicted that Chinese devaluation was coming months ago and that it would lead to a tidal wave of deflation heading West.

When it hits the US, it won’t be pretty. Forget cheaper gasoline prices and commodities. They aren’t much use when you’re out of a job because your economy has gone back into recession.

Okay, the US won’t raise interest rates. When it becomes clear that it is falling back into recession, QE4 may be unleashed. However, more bank bailouts (which is what QE is all about) won’t save the US economy from turning Japanese and stagnating.

This week, in a note published on August 27th, Edwards explained: “Despite deflation fears washing westward and US implied inflation expectations diving to levels not seen since the 2008 Great Recession, there remains a touching faith that the US is resilient enough to withstand further renminbi devaluation. And if it isn’t, why worry anyway, because QE4 will be around the corner. But let me be as clear as I can: the US authorities CANNOT eliminate the business cycle, however many QE helicopters they send up. The idea that developed economies will decouple from emerging market turmoil is as ridiculous as was the reverse in the first half of 2008. Remember Emerging Market and commodities had then de-coupled from the wests woes until they too also crashed. “

He also stated that we are already in a bear market. “While equities rebound investors are hoping things are quickly returning to normal. One of the many lessons from equity investing during Japan’s Lost Decade is that in a secular bear market hope is a killer. In a secular bear market hope should only be flirted with briefly during cyclical upturns, but it must be ruthlessly rejected as the cycle turns. In a secular bear market being wedded to hope destroys portfolios as the bear slashes to ribbons the hard-fought gains of the previous bull market. Gains that have taken years to accumulate are gone in months. One key measure we monitor informs us conclusively: we are now in a bear market.”

Time to be fearful

When men as smart as the 3 oracles above tell you that things are turning nasty it is time to listen. Far from being greedy it is now time to be fearful.

Certainly, it is time to take profits/hedge your winnings. Avoid leverage and take all money you need for the short term out of the market.

Even in a bearish environment physical gold and silver should do well and probably selective, innovative, small caps.

P.S. Please BBC put on a show like RT’s The Keiser Report and interview these 3 people. Their deep knowledge is desperately needed by a mainstream audience fed incoherent nonsense until now.