I have often sung the praises of set-top box manufacturer (and Cambridge silicon fen resident) Amino Technologies (AMO), and the recent takeover of Pace (PIC) by US telecoms firm Arris prompts me to revisit the investment case. Obviously, this is a sector where great change is prompting big players to look to M&A action in order to consolidate their position. Amino, I believe, has an attractive portfolio of products that set it in good stead to compete in this changing landscape, and I am sure it would make an attractive target for such reasons. There is also a >4% divi, which management has committed to raising no less than 10% per annum to 2016. The net cash pile is equivalent to 40p per share, which makes the shares still cheap by my reckoning.
I see that Omega Diagnostics* (ODX) – which received a write-up from me in the May edition of Master Investor Mag – has begun to fire up in anticipation of further news regarding the Visitect CD4 device, promised for the end of the current month. The great thing about this stock is that although it has blue-sky potential, it is by no means a one-trick pony, so failure with Visitect would not spell disaster. There is a pre-existing, profitable and growing business here, which provides some downside protection should things not go to plan.
Back in December, I flagged Bioquell (BQE) as one with scope for upside once it put its house in order. That upside seems to have materialised faster than expected. The shares are up c.50% since my initial comments on SpreadBetMag, as March saw the disposal of the firm’s specialist testing services subsidiary, TRaC, to Element Materials Technology Group Holdings, for a cash consideration of £44.5 million.
One does not like to blow one’s own trumpet, but I was clearly right about the latent value here. The consideration amounted to 105p per share, versus a share price of 82p prior to the announcement. Following the disposal, Bioquell is left with a focussed biological contamination control business (Bio division) selling into the international Life Sciences, Healthcare and Defence markets. The Bio division had revenues of £27.9 million for the year ended 31st December 2013.
This looks like it could be the beginning of a value realisation process at Bioquell, not least because the directors collectively hold around 33% of the stock and are obviously incentivised to maximise value from a shareholder perspective. I am not a shareholder, but if I were I would hold on tight.
* James owns shares in Omega Diagnostics.
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