Blinkx, closed & restricted periods and the curious absence of directors buying…

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I last wrote about Blinkx several weeks ago and set out the valuation basis for the stock at around the current price, essentially being underpinned by the pro forma net cash forecasts for 2014 of circa 20p per share. The EV:EBITDA measure on consensus broker forecasts is around 4 times for 2015, and under just 3 times for 2016 (see Numis forecasts below). As this measure incorporates debt and cash (on the EV side), then for ungeared business like Blinkx it is a good proxy for an earnings yield.

Considering that back in July, and before that in March and February of this year, there was some modest Director’s purchasing of Blinkx stock, in particular by CEO Mr Mukherjee, and at prices north of £1, it rather intrigues me that there has been no new stock purchases in recent weeks as the stock revisited the lows of late 20’s/30p last seen in early July…

I am prepared to be corrected but, given that the final results were in early May and a trading update was given in early July, I do not believe that the Board is presently in a standard closed period (a standard “closed period” being defined as 2 months before publication of the annual results). Interims are in fact not due until early November too.

Looking at the chart above, it does rather beg the question – is there some corporate news due that is thus restricting the purchase of stock by the Board? After all, if you were a buyer at 100p, and assuming one still has the pocket depth, then you must surely be a buyer at 35p… unless of course you are in a “restricted” period, which is essentially a period where one is in possession of material, non-public info. IF the company has been “approached” we would highly doubt that a price south of 60p would be entertained by the BoD and major shareholders.

CLEAR DISCLOSURE – RICHARD JENNINGS AND TITAN FUNDS ARE LONG OF BLINKX. This piece should not be taken as an advocation to buy (or sell) these instruments and you should always take independent financial advice in relation to your own personal circumstances.

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