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ADVC - Advant-e Corp.


alpha231616967560

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Hi shareholders!

 

Let's band together. Email me at aalexa1@gmail.com, and let's talk about how we can get as much value from this situation as possible.

 

 

You'd have appraisal rights (at least) in a take under.  But until that happens, what can you do given that the CEO owns more than 50% of the shares? 

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  • 7 months later...

Is anyone still holding ADVC?

 

Just received a juicy 8.54% dividend in my account today. I don't recall there was any announcement. But Google Finance shows the dividend was declared on Feb 16. There was no communication of any form from the company... Or did I miss it?  :-\

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Is anyone still holding ADVC?

 

Just received a juicy 8.54% dividend in my account today. I don't recall there was any announcement. But Google Finance shows the dividend was declared on Feb 16. There was no communication of any form from the company... Or did I miss it?  :-\

 

I'm still holding.  I didn't see any announcement either.  Given the historic payout ratio, the dividend is a good sign.  We should find out more in a few months when they send the annual report.

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There was a dividend announcement in my IB account. The stock went up on decent volume as well. I took the opportunity to sell almost all of my position. The way they went about the reverse split, and forced out many small shareholders at a low price, was terrible. Given this event, I believe they are unlikely to treat minority shareholders fairly in the future. Since it didn't make sense for me financially to pursue appraisal rights if I get offered a sub-par price in a future forced cash-out, it didn't make sense for me to hold. There is nothing stopping them from doing another forced cash-out of small shareholders.

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There was a dividend announcement in my IB account. The stock went up on decent volume as well. I took the opportunity to sell almost all of my position. The way they went about the reverse split, and forced out many small shareholders at a low price, was terrible. Given this event, I believe they are unlikely to treat minority shareholders fairly in the future. Since it didn't make sense for me financially to pursue appraisal rights if I get offered a sub-par price in a future forced cash-out, it didn't make sense for me to hold. There is nothing stopping them from doing another forced cash-out of small shareholders.

 

I generally agree with you.  In particular, I agree that a go-private is likely coming and that minority shareholders won't get full value.

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There was a dividend announcement in my IB account. The stock went up on decent volume as well. I took the opportunity to sell almost all of my position. The way they went about the reverse split, and forced out many small shareholders at a low price, was terrible. Given this event, I believe they are unlikely to treat minority shareholders fairly in the future. Since it didn't make sense for me financially to pursue appraisal rights if I get offered a sub-par price in a future forced cash-out, it didn't make sense for me to hold. There is nothing stopping them from doing another forced cash-out of small shareholders.

 

I generally agree with you.  In particular, I agree that a go-private is likely coming and that minority shareholders won't get full value.

 

It depends how small your holding is.

 

ADVC was listed via a backdoor listing at the time when ADVC needed the liquidity for its early investors who put in the capital to transform the business from a desktop software provider to a cloud-based SaaS provider. The CEO looks after these initial investors who helped him going through that difficult time. It shows in his earlier communications and in the generous dividends. If you think about it, given his majority shareholding, he has no reason to share the profits via dividends if he wants to screw all the minority shareholders and maximise his gains. He could've paid himself gigantic salaries.

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  • 4 weeks later...

CFO says financials our out... Anyone seen them yet? they are being distributed by Broadridge.

 

I am a huge fan of ADVC. 8% dividend, no debt, lots of cash, and we shall see if they kick started their revenue growth in 2016.

 

AOA

 

Where did you hear it? I haven't heard anything from my broker yet.

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If the primary risk is that Kroger goes away, then I am fine with that.

 

I don't want to go down an Amazon/grocery store business rabbit hole right now, but suffice to say, delivery of groceries is a business model not really suited that well to deliveries.

 

People think Amazon will eat the whole world; They barely make money, and any money they DO make is directly related to their cloud computing business.

 

AOA

 

 

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I emailed the CFO

 

Thanks.

 

The risk with ADVC is, IIRC, Kroger is their primary customer of which the industry is under threat from Amazon.

 

ADVC doesn’t make money from Kroger.  They make money from Kroger's vendors.  My understanding is ADVC initially gained traction by getting Kroger and a few other grocery retailers to endorse their network, which effectively forced smaller vendors unable to develop EDI in-house to go with ADVC.  This is a classic two-sided market scheme: get one side of the market to endorse your product by charging them little or nothing and charge the other side for access (think payment networks and ratings agencies).

 

I have concerns about ADVC’s business, but Amazon steamrolling grocery stores isn’t one of them. 

 

 

 

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I emailed the CFO

 

Thanks.

 

The risk with ADVC is, IIRC, Kroger is their primary customer of which the industry is under threat from Amazon.

 

ADVC doesn’t make money from Kroger.  They make money from Kroger's vendors.  My understanding is ADVC initially gained traction by getting Kroger and a few other grocery retailers to endorse their network, which effectively forced smaller vendors unable to develop EDI in-house to go with ADVC.  This is a classic two-sided market scheme: get one side of the market to endorse your product by charging them little or nothing and charge the other side for access (think payment networks and ratings agencies).

 

I have concerns about ADVC’s business, but Amazon steamrolling grocery stores isn’t one of them.

 

What will happen to ADVC's business if one side of this market (i.e. Kroger) disappears? Say, if Kroger decides to close shop tomorrow.

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That would be bad, but so far fetched that you should not worry about it.

 

Barnes and Noble, located more rigidly in the sweet spot of destruction than any business Amazon has ever targeted, still has a market cap of $670m.

 

Over the last five years, their stock has gone down 15%, hardly a good result, but so far away from "shutting down shop".

 

AOA

 

 

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I emailed the CFO

 

Thanks.

 

The risk with ADVC is, IIRC, Kroger is their primary customer of which the industry is under threat from Amazon.

 

ADVC doesn’t make money from Kroger.  They make money from Kroger's vendors.  My understanding is ADVC initially gained traction by getting Kroger and a few other grocery retailers to endorse their network, which effectively forced smaller vendors unable to develop EDI in-house to go with ADVC.  This is a classic two-sided market scheme: get one side of the market to endorse your product by charging them little or nothing and charge the other side for access (think payment networks and ratings agencies).

 

I have concerns about ADVC’s business, but Amazon steamrolling grocery stores isn’t one of them.

 

What will happen to ADVC's business if one side of this market (i.e. Kroger) disappears? Say, if Kroger decides to close shop tomorrow.

 

EDI systems are more interoperable now.  On ADVC's website, for instance, they list hundreds of retailer/distributor connections.  If Kroger went bust, its vendors would still sell through non-Kroger channels and would need an EDI provider, like ADVC, to help them do it. 

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  • 2 weeks later...

Anyone receive financials yet?

 

AOA

 

Revenue up ~6%, EBIT and Net Income up ~15% (significant increase in gross margin).  At $5/share, it's trading at about ~10x earnings and 7x earnings ex-cash. 

 

They are also paying a 34% tax rate, so would benefit from any U.S. corporate tax cut.

 

If you believe minority shareholders will be treated fairly, then $5/share is a bargain.

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Yeah... CEO owns 50%, so as long as their is not a take under, things will work out okay.

 

I wish they were buying back shares, instead of paying dividends, but really great financials.

 

Everyone, email the CFO and express pleasure at results, but ask for a shareholder letter or something.

 

AOA

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  • 5 months later...
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The annual report is out.  Revenue ($12.8 million) and EBIT ($4.4 million) were essentially flat for the year.  After accounting for the dividend paid earlier this calendar year, the company has about $7 million in net cash.

 

5.8 million shares at $5.65/share = market cap of $32.8 million.  If the new normal tax rate is 25% and the company can keep all of the tax savings, run-rate net income is ~$3.3 million, for a p/e of about 10, and an ex-cash p/e of about 8.  EV/EBIT = 6.

 

At the historical payout ratio, 2018 annual dividend should be around 0.45 - 0.50/share.

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  • 3 months later...

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