So, it appears I got it right over an unprofitable technology company. But 2021 has been something of a turnaround year. Tern shares are up 160% so far, admittedly from a low base. They’re still about 30% down since my last look, mind.

Like many a tech growth share, Tern has been volatile along the way. By May, the price had more than quadrupled from the start of the year. But, again, that’s often the way it happens with popular growth stocks. Those who bought in at the early peak have lost out.

A bit of risk

So investors who got their timing wrong in May are now sitting on a 43% loss. Still, those who go for small-cap growth stocks tend to be steely folk who can handle a bit of risk. But will I finally be tempted to buy now things are looking better?

Well, the Tern share price is actually down 6% on the day, as I write. And that, it seems, is all due to Thursday’s interim results. But first, I need to remind myself what Tern does.

Tern doesn’t actually do any technology itself. Instead, the AIM-listed company invests in those who do. Tern specialises in the so-called Internet of Things (IoT). And it says it  has seen “significant progress from all of the company’s principal portfolio companies in the period.”

Turnover growth

Tern said those companies had seen turnover grow by 75% in the six months to 30 June. That compares to a 62% rise in the first half of 2020. Employee counts among the chosen few rose 14%, and they recorded a 53% jump in revenue per employee.

During the period, Tern invested a further £0.7m in its favourite companies. And at 30 June, it still had £0.4m in cash. Since then though, the company has raised a further £4m.

In the interim update, CEO Al Sisto said: “The opportunities for IoT company investments continues to be remarkably robust as a result of the pandemic requiring companies and governments to adopt digital solutions.“

So Tern has plenty of cash to invest. And it does seem to be upbeat about its prospects. The successful fundraising in July also strikes me as an impressive vote of confidence.

Tern share price dip

But there’s one thing I haven’t mentioned yet. Profit. There isn’t any. For the half, Tern recorded a pre-tax loss of £718,465. That compares with a profit of £142,474 in the equivalent period last year. And an £803,891 profit for the whole of 2020. That might well explain the Tern share price fall on the day of the results.

So what will I do? Were I 20 years younger, I might well be buying Tern shares right now. But I’m older and more cautious these days. And Tern is still a ‘jam tomorrow’ company working in a sector that I still don’t really understand, and whose share price has been gyrating wildly. It’s still not for me.

The post The Tern (LON: TERN) share price is dipping. Is it a growth stock to buy now? appeared first on The Motley Fool UK.

Dr. Reddy’s Laboratories, an Indian pharmaceuticals firm, has been temporarily prevented from selling its generic competitor by a preliminary injunction on 13 July, but it seems that in the preceding days the firm was able to get a large amount of it out to the market.

Indivior had anticipated a 2018 revenue hit of at least $25m, but now says it could be “materially higher“. Although sales of Dr. Reddy’s alternative have been stopped for now, the drug had already gained Food and Drug Administration approval in the USA. That approval is being contested by Indivior, alleging that it infringes on its patents, and the whole issue is heading for the US courts with both sides seeking a speedy judgment.

Profits down

The rest of the H1 results seemed barely significant in comparison, but included a 7% fall in net revenue at constant exchange rates, and a 34% drop in adjusted operating profit with adjusted EPS down 16%.

The question is, are the shares an oversold bargain now? I’d say that is a total gamble. Should the courts rule in favour of Indivior, we could see business back to usual. But there will still be a one-off hit from the generic drug already released, and the competitors will still be there when the patent expires.

With around 80% of Indivior’s 2017 revenue coming from Suboxone and making it pretty much a one-trick pony, could a judgment in favour of Dr, Reddy’s even wipe out the company?

Another faller

Among the rest of the day’s fallers, my eye was caught by Tern (LSE: TERN), which describes itself as an “investment company specialising in the Internet of Things.” That’s something which makes me a bit nervous these days, as I can’t help feeling it’s a buzz phrase that has perhaps been overhyped a little.

Tern shares lost 16% in early trading, on the day the company revealed that it has raised £2.9m through a placing at 26p per share. That was 6p lower than Tuesday’s closing price, so a drop to just under 28p in response doesn’t seem all that surprising.

Chief executive Al Sisto said it will “enhance our opportunity to further develop our underlying net asset value,” which I take to mean keep the company afloat for a while longer until it achieves sustainable profitability.

Asset acquisition

There was other, apparently good, news on the day too, after InVMA, a company in which Tern has a 50% holding, announced it has acquired “the intellectual property and other assets of  Cambridge-based AMIHO Technology.” AMIHO, apparently, is working on “the problem of connectivity for the smart energy industry.” And though I don’t pretend to understand what that means, it sounds like it’s developed a bunch of application-specific communications technology.

What does it all mean for me as an investor? Not a lot, frankly. What I see is a ‘jam tomorrow’ company working in a sector that I don’t really understand, and whose share price has been gyrating wildly. Not for me.

The post Is Indivior a falling knife to buy after plunging 20%? appeared first on The Motley Fool UK.

Clearly, this is good news for the company and investors have reacted positively to the update. Today’s share price rise takes Independent Oil & Gas’ capital gains since the turn of the year to 27%, with at least some of those gains being due to a higher oil price.

Looking ahead, there is further potential for gains if the oil price rises, although the supply/demand imbalance which has been present in recent years looks set to persist in the short term at least. Therefore, buying smaller exploration plays remains relatively high risk, although Independent Oil & Gas may be of interest to long term, less risk averse investors.

Also rising today are shares in Belvoir Lettings (LSE: BLV), with the property specialist announcing the acquisition of Northwood GB Limited for a total consideration of up to £22m. With Northwood being the largest remaining independent UK lettings franchise which operates 86 outlets nationwide, Belvoir will be the largest property franchise group in the UK upon completion of the deal.

To fund the acquisition, Belvoir is conducting a placing to raise gross proceeds of up to £2.5m. The deal appears to be a logical one for Belvoir and fits in with its multi-brand strategy to grow both organically and through acquisitions.

With Belvoir forecast to increase its bottom line by 12% this year and 9% next year, it appears to be performing well even without the acquisition of Northwood. And with greater diversity and increased resilience during what could prove to be a relatively challenging period for the UK property sector, buying Belvoir now seems to be a sound move for long term, less risk averse investors.

Meanwhile, investment specialist Tern (LSE: TERN) has also been engaging in M&A activity of late, with it announcing the purchase of Flexiant Limited last month. It is a provider of cloud management software for cloud orchestration for on-demand, fully automated provisioning of cloud services. The deal has been paid for through the issue of 8m new ordinary shares in Tern and with its shares rising by 13% in the last month, investor sentiment in the business seems to be improving.

Clearly, the cloud and internet of things spaces have considerable long term appeal and could allow Tern to deliver rising profitability over the coming years. However, with it being a loss-making entity last year and there being other options within that space, it may be prudent to await further news flow and improved financial performance before piling in.

The post 3 unmissable small-caps? Independent Oil & Gas plc, Tern plc and Belvoir Lettings plc appeared first on The Motley Fool UK.

Tern (LSE: TERN) fell almost 14% from its intra-day high on Tuesday, but Globo (LSE: GBO) fared even worse yesterday, when its shares lost 16% of value during the trading session. Glencore (LSE: GLEN), meanwhile, is down 10% since it bounced back to 144p last week on the back of a new restructuring plan.

Here’s my quick take on these three very different companies. 

Top Pick 

Globo’s downbeat performance since mid-June has surprised me. Its shares roared back today, and were up 15% at the time of writing, but I am puzzled. It is really hard to say why they have fallen and risen so much during the last couple of days, given that aside from an update on its high-yield bond fundraising, there’s not been much to report this week. 

“This process has been delayed by market events through the summer of 2015,” the tech company said on Monday, and it’s possible that investors were not pleased with that. Still, it also said that its financing plans have received “strong interest from numerous investors“, and frankly its balance sheet doesn’t strike me as being particularly stretched, while its core cash flow profile is sound. Trading multiples also point to value. 

It has succumbed to broader market volatility in the third quarter, but its first-half trading update was decent and personally I think its stock remains a good buy at 28p. 

Trust

I wouldn’t blame you if you are reluctant to invest in Glencore.

On the one hand its update on 7 September was good news, as it signalled that management is ready to take drastic action to preserve cash flows in order to ride out a very difficult economic juncture for all the major minors. On the other, it will take time to determine whether the “New Glencore” will be any better than the “Old Glencore”, and several elements of its radical restructuring deserve attention.

At 131p, the shares hover around their all-time low of 118p, yet before a sustained rally takes place, investors must regain trust in the company as well as in the global economy.

Risk 

Tern is up 10% today, and currently trades at 21p. This is a tiny firm that invests in the tech world, and as such I would expect it to have a relatively weak balance sheet, negative operating cash flows and funding needs that are essentially backed by investors who are willing to embrace risk.

That’s precisely what you’d be buying today, which is not necessarily a big problem given that its investment portfolio could indeed deliver rapidly rising returns.

The biggest risk is represented by possible dilution stemming from several rounds of equity financing that may be needed to support its cost base as well as its ambitious expansion plans. 

Until higher revenues are generated, though, personally I’d leave it to opportunistic traders.

The post Why Have Glencore PLC, Globo Plc & Tern PLC Been So Volatile In Recent Days? appeared first on The Motley Fool UK.