Friday, 19 June 2009

Xploite shows the power of the ‘dark side’

(By Anthony Miller – Friday 19th June 2009 9:15am). One of the first lessons I learned very quickly when I joined leading boutique equity research firm, Arete, in 2004, was that from an investor’s point of view, a company is not a company, it’s a stock. In other words, it’s just an investment proposition. That may seem a statement of the bleeding obvious to you, but to an industry guy like me, who had by then spent some thirty years looking at the IT market from the perspective of the players and their customers, this came as a huge culture shock. Such was my initiation into the ‘dark side’ as an equities analyst.

I tell you this because an interesting example of playing IT services purely as an investment proposition from within the industry can be found in “buy, build and sell” player, Xploite, which announced its interim results today (see here). We first wrote about Xploite less than a month ago when they sold off Anix (see Xploite sells Anix. Who next?). As a result, Xploite now has a continuing revenue stream of next to nothing, but should soon have the most part of the £31.5m cash for the sale of Anix in the bank once the deal completes. Then, we assume, it’s off shopping again.

So, while some play the investment game buying and selling ‘valuables’ such as antiques, Old Masters, wine and whatever, others do it with SITS companies. Whether or not it’s a ‘good thing’ for SITS companies to be passed from pillar to post will I’m sure stimulate a lively debate. But, as all investors eventually learn, it doesn’t pay to get emotionally tied to your investments if the aim of the exercise is to make money!

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