The Little Stock that Should Rise, Monitise

Yes, the title is cheesy, but it’s a cheesy

situation!

 

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 NOTE: This is not investing advice, it was written for entertainment and thought provoking purposes only. Do your own research before investing in any company.

 

The catalysts for the following event were Monitise lowering guidance twice in one year, losses due to changing their business model to a subscription base over licensing model , and Visa announcing that they may relinquish their shares in the company.

 

Just in case you have been too obsessed with Alibaba (or as Doug Kass says, “Ali Blah Blah”)  this past week to do any reading – I’ll give you a brief background. Visa announced that they may relinquish their 5.5% holding in the small UK mobile money company called Monitise … causing their stock chart to resemble a cliff…er ….vertical line .. going down, straight down, really, really fast, like a hot knife in a Baskin Robbins ice cream cake.

Welcome to Panic City!

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Forbes says Visa says they want to work on their own technology to compete in the mobile $ space. Forbes says they may want to unlock funds to do so.

Really? Odd. Because they just made their funds worth a whole lot less.

Forbes

What they don’t say and this stuff is worth knowing and remembering for the investors holding long – especially those in the house of pain right now.

1. Monitise doesn’t have to rush to develop anything. They have NFC and other patented solutions ready to go right NOW – and this IS happening right now! Yes, some banks have developed their own, or in the process of doing so, but many banks may find themselves playing catch-up soon and find they need a white label payment solution right now….and quickly, like yesterday, or the day before!

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2. Monitise has partnered closely with IBM to work on apps and take advantage of IBM’s cloud services.  Closely enough for Monitise to place 20% of their staff (200 employees) with IBM. IBM must want/need something from Monitise for this to happen as last time I checked, IBM was not a soup kitchen for wayward mobile tech companies. If it’s anything to do with Apple – we may never get the details. EVER. EVER. Did I say …EVER?

 

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3. Apple has partnered with IBM and counting on them to develop more in depth software and apps that Apple wants to see happen as per Tim Cook’s recent interviews. By proxy that makes Monitise a little brother, ok, maybe more of a 2nd cousin twice removed, I mean – an indirect partner of Apple – but…see #4

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4. Monitise can be successful whether or not they are involved with Apple Pay’s token payment system.******** Since they carry agnostic solutions, (meaning working on any handset with any bank, any credit card, etc…NOT agnostic – as in a non believer in God – as I read on an investment board recently) they have a bigger audience because they CAN work with any handset or any bank or any card, even a prepaid card, including – guess what? Yep, even Apple Pay itself. You have to remember that Apple isn’t the only game in town. When you look globally, Apple isn’t even the biggest game in many towns. How many Android phones out there? Yeah, Apple Pay won’t work for any of those. Being able to work with ANYONE is probably what Al Lukies means by 10% of a really big #.

5. Monitise could (read: should) be planning on being into retail with their shopping solutions as much as their banking and intertwining the two. Or why even buy Marcko Media? Why launch YAAP? For their contacts – yes –  but so much more can be done there. Think Groupon. Think Target’s cartwheel app – oh yeah, that thing is dangerous! Anyone need some brocade red and gold drapes?

US Bank's mobile shopping app developed by Monitise

US Bank’s mobile shopping app developed by Monitise

 

6. IBM’s partnership (Monitise by proxy) with Apple has basically made them competitors of ALL other developers or potential developers – including Visa. I mean, they already were – but when Apple Pay was announced, it just amplified it all… like a ringing phone in a cemetery at night.

7. Visa once owned 14.4% of Monitise and now only owns 5.5% – this too shall pass. I saw many investors flat out trashing Visa on Twitter. Don’t judge Visa too harshly – they will be fighting for their life too, in this changing landscape. Oh, you don’t think so? Think about it.

McDonald’s vs. Chipotle – right now!

Remember Tower Records? Blockbuster? Anyone?

8. While mobile payments will be an all out war for a while – with many smaller battles taking place around the world – there can’t be one winner – just as there isn’t one credit card company, one bank, one restaurant chain, or one retail store. Monitise may be small, but they had a head start in the mobile payment arena. Especially when it comes to linking banks and money to mobile handsets. For those that are still not sure this is going to happen, ask yourself one question. Have you ever see a millennial without a phone in their hand (or the very least, their pocket or bag) … EVER?

9. Monitise has put revenue expectations in place for the Marcko Media purchase price and share price expectations for their own directors to get their share bonuses –  all available in the RNS section on the Monitise website. Right now, not so relevant – but it may help you hold your nerve, and get some sleep.

10. Does the Investor Relations division need to do a better job? Yes. Problem is, Monitise may be a little too busy in this battle to hold the hands of their investors. They are still a little company walking alongside Titans. So, you may just need to wring your own hands for a while, vent (nicely please) on Twitter, tend to your garden, do some research, or write a silly blog post. The people at Monitise are a little busy doing what we investors expect them to do and are adding paths to those subscriptions. Like these…

 

Santander

BBM Money

 

 More thoughts on the future of Monitise.

Can Monitise Survive V-Bomb?

The article quotes Barclays as stating that the market clearly over reacted to the stock overhang and loss of future revenue tied to Visa. They also state the loss of Visa as a client as about £10mil in revenue in 2017. By then Canaccord Genuity estimates generating annual revenue of £372 million and adjusted pre-tax profit of £64.3 million for Monitise. (In other words, they don’t need Visa)

 

According to a fellow tweeter Alessandro Grande:

@alegrandebig: @MzJunieBug basically 10x eps 2017. For tsla you pay what 30x 2020.

There are companies out there that have sky-high stock prices that have never shown a profit…Hello Amazon? Or cult stocks that are extremely expensive…Hello Tesla? And the beat goes on. And some people want to pick on Monitise?

My answer: Oh…go pick on someone your own size!

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Note: Monitise is a stock trading OTC and is a high risk stock. Several large US investors own shares of Monitise, but this makes it no less risky.

 

More on Monitise from the perspective of BTIG

BTIG also thinks the market over reacted and that it’s a good time to BUY. They also think a takeover by IBM is increasingly likely.

To be honest, I really want this to play out all the way, without a buyout

******The reason I did not bring up the payment token and NFC patents that Monitise holds: Apple has their own token payment patent from 2009 – (as well as an NFC patent) so not sure if they really need anyone else to make the token part of their payments work. Keep in mind, that many companies hold token payment or NFC patents now, all of them different enough to be granted.

That being said, the patents that Monitise holds are still very important as it protects their own work product and allows them greater access to a wider variety of clients as they can offer a greater range of services and products.

Author is long MONIF, MONI.L, and AAPL

And maybe IBM soon (she said with her tongue firmly planted in cheek)

How I originally invested in this small UK company.

 

 

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Holiday in London

 

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The 1p Easter Egg I never got

 

 

What do you mean a UK company bought Clairmail?

What do you mean a UK company bought Clairmail?

Why Vacations Rock for Private Investors

Note: This piece is for entertainment only, it is NOT investing advice. Do your own research before investing in any stock.

Vacations are not only fun, they can be important to the private investor.

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Trevi Fountain in Rome, with my husband, Marc.

His iPhone took this picture. It also provided a great walking map app for Rome.

 Forbes recently published this article about why vacations are good for business ideas, specifically start ups.

Forbes article

OK. So, maybe you are not a programmer, and you have no desire to start a business. Just because you may not be interested in manning a startup, does not mean this information does not apply to you. I have gotten some of my best investment ideas – on vacation. As the article states, a vacation allows you time to free your mind. When your mind is free – you can look at the world a bit differently. You may notice things you never noticed in the hustle and bustle of work and your daily life. It matters not so much where you wander, but that you allow your mind to wander.

Ideas that came to me on vacation

AAPL – no matter what continent we traveled, my husband’s iPhone worked – can’t say the same for some of my android equipment. And we saw iPhones and iphone equipment everywhere.
Solution: buy an iPhone, an ipad, and more Apple stock.

NFLX – like one of the founders, a former fellow teacher, I was super annoyed by overdue video charges I rang up on a summer holiday. I admit, I was out of my routine, and being a bit lazy. But, seriously, the charge was more than the movie cost to buy. Also noticed my daughter and many of her friends were ditching video store rentals for Netflix.
Solution: ditch Blockbuster, use Netflix, and buy Netflix stock

SBUX- no matter what country I found myself in, Starbucks was BUSY – people of all ages and incomes, sipping coffee and eating scones. I detest coffee, but I sill found myself drawn to the atmosphere. Always nice, well placed locations, and good service.
Solution: buy Starbucks

 

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Granddaughter Gwen, at Disneyland Paris in the middle pic,

and us at Disneyland in Anaheim on the left, Grandpa  and Gwen ride the teacups

2009

DIS – walking around Downtown Disney in Anaheim, I noticed how diverse Disney had become. Theme parks, toys, movies, TV stations, even ESPN. Disney was also on the rise internationally, with new parks opening. Disney is like a consumer discretionary ETF within itself.
Solution: buy Disney stock

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FB – my family is spread around the world, and we keep in touch via Facebook. I noticed that this was even more important to me when I was traveling. I checked in with the family, and shared vacation photos. And so did my friends. And so did their friends. My younger colleagues tell me they do almost everything through Facebook – Evites, social planning, shopping, listening to music, sending special event gift cards etc.
Solution: buy Facebook stock

 

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London, in the rain, of course 

Your idea may not be a blue chip stock. It might be a tiny little stock no one in your country has ever heard of. Which brings me to Monitise – a UK company.

 

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The 1p egg was as elusive as the Easter Bunny – at least for me – others had great success! 

A London vacation is how I originally found MONI/MONIF stock. (I was trying to purchase a 1p Easter egg off of a billboard, but my US phone wouldn’t work) I was super impressed by the technology provided by Simply Tap – a subsidiary of Monitise. Then Monitise bought Clairmail – a company I was watching, hoping for it to go public. As I researched Monitise, I really liked their approach to mobile money.
Solution: buy Monitise
Note: It sells under the stock ticker MONIF in the US. (MONI in the UK)

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Maybe investing in newer speculative type stocks like FB or the OTC stock MONIF feels too risky. In that case, stick with the tried and true, like Disney. If one invested conservatively and bought 100 shares of Disney at about $25.00 per share 5 years ago today (7/1/09)  it would have cost $2,500.00. Today, as I write this (7/1/14) Disney trades for about $86.00 per share – that is $8,600.00. That is $6,100.00 for the vacation fund, without even taking dividends into account. And now, we all know how important, and profitable, vacations can be.

Please, thoroughly research any company you plan to invest in. I can’t stress this enough!

Full disclosure: Author is long AAPL, DIS, FB, SBUX, and MONIF as of this posting.

Update 7/1/2014

After reading the article, my husband pointed out two I had forgotten about. Ford and Bank of America. We got a Ford Escape rental car on a Disney vacation. Loved it. Upon returning home, I did some research and bought Ford. After a trip to Europe, when our BofA ATM and credit cards worked more often than any of the other cards we carried – I did some research and bought Bank of America.

Also long F and BAC. 

PS. Sold Netflix in early 2014 when the valuation got too crazy, and kept me up at night. These investments took place over the course of a decade – it doesn’t happen overnight.

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Warren Buffett Invests Like a Girl: And Why You Should Too


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