Hansen Technologies Limited (ASX:HSN) will increase revenue by over 50% and achieve EBITDA of well over $20 million in FY2014, according to their recent update.
The share price is now over $1.45, making it not unreasonably valued at a far higher price than when I stupidly sold it some time ago. It was my friend Damien Lynch who first told me about Hansen when the share price was under 80c. He also told me to look at My Net Fone (ASX:MNF) when it was around $1, told me to seriously consider TFS Corporation (ASX:TFC) when it was about 60c, and suggested TPG Telecom Ltd (ASX:TPM) to me when it was trading at but a fraction of its current price.
Here is an excerpt from a private email I wrote to him in early 2013:
"I've sold my entire holding [of Hansen] at 85c, which, accounting for all costs and dividends, puts me at only a mild profit... I don't see Hansen growing until 2014, at the earliest. I think that once more information becomes available about the acquisitions, then the company's prospects will be a lot clearer."
Here's my original research that I wrote and shared when I bought Hansen shares in 2012. You can see how my style of analysis has changed quite a bit since then (although I do tend to post shorter blog posts more these days - which are more about sharing ideas than presenting full research.)
HSN Compiled Research (opens pdf)
It's interesting to note for me because the research is very basic (but proved to be roughly correct). If I had stuck to my guns, I'd be sitting on a big gain.
In retrospect, from March 2013 - October 2013 I was overly influenced by another investor, because I was focussed on learning as much as I could from others. Whoops.
The big lesson for me is not to let someone belittle your research and make you doubt your own intelligence. A good friend will disagree with you, strongly if need be, but they won't attack you personally. One such example is the personal attacks I got when I suggested Sunbridge Group Ltd (ASX: SBB) might be a trap rather than literally the best value opportunity I have ever seen on the ASX. One acquaintance told me to stick to my knitting. A bit rude but forgivable.
But that relatively benign ad hominem shot seemed to encourage some lunatic to start trolling me on twitter. He [the lunatic] demanded to know what "black flags" I was talking about. Blocked.
A few hours later the CFO resigned. But in more recent news, the stock is up strongly on the latest quarterly which - surprise, surprise - looks good. Sunbridge just may have been the cheapest stock on the ASX, but I couldn't be sure of that, so I gave it a miss. I regret the bumper profits I've missed, but I don't regret questioning the opportunity (indeed, I still wonder why that insider was in such a hurry to sell).
Funny how some traders see fundamental analysis something to use to their advantage, whereas others see it as a threat to their profits (they need stocks to be overhyped or hit by panic to make money).
I'd suggest that if you want to find a good technical trader, look for the ones that aren't afraid of fundamental analysis, but rather use it to their advantage. Assad Tannous seems to be able to combine the disciplines effectively although his core strength is in Technical Analysis. There is of course an element of self-fulfilling prophecy about his buys - given his truly phenomenal twitter following - but I've found his and Bill Pavlovski's technical analysis to be extremely useful. I think if I let their opinions guide me a little more I could probably improve my returns. Technical analysis remains a significant weakness of mine (although I think I am learning a bit...)
My main teachers are the market and of course my investor friends. However, friends don't attack you when they think you are wrong. They simply disagree with you politely and try to convince you otherwise. Sometimes, they just tell you what they're buying or selling (as that is a good signal they may disagree with you.) For example about 2 months after I sold Hansen (in May 2013), Damien emailed me that he "Recently bought HSN (earlier in the week)... Overall, cashed up as well."
At least I have had long term exposure to Hansen through my investment in this boutique ethical fund.
The author owns shares in My Net Fone. The author has an indirect interest in Hansen Technologies, TPG Telecom and TFS Corporation through his shareholding in August Investments. Nothing on this blog is advice, ever, and may even be plain wrong. The purpose of this blog is to document my thoughts on different companies in an easily accessible way and to make connections with likeminded investors. Subscribers to the Free Newsletter get sent research first, and have access to the Hidden Research.