August has continued the positive run that tech has enjoyed for most of 2012. Indeed NASDAQ stormed ahead by 4.3% and the UK TechMark was up 2.9%. The FTSE SCS Index (which best represents UK SITS stocks) was up 1.9%. That’s a 20.6% rise YTD – the BEST of any of the indices that we track.
We have long learned that there is little connection between stock market performance and the actual performance of either companies or countries. It’s all about ‘anticipation’ for the future. Indeed, once that ‘anticipation’ has been resolved – one way or another – it’s probably time to sell. So the only way to read the markets this year is that investors believe that ‘things can only get better’. However, if you read the outpourings from most learned global economists (OK, given past performance ‘what do they know?’…) the world, Europe and the UK are in for a bad time for years to come.
Still, back to the ‘Good News’.
I don’t think, in all the decades I have been following the share movements of SITS stocks, that I have featured CSC as the ‘Stock of the Month’. But with a 31% rise in Aug, that’s exactly what they are! The reason is in the headline to our HotViews comment earlier this month – Lawrie starts recovery at CSC. Hot on the heels of solving the huge set of problems he inherited at Misys, Lawrie sets to work on a similar task at CSC. Early signs are encouraging. Even the NHS dispute is said to close to resolution. Lawrie is known as a hard nosed ‘disposer’ of both staff and subsidiaries. So expect further fireworks. But shareholders could see rich rewards. But remember even with today’s higher share price of $32, CSC is still significantly down on the $56 of Jan 2011.
Our second best performer was Phoenix IT – up 22%. See – Phoenix IT – Q1 wobble but Full Year is unchanged. But again this is more of a recovery. Phoenix IT is still below the high it reached in May 11. K3 was also up 21% - most of this rise was late on Friday. There has been no announcement from K3 to back this up. Back in March we reported that K3 puts the ‘For Sale’ up. Maybe ‘this is it?’. (Note – In search for news on K3, we discovered that K3’s CFO David Bolton, was also the Chairman of Dawson International, the cashmere sweater company, that went into administration this month. A strange combination of jobs and certainly proves our warnings that when involved in a pluralist career expect every company in which you are involved to have a peak of activity at the same time)
At the other end of the scale, Mouchel really is the ‘Loser of the Month’. Technically we have them down as declining 60% to just 1p. But as they have now appointed administrators, Mouchel shareholders lose their penny too. Given that a few years ago they spurned an offer at 260p a share, there must be some ‘sick parrots’ today.
SocialGo lost 21% this month. For the ‘complex’ reasons behind his, reread our SocialGO warns – and gets social with Catalis post of a few weeks back.
Finally, and almost as ‘bizarre’ as CSC leading the pack this month, is Facebook’s continued slide. Down another 17% to $18.1 making it a 53% slide since the $38 ill-fated IPO. I have written more on Facebook than any other company bar Apple (up another 9% this month making an eye-watering 64% gain YTD…) I wrote my ‘defining’ and much quoted note on FaceBook in Feb 12 – The $100b FaceBook Question. In it I argued that FaceBook was ‘worth’ perhaps half of its $100b IPO valuation. Well, FaceBook is now valued at just $38b. But there is now so much negative news surrounding Facebook – in particularly how it is going to make money from mobile and the huge overhang of ‘locked up’ shares likely to hit the market in coming months – that it would be a brave investor who plunged in even at today’s valuation. Indeed the falls on Friday were as a result of a broker’s sell recommendation with a price of $15 suggested. Oh how the ‘mighty’ are fallen.