Sharesmagazine
 Home   Log In   Register   Our Services   My Account   Contact   Help 
 Stockwatch   Level 2   Portfolio   Charts   Share Price   Awards   Market Scan   Videos   Broker Notes   Director Deals   Traders' Room 
 Funds   Trades   Terminal   Alerts   Heatmaps   News   Indices   Forward Diary   Forex Prices   Shares Magazine   Investors' Room 
 CFDs   Shares   SIPPs   ISAs   Forex   ETFs   Comparison Tables   Spread Betting 
You are NOT currently logged in
 
Register now or login to post to this thread.

Dowgate Capital - Capitalising on the booming AIM market (DGT)     

overgrowth - 09 Feb 2005 20:52

Dowgate Capital (DGT) are sitting in the middle of a goldmine!

This company through their sole trading arm City Financial Associates are looking to take full advantage of the "booming" AIM market this year. Dowgate provide NOMAD (NOMinated ADvisor) services to AIM companies and also have full Corporate Broker status which means that they can fund placements on behalf of the companies they represent.

On first sight, the fact that Dowgate exist in the often veiled financial services sector makes you think twice about investing in company such as this because it would be impossible to understand what they were doing - however, think again!

DGT bring new companies to the AIM (Alternative Investment Market). For each new company "floated" on AIM, they take arrangement fees when acting as NOMAD. After the company is launched then for a nice steady earner DGT get another healthy chunk of cash every year for looking after them (note that all AIM companies must have a nominated adviser - thereby securing a ready source of recurring income).

Because DGT also act as a Corporate broker they can get a very healthy percentage for arranging placement of shares with insititutions before a new company floats. In addition, because placements come outside the sphere of yearly NOMAD work, they can also gain healthy percentages of placements which companies may need to make throughout the year when they need a quick injection of cash to speed growth.

Current NOMADships: 28 companies represented (gives recurring income of approx 480,000 per year)

Current on-going Brokerage agreements: 19 companies (income depends on placements)

For flotations, depending on the size of a company, fees charged will be anything from 50,000 to 100,000+ For placements (the real earner), DGT get anything from 3% to around 12% of the TOTAL AMOUNT RAISED - For example a new company raising 3M though a placement will earn DGT anything from 90,000 to 360,000 ! These figures are indicative as actual deals all differ due to circumstances and DGT sometimes take payment in shares - they still have a tasty chunk of Setstone shares and when this Russian exploration company comes back to AIM, predictions are that the share price will rocket. Note that the amount that this little company can earn in fees is huge and every new deal that comes through we know will contribute another healthy chunk into the bottom line. The good news with every new floatation means that it's another chunk of recurring revenue which could go on for years, with DGT having to do very little. New clients gained in 2005 are:

Mediazest (NOMAD & broker) Elite Strategies (NOMAD) Process Handling (NOMAD) Poland Investment Fund (NOMAD) Nanotech Energy (NOMAD & broker) Archimedia Ventures (NOMAD & broker) Red Leopard Holdings (NOMAD) Alba Mineral Resources (NOMAD & broker) Intandem Films (NOMAD & broker) Motive Television (NOMAD) IncaGold (NOMAD) Sportswinbet (NOMAD & Broker) Infoscreen Networks (NOMAD & Broker) Mark Kingsley (NOMAD & Broker) Croatia Ventures (NOMAD & Broker) Pantheon Leisure (NOMAD) Firenze Ventures (Ofex Advisor) FlightStore Group (NOMAD & Broker) Euro Capital Projects (NOMAD) Pearl Street Holdings (NOMAD) Worldwide Natural Resources (Ofex Advisor) Dovedale Ventures (Ofex Advisor) Other 2005 work completed:Neptune-Calculus VCT offer for subs of up to 12 million Advisory work for TGM on London Bus disposal for 20.4M Advisory work for Creightons on property disposal Advisory work for Hampton Trust on company restructuring Advisory work for Interbulk Investments on acquisition of Inbulk Advisory work for Fundamental-e Investments on two disposals Advisory work for Designer Vision re: Design Rights against Centurion Electronics

Click Here for fundamentals and profit projections.
Chart.aspx?Provider=Intra&Code=DGT&Size=Chart.aspx?Provider=EODIntra&Code=DGT&Si

EWRobson - 03 Mar 2006 13:09 - 2115 of 2787

It could well be significant that the share cap. has moved above 5m. This could bring it on to a few more radar screens, including fund managers specialising in AIM. Really, the share cap. should not be less than 10M given the earnings growth, diversification opportunities and cash in hand. The golden cross will help. Wonder if there is another nugget on the market like DGT?
Eric

stockdog - 03 Mar 2006 13:25 - 2116 of 2787

Eric
One thought to explain relativ lack of institutional interest is the NMS - 100,000 - worth 840! How can you get a decent volume and more importantly be assured of selling in a hurry if you (we come to that!) need to. NMS should be at least 250,000 = 2,100.

Also the spread is a killer - still up at 9.5% even with a good two way market going.

A share consolidation 1 for 100 and a realistic NMS would sort this out and bring this share within reach of many more investors.

sd

EWRobson - 03 Mar 2006 14:01 - 2117 of 2787

Agree with you as usual, oh WASOD (wise and sagacious old dog). Interesting that the spread is currently 0.05p or 5% (lowest offer less highest bid) although each of the individual MMs has a spread of 0.1p. This is clearly a deterrent: very nice sitting with a good paper profit but I wouldn't like to have to dispose of it quickly. I've noticed that, when there is a big seller about, you can pick up decent quantities; I remember sitting in my condo. in Whistler and picked up 3.5 million shares in no time at around 0.3p (when Shaw was selling his stake); stupidly didn't hold on to them. But I don't think that will happen again. But RIL could well be back for more so some decent buyers should make them easier to sell. A lot of 100K sells have gone through, so the poor blighter, apart from being foolish enough to sell, is having to pay commission on 800 parcels. Poor sucker! Obviously not a follower of this thread!
Eric

stockdog - 03 Mar 2006 15:58 - 2118 of 2787

I might write to TR suggesting he talks to their house broker (EVO?) to sort out the NMS and spread - so that DGT becomes the perfect PI's share to invest in. Performance and Structure all in one.

sd

markusantonius - 03 Mar 2006 16:46 - 2119 of 2787

Good posts again, Eric and SD - I second the above motions!!

stockdog - 05 Mar 2006 12:10 - 2120 of 2787

I've written a letter to TR today asking if he has any influence over increassing NMS to nearer 250,000 and reducing the spread to no more than 5%. I'll let you know what transpires.

sd

Paulo2 - 06 Mar 2006 07:28 - 2121 of 2787

sd, I've just been talking to a much respected chartist over on advfn called fingers. He suggested that if you actually look at the WMAs, a golden cross occured on February 24. He also said something about a W formation possibly occuring which could see the SP rise to 1.375p short-term if we can just get over the psychologocal 1p barrier. Any thoughts?

stockdog - 06 Mar 2006 07:58 - 2122 of 2787

paulo
a golden cross of 25dma moving up through an upward moving 200dma did occur on 24th Feb. I'd always understood the term referred to the 50dma crossing the 200dma - it doesn't matter that much.

The W - is that what I call a double bottom? If the share breaks above the interbottom high on the last stroke of the W, then the SP can be expected to rise above that point the same height again as the height of the interbottom peak above the two bottoms. There is a series of bottoms at about 0.425p from Sep to Jan with two interbottom peaks of 0.65p in Nov and Feb - so I would expect the SP, once break out above 0.65p has happend, to reach 0.65 + (0.65-0.425) = 0.875p which it is well on the way to doing as I write.

Further, once we break past the previous peak of 0.85p you can add on the difference between peak and trough within the W formation to another level - I would add the difference between 0.85 and 0.65 and get 1.05p as the next step to achieve. I'm a bit vague here, but something like that.

Not sure where your friend gets the 1.375p level, but I'd like to meet him when we get there!

Onwards and upwards!

sd

Paulo2 - 06 Mar 2006 08:08 - 2123 of 2787

sd, I'm not sure if you're a member over there, but here's the link just in case.

http://www.havetimeout.co.uk/analysis/analysis.php?aid=220

stockdog - 06 Mar 2006 08:36 - 2124 of 2787

Thanks, paulo
I now understand - I might try WMA's.
Also interestingto look at the 2 year W instead of the 9 month one
must run - school run
sd

Global Nomad - 06 Mar 2006 08:36 - 2125 of 2787

morning paulo2, just wanted to check if you are also posting over on iii, otherwise there is someone copying and posting bits of your comments.....or vice versa...

lets see this pause for breath put another move on the sp in the next days and answer some more hopes and desires

Paulo2 - 06 Mar 2006 08:41 - 2126 of 2787

Just call me Mr T, Global.

LOL

Global Nomad - 06 Mar 2006 09:24 - 2127 of 2787

yes sir!

stockdog - 06 Mar 2006 10:49 - 2128 of 2787

Little bit of mild profit taking by 6 PI's so far today - only one of any size and still uner 5,000. As GlobNom says - time for a pause on this one before the next phase. MMs have marked the price down to protect themselves and possibly scare a few weak holders into their arms before they mark the price back up when buyers start appearing.

Anyone who spots any business for DGT being announced, please keep it coming so I can add to my model and keep the figures up to date for you all.

sd

Global Nomad - 06 Mar 2006 20:32 - 2129 of 2787

spread has also narrowed nicely today

stockdog - 06 Mar 2006 20:46 - 2130 of 2787

MMs happy to sell back at a small mark-up the 3m shares they took on today and probabaly similar amount yesterday, so offer dropped to shift the stock they now hold having shaken the tree. With about 2.5m bouthg back by investros today alone, won't take long to exhaust their stock, then they'll have to put the bid up again to get more in - or really scare us with a bigger drop in price.

butane - 06 Mar 2006 21:40 - 2131 of 2787

Try Dowgate at 0.8p
06.03.06
t1ps - Luke Heron


From Luke Heron of Watshot.com


These recommendations do not constitute advice, please read the risk warnings

For those that like Daniel Stewart, but feel they missed out on the bigger slice of the action, AIM-traded tiddler Dowgate is well worth a look. Dowgate has a market capitalisation of just 4.3 million, which for a company delivering decent levels of profitability, fantastic growth and backed up by cash of circa 1.2 million and no debt, is very cheap indeed.

Dowgate, which owns broker and NOMAD, City Financial Associates (CFA), last week unveiled full year results for the 12-month period to 31 December. Substantial progress was made during 2005 in establishing the name and reputation of the adviser among smaller quoted companies. This has resulted in the transformation of the business into profit following significant losses in all previous financial years. Dowgate is now well placed for expansion. Turnover rose to 2,310,000, up from 1,325,000 - an increase of 74%, as profit before taxation came in at 587,000 from a loss of 366,000 a year earlier. Earnings per share were 0.095p, putting the stock on a price to earnings multiple of just 7.2. Take out the cash of circa 1.2 million and the shares trade on an enterprise price earnings of just over 5. There are no two ways about it, this stock is seriously cheap.

Going forward and as market conditions change, CFA will find itself being required to raise funds for its various clients. Whilst clearly it already has some capacity in this area, it is now looking at developing this fund-raising capability during 2006. This development will be balanced with its wish to continue to work with a range of brokers suited to its clients' needs. Meanwhile, the prospect for dividends also looks good. With the breakthrough of the business into profit in 2005, accumulated losses within CFA itself were almost eliminated, but substantial losses arising from Dowgate's previous ownership between 2001 and 2003 of CFA Securities Limited remain carried forward into 2006. The potential exists for the bulk of these losses to be written off against the company's share premium account but further profits need to be earned or distributable reserves created for all past losses to be eliminated. The dividend policy is now under review, but if growth continues as it has done, I would imagine a maiden dividend this time next year. With clients being signed up left right and centre (20 signed last year and I believe a further six signed since year end), momentum is clearly on its side. At 0.8p, if you buy these shares, I believe you can reasonably expect the stock to at least double on a 12-month view. "Buy".

This newsletter was published by t1ps.com Ltd which is regulated by the Financial Services Authority and can be contacted on 020 7033 9389. The articles in it are for general guidance only and we cannot assume legal liability for any errors or omissions they might contain.

T1ps.com assurance all editors and contributors to the Tips service will declare any personal interests they have with any individual company they are discussing.



Some of the shares recommended on this site will be smaller company shares. By their nature such investments can be relatively illiquid and thus hard to trade.

stockdog - 06 Mar 2006 23:45 - 2132 of 2787

Nice one, butane. Twice the price would suit me fine.

sd

Paulo2 - 07 Mar 2006 09:50 - 2133 of 2787

Eric, did you get on to Shares mag about doing a piece on DGT? With the figures out I don't think I'll ever buy another issue if they don't give us a good write-up.

EWRobson - 07 Mar 2006 12:24 - 2134 of 2787

Paulo: as I mentioned on this thread, I decided to wait for this issue to see if they do a piece. If not I will write under the title 'Dowgate under the radar'. pth wrote a year ago when the cap. was 2.5m and that was there excuse for not giving coverage. I see their point because , if they made DGT a Play of the Week, then the market may not be able to cope with the demand and their readers would be cross. But they need to find a way of covering smaller cap shares. Is there another DGT out there, I say? One way, of course, is to publish reader's letters without a recommendation but giving the opportunity an airing.

Butane: thanks for that. I subscribe to t1ps but missed that one. Very balanced post and my views precisely. Interesting to see the price easin despite a preponderence of buying. Suggests that MMs topped up expecting a higher level of demand which hasn't yet materialised;just makes the Shares attitude mopre important. This ought to be the ideal conduit for this sort of investment analysis.

sd: you should be congratulated on the accuracy of your analysis. I thought you had undercooked it but forgot that dogs like raw bones: gives this board tremendous value and I will include that in my letter (if I need to write it). In one respect, I think your forecast is light though. You say 24 new clients instead of 20, yet the number of consultants is up from 4 to 6 or 50%. There should also be more of a trend to a higher average income; again as they come into larger companies radars. I also liked Daniel Stewart's point about fundraising. I suspect that they will raise funds directly for their smaller clients and use the established borker's for the larger ones. That way they will still get the referred business.

Everywhere you turn, the picture is positive. I might even start buying again myself! RIL need some opposition after all.

Eric
Register now or login to post to this thread.