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.

Website: www.cityfin.co.uk

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.

thanks pth--patience is all we need IMO.

pth
many thanks

i am thinking seriously of adding substantially to my holding now.

ranoszek

hmm, you're not the only one. Against, topping up is that DGT already represents a significant overweight portion of my overall portfolio. For, should the company continue to gain new clients at the rate they have achieved this year, the Final Results will be outstanding and the SP will be significantly higher than at present. On fundamentals alone, at conservative levels, we should be looking at a minimum of 1.00p, throw in a bit of market sentiment and momentum and who knows? I am already looking forward to the Interims, which DGT seem determined to release asap after June. (July is not far away). As long as they continue to attract clients and we don't have any further disruptions (aka S Barclay) this is a no brainer IMHO. A few iffs in there though!! LoL

Good luck if you decide to top up.

pth

pth

cheers and good luck to you and all holders on here. We've endured a lot over the last few months and hopefully the shennagigans of Barclay et al are dead and buried--Hope deadfred isn't watching?

Many thanks for posting those details pth.

I hope you also congratulated Tony and his team on their excellent performance in turning this company around into a real force to be reckoned with.

Interims will provide all the proof we need to top up - though I think there may be a rush to buy before, and the shares are now looking like the cheapest they're ever going to be.

I've found throughout many years of investing that you make the most money if you find the right company and invest a stack of dosh into it at the right price (easier said than done lol!).

I used to have a portfolio of 20+ small caps. and blue chips on top, though the amount invested in each was not significant enough to create any serious wealth.

My core portfolio now consists of 5 companies and I've made a significant investment in all of them including DGT.

The fact that this company is going to make substantial profits by year end 2005 can't be disputed and from what I've seen and heard from TR, I think that we're looking at the birth of a real success story.

If I can release the funds you can bet I'll be topping up too!

og

My parting shot to TR:

"Finally, many thanks for your efforts this year so far. It is clear that the
company is in better hands than previously and I have every confidence in your
intention to 'build a valuable business." Unless I feel really concerned about any other aspects of the business, I won't be bothering him again, much better left to generate some profits!

Interesting you remark on smaller portfolios. I had the pleasure of playing golf with markusantonious today and that was one of the very subjects we were discussing. I currently have 20 or so stocks in my portfolio and it has become very obvious that small investments in many companies are not going to generate significant wealth. I have come to the conclusion that it is much better to have a smaller spread of stocks with a larger investment. Set a stop loss and target and be disciplined in one's 'trading.' Ceratinly, an ethos I intend to develop (should the dogs ever become worth selling!).

I think June will probably (hopefully) be the last opportunity to top up at these sort of levels.

pth

Hi guys, just back from a week's sailing and pleased to return to another possible transaction fee (Nat Express/Tellings - say 10k fee) and a new NOMAD/Broker client (say, retainer 22.5k + IPO fees of 25k) whih takes us to over break even for the full year 2005 by end of June and still 6 months to go.

As per my model:-
Revenues to date:-
Retainers from prior year clients 315,000
Retainers from 2005 new clients 160,000
Other transaction fees 2005 160,000
Broker commissions 2005 211,000
Total revenues to date 2005 1,371,000
Operating costs for full year 1,200,000
Profit to date 171,000 after first 6 months ! ! !
6 months revenues to come - all profit,
say, 4 NOMAD only, 4 NOMAD/broker - 460,000 (if same as 1st half this rises to 531,000)
Ignore incidental transaction fees and any options/warrants held in client shares
Full year profit 631,000
Market Cap 2,476,000
PE 3.92 should be nearer 12
so SP should be .40 X 12/3.92 = 1.22 mid or 1.10 bid (allowing 20% spread)

1st half results will indeed be interesting to see if the dog is healthy and wise or flea-ridden and mad.

This situation suggests topping up before results published. DYOR

sd

RNS out.....Another 1,25mill buy for TR.....takes his holding to 24 million.....

hi chaps,

Following the comments in TR's emails to myself, I feel that this is getting just better and better. Obviously, due to non disclosure TR has to be very careful with what he reveals by both the written and spoken word. But hot on the heels of his encouraging remarks, he goes off and buys yet more shares. can't send a clearer message than that I feel.

Cleaned out some dogs this afternoon (sorry, not you sd!) and topped up with a few more. Starting the rationalisation of the portfolio at last and can't think of a better home than in DGT. Always prepared for disappointment, but the business is so trnasparent with regard to fees / turnover, I am feeling rather hopeful to say the least.

pth

DGT is indeed getting better and better every day!

If your figures are right SD, that's big news that we're in profit after just 6 months of trading under TR and team.

It's great that TR has faith to put his own hard-earned into the company rather than milking the company from options etc.

DGT certainly look as though they're going to be a big success story of 2005 - and when the results come out to prove this, I think we'll see a flock of buyers rushing to join the gravy train.

pth - good to hear that you're starting the consolidation process with your portfolio - it will make a massive difference when the companies you choose get motoring (apart from DGT of course which appears to be already motoring in top gear!).

og

Bit of a painful process, I have to say. You always believe that the poor performers are going to come good. Looked at three this afternoon that have been in the doldrums and worked out that if DTG's SP performs in line with the expected Interims, I will have recovered my losses and a little bit more besides. The secret now, of course, it to bin the small dogs and make sure I don't choose an Alsatian sized one!!

All we need now is for the rest of the Directos to put their hands into their pockets!! Mind you very happy with TR's efforts!!

pth

AFX News Feed

Friday, 03/06/05, 07:59

Interregnum says Red-M Group postpones AIM float due to market conditions

LONDON (AFX) - Interregnum PLC, the technology merchant bank, said its portfolio company, Red-M Group has postponed its proposed listing on AIM in the first half due to the "significant deterioration" in market conditions for new issues.

etc. . . . .

This is a small cloud on the horizon which we need to keep an eye on. It's an issue I have raised in a previous post. I do not think it will affect my projected further 8 new clients for the second 6 months of this year, but it could start to drag on prospective growth for future years and on sentiment.

Anyone else picking up similar vibes?

sd

Notwithstanding the small cloud, topped up today in a small way, following TR's lead - although, sadly not at his price - I got them at 0.429p. But who's counting by the time you get to 1p!

sd

Nice one SD, and many thanks for posting up to date details from "the model" which look fantastic.

Re: Interregnum - Tech. stocks are not currently flying in general and institutions looking to invest in placements for a company which effectively funds these stocks will need a lot of convincing - this is what I interpret as these "market conditions".

Overall AIM market conditions continue to be bouyant and DGT cover a wide range of sectors in their floats, shielding them from the sector-specific effect.

I started a thread about a week ago, which unfortuntaely didn't spark any interest. Essentailly referring to the downturn in the AIM Index. I thought then that the Index was oversold and since posting it has risen steadily. I believe that any doubts that new companies would have had about floating for the last few months will probably have been dispelled by the current strength of this market.

Notwithstanding your lead sd, there seem to be a few others dipping their toes into DGT. I sometimes get the feeling that their are a few hardy souls whom have stuck with this and practically prop the SP up on their (our) own. Although, I am sure that is not the case really. There are a lot of lurkers who will be watching and waiting. The Interims are not far away and I will be surprised if we don't see greater activity before then.

pth

pth - certainly concur with your observations, now is the time for limpets...

I agree - it looks as though we're going to have to wait for interims before we get any serious buying which will move the price up quickly.

At these prices you can get a million shares for round about 4K, I'm sure that we'll get a few more potential "share millionaires" willing to have a dabble when they see proof of the excellent performance so far this year.

BusinessWeek Online
Europe's Small-Cap Fever
By Beth Carney


Europe's small-cap stock markets are booming. Last year, the London Stock Exchange's junior exchange for small companies, the Alternative Investment Market (AIM), attracted 226 initial public offerings, the most in its 10-year history and more than three times the number it drew in the previous year. In April, the Irish Stock Exchange opened the Irish Enterprise Exchange, a junior market for smaller companies. And on May 17, the European stock exchange Euronext is opening a growth market in Paris, called the Alternext, which will focus on listing the one million small-cap companies in the euro zone.


The question now: whether AIM and its emerging rivals can continue to succeed where European exchanges have failed in the past. The Neuer Markt, run by the Deustche Boerse in Frankfurt, which was set up in 1997 for technology companies, collapsed in 2003 after the value of its top 50 companies fell 95% from their peak and several became embroiled in scandals. Other growth markets -- such as an earlier Euronext small-cap market called the Nouveau Marche -- simply never established critical mass and had to be subsumed into existing stock exchanges.

Small-cap exchanges are reemerging as a force in Europe, partly to allow small companies to avoid stricter European Union regulations coming into effect in July that will create new guidelines for reporting and company prospectuses. The new exchanges, like AIM, will be exempt from some of those requirements, because they are classified as self-regulated. Like AIM, the new markets will have simpler listing requirements and regulatory regimes than major European stock exchanges.

POWERFUL DRAW. The junior markets are also seen as a growth opportunity for major exchanges operating in an increasingly competitive environment. As in the United States, where the New York Stock Exchange and the Nasdaq are attempting to become more competitive by buying electronic trading platforms, stock exchange consolidation looms in Europe, too. British authorities are now reviewing an initial approach by Euronext to buy the London Stock Exchange.

In the meantime, AIM's success in attracting both companies and investors has clearly been a powerful example to its rivals. There are 1,127 companies listed on AIM, including 134 from outside Britain. International listings grew by 15% last year, faster than the 9.7% growth in domestic listings, and AIM's new listings accounted for more than half of all new listings on stock exchanges across Europe, according to statistics complied by the Federation of European Stock Exchanges. Though the average AIM firm has a market capitalization between about $20 million and $40 million, the largest are valued at more than $1 billion.

AIM's performance is another draw: In the 12 months that ended in April, the FTSE AIM index gained 12.6%, outperforming both the FTSE 100 and the FTSE small-cap indexes. A total of $8.8 billion was raised on the exchange in 2004, more than doubling the $4 billion raised in 2003.

BIGGER RISKS. The key difference between AIM and earlier growth markets is the exchange's looser regulatory regime, according to Tim Jenkinson, a member of the finance faculty at Oxford University's Said Business School. Under AIM rules, companies can enter the market with no trading record, no minimum market capitalization, and no prospectus. The London Stock Exchange does not review any admission documents.

All the companies need in order to list is for one of several dozen designated nominating advisors -- which include brokers, accounting firms, and investment banks -- to sponsor the company's admission. "It's a very different type of market," said Jenkinson, who attributes its popularity to the relative ease of access.

Of course, the flexible listing process, though cheaper and easier for companies, dramatically increases risks for investors in AIM-listed companies. One concern has been the number of cash shells listing on AIM -- investment companies with no physical business that are formed to raise money for purposes such as mineral exploration or making acquisitions. Last month, the London Stock Exchange tightened AIM's rules regarding such businesses, requiring them to have a $5.7 million market capitalization before listing.

"MORE SILT." However, the threat of the rule change prompted a rush of cash shells to the market. According to a study by the accountancy and consulting firm Grant Thornton, which advises AIM companies, half the companies that have listed in the first quarter of 2005 are cash shells, which are by definition uncertain propositions. "The types of companies on AIM tend be of a higher risk profile," says Richard Staveley, manager of the SG UK Smaller Companies Fund at SG Asset Management, who limits his fund's investment in AIM to 20% because of the risks.

Adds Crispin Finn, manager of British growth funds at Credit Suisse Asset Management: "There are far more low-quality companies on AIM. In order to find the hidden jewels, you have to sift through a lot more silt."

Both the Irish and Paris exchanges have somewhat stricter listing rules than AIM. The Irish Enterprise Exchange requires companies to have a minimum market capitalization of about $6.4 million, in order to discourage cash shells, and Alternext will demand that companies place at least $3.2 million in public hands. Both exchanges will use sponsoring advisers to help companies list and ensure their compliance.

AIM WANNABES. Whether the new exchanges will replicate AIM's success remains a question. AIM has one big advantage -- a tax break the British government gives to investors in AIM companies to encourage startups. "AIM has such an accepted international reputation, I believe that for some time it will be the first choice," said Simon Boadle, corporate-finance partner at PricewaterhouseCoopers, which advises AIM companies.

For now, AIM is the leader that the others hope to emulate. "AIM is the model that has worked," admits Brian Healy, director of trading at the Irish Stock Exchange. But competition is heating up as rivals aim to emulate AIM's success.

Good find butane - that confirms that DGT are on course for providing a repeat of the fantastic H1 performance in H2 also.

If that's the case, then we're going to be looking at a very healthy company by the end of 2005.

An interesting 750K trade (recorded as a sell) has just caused a tick up on the bid - must have been a buy, and at that price it can only be another director buy IMHO.

When these "special discount" director buys are out of the way the shackles should be released and we ought to see the price moving up what I would say is fair value based on current trading of around the 0.75p mark.