[Logan]

@Diana, I understand all these things. But why target me for the actions of the management? You chose to reply only to my post but not to the other posts. Why didn’t you raise the same complaints on the AGM day or the day that the warrants were approved? Why target only me? Aren’t you curious as to what the management will do with that money (which was more than the market cap of the company)?

If you don’t want me writing balanced posts then please tell me, I’ll stop writing. Why should I do hours of research so that everyone gets the “right” information? Yesterday I talked about opportunities lost and gained but you chose to bring up warrants issuance. Nitin asked me my thoughts on AI, and agritech but I went off topic and discussed other things also as I found it interesting.

[Logan]

@PBB, I don’t know about the g gang but Oak exited because their fund was closing down. No matter what, they had to sell all the shares that they held and had to return the money (whatever was left) to the investors.

[Logan]

Since we are discussing the warrants topic, everyone should know the facts.

Out of the 114,740,586 votes polled (public-non institution), only 28,745,069 were against the warrants. That’s only 25% of the votes. That means out of 4 people, 3 have voted in favour of the warrants and only 1 has opposed it.

The train has left the station and there’s not much we can do to stop it. At the next station, the exchanges can stop it but when the votes are in favour of the warrants what will they do?

At this point we can only discuss what the company will do with that money and that’s what me and others were doing. Like everyone here I also hate the warrants but we can’t do anything to stop it now and we couldn’t have stopped it before also. How could we have stopped it when 3 out of 4 have voted for it?

The majority sees it as good for them and that’s why they’ve voted in favour of the warrants. It’s simple as that.

[Logan]

@Diana Horton, I agree with you and we all know that (valuation) is the main thing to look after now with all the issues almost sorted out. See whatever I’ve written, I have taken a balanced view. I have always opposed the issuance of warrants and I am angry at them for not disclosing for what purpose these warrants are allotted. I don’t like the allottees too as I don’t see them as stable investors. I have always asked why warrants at a time when they are certain that they’ll get the LOC.

What can we as retail investors do to stop the issuance of warrants? We can vote No to that and we can complain to SEBI but what more can we do when most of the shareholders (even the retail investors) have voted Yes? Many won’t consider the dilution and all they care about is whether the company is taking any action or not. Some see this issuance of warrants as a positive but I don’t agree with them.

That amount he’s raising, it is more than the market cap of the company when it was announced (share was trading at 5). So just like everyone I’m curious on what he’ll do with that money. I thought of discussing with others as to where it will be used. In September call he said he has big plans for the company and in the AGM he hinted he may go for acquisitions like he did in the past so I assumed he may acquire a company using that PW money. I wanted to know everyone’s opinions on this.

All the time when we send questions to the company to be answered in the conference calls, I will always ask the most important critical questions (you can check those). I don’t think I can do more than that to bring changes in the company. I have invested in other companies too but I haven’t seen this much drama in any of those companies.

[Logan]

See this interesting thing about fate :

1998 : Yahoo refuses to buy Google for $1M (maybe 5crs)
2002 : Yahoo realizes its mistake and tries to buy Google for $3B (20-25k crs). Google wants $5B (30-40k crs). Yahoo says no
2008 : Yahoo refuses to be sold to Microsoft for $40B (3lakh crs)
2016 : Yahoo sold for $4.6B to Verizon
Now Google is valued at $1.28 trillion. That’s 93439232000000 rupees. I don’t even know what term to use for that in rupees. Yahoo could’ve bought it just for 5crs!!!!

Similar thing happened in Lycos. It was very innovative and very early compared to many others but now it’s almost non-existent. I don’t think anyone will recognize Lycos now. Lycos was once valued at $12.5B (maybe 70-80k crores) but later it didn’t innovate like it did in the past and was sold to Daum for just $95M (maybe 500-600crs). Then it was sold to BCG for just $36M.

Some of us want the company to invest heavily in AI and ML and some of us don’t want the company to do that and would want the company to look at fixing the valuation. I seriously don’t know which will be better for the company and the shareholders.

(Sorry for going off topic but I found this very interesting so I wrote a lengthy post about it)

[Logan]

Thanks @vgsatwork and @nitin_asce for sharing your opinions with us.

@nitin_asce, as they say, “being too early is the same as being wrong.” With Lycos Life, BCG was quite early compared to many companies (not earlier when compared to FitBit etc). If you see now, almost everyone has a smart watch and that trend has accelerated because of the pandemic. Everyone wants to stay healthy and smart watches helps a lot in that. If the company had launched it a few years later then we could’ve seen good growth rates in that.

The same case in the stock market too. Back in 2012, when BCG came to the market, everyone wasn’t that interested in tech companies as they are now. Back then BCG had great growth rates but that didn’t reflect on the stock price. Imagine where the price would be if BCG had come to the market in the last 2 years and if it had the growth rates like it did in the 2010-16 period. Even the issues wouldn’t have impacted that much. Affle came to the market at a great time. Same with TTD but Criteo, Rubicon Project, RocketFuel etc came too early and went unnoticed for a longer period of time. Obviously growth rates do matter but now the market is highly valuing all the technology companies even if those companies don’t have good growth rates.

Sometimes being early is good too. In the online advertising field they were early compared to many others and that helped the company a lot. They bought OMS, Israel for just 50-60crs back in 2007-08 and now its making more than 1000crs revenue and profits are little over 200crs. BCG is getting 4 times profits what it paid for in a single year. If anyone wants to buy OMS now, they should be ready to pay 5k to 10k crores at least. OMS is profitable and if it is given some liquidity it’ll have great growth rates too.

Pubmatic with revenues of $120M or little more (with revenue growth rate of 14-15%) is trading at $1.80B valuation. That’s 15 times the revenue so OMS can easily get valuation of 5-10 times revenue. Magnite Inc now is trading at 20+ times revenue. When it was trading at 3-4 times revenue, Motley Fool website said Magnite is undervalued. We have BCG trading at 0.13 times the revenue and the market is completely ignoring it.

So whatever decisions the management takes, we should just hope that it’ll benefit us in the short and long terms. AI is growing like crazy and all the companies are investing heavily in that. If you don’t invest in that then you’ll end up missing out on the opportunities and the business may go down but if you do invest in that there’s no guarantee that it’ll result in growth of the business. It may end up like Lycos Life or it may end up like online advertising. Nobody knows what will happen.

[Logan]

Thanks for the reply @nitin_asce.

Could that be the reason he didn’t want the LOC to come to the parent company? If it came to the parent then Axis could’ve blocked it till the matter was closed?

So maybe that’s why they didn’t concentrate on the standalone business all these years, if they showed profits then he’d have to pay more to the banks. Now since they are settling with Axis he can start concentrating on the standalone business again and maybe that’s why he’s raising funds? Maybe acquire that company Tryan where Mr.Pisipathi is the CEO. He did say that Mr.Pisipathi is working on a hardware related project and because of the pandemic they are taking it slowly. It’s an agritech company.

Also, what if both parties don’t come at an agreement? What happens then? In many other cases they end up liquidating the company right? Will the same happen here or will the judges order BCG to pay that 41crs with some penalty?

If he didn’t want to show cash then why is he raising PW money? Axis can block that also right?

Sorry for asking these many questions.

[Logan]

@nitin_asce, I think the original loan amount was 41crs or something and the ots was 24crs. Including interests, BCG maybe has paid more than 1.5x (60-80crs) the original loan amount. Will the judges consider this?

Out of 24crs, 8-9crs are pending and the date has expired. If they put some penalty it should not be more than 12-15crs right?

In one of the orders (the lengthy one) I guess it states that Axis wants that 41crs but in the December order it states Axis is asking BCG to pay the full ots amount. I maybe wrong in understanding this but what amount is BCG supposed to pay?

[Logan]

@dileepvn, you are 100% right.

My observation was about what he’ll do with the PW cash. Obviously the price was manipulated and there’s no denying that.

What I observed was that he hinted that they are looking at acquiring companies like how they did in the past (once all the issues are resolved). Maybe he wanted cash to do that and maybe the first tranche from the LOC will not be sufficient.

Yes, the AGM was a total disappointment and he avoided all the important questions. The callers also didn’t ask him any important questions.

[Logan]

And the last amount that they raised, it was equity not debt. Valuation matters more while raising money through equity sale than debt. With the LOC, he’s keeping the receivables as collateral so I don’t think they consider the valuation part of the company. If you see many mergers and acquisitions in the past (mostly in the US), many smaller companies have bought bigger companies maybe twice their size using debt (leverage). That time most of the banks will look at the size of the business more than the valuation.

Also You are not harsh at all. I don’t mind us having these discussions. It’s very important that we have these meaningful discussion so that we understand the situation well enough. If my views are wrong then I’ll change them in a second.

[Logan]

@dileepvn and @Rathi_b, I’m not denying the manipulation of prices but my point is why go through these legal processes if he doesn’t need that cash? If it is shares that he wanted he could’ve simply asked those people to buy it for him and later he would’ve got them.

If you remember in 2015-16, he wanted to buy MySMS for 100crs and he was ready to give them shares instead of cash. That time also he didn’t care about the valuation.

Warrants approval requires legal actions. There are many rules and regulations for that.

Also I don’t think he wants the LOC to come to the parent company. If you remember in one of the calls, he said the same to a caller.

[Logan]

@Rathi_b, do you think Axis is keen on settling with BCG or do they want to drag it further? (Until BCG agrees to their demands)

Everytime in those NCLT orders, BCG’s lawyer says the company wants to settle and they are having negotiations with Axis but with Axis the reply is always the same.

What are your thoughts on this?

[Logan]

I think if he has to use that PO money then he should pay 24crs or something (the first agreed ots amount).

I don’t think he’s ready to do that and even Axis won’t agree to the amount that BCG is willing to pay (8-9crs).

[Logan]

These things have a timeframe right? The court has to give a verdict within that period?

[Logan]

I think they neglected the software business all these years and saw it only as an holding company but now they may have found opportunities to revive the business.

The CEO talked more about AI and ML in the AGM than about online/digital advertising so my guess is that they may scale up the existing AI business (Dyomo) or maybe they’ll acquire an AI company.

We should just hope that whatever he does it won’t end up like Lycos Life where even though the products were good, the company burnt a lot of cash. In one of the calls he said they’ll take things slowly with AI and ML and won’t rush it like Lycos Life which is good. They must have learnt a lesson on not to rush things.

[Logan]

Finally connection to BCG’s website is secure (https). First they changed the logo’s direction from \ to / and now this. Something is happening for sure.

[Logan]

@drjaysee, I don’t think he’d go for buybacks because if he did want to reduce the free float he’d have asked those people to buy shares from the open market instead of giving them the PW. Even if they were to buy shares worth 65crs at price 5-6, they’d have got more than 20% of the company – that’s not small.

In the last call he said that bringing in stable investors was a personal endeavour of his and he’s making good progress on that and he also said he won’t consider buybacks at this stage but maybe later.

In the AGM he talked more about AI than about digital marketing so maybe he wants to acquire an AI company with this PW money (just a speculation). Nothing is clear as of now and only the company/CEO can provide us proper details (which they haven’t till now).

We all hate the issuance of warrants but others (almost all the other market participants) won’t care about the warrants because all they care about are results. If by issuing warrants if the company improves and if the share price rises then most of the people won’t care about dilution.

I read an article on Indo count industries where before the warrants it was trading at lower prices and later it shot up. There the promoters got shares at cheaper prices but the market didn’t care about all those and all it cared was results and the results were good so the market rewarded Indo count. I’m not saying the same will happen with BCG – my point is that the market cares more about results than about execution.

[Logan]

@Adi, I’m just sharing information about companies in Adtech industry. We should know where the industry is going and how other companies/stocks are doing. Since analysts don’t cover BCG we should rely on reports on other companies to know more about the industry. Adtech business is very competitive and if companies lose focus then they’ll go out of business.

Motley Fool was very bullish on Magnite but Spruce Point is negative. Spruce Point has mentioned that they are long on TTD, Pubmatic and Roku which means it’s not the industry that they are bearish on but this specific company. It’s good to see both positives and negatives of a company/industry. Our aim is to make money (good returns on investments) and if we focus only on negatives or only on positives then we won’t take good decisions.

[Logan]

Spruce Point Capital Management Releases Report and Strong Sell Research Opinion on Magnite, Inc (NASDAQ: MGNI)

[Logan]

This was written by Scott M.Stolz on Quora.

What would a world without advertising look like?
The world would be a very different place.

1.Most free content and information would be gone. You would need to pay for everything now. No more free articles, websites, online newspapers. No more free TV over the airwaves either. And most free services like Google Maps and Gmail would disappear too. Certain things might persist, like Wikipedia and public broadcasting (PBS), but they would be constantly asking for donations to stay alive.

2.Products would deteriorate in quality and be packaged in plain packaging. It would be like the former Soviet Union, where factories did not advertise their products either. If you wanted them, you went to the store and bought whatever was on the shelf. Without advertising there would be no way for consumers to compare what products are better. This means manufacturers can make deals with retailers for exclusive distribution deals, and retails would accept them, since there is no consumer pressure to carry other brands (mostly since they are unaware there are other brands since there is no advertising).

3.It would be easier to form monopolies, since competitors cannot advertise. Some back room deals with suppliers and distributors, and it is easy to put a new competitor out of business. And without advertising, no one will even know the new company or product or service even exists, making it almost impossible to launch. So the lack of advertising would give an incredible advantage to incumbents. And incumbents would start behaving more and more like monopolies, increasing their prices, reducing the quality of their services and treating their employees poorly.

4.Depending how far the ban goes, it may even be difficult to find businesses. For example, one neighborhood near me has a ban on outdoor signs. One day I tried to find a business. I spent 1 hour looking for that place, and gave up, because there were no signs. And even if signs were still allowed, if a new shop opened up the next street over, I would never know unless I happened to drive by it.

5.Any business that does not have a prime location would have a harder time staying in business, since their only source of customers would be drive-bys. Real estate prices for prime property would probably skyrocket as a result.

6.Freelancers and independents would have a hard time making extra money, since they can’t get the word out about what they offer. They would have to get corporate jobs, if they could find it. Some of these people would have to go on public assistance since they can no longer support themselves.

Many people hate advertising, but without it we’d be handing money and power over the the incumbent corporations who are already in retail outlets, and are already known in the marketplace. It would effectively kill any competition and any startups, and force freelancers and independents to go back to work for the very corporations they were trying to break away from.

Advertising may not be pretty, but a world without competition and innovation is pretty ugly too.

[Author]

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