Forum Archive Index - January 2000

[Phil Eriksen <phil@acepay.co.nz>]

> Henley supply closing prices for 20 or so of the worlds leading exchanges.
> This provides an income for them. Costs the client $25 - $50 a month depending
> on exchanges required.
> They provide free software 'Henley Investor' and 'Henley Chart' to analyze the
> data with.
> You can do very rudimentary or very sophisticated analysis, whatever suits 
>your
> style of investing.
> 
> The software is aimed at giving the small investor or trader (you and I)
> sophisticated analysis tools at an affordable price.
> The number of on line investors worldwide is increasing at a great rate and 
>most
> of them are looking for software like this.
> There appears to be a worldwide opportunity for Henley.
> Giving the small investors data services and analysis tools they need at a 
>price
> they are willing to pay.
> 
> The services provided are quite separate and distinct from the services of a
> broker.
> I get whatever closing prices interest me from Henley, do my data analysis 
>with
> their software, and do any trades required through a discount broker.
> 
> I am delighted with the service recieved so far and have been quick to take 
>some
> shares in the company.
> They are one of my two picks for shares to do best this year.
> The other is IndraNet.

Hi Richard,

No doubt i'm opening myself up to abusive private emails from a couple
of the fatanical e-commerce lurkers who respond to anything negative i
say, but here goes.  I haven't look into Henley in any detail at all -
i've read the investment statement, gone through their website, asked 2
people who might know a little, and read a short review in an investment
publication.  I don't claim to be an expert on this company at all, but
it doesn't look good to me.

To quote a section from the most recent "Market Analysis" - "Formed in
1997 and "having successfully established itself" revenue is forecast to
be $51,000 in the year to March 2000 - when the company expects a loss
of $696,000.  So Henley shares are being valued at a Price/Sales ration
of 392.  Revenue is forecast to grow 9,702% to $4,999,000 in the year to
March 2001..." etc etc

"... public investors are being offered the opportunity to put up all of
the $5 million risk capital needed to try and expand the business
300-fold over the next 2 years - in return for just 25% of the shares!"

Now, Henley may well offer great services that are useful to you, but
surely the service you receive is only one factor in whether a business
is a good investment?  For example, with Coke, if you enjoyed the
product you might investigate buying shares.  However, if the shares
were on a p/s of 392 they would have to be putting some pretty serious
drugs in it before i was loose enough to buy shares.  Even with the
early internet companies floated in the US, they didn't list at a p/s of
392, they were bid up this far in a frenzy.  When a company lists at
such an steep price, where is the upside?

To take things a little further, lets say i ran a "business" that
offered a "product" called EZY-money.  In this business, you, the
customer, inserted a $2 coin into a machine, and out popped $10.  As a
customer, i'm guessing you'd enjoy the service.  You were getting
something at well below my cost of providing it (ie you get $10, which
costs you $2, and i absorb an $8 loss, plus my other costs).  While you
would find this to be the best service in the world, would you buy
shares in it?

This, I believe, is *exactly* how a large number of internet companies
operate.  They are selling their goods and services at well below the
cost of developing and providing them.  As a consumer, you should lap
this up, and deal with these companies with great enthusiasm.  As an
investor, however, you should run a mile.

Finally, and no doubt someone will get very offended here, but a company
with $51,000 of sales should not be listing anywhere, at any time.
Period.  The average corner dairy has sales far above that, and who
would buy shares in that?  The average corner dairy, however, would not
lose $696,000 on those $51,000 in sales.

Cheers,
Phil

P.S     Despite all that i've said, im not assuming the shares will go
down.  They may well go up.  It's a weird weird world.

P.P.S   I hope the producers of "Market Analysis" don't object to my
little quote.  Information on this excellent publication is at
www.stockmarket.co.nz (i'm not involved with them, just a satisfied
customer)

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