Forum Archive Index - August 2001

["George Hill" <ghill@buzzavox.com>]

Title: Message

Heather

 

My impression is that ITC is in something of a 'Catch22' situation. They have two investments which need further funds to grow and realise value for ITC. In a more forgiving climate for publicly-listed venure capital cos., they could reasonably expect to raise these additional funds via the sharemarket ... however it's not a good time to be doing that. And the many small investors like us who are looking at sizeable losses at current share prices are unlikely to want to invest further.

 

I contacted a friend who manages a very large private investment fund overseas, to ask his advice prior to this weeks AGM. Although he wasn't familiar with IT Capital, he quickly categorised it as yet another DOT COM company in need of funds. To quote him:

 

"I don't know ITC and after visiting its web site, I can't say I'll have too much good things to say either. Its portfolio of investee companies looked ordinary and I would be very surprise if any one of them is currently cash-flow positive i,e, the company is making enough money to continue its trading...I think this is one of the questions I'll put to ITC. My impression of the management of ITC is also mixed. While the team reads well, there weren't anyone that has deep understanding of vc investments in NZ which is where ITC is supposed to be differentiated. Your punt may still be okay if ITC still has lots of cash. There are many internet shares that have been severely penalised by the stock markets that they are trading below cash backing. If ITC's cash position is weak, I suggest you cut your losses and cash out while you can because the market is very hostile. We have written off 3 investments in our internet portfolio in the last 10 months. One more is tethering on Chap.11 . This is out of a portfolio of 5 investments in internet companies. We are caught by the significant reversal in the ability to raise more cash to continue the business development. In 1999/2000, this was easy as everyone was keen to be in the internet game. Now, this is completely the reverse and noone wants to be in just an internet play that can't be cash-positive in a sensible time-frame. I hope I am not too down-beat for you but you happen to ask someone who is in the middle of a major work-out of his portfolio."

Although this friend is mistaken (IMHO) in classifying ITC as an 'internet company', perhaps what's more instructive is that his comments reflect the mood amongst overseas fund managers. Fund managers whom ITC would ideally like to take up the additional 100m shares that they're talking about issuing.

I guess it comes back to the old drivers, fear and greed. What we need is some good news to generate a bit of greed. Perhaps last weeks SIGGRAPH trade show will have resulted in something good to report about Deep Video Imaging?

Ever the optimist,

George Hill

DISCL: Hold ITC shares

 

 

 

-----Original Message-----
From: owner-sharechat@sharechat.co.nz [mailto:owner-sharechat@sharechat.co.nz] On Behalf Of Heather Reiss
Sent: Monday, 27 August 2001 2:47 p.m.
To: sharechat@sharechat.co.nz
Subject: [sharechat] ITC demise?

I'm interested in comments from those who follow ITC. Worse news seems to follow bad news and so on .

The share price has taken a substantial hit of late and again today. I bought in at 22c expecting at least some competency. I'm releuctant to sell at present market prices yet I suspect the price will drop further.

They may even have difficulty raising funds.

Is this now a bottom drawer share?

Cheers

Heather