3 Reasons I Bought Shares In YOLO

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3 Reasons I Bought Shares In YOLO

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3 Reasons I Bought Shares In YOLO
yolo

“YOLO’s vision is to be a successful and profitable investment company focussing on technology, travel and leisure businesses. We will achieve this by identifying early stage or turnaround opportunities that require investment and / or have potential for a reverse takeover”.

YOLO Leisure & Technology (YOLO)
Share Price: 0.975p
Market Cap: 1.74m
Shares In Issue: 178.92m

1. Shareholders
nigel-wray

The shares of YOLO are very tightly held.

According to their website, “at 24 May 2016, 32.43% of the Company’s AIM securities was not in public hands”. There’s a total of 178,922,758 in issue so that means only 58m shares are in free float.

Of the major shareholders, Nigel Wray, holds 28%.

If you’re not aware of Nigel Wray, then have a read of this article but suffice to say, he’s a very successful investor, especially in the small cap arena and The Times Rich List for 2016 has his worth estimated at £300m.

yolo-shares

Serial technology entrepreneur Chris Akers holds 5.22%. Chris has had many a success including the sale of a £25,000 start-up Sports Internet Group to BSkyB in 2000 for £300m. He is currently Executive Chairman of Concha (CHA).

CEO, Simon Robinson holds 4.06% (see below).

2. Management

CEO – Simon Robinson
simon-robinson

Simon’s career with Thomas Cook spanned 16 years from 1997 to 2013. Simon progressed his career in the hotel and leisure industry, from front line customer service and commercial roles to CEO of Thomas Cook’s retail joint venture, with responsibility for £4.5bn of revenues together with 6 multi-channel and 3 product businesses.

In 2010, Simon joined Thomas Cook’s European Online Travel Agency as MD for the UK region. In late 2011, he was appointed CEO of a newly created retail joint venture consisting of e-commerce, retail and specialist businesses with an Operating profit of £56m & 9,000 employees and sitting on 3 Group Boards.

Simon is also a director of Simplestream (See Below)

I talked to Simon on this week’s podcast, click here to hear it.

3. Investments

simple-tvplayer-boom-gfin

YOLO have made 3 investments.

Two of the companies are publicly listed, audioBoom (BOOM) and Gfinity (GFIN), the other, Simplestream, is a private company.

So why would you choose to invest in YOLO, given that you could invest directly into audioBoom and Gfinity?

Firstly, I know this sounds cliched but I believe all the investments, are currently at inflexion points (see the description below) but it’s Simplestream and TVPlayer that’s of particular interest here.

Simplestream’s revenue for 2015 was bigger than that of Gfinity and audioBoom combined, plus it has experienced 100% revenue growth year-on-year since its products and solutions were introduced to the UK market in 2012.

Simplestream – total investment at cost of £814,884
simplestream

Until recently, the Simplestream business consisted of: Simplestream: a B2B cloud based video platform which simplifies the deployment of next generation online TV services across multiple platforms and territories and TVPlayer.
tvplayer-001
TVPlayer is a B2C online freemium over the top (OTT) television platform.

It streams live TV across multiple devices from the UK’s most popular free-to-air and pay broadcasters. TVPlayer is one of the fastest growing platforms in the UK with over 3m downloads, offering over 100 channels to over 1 million unique users per month.

TVPlayer is the ONLY UK service to have acquired 4G streaming rights for all of its channels.

On 3rd October A&E Networks and Beringea, invested £5m in TVPlayer. This transaction also means TVPlayer demerged from parent company Simplestream.

YOLO have a 4.66% holding in TVPlayer and a 6.21% stake in Simplestream.

This is £5m investment is very telling as to how well TVPlayer is doing.

a-and-e-networks

A&E Networks is a joint venture between Hearst and Disney-ABC Television Group, a unit of the Disney Media Networks subsidiary of The Walt Disney Company. Today, A+E’s total value is estimated by Investopedia at $26 billion.

Beringea, a venture and growth capital investor in high growth businesses, with £450m ($600m) under management.

Recently TVPlayer signed a deal with signed formal licensing multi year content agreements with ITV, Channel 4 and Channel 5 to simulcast the broadcasters’ free to air channels on TVPlayer.

TVPlayer has signed a raft of deals, including a recent one with Viacom to air MTV, Comedy Central, Comedy Central Extra, Nickelodeon, Nick Jr. and Nick Jr.

This is a very hot sector and one set to grow if this recent study is anything to go by, which suggests Millennials watch 4x as much online TV as Boomers.

According to their accounts filed via companies house, for the year ended 31st May 2015 SimpleStream’s revenue was £1,423,285 (a 109% increase on the previous year) and their total currents assets less liabilities were, £2,061,376.

Remember, this turnover £1,423,285 was for the year ended May 2015, so we are yet to see this year’s accounts and so far, from 2012, it has achieved 100% revenue growth year-on-year since 2012.

In a recent Tweet Chris Akers reckons the business is now worth £25m.

akers-tweet

Even if we reduce this figure by a third to £16.7m, that means YOLO’s 10.87% stake is worth £1.8m alone. Their current market cap is £1.75m and this includes investments in audioBoom and Gfinity.

For me, there’s several interesting points, in regards to Simplestream and TVPlayer.

Firstly, the fact that TVPLayer has demerged, after it’s the last investment, suggests some kind of change going forward. This could mean the there’s a possibility that either Simplestream or TVPlayer gets floated or acquired.

Secondly, Simon Robinson, the CEO of YOLO is also a director of Simplestream.

Thirdly, YOLO’s aim as investment strategy is: to be a successful and profitable investment company focussing on technology, travel and leisure businesses. We will achieve this by identifying early stage or turnaround opportunities that require investment and / or have potential for a reverse takeover.

2. Gfinity (GFIN) – total investment at cost of £364,650
GFIN

Gfinity is an end to end eSports (also known as competitive gaming or electronic sports) solution, founded in 2012. Gfinity has quickly established itself as one of the world’s leading eSports companies, capable of providing an end to end solution and with a strong reputation for quality across publishers, players and eSports fans.

It looks like Gfinity is starting to gain some traction revenue wise.

FY 2014: £213,450

FY 2015: £560,828

For 6 months ended 31st December 2015: £624,292 

Their revenue for the H2 2015, increased by 329% over same period for the previous year

In the last 6 months of 2015, they turned over more than they did in their previous full year (£624,292 v’s £560,828).

I suspect Gfinity revenues for the last 12 months will exceed £1m this year.

Nigel Wray also holds 13.56% of Gfinity and CEO Neville Upton owns 9.26%.

You can hear my podcast with Gfinity CEO, Neville Upton by clicking here.

3. audioBoom (BOOM) – total investment at cost of £275,654
audioBoom 001
audioboom is an audio player software platform that enables the creation, broadcast and syndication of audio content across multiple networks and geographies.

audioBoom’s revenue are also improving, as you can see below:

H1 2015: £46,000
H2 2015: £146,000
FY 2015: £192,000

H1 2016: £329,000

audioBoom’s revenue for the first half of 2016 were 171% greater than the full year revenue for 2015.

Looking at the increasing listening figures and the fact that the company have prioritized revenue generation, I wouldn’t be surprised if their full year revenue comes close to £1m this year. I also think total listens this year could be close to half a billion listens. Total listens for 2015, exceeded 300 million (2014: 180 million) – up 66%.

Reading the updates, on both audioBoom and Gfinity, I would be very surprised if their revenue for the current year didn’t continue to grow, at the same rate, as it has over the last 12 months.

So even though YOLO invested, in both these companies at higher levels, I can only assume both companies share prices will soon start to climb on the back of improving revenue.

I cover audioBoom on this weekend’s podcast, click here to hear it.

In Summary

yolo
I see one of 2 things happening with YOLO.

1. If they continue as an investment company, I see the value of all their investments improving this year.

Simplestream is already a profitable business that will continue to grow. TVPlayer will continue to gain traction amongst viewers and do deals with bigger companies, therefore attracting better opportunities and greater investment.

audioBoom seem to be on track to meet market expectations for FY 2016, improve revenues and move towards its target of a breakeven position by the end of 2017.

Gfinity last interims also seem to point toward a brighter future.

2. Given the board and major shareholders, I wouldn’t be surprised to see them announce a reverse takeover, either with TVPlayer or another vehicle.

Whichever option plays out, the result should see their share price rise.

The content of this podcast (or content associated with it) is not intended as investment advice and people featured may hold positions in the companies they talk about. Please do you own research. The writer of this blog, holds stock in YOLO.