Jul 3, 2023Liked by ToffCap

Another great read, thanks!

Expand full comment

Looking forward towards your reanalysis of UMDK!

I extensively read through this discussion till the posts from autumn last year:


"Snoopykilla" gives some critical insight. It looks bad. In January they also discuss your article on the company, by the way.

Expand full comment

Hi Simon. No re-analysis of UMT. The thesis was that of a company with some interesting looking assets trading at a big discount due to inapt management. A (partially) new management and the acquisition of MEXS might have led to a crappy company being 'less crappy'. Normally that is enough for a good rerating. But UMT managed to go from 'crappy' to 'total shitshow' - which is always a real possibility in (German) micro-cap land.

UMT is dead money for some time imo. I'll keep an eye out just to see what happens and for the occasional dumpster-dive. But in terms of this management actually growing up, I don't have much faith.

Expand full comment

Hi ToffCap,

thanks for answering! :-)

Well, I didn’t get the impression from your article that you thought it was a crappy company (management apart, of course). By the way, I’d still have some questions about the article and it would be great if you addressed them.

On the Wall Street Forum I linked to, everyone wondered where you got that information from:

“In order to speed up the intended transition to a ‘Technology House’, Albert Wahl agreed with the family office that part of the funds he was overseeing would be managed by UMT (roughly €400m), for which it would charge a 2.5% management fee, accruing to UMT.”

“What we do know is that the AuM were roughly €400m, for which UMT charges a 2.5% management fee for a 10 year period. The contract started in 2H 2020, so it will run until 2030.”

In particular the amount of assets under management and the management fee, because no one had had heard of that information before. And I think the ppl on this forum are those who follow the company most.

You also talk at various places about the “strong/healthy cash flow generation”. How did you arrive at the assessment of strong cash flow generation?

And then, linked to that, what you write about the MEXS deal:

“MEXS was acquired for €13m in cash, the first deal of UMT to be fully financed with generated cash flow. The deal includes an earn-out component of which the details have not been disclosed”

“UMT has continued to generate a healthy level of cash, and acquired MEXS for €13m in cash from its own balance sheet – a strong indicator of UMT’s underlying cash flow generation potential.”

In truth, details about the earn-out component _have_ been disclosed, at the 2022 shareholder conference. Ppl who attended write about that on the Wall Street Forum. UMT paid for MEXS… 1 EUR (the bulls also confirm that information). Yes, exactly: one. The rest is all earn-out.

But what I’m most interested in is where you got that information from:

“As a side note, given negative interest rates on deposits, over the past few years UMT opted to keep its cash in money market funds to avoid paying negative interest.”

“As at June 2022 (and prior to the acquisition of MEXS for €13m), UMT held c. €2.4m in cash and €19.6m in money market instruments.”

Because ppl on the forum make all sorts of assumptions/theories about what the “Sonstige Vermögensgegenstände” actually are, and no one knows, and management never has disclosed that.

However, you know.

Where did that information come from?

It would be great if you could answer, that would help to shed some light.

Expand full comment

All the info came from the old CEO / main shareholder. They did a poor job at communicating / explaining the potential. Now that he's gone, and given the poor job current mgt is doing in communicating, doubt that we will get more information. Why do they need to do a capital raise at these levels if the underlying business is strongly cash flow generating? Either what was communicated is incorrect, or they're planning something really big but with questionable strategy / intent imo. Let's see. UMT was and remains a call option.

Expand full comment

Thanks for explaining!

If you don't mind I would also share this information on the Wall Street Forum, because there in the discussion you can see everyone was confused about how you got that information about the nature of the Sonstige Vermögensgegenstände (which no one appears to know) and the scope of the asset management. One member advanced that you were paid by UMT to write the piece. Another suggested that you had a fire-side chat with Dr. Wahl and some wine and cigars. ;-) So it appears it was the second idea, but without the wine and the cigars.

Frankly I've come to the point now that I don't believe neither Mr. Wahl nor Mr. Teufel have been and are telling the truth.

Because, principally, the capital raise at the rock-bottom price the stock trades at makes not the slightest sense in the world if truly they have all this cash and cash equivalents sitting idly in the company and are generating healthy cash flows on top of that. They could install a dividend or buy back shares (like they announced contemplating in 2021 and 2022, respectively), be transparent about their books and perhaps even get their IR straight, then the stock price would shoot up and issuing new shares would bring in big.

So, when now they raise capital, I think it's because they see no other way to get cash.

I'm rather inclined to think now that, in large part, there is fraudulent behaviour involved here. I'm a very naive person and I would prefer ppl to be better than they are, so I do not arrive lightly at this conclusion. And I would prefer being proven wrong, of course.

Expand full comment