Fund manager interview with Laurence Hulse of Dowgate Wealth. 15 stock ideas for Xmas

15th Dec '23 by Paul Hill

7 comments 1423 reads

Timestamps

In this interview, smallcap fund manager Laurence Hulse of Dowgate Wealth takes me through.

00:00 His 2024 outlook for equities.
06:15 Premier Miton Investors & Liontrust Asset Management PLC.
09:05 Angling Direct PLC
16:35 J D Wetherspoon
19:20 Comptoir Libanais
24:40 Transense Technologies plc
33:45 Mpac Group PLC
40:20 Speedy Services
43:50 EKF Diagnostics
49:05 Springfield Properties
53:45 Vistry Group
56:55 #RBG / Rosenblatt
62:35 Trustpilot
66:35 Team17 Group PLC
69:55 Windward

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About the Author

Paul Hill

Premium Member

Stocks owned : EQLS, AGFX, Pfizer, Bristol Myers, Roche, WATR, VCT, MBH, ASTO, IOM, TR25, ESYS, ELCO, IHC, Paypal & AOM Elsewhere, I'm also paid by Vox Markets (as a contractor) to interview interview fund managers, capital market experts & companies (re EQLS, VRCI, BELL, FIN, AVG, AVCT, LLAI, VLG, FADL, SUP, ELCO, LORD , MPAC & ONC). I believe all these stocks are clients of Vox.Lastly my 24 year HIT RATE is only 62%. Meaning 38% of the time I lose money (ie often wrong) - albeit my winners are (on average) 1.5x larger than my losers. Please Do Your Own Research. more »

7 comments

Paul Hill

15th Dec '23

Valuation benchmarks wrt those stocks discussed.

Helvellyn

15th Dec '23

Paul,

I would say that was one of the best / most informative one of these you have done.

Thank You

Paul Hill

15th Dec '23

Thanks Hevellyn. Agreed, Laurie is another 1st class investor.

Lefty99

15th Dec '23

Thanks Paul, really impressive how Laurence describes the investment case and potential of each company. I am fully invested at the moment, but some do sound very tempting.

Paul Hill

15th Dec '23

Agreed Lefty.

Paul Hill

16th Dec '23

Funnymoney

1st May

Here is a summary of the investment thesis presented for each company:

Angling Direct (09:05)

Insulated from downturn due to £15M cash, hobbyist customer base, repeat business
Opportunity to focus on accelerating growth in core UK business to increase market share from 12% to 20%
This would improve bargaining power with suppliers to expand gross margins
European expansion has struggled, so focusing on UK offers better risk/reward
Could become an attractive acquisition target for a larger player

JD Wetherspoon (16:35)

Affordable pub chain well-positioned as consumers look to socialize on a budget
Founder recently made large personal investment at higher price than before
Suppressing margins to protect loyal customer base, opportunity to expand margins as real incomes recover
2% price increase has 40% profit drop-through, significant operating leverage

Comptoir Libanais (19:20)

Affordable, fun casual dining chain traded resiliently despite headwinds
New high-quality board has turnaround plan to restore former glories then grow
Refurbishments have lifted customer satisfaction scores
Confidence to resume expansion with new sites
£5.5M cash, £7.5M market cap, pathway to £20M EV based on £35M sales at 7% margins
Founder has large stake, impressed by management, eventual exit likely needed

Transense Technologies (33:45)

De-risked by royalty deal on tire pressure monitors with Bridgestone
Frees up cash flow to commercialize other two core sensing technologies
Seeing initial contract wins and inquiries for surface acoustic wave (SAW) sensors
Aerospace and motorsports design wins validate performance
Large opportunity in areas like agriculture, robotics, EVs as SAW solves issues with current approaches
Consistent director buying signals confidence

Speedy Hire (40:20)

Shifting mix to re-rental and services improves returns in higher cost of capital environment
New CEO from JCB implementing "Project Velocity" initiatives
Emissions and sustainability focus creates opportunity in construction
Leading with zero-emission equipment rentals like hydrogen powered MEWPs
Pathway to double digit EBITDA margins, dividend yield while market re-rates

EKF Diagnostics (43:50)

Razor/razorblade model diagnostic business with strong IP underpins current valuation
Founder Julian Baines returning to right previous wrongs and restore growth
Key is commercializing new US enzyme fermentation facility
Already seeing initial orders come through faster than guidance assumes
Can drive group EBITDA margins toward 20-30% if enzymes gain traction
Possible acquisition target given high gross margins and US biotech exposure

Springfield Properties (53:45)

Overly indebted from M&A at the cycle peak, market skeptical on stated NAV
But has largest strategic landbank in Scotland, one of largest in UK
Selling parcels to reduce debt from £95M to £55M by May, converting EV to equity
Focusing on affordable housing to improve cash profiles during deleveraging
Risk of impairments appears priced in below 100p/share

RBG / Rosenblatt (56:55)

Core law practice overshadowed by destructive management and diversification
Market cap of £15M despite core business capable of £15M EBITDA alone
New board of experts restructuring to focus on high return core legal practice
Winding down other divisions to pay down £25M debt over 2 years
Depressed 2x EBITDA valuation can re-rate to 7-8x as turnaround plays out

Trustpilot (01:02:35)

Refocusing on profitable growth vs chasing loss-making market share
Dialing back growth spend so marginal returns exceed cost of capital
New chair Zilla leading this transition as founder steps back from day-to-day
Profitable growth dropping through to expanding EBITDA margins
Consumer reviews still have trust issues to resolve longer-term
But path to 20-30% EBITDA margins not reflected in 2.5x sales multiple

Team17 (01:06:35)

Video game developer and publisher hit by industry slowdown post-COVID
Pre-announced disappointing earnings, some risk to revised numbers
But 7x P/E ex-cash after 50% share price decline prices in a lot
New chair buying shares, prior M&A record and sector knowledge encouraging
Undemanding valuation makes it a consolidation/M&A target
Solid core business and IP despite short term headwinds

Windward (01:09:55)

Highly specialized predictive maritime AI and data analytics platform
Core government and commercial business alone supports current valuation
Key is expanding into wider supply chain visibility and predictive logistics
Landing early customer wins for this new higher growth/margin offering
90%+ recurring revenue and nearing profitability inflection
Strategic value from unique data and network effect moat
CEO relocating to UK HQ to lead next leg of growth

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Fund manager interview with Laurence Hulse of Dowgate Wealth. 15 stock ideas for Xmas

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About the Author

Paul Hill

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