Small Cap Value Report (20 Oct 2016) - G4M, LRM

Good morning!

Just a short report this morning, as I am heading into the city for a meeting at Panmures with management of my favourite GARP share at the moment, Gear4Music (G4M). As this is at noon, combined with me oversleeping, that leaves very little time to write much here this morning. Then I've got meetings all afternoon, so am out all day.

I note that the private equity backer of G4M is now completely out. These have been disclosed as Director sales, but they're not really. It's just that Key Capital Partners had a NED on the Board. Where did their shares go? A lot seem to have been absorbed in the market by private investors, which is great as it will increase liquidity & narrow the spread as daily volumes increase.

As I always tell companies & advisers, there's no point in being listed unless you nurture an active private investor base. This is because it's us who generate the liquidity, and small trades set the share price. As in this case, an enthusiastic PI base has apparently absorbed a lot of the shares by a selling institution - an ideal scenario.

Plus each PI that is interested in a company will tend to generate multiple trades each year - topping up when feeling positive, top-slicing when seeking to bank profits, etc. I'm not saying everyone does that, but a lot of people do.

It's pleasing to see that Hargreave Hale has bought 578k shares, taking them up to 12%, which is encouraging. I respect their analysts.

Lombard Risk Management (LON:LRM)

Share price: 8.5p (up 17.2% today)
No. shares: 400.6m
Market cap: £34.1m

Interim results, 6 months to 30 Sep 2016 - I was getting ready to pour scorn on these figures, but they're actually not too bad. As usual, the EBITDA figure is nonsense, so best ignored.

• Revenue is up an impressive 41.2% to £15.2m.
• It's around breakeven at a loss of £0.1m for the half year.
• Funding is adequate, following an £8.0m fundraising in June, at £6.9m cash.

Outlook - reasonably optimistic;

The second half of the financial year will be a period of sustained investment for Lombard Risk, as we fully engage in the delivery of our next-generation products and our new software development facility.

Notwithstanding this, with the increasing strength of our recurring revenues, an order book of £9.2m and the transformation of the Lombard Risk organisation largely complete, the Board faces the second half of the year with optimism.

Whilst the Financial Services industry as a whole remains under pressure, the Governance, Risk and Compliance sector continues to experience strong growth and the Company remains well placed to service all our clients.

I'm not keen on the phrase "period of sustained investment", as that usually means losses.

My opinion - there's a chance that this might actually turn into a viable business. So far that has not been the case, with it being a black hole for investor funding.

Today's figures are the least bad we've seen for a while, so that's something I suppose. Although you need to be very optimistic to think this will suddenly turn into a wonderful business. It's not for me, but I recognise that things are improving.

Drat, I've run out of time, gott dash now for this 12 o'clock meeting.

Later on I hope to be able to update further on;

Solid State (LON:SOLI) trading update

Hayward Tyler (LON:HAYT)

There doesn't seem to be much else of interest other than that today.