Small Cap Value Report (Fri 31 Dec 2021) - PXS, SYME

31st Dec '21 by Paul Scott

62 comments 7906 reads

Good morning! It's Paul here with the last SCVR for 2021. Another year that is best consigned to the dustbin of history.

Agenda - I'm really scraping the barrel here -

Provexis (LON:PXS) - brief comment (no section below) - Interims to 30 Sept 2021. It's trying to commercialise a tomato-based product called Fruitflow, with supposed health benefits, in China. H1 revenue similar to LY at just £211k. Overheads seem minimal though, so the loss before tax is only £(144)k. Has £982k cash in the bank, so looks able to continue operating. £18m mkt cap for this jam tomorrow company. One for gamblers only.

Supply@me Capital (LON:SYME) - brief comment (no section below) - Trading update that sounds very rampy to me. It seems little more than a start-up, judging from the last set of interim accounts. I don't see any evidence of a viable business as yet. £80m mkt cap seems to rest entirely on hype, and jam tomorrow hopes. Again, for gamblers only at this stage.

Explanatory notes -

A quick reminder that we don’t recommend any stocks. We aim to review trading updates & results of the day and offer our opinions on them as possible candidates for further research if they interest you. Our opinions will sometimes turn out to be right, and sometimes wrong, because it's anybody's guess what direction market sentiment will take & nobody can predict the future with certainty. We are analysing the company fundamentals, not trying to predict market sentiment.

We stick to companies that have issued news on the day, with market caps up to about £700m. We avoid the smallest, and most speculative companies, and also avoid a few specialist sectors (e.g. natural resources, pharma/biotech).

A key assumption is that readers DYOR (do your own research), and make your own investment decisions. Reader comments are welcomed - please be civil, rational, and include the company name/ticker, otherwise people won't necessarily know what company you are referring to.

No company news of any significance today, so I'll sign off.

End of year message

Wishing everyone a very happy, healthy, and successful 2022! It looks as if we're approaching the end of the pandemic, with omicron about to rapidly burn itself out (with generally mild symptoms) and displacing delta. This seems very positive to me, so I think the…

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Kevin Holloway

31st Dec '21

Thanks to all those sharing over the last few days

My top 10 ranked by current value: (not recommendations)

1. Rambler Metals And Mining (LON:RMM)

2. Tekcapital (LON:TEK)

3. Smart Metering Systems (LON:SMS)

4. Cornish Metals Inc (LON:CUSN)

5. Sylvania Platinum (LON:SLP)

6. Somero Enterprises Inc (LON:SOM)

7. Imperial Brands (LON:IMB)

8. Hostmore (LON:MORE)

9. Capital (LON:CAPD)

10. Games Workshop (LON:GAW)

I'm quite happy with my first year of running my SIPP and my wife's SIPP with gains of 22.6% and 22.9%. My ISA is only up 7.8% though.

Lastly, and most importantly, thanks and happy new year to all who contribute here with a special mention for Paul, Jack, Roland and MrC

Kevin

Boon

Thank you for your daily summary snippets! I have really found them useful in 2021, to get a quick read of the wider market, and also some of the shares have made it to my watchlist and further research, that wouldn't have had otherwise.

Dicky Mint

Top 10 by value - Do your own research :)

Lloyds Banking (LON:LLOY)

Clarkson (LON:CKN)

Barratt Developments P L C (LON:BDEV)

James Halstead (LON:JHD)

City Of London Investment Trust (LON:CTY)

Rolls-royce Holdings (LON:RR.)

Character (LON:CCT)

Hostmore (LON:MORE)

Sylvania Platinum (LON:SLP)

Ferrexpo (LON:FXPO)

Funderstruck

I understood exactly what you meant.. Nice to see some stocks that are not so the common currency here.

Wish you every success with them, i have a couple myself.

mikeon

Thank you Paul and Jack for all your reporting analysis in 2021. I think I have read every report over the last five years and look forward to reading through 2022. I also enjoy the comments from investors wiser than I. Wish you all a happy and successful 2022.

Andy Coaten

thanks to the Stocko team for guiding me through my first full year of managing my own portfolio - happy with my 12% return ( and yes it's not a profit until I cash in) but with patience it could have been so much better - HNY

Snowbum

1st Jan '22

Always interesting to see other's top 10's, seems unfair to peep without flashing a little too so here goes....

Current top 10 by value, some are newer positions some are very old, no recommendations. You'll note a heavy bias towards resource stocks, this is an area I specialise in. I am happy to trade in an out of all positions, adding and slicing when the price is right for me. I currently hold 21 positions. So without further procrastination, here is the top 10 list:

Solgold (LON:SOLG)

Axcelis Technologies (US)

Yellow Cake (LON:YCA)

Sky Harbour Resources (Canadian)

Franco Nevada (Canadian)

Centrus Energy (US)

Roblox (US)

Deepverge (LON:DVRG)

Bluejay Mining (LON:JAY)

Aemetis (US)

Happy New Year to all staff, contributors and readers.

Forbsy.

Snazzytime

My top 10 (no recommendations)

1. Keywords Studios (LON:KWS)

2. Domino's Pizza (LON:DOM)

3. Marlowe (LON:MRL)

4. System1 (LON:SYS1)

5. Auto Trader (LON:AUTO)

6. Britvic (LON:BVIC)

7. Victrex (LON:VCT)

8. Vertu Motors (LON:VTU)

9. B&m European Value Retail Sa (LON:BME)

10. Learning Technologies (LON:LTG)

Good luck to all in 2022.

Snazzy

bryans1311

Since everyone’s doing it…

I only hold 8 shares currently, but will be looking at add 4 more in the next month or so. I’ve found 12-14 is the right number for me. Fewer, my brain doesn’t like the volatility. More, it can’t keep track!

In alphabetical order, rather than size.

1. Cerillion (LON:CER)

2. Centralnic (LON:CNIC)

3. Tclarke (LON:CTO)

4. Gulf Keystone Petroleum (LON:GKP)

5. Gulf Marine Services (LON:GMS)

6. Serica Energy (LON:SQZ)

7. Supreme (LON:SUP)

8. Volex (LON:VLX)

Investment4Adam

Christopher Mills also did an interview last week with Paul Hill which is on his twitter and Vox accounts @CapitalPmh

timarr

I have 130 holdings at the moment, CAGR about 14% over the last decade – which obviously has been a ridiculously good time to be investing, but it was only slightly more than the previous decade. Pre-2000 we don’t talk about due to my unerring ability to buy dross and then sell in a panic …

Top ten stocks, as opposed to collective investments or ETFs/ETCs:

Alphabet (held for 11 years)
Apple (13)
Itv (LON:ITV) (2)
Cerillion (LON:CER) (5)
James Latham (LON:LTHM) (18)
Record (LON:REC) (5)
Aj Bell (LON:AJB) (3)
Jarvis Securities (LON:JIM) (2)
Ig Group (LON:IGG) (3)
Croda International (LON:CRDA) (10)

Collectives in the top 10 are Scottish Mortgage Investment Trust (LON:SMT) (4), Wisdomtree Physical Gold ETC (£PHGP) (4) and L&G LSE Cyber Security ETF (£ISPY) (3).

Cmc Markets (LON:CMCX) (5) and Paypal (7) suffered quite significant drawdowns during the year, which pushed them out of the top tier, while a number of the stocks I bought following the March 2019 panic have continued to do well - Cvs (LON:CVSG) , Somero Enterprises Inc (LON:SOM) , Property Franchise (LON:TPFG) , Belvoir (LON:BLV) , Creightons (LON:CRL) - and are now hovering underneath.

Biggest gainers of the year, both bought during 2020 – Wisdomtree Tin ETC and Schiehallion Fund (LON:MNTN) . The world is random, the stockmarket doubly so.

Thanks to Paul, Jack and Roland for the remarkably consistent input over the year and good luck to all in 2022.

Gostevie

Hello bryans1311,

I am in the same camp as you in that about 12 to 14 holdings (excluding my VCTs) feels about right.

Richard Goodwin

£HMPL was one

mojomogoz

Mercia Asset Management (LON:MERC)

This SCVR from early Dec is perhaps a good starting point as Jack wrote a piece on it and I had some comments in the discussion:

https://www.stockopedia.com/co...

And I wrote about it here:

My note is quite a sketchy run through. Done quickly (as usual).

Mercia is a tricky business to price and I think many PIs perhaps stumble on how to put the pieces together. This an opportunity...and risk. We saw the risk side of it in 2019 where IMO it was clear they were being successful but were going to raise again to fund biz/portfolio development but PIs didn't see it coming. Plus they had been caught up as Woodford stock so really messy period that damaged valuation and image to some extent.

IMO it should be viewed as two businesses so SOP is the right approach. A 3rd party asset manager with near £800m AUM that is predominately venture capital, long term commitments and high fees. This is driving a dividend they say they will target around the 2% level for total business (which equates to a very high dividend if a standalone asset manager - lots of handwaving in how one looks at it but lets say its like an approx 15% yield asset manager...if you ignore the bigger portfolio of direct VC investments and retained cash on the balance sheet.

-> IMO its shows (perhaps too subtle for most that the asset management biz is very undervalued).

Then the balance sheet investments are now more mature. VC always goes through a J curve. It means that your losses come before your gains so you are taking your lumps before you look good with gains. IMO Mercia have managed their losing/disappointing positions well including often offloading to a trade buyer and avoiding loss. That they are taking businesses that have already been through Mercia's 3rd party usually very early stage venture investments and then they pick up the 'cream' for acceleration/growth in their balance sheet investments means they have an unusually good inside track on their positions compared to more pure VC/PE stuff.

A recent investment is a good example of that - Sense Biodetection. Its been on th EIS/venture side for several years very successfully developing. Recently put into balance sheet portfolio at quite small weight but I'd guess there is a funding round coming whereby Mercia throw a good few more percent in to the biz with an exit possibly coming not too long after (like 2 years) for quite a tasty valuation pick up and strong IRR/RoC. This is one that might go fast as they have just hit a very hot area that has accelerated partly due to covid events. (I think its an approx £200m company now and there seems to be some hope this is a £unicorn - that's total speculation and not a reason to invest, just an example of what's going on).

More generally, and not as such warp speed, other portfolio holdings are maturer and like Faradion perhaps heading towards the exit uplift. The acquisition of Northern Ventures along with their continually maturing EIS biz means that the supply to the balance sheet is richer and it may be possible for Mercia to pick up more accererated development businesses due to this and pick up IRR/RoC going forward. This is speculation and not base case for investing but I'm always looking for the decent change upside optionality that isn't priced.

Of all my holding Mercia is more at the value based end. I never invest purely for value though so I'm looking for 'growth' upside.

As they target £1.5bn AUM (so approx £1.25bn 3rd party) over the next 2.5 years its quite likely they make another acquisition. This could mean equity based raise again. Though I'd assume they will also use some of their balance sheet cash as probably not all of it is required for deployment now given successful realisations in last 18 months producing lots of cash from mature VC businesses that they only need some of to deploy into less mature. Though it may be that they want to keep the cash to expand investments too etc and even move a little up the maturity scale (Sense Biodetection perhaps a glimpse of this and maybe they throw £20m into a late stage financing round etc).

Anyway, ask questions etc. Mercia requires a little time comprehending the biz and financials

Logical David

Seeing everybody is listing their Top 10 Holdings then I may as well list mine. I currently hold 12 shares, so I may as well list all twelve. My Holdings are listed on my 'User Profile' page for anybody to view throughout the year. For newbies, if you wish to view a users profile page, just click on their name.

The shares I hold are a mixture and they range in value from £361 million -> £14.1 billion.

3i (LON:III)

Atalaya Mining (LON:ATYM)

Centralnic (LON:CNIC)

Indivior (LON:INDV)

Kape Technologies (LON:KAPE)

Liontrust Asset Management (LON:LIO)

Luceco (LON:LUCE)

Morgan Sindall (LON:MGNS)

Polar Capital Holdings (LON:POLR)

Renew Holdings (LON:RNWH)

Volex (LON:VLX)

Watches Of Switzerland (LON:WOSG)

Wishing everybody a Happy & Prosperous New Year.

David

mariners18

3rd Jan '22

I am disappointed with Paul’s comment on Provexis (LON:PXS) namely, ”supposed health benefits”. I am a long term holder of this stock, long before it was the first to be recognised, in 2009, lby the E.F.S.A. under EU Article 13(5). I take it and both my sons get an annual supply, as a Christmas present!

Approved wording from the EU, “helps maintain normal platelet aggregation which contributes to healthy blood flows” says it all. If you read many of the published learned papers you would quickly realise that your comment is, t.p.i.m., rubbish.

In future, I shall regard much of Paul’s judgements in a different light! “Do your own homework”, is always good advise!

Dragon

" I take it and both my sons get an annual supply, as a Christmas present!"

Yes, but we are investors, not vitamin samplers. You seem to be suggesting that you bought Provexis (LON:PXS) @15p it's now 0.78p. Keep taking the pills.

James Kerr1

Provexis (LON:PXS) Really? His comments seem entirely fair. A sub £20m microcap where the share price has gone precisely nowhere for a decade, and before that fell like a stone. Maybe it will provide lashings of jam tomorrow, but that's exactly the punt we chose ( or don't) to take.

ExpectingValue

5th Jan '22

What's wrong with a pair of socks and a bag of chocolate coins?

Great responses! I had another great year and, contrary to the “expert”, overall Provexis (LON:PXS) is showing me a reasonable profit. When you get to Cloud 9 don’t forget who tried to help. Thank you and may you all have a successful year. Cheers.

Small Cap Value Report (Fri 31 Dec 2021) - PXS, SYME

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Paul Scott

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