13th Feb '23 by Paul Scott

56 comments 8395 reads

Good morning from Paul & Graham!

Today I noticed for the first time this year, that it's just starting to become daylight outside, when my alarm gives its second and final time to get up message. That's a nice positive milestone!

Podcast - here's the link for the audio of this weekend's podcast. I'm not typing up transcripts any more, as they take too long. Also there seems to now be very good software available for transcription, so hard of hearing people who need transcripts, can hopefully get their own generated using such software.

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.

Agenda/Summaries

Paul’s Section:

Journeo (LON:JNEO)

140p - market cap £23m

Trading Update

Journeo plc (AIM: JNEO), a leading supplier of information systems, software and services to transport operators and local authorities is pleased to provide an update on trading for the year ended 31 December 2022.

Guidance for FY 12/2022 -

Revenues £21.1m (up 35%)

Order intake of £27m is up 50%, but I can’t see a closing order book figure.

Profit in line with expectations (a note from Cenkos puts this at £0.9m, both pre-tax and post-tax)

Recurring revenues (no figure provided) being received from 10k connected vehicles.

“No material issues” with supply chain.

Acquisition - this seems a game-changer, which makes me wonder why…

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timarr

13th Feb '23

I think this has been covered before, but Watkin Jones (LON:WJG) had always tended to trade at a premium because it is an asset light business model - it forward sells its properties to institutional investors.

To try and find some negatives - there is a potential exposure to counterparty risk - i.e. a buyer goes bust before a development is completed, leaving the company with a partially built site and no funds to complete it. And the move into affordable housing has been self-funded, although they're now moving to the same capital light model there.

There's also a cladding charge - £9.4 million carried forward, but the government could change the rules there. Must be a lot of high rises in their back catalogue.

Overall, though, it's pretty low risk - student accomodation, buy-to-rent, affordable housing nearly all pre-sold to end clients and institutions, who they state are blue chip and a small but growing rental management business. It's a very different model to traditional housebuilders self-funding developments and selling direct to consumers.

DWit199

"9/10 for a broadly inline update, far too high, IMO."

The Frp Advisory (LON:FRP) score was 7/10.

Just for timarr I asked ChatGTP to summarise the FRP update again, but this time with humour.

FRP Advisory Group is making progress, despite the ongoing struggles of the world and the fact that the higher value restructuring market hasn't fully recovered from the pandemic, but they're still optimistic about being in line with expectations for 2023, until their full year trading update in May - which might or might not burst their bubble.

I don't think Mr C has much to worry about at the moment :-)

Rusty2

OK, but still too high.

davidjhill

Bidstack (LON:BIDS)

If Mojo is reading would appreciate views on trading update.

I was expecting it to be poor but £1m pm revenue in weakest quarter so far is much better. Plus £8m (half its market cap) in cash now. Doesn't seem to be burning cash as quickly as I had feared either and if they are going to do £15m revenue approx this year then suspect the balance sheet may be better than I'd anticipated.

Market hasn't really appreciated them much this morning clawing back a little of the recent losses mind and i'm wondering why.

Obviously a high risk stock and certainly not for widows or orphans but I wonder if they might actually make it now even despite the Azerion fiasco.

Obviously I owe you that pint :) not forgotten.....

Agreed.

This is the first time I have tried using AI to provide some interpretation of text. Overall , I am actually quite impressed with the analysis ChatGPT has performed on these trading updates and the way it has summarised them. Bear in mind that it is only trying to analyse the text of the update as provided to it by copy and paste for the broad sentiment that it expresses rather than an in-depth analysis of the numbers. If you look at the FRP update for example, that Rusty2 considers to have too high a score, there are many positive points in the text and few negative, so based on the text alone, the score of 7 seems to me to be about right.

eParo

He needs 75% to de-list. Slater and co will have a say here. May extract more for other shareholders. Expect another higher offer imo

Bouden54

Yes your point about counterparty failure is a potential risk, although I would say mitigated by the fact that they have plenty of cash, so in a worst case scenario they could pay for the rest of the construction themselves. Also, given the strong investor demand I'd be fairly confident they'd be able to line up another buyer.

jimrog64

I recommend Tim Harford's piece from the FT the other day.

Why chatbots are bound to spout bullshit.

He makes the point that ChatGPT does not have a model of the world but a model of the kinds of things that people tend to write. Of course this makes it sound believable but we know that some of what people write is true and some not. Hence ChatGPT will be very plausible but not reliable.

Hi Bouden54

RE: Watkin Jones (LON:WJG)

Yes, I agree with that. Still, as a holder, my job is to look for reasons why I shouldn't be a shareholder. Disconfirm, always disconfirm.

Overall, though, I'm optimistic that WJG will turn out to be a rare long term compounder in the "housebuilding" space. As a minimum it's very hard to envisage a situation where the company is at risk of failure so, at worst, it's a question of waiting for the next economic upturn.

I hold quite a lot (for me) and have been buying more, but remain considerably underwater overall.

Hi jimrog64

Yes, I saw Tim Harford's article. Of course, the things that people write do influence the world so I think there's a plausible (sic) line of argument that ChatGPT (or replacements) will have more impact than we expect.

For example, people believe (and act) on advice from plausible "experts" more than than they do from hesitant ones. Given the uncertainty in the world the latter are more likely to provide good advice than the former but sadly we prefer to follow confident (and wrong) leaders more than cautious (and right) ones.

What would be interesting is, if in the hands of Alphabet and Microsoft, ChatGPT offers the same information to everyone. At the moment search engines proactively serve content that we prefer to read - so if we're red-blooded, right-wing conservatives we get Fox News and if we're livy-livered, left-wing liberals we get the Guardian.

So will ChapGPT be impartial or will it, like human beings, attempt to tailor its messages for its audience?

timarr

Caduceus

How did you express the query to ChatGPT for this may I ask please?

Howard Adams

Augmentum Fintech (LON:AUGM) released this RNS this afternoon.

The headlines are ......

Augmentum Fintech plc

Proposed acquisition of Cushon by NatWest Group

Augmentum Fintech plc (LSE: AUGM) (the “Company” or “Augmentum”), Europe’s leading publicly listed fintech fund, announces that NatWest Group, the FTSE 100 banking and financial services group, has agreed to acquire a majority shareholding in Cushon, a portfolio investment of the Company. The acquisition will be subject, inter alia, to the receipt of the necessary regulatory approvals. This transaction will represent Augmentum’s fifth successful portfolio investment exit, all of which have been at or above the last reported holding value.

Augmentum first invested in workplace savings and Net Zero pension provider Cushon (www.cushon.co.uk) in June 2021 with a £5 million investment as part of Cushon’s Series A fundraising round and since that date the Company has invested a further £5.8 million.

Augmentum is expected to receive proceeds of £22.8 million from the completion of the acquisition, representing a 46.2% uplift on the unaudited 30 September 2022 holding value of £15.6 million, a multiple of 2.1x on cost and an IRR of 66.3%¹.

Rest of RNS is here ...

https://www.investegate.co.uk/...

I hold

Regards

Howard

rmillaree

"Why chatbots are bound to spout b......"

Worryingly humanlike characteristics if that is the case

Start a new chat and type an instruction in the input box:

Sentiment of this trading update on a scale of 0 - 10? "......paste trading update here...."

Usually, this will then return a single paragraph summary which includes the sentiment score. It won't always generate exactly the same summary from the text but the scores seem consistent. There may be better ways to phrase the question.

Not a UK SCVR in any shape or form, my apologies, but might interest some US/Tech investors

For any Palantir Technologies (NYQ:PLTR) followers, stock price up over +18% in after hours after making GAARP profitability for the first time in their history (a big deal for US markets).

A stock not for the fainthearted but for the deep DYO people worth digging into deeply IMO.

I hold. Also Palantir Technologies (NYQ:PLTR) is integrating AL/ML capabilities developed over past 20 years, so not Mickey Mouse stuff at all.

Of particular note, they have placed to the fore data protection and integrity.

A webcast is on their website.

GTrader

14th Feb '23

I assume you mean AI/ML, Artificial Intelligence/Machine Learning? Not everyone is ofay with tech acronyms.

Scott Porter

If you are interested here is what a prototype Google AI had to say about the BRCK trading update:

"I would rate the sentiment of the update as 7/10. The announcement is positive because it reports that Brickability is doing well and has performed better than expected. However, the announcement is not overly positive because it does not provide any details about the company's future plans or expectations."

15th Feb '23

Do you have a link to the Google AI?

I think the ChatGPT summary is rather more informative than Google's. However, I am unsure of how to systematically integrate this information into an investment process, although I feel there is potential.

Hydro31

16th Feb '23

Polx might be worth another look. They released an investor presentation yesterday, webinar to come on Monday with Q and A , answering some of your questions on value. Sentiment seems to have gone full circle since a few days ago.

Small Cap Value Report (Mon 13 Feb 2023) - JNEO, BRCK, FRP, POLX, TGP, LOK, KAPE

Agenda/Summaries

Paul’s Section:

Journeo (LON:JNEO)

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Paul Scott

56 comments

Why chatbots are bound to spout bullshit.

"Why chatbots are bound to spout b......"

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