Small Cap Value Report (Mon 18 Sept 2023) - SFOR, BPM, PDG, CTG, TPX

18th Sep '23 by Paul Scott

84 comments 8568 reads

Good morning from Paul & Graham!

Reminder - it's Mello Monday starting at 17:00 today. Well known fund manager Judith MacKenzie is on first, then it's the new Director Hot Seat feature. Last week's was really interesting, with the CEO of AFC Energy (LON:AFC) subjected to a thorough grilling from an experienced investor. I thought he coped very well! Let's see if tonight's CEO will stand up to scrutiny too?

I (Paul) was starting to feel unwell on Friday, and tested positive for covid on Saturday morning - it's spreading like wildfire in London, where I am at the moment. The good news is that the symptoms are definitely milder than the first wave in April 2020. I've experienced a very sore throat, mild fever, and lethargy as the main symptoms. So my top tip is for subscribers to stock up with soluble aspirin and paracetamol, because they're a necessity for this variant. Anyway, I'm bored stiff after doing nothing for 48 hours, so will do some work here, but please bear with me if it's not fully up to scratch.

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 (usually) between £10m and £1bn. We usually 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.

What does our colour-coding mean? Will it guarantee instant, easy riches? Sadly not! Share prices move up or down for many reasons, and can often detach from the company fundamentals. So we're not making any predictions about what share prices will do.

Green (thumbs up) - means…

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Boon

18th Sep '23

Shein getting local UK capabilities, logistics, and infrastructure via Missguided means probably more bad news for Boohoo (LON:BOO) and ASOS (LON:ASC) as Shein starts to offer locally shipped products?

cheeky_minnows

I have this on my diary front page :o)

'Projections should be handled with care, particularly when they're being provided by someone who has an interest in misleading you' Charlie Munger, Berkshire Annual Meeting 1995.

Michael C

This comment has been moderated

mjfgs

A vaccine reduces the symptoms and seriousness of a disease (bacteria or virus) that has already infected the host. Vaccines do not work like a 'magic shield' that prevent the virus/bacteria from entering (=infecting) the body in the first place.

Vaccines generally work by 'readying' the body's immune system (usually by the quick production of antibodies to neutralise the virus or bacteria) - but this generally only happens AFTER exposure to the virus or bacteria - ie. an infection - the virus/bacteria has already entered the body and 'infected' the host.

Perhaps they're suggesting that vaccines 'prevent infection' by making those who have already been infected less likely to spread the disease thus preventing the disease in others (which is another reason why most of us should be vaccinated)...however vaccines do not prevent the vaccinated from catching the disease in the first place - they reduce the severity of the disease, sometimes to the point that the symptoms of infection are so mild as to be non-existant - but this person has still been infected.

I guess there are 2 definitions of "having the 'flu or covid etc": 1.Being infected with the virus and having no symptoms (which is a more scientific/medical definition - not having symptoms does not mean that the person is not infected - they still have the virus in their body, but it is being fought off efficiently by the immune system) or 2. Being infected and having symptoms - which as a patient we'd describe as "having the 'flu"!

yiannos1

ken mitchell

Hi topvest

That was a very interesting quote!

I guess you realise this but in case others don’t, Investment Trust subscription shares and warrants are exactly the same thing, except that if called a warrant it is not eligible for ISAs (unless the regulations have changed as I haven’t checked before posting this) but if it’s called a “subscription share” it can go in to ISAs.

rmillaree

I would say with both 1 and 2 you have the virus - thats simply Asymptomatic or not Asymptomatic - whether you show symptoms or not you clearly have the virus when tested.

From what i have read the net clearly suggests that to a greater or lesser degree it also CAN protect you from getting the flu. This kinda makes sense if the virus turns up (you are exposed) and the body prevents it infecting cells practicably speaking.

If you want another site that suggests the flu jab CAN prevent the flu then the mayo clinic say the following. Note i aint saying it will prevent the flu - just that sometimes it may do that according to these sites - it would surprise me if they would get it wrong by using sketchy language.

https://www.mayoclinic.org/dis...

Reviews of past studies have found that the flu vaccine is about 50% effective for healthy adults who are between 18 and 64 years old. The vaccine may sometimes be less effective.

Even when the vaccine doesn't completely prevent the flu, it may lessen the severity of your illness.

ok thats enough of me going ot for one day if that doesnt convince you i give up - i aint a doctor so i could be spreading false info - apologies if that is the case !!

ridavies

Hello Albm7 - and others - Interesting situation with Pendragon (LON:PDG) here. Hedin offered 28p,last autumn, then wanted more time to review the books (at which time I should have sold at 28p) and then withdrew their offer.

The 35p bit is new to me, and of course I would be happy with that since the company is my equal largest shareholding which I bought speculatively some time ago with a batch of car dealers when Marshalls took off.

Interesting that Hedin didnt think the business was worth 28p and it fell back dramatically when they withdrew, then say they want 35p

The Phoenix

Thanks Tim

Huge amount of consolidation in this sector with the likes of Charles Stanley, Brewins and Gresham House to name but a few being bought out in the last 1-3 years and personally don't see that trend changing.

The fund management model is capital light once you have the team in place you can scale up assets you can manage/handle quite quickly with no major increase in staff head count.

Liontrust have had a torrid time past 18 months as you say in a bull market most managers should do okay against peers but in 2022 pretty much all of them did badly unless they could short, held a lot of gold, or held dollars/dollar denominated assets.

I'm also hold Legal & General and Polar Cap and happy to collect the dividends whilst I wait for the markets to turn at some point maybe early part of 2024 possibly.

Appreciate your input.

Andy

Michael Tee

Hi rmillaree

Bango (LON:BGO)

3 months ago I had a one to one zoom with Paul Larbey CEO and challenged him on his confidence at achieving expectations. I did the same via email after the HY update. Each time he answered very confidently with concrete reasons why.

Bango (LON:BGO) are typically H1/H2 weighted due to seasonality. This weighting normal and not a one off. The only time this deviated was in one year due to Covid.

Profitability is expected to show a dramatic improvement in H2 as the cost synergies from the Docomo acquisition which have been effected, show in the numbers.

ARR run-rate of $10m is in great part already in the bag as many new telcos which have signed up in H1, start producing revenue in H2.

Bango have a pretty unique subscription bundling platform which is highly desirable to telcos as it helps them retain customers and increase revenues and means customers can have all their subscritpions in one place. The signs are this is gaining good traction.

Clients and merchants comprise all sizes but importantly includes many of the largest companies in the World - Amazon, Google, Microsoft, Verizon and many more. The fact that Bango has long term sticky relationships with many of these suggests the platform is very good and they are happy.

I consider management display high levels of integrity.

I think today's update was very good.

I am a holder so biased.

I'm a doctor! I think the confusion lies in how the language is used: medical vs colloquial.

Point is, vaccines work on the whole.

All the best.

marigold

But we know now from the evidence that getting the Covid shot does not prevent you getting it or passing it on to other people. So what is the point when for most healthy people flu is not something they have to worry about, and certainly not children. No vaccine is without risk.

Albm7

Hi ridavies and others....Yes I I know that feeling... (not selling) I bought some more late July and was looking at adding more as it was drifting lower late week, oh well.

Here is the link to the 35p bit I referred too, Would be a seller of their stale at no less than 35p

Also something else I read from the trade press was that Hedin walked away due to a legal dispute regarding Pinewood. Also I know Paul mentioned possibly buying into this to get hold of the Pinewood part of the biz but this link is worth reading as it says the deal is structured in such a way as to remove Pinewood from the deal...Hedin won't be able to block the deal etc

It does appear that as it is an asset sale and not a takeover a 51% majority is all that's is need but as Paul has already mentioned Zeus comments, it does look like they are getting the deal on the cheap, hopefully other shareholders push for a better price.

I for one would like a complete take over - surely if Pinewood was so great why leave it behind as a separate entity unless of course they are parking the litigation risk with it which would not surprise me at all.

Because flu and covid (and measles, mumps, rubella, polio, diptheria, tetanus, meningitis, hepatitis etc) still kill thousands & thousands of people. And thousands and thousands more are hospitalised and end up with longterm health problems. Vaccines reduce the severity of the illness. That is why we vaccinate!!!!! It's really very simple!!!!

planetx

Talk about punchy valuations for a restaurant business... EUR270m for 23 sites at Big Mamma Group.

Big Mamma group sells majority stake to private equity - https://on.ft.com/3LsmnMc

Now if only some of the ftse listed hospitality groups could be valued at £10m+ per site....!

ed_miller

19th Sep '23

Small Cap Value Report (Mon 18 Sept 2023) - SFOR, BPM, PDG, CTG, TPX

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Paul Scott

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