Small Cap Value Report (Thu 2 Nov 2023) - EQLS, CER, NXT, ESP, TIFS

2nd Nov '23 by Paul Scott

62 comments 8687 reads

Good morning from Paul & Graham!

I'm sitting here in Bournemouth, surrounded by garden furniture, brought in to prevent them becoming airborne hazards as we brace for Storm Ciaran. One of my skylights has already started leaking water, so I've got a bad feeling about this.

As I woke up early, let's start with a joke which made me chuckle -

I was passing a pet shop, and saw an adorable kitten in the window, labelled "Netherlands kitten for sale".

I've never heard of a "Netherlands kitten", but my interest piqued, I went in, and enquired, "How Dutch is that moggie in the window?!"

(I'll get me coat. Acknowledgement: John Heald)

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 in our opinion, a company is well-financed (so low risk of dilution/insolvency), is trading well, and has a reasonably good outlook, with the shares reasonably priced.

Amber - means we don't have a strong view either way, and can see some positives, and some negatives. Often companies like this are good, but expensive.

Red (thumbs down) - means we see significant, or serious problems, so anyone looking…

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davidjhill

2nd Nov '23

Don’t take what officials say at face value. The reality is that this is all a confidence game and all central bankers know it. I remember speaking with a prominent European central banker at a dinner back in the euro crisis in 2012 who were hugely frustrated at the German Bild undermining every tool they brought out to calm markets. Each time they had to bring a bigger bazooka…..

So all that is happening here is central bankers are breathing a sigh of relief that inflation is coming back down. They know the likely direction of rates travel is now down from here as economies struggle to grow but they can’t signal that even remotely to the market, as confidence needs to be maintained that rates are high until inflation is tamed. That is why you are also seeing 10Y yields drop quite dramatically today.

Of course higher inflation erodes debt so that helps governments given the amount of that floating around which in its own right could create another crisis, but that’s for another day.

chrisgb

I would be surprised if ULEZ significantly reduces petrol consumption. Most people I know round where I live have replaced an old diesel car with a slightly younger petrol car which does not have a much better mpg. The boost to car manufacture will also increase CO2. A lot of so called green initiatives - cycle lanes, 20 mph zones, etc - could well increase congestion and hence increase CO2 emissions. The green rationale for them only makes sense if they persuade people to stop driving altogether.

BnB

Like bankruptcy, the transition to electric cars will happen slowly for a while yet. And then very suddenly.

Boon

"Tremor already has a US listing through equity instruments known as American Depositary Receipts (ADRs), which it launched in June 2021."

My belief is that if there is strong buying in the ADRs, it should have a corresponding effect on the share price of the UK primary listing? As ADRs and the primary listing price should be in sync?

c038644

The takeover of Instem (LON:INS) has now been voted through. It was much closer than I expected. Hat tip again to Mammyoko for bringing it to our attention. I decided to sell on the news to reinvest elsewhere.

yiannos1

They deal in PPA contracts.

At the moment that are paying more for energy than they actually charge their customers; thus the extraordinary profits from last year.

Michael Taylor

Re EQLS - the company mentioned it has contacted other companies and not the other way around. So I'm not sure why the shares jumped on the news. If neither co is interested then the price goes back to the undisturbed?

(I have no position)

Fegger

Just tried searching for gins on the website and it is not user friendly. You press the promotion button for gins and it brings up all alcohols and doesnt allow you to limit to gins. Even the overall search button doesnt allow to limit to all gins and actually take a look at them and their pricing individually. Very disappointing as a shareholder.

Bouden54

Decent amount of money flowing into fixed income though this year - bond focused fund managers such as £MNG should be doing well, indeed they've reported positive flows this year.

Pimlico on Thames

I clearly missed the memo as I put most of my cash back into equities over the last week, partly prompted by the thought that it's darkest before dawn and Paul's observation that those not invested might regret it as when markets turn they often take off at pace.

Wolf's charts yesterday on AIM growth from previous slumps certainly reinforced this (confirmation bias).

Some went back into stocks I'd been stopped out or taken profits on - BP (LON:BP.) Glencore (LON:GLEN) Impax Asset Management (LON:IPX) and HgCapital Trust (LON:HGT)

Most went into new positions or topping up oversold stocks - Hikma Pharmaceuticals (LON:HIK), Polar Capital Holdings (LON:POLR) , Solid State (LON:SOLI) , Vistry (LON:VTY) , Yu (LON:YU.)

The market gains over the last couple of days has shown how quickly the markets could bounce. Certainly not claiming to be a timing genius, and Hikma Pharmaceuticals (LON:HIK) has taken a bit of a dip.

Alan Partridge

If anything it sounds a little desperate. Why would you look to sell if the business prospects are great?

You might be right in this case. But every one of the businesses I sold went on to grow profits for years under new ownership. Sometimes you just want a new challenge/fancy a big lump sum in short order/eye up a couple of years sabbatical/have a tax bill to pay.

It wasn't intended for public distribution - It was a LEAK!

Normal course of business disrutpted by a leak - resulted in the necessity for an announcement under MAR.

Gotcha - thanks. thats helpful. so I had better dig into this in more detail then - less attractive based on that

jonno

Porvair (LON:PRV) 4 trades totalling 1388 shares of which three were buys and one sell of 85 shares according to Sharepad.

Result, the shares close down 4.7%. Absolutely bonkers. Talk about dysfunctional markets; you couldn't make it up.

I hold and have been adding.

StrawberryDreams

The whole wind manufacturing sector has been a bit of a disaster lately and taken writedowns lately.Danish Orsted were the last company to back out of 2 US projects after Siemens Energy, which took on Siemens Gamesa, was rumored to be needing german state support a few days ago after needing to take potential billion figure writedown for faulty parts only a few months ago they said.

BP and Shell are on lower multiples than their US counterparts.Just a couple of years ago they would have commanded a premium for their green projects perhaps..

ADRs and UK share price will be in sync but Americans don't trade ADRs particularly. Yes they have access but generally trade stocks on the index. Thus the idea behind it will be to put Tremor International (LON:TRMR) into the mainstream US market as a primary listing and thus Americans will view it as an American company and trade it accordingly.

There is some merit to this, and in the case of Tremor International (LON:TRMR) it is far more a US business than it is UK. Yes, it has a HQ in Israel and was originally founded there but in reality its executives are all based in the US and its business is largely operated from the US and most of its clients similarly. Of course ultimately only if the underlying revenue and profits come through from execution of the business plan will value really be realised

mammyoko

Instem (LON:INS) - glad you were able to take advantage of that one. Lots of mispricings around in this thin market

AcornInvestor

Me too. Thanks mammyoko.

abtan

3rd Nov '23

Instem (LON:INS)

My thanks too mammyoko :)

Small Cap Value Report (Thu 2 Nov 2023) - EQLS, CER, NXT, ESP, TIFS

Explanatory notes -

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Paul Scott

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