Small Cap Value Report (Thu 28 Dec 2023) - TRYB, CHLL

28th Dec '23 by Paul Scott

37 comments 4267 reads

Good morning from Paul!

Quiet for news again today, but I'll be taking a look at a couple of £20m market cap minnows. Today's report is now finished.

I was pleased to see there's clearly subscriber demand for SCVRs in this quiet period, with 4,713 reads, and 154 thumbs up for yesterday's report. If the market is open, then there will be an SCVR, as subscribers need somewhere to discuss topical issues every trading day.

I'm keeping my eyes peeled for unusual share price movements - in the usually modest liquidity of the Christmas break, price spikes can occur, presenting the occasional opportunity for people paying attention.

Same as every year, I'm planning on writing my year end review, and my top 20 value/GARP shares for 2024, over the New Year break. I also really enjoy reading subscriber posts about your investing year, and how you see 2024 panning out, so I encourage everyone to share your thoughts either by creating a separate post, or in the comments here.

While I'm preparing today's report, take a look at Keelan's review of the mining sector in 2023.

Two more 2023 reviews have been published today -

Graham's 10 share picks for 2023 have delivered a remarkable +25% (including divis)! Article is here.

Megan posted some more macro-focused themes today in this article.

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.

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rmillaree

28th Dec '23

Chill Brands (LON:CHLL)
I see the logic for not paying back - but I also see the logic for saying that we no longer need the support of the emergency prior funding that was handed out. Many of the listed companies rightly imho went above and beyond with regard to repaying these loans early and not seeking any government grants freebies that are were not wholly necessary for the business so thrive. Presumably the rationale of why they needed the funds then no longer applies too so would have been nice small positive sign if they had repaid the 30k they owed from recent funds raised and advised that was the right thing to do. No biggie that they haven’t paid back I would agree.

Peter T

With regards to Equals (LON:EQLS) They issued confirmation yesterday that the strategic review deadline has been extended again until 24/01/24. I suppose there is nothing to conclude from this either way, that it is just standard practice and the deadline could be extended again on the 24th (am I right in saying they can only be extend the deadline in these four week chunks?) but would be interested in the thoughts of other more knowledgeable investors here if you have a different view (I hold and intend to stick it out)

Also, thanks to Paul Hill who first alerted me to Equals (and Northbridge/Crestchic for that matter)

Chill Brands (LON:CHLL)

Bri72

What we really need from companies like this is firm future forecasts and regular updates ref those forecasts - in the absence of that this company doesn’t make any sense to me as an investment case from my perspective. It’s early days as yet but do they have any expectation ref numbers next year and year after ? Any proper company should have targets in that regard with updates ref those known expectations each time they update the market. Talk of deals done whilst ignoring the big picture of the totals imho is pretty useless.

Skweeka

This list of possible takeover candidates from Shore Capital may also be of interest, it was published in a Shares magazine article dated 16/11/2023:

Small caps:

FD Technologies
Future
Loungers
Norcross
RWS (I hold)
Volution

Larger caps:

Entain
OSB
Watches of Switzerland
Whitbread

JCPr

There was no RNS. The rise was because of a few words spoken in Argentina. Their new president made some comments about how he would intend to pay an award made against the Argentinian government which currently stands to benefit Burford Capital (LON:BUR) to the tune of $6bn (at least in theory $6bn - a substantial discount is assumed). There's no large exposure on that case; Burford Capital (LON:BUR) have already sold off sufficient parts to have made a small profit. There is a hugh amount of expectation though.

Camtab

Good Morning. I spent most of 2023 in arrears with the last month enabling me to claim a small premium for the year. I suspect this might be quite a common outcome. But really what a boring year. 2020 for me a was a great year with 2021 up 5% and 2022 marginally down. The key being I managed to protect my capital when small caps collapsed, largely by shorting 10 year gilts and treasury and switching across into index linked gilts. But definately not an exciting couple of years and when you take inflation into account loss making. I remain cautious that macro influences could throw in a googly this year. The balance of power seems to be shifting and this does make things more unpredictable. That said for me it also highlights an opportunity in anything defence. I have spent the last few months initiating holdings in MS int, Avon Protection, Concurrent Tech, Global Data and James Cropper (yes defence! But incredibly hard to get any size and wouldn't want to pay much more than £7.50 at current time anyway). I continue to hold Avacta and Verici DX. Avacta could have funding difficulties but I personally think this will end up a £10 share, (contentious I appreciate but its my money). I was interested to hear Christopher Mills say this sector is finding it more difficult raising funds. Verici were clever and have shown leadership which i like. Otherwise I hold a handful of shares on valuation arguments. IPO are still valued less than 50% of their NAV. I think Record Holdings will turn out to be cheap. I prefer a handful of shares in size having spent time over the years building diversified portfolios only to end up relying on beta for return. I am interested in capturing the alpha i.e. backing my judgement. Well I wish you all success in 2024, there are many uncertainties out there but were I to back one theme I think defence has got to be a growing sector over the next 5 years. If not Poootin is going to be as happy as a pig in a poke!

Thankyou one and all for your contributions over the last few years. I prefer working in a team.

grumpy5

I prefer to think of Pootin as a pig in s**t, but concur with your views that one should have a v solid weighting in defence. One should not overlook European stocks - Rheinmetall is a core holding for me, and I also have Cohort (LON:CHRT) and MS International (LON:MSI) .

Thanks for posting the spreadsheet Michael C. Another one from the Harwood stable for the list maybe is Real Estate Investors (LON:RLE) Chris Mills talked about it with Paul Hill at the following link (from about 78mins in) flagging it up as such albeit, dependent on the correct market appetite returning (pays a decent dividend while you wait). I hold. https://www.voxmarkets.co.uk/a...

Lucky dip

Halford and SPI are on my list for disappearance!

mojomogoz

Chill Brands (LON:CHLL) - isn't the idea of nicotine free vapes a stupid idea?

GloucesterBob

If it get people off nicotine vapes then it's a cracking idea, but without the "addiction" factor, it's going to be a tough sell.

I don't disagree - it's early days. They're expecting £2m of revenue in next quarter, but by own admission this has happened much faster than expected. I haven't seen research on them - closest is the Sunday Roast, but that's more PR than research. Personally, I believe its more than a hope, hype stock - there's something tangible building here - it just looks like it needs some more time to become apparent. Up 15% on the results - so some people agree with me. Many thanks to Paul for reviewing today, I'm hoping for a more positive review soon...

The skier

Seems so now. Many thanks.

rogerh

Global non-alcoholic beer sales apparently $20 billion in 2023 and projected to rise to $40 billion in 2033

Rusty2

But a lot of that is because people are driving? Beer sales, worldwide, are around $320bn.

Bouden54

Also see a lot of value in REITs, which should continue to do well as interest rates fall. I follow the sector quite closely and agree the Tritax EuroBox (LON:EBOX) probably looks the best opportunity right now for the reasons you've outlined.

Samsgrandad

Thanks to my son's "research" I've been introduced to an alcohol free (well very very low) beer that amazingly tastes like beer. It's Brooklyn Breweries Special Effects. £4.50 for 4 330 ml bottles.

dunns_river_falls

Erdinger alcohol free is also superb.

Paul Scott

Thanks marcusb! :-)

I remember in the 1980s, when I was trying to quit smoking, and I found some nicotine-free "cigarettes". There was absolutely no point in smoking them, because there was no nicotine hit, which is the sole reason for smoking.

Also I got banned from a local cafe, as the owner confronted me and told me my nicotine-free cigarettes smelt like a bonfire, and to take my coffee and cake requirements elsewhere. He didn't have any objection to people smoking conventional cigarettes.

For this reason, I very much doubt that nicotine-free vaping will take off. Other than as a vaping-cessation product.

Small Cap Value Report (Thu 28 Dec 2023) - TRYB, CHLL

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