Small Cap Value Report (Tue 31 Oct 2023) - BEG, HEIQ, ELM, UPGS, D4T4, ESYS

31st Oct '23 by Paul Scott

94 comments 9721 reads

Good morning from Paul & Graham!

Today's report is now finished.

Press reports say that the recent demise of Safestyle (double glazing), going into administration recently, has resulted in the administrator making 680 people redundant. A stark reminder that there's a human cost to failed investments. Let's hope they are re-employed if the operating business is sold to a new owner.

Graham's youtube link for today - covering UP Global Sourcing Holdings (LON:UPGS) , IG group (LON:IGG) and Elementis (LON:ELM)

Inflation falling

Some positive-sounding data out today from the British Retail Consortium here, showing a sharp reduction in retail (shop prices) inflation - good news I think (but not sure what expectations were), and remember this is not the official ONS data that includes a wider spectrum of household costs beyond retail -

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 -…

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Epitychia

31st Oct '23

The spread was large last time i looked.

The Phoenix

Thanks Pike , agreed he's got some great video's the "portfolio matters" fellas weekly macro podcast is awesome also if you don't subscribe.

jamesalastair

SDI (LON:SDI) I sold a modest holding a few weeks ago having watched the CEO in action, who I felt was less than impressive. I now see Pershing Square has popped up on the share register with a 6% + holding which I thought was odd give the type of business Ackman usually invests in and the relative market caps: Pershing Square Holdings (LON:PSH) : £5.61 B and SDI (LON:SDI) £106 m. Even a 100% holding hardly moves the needly on Pershing. I wonder what Ackman is up to?

I have a largish position and am happy to add on weakness. I think it is a compelling investment although of course time will tell.

"Please, speak as you might to a young child or a golden retriever" .... that made me laugh. 35 years ago, I once made a pitch to a MD at one of our old - now long gone - merchant banks. After I had finished, the MD said "I didn't understand a word of that , but I suspect you didn't either".

mojomogoz

Not Ackman. Its this https://www.pershing.com/uk/en...

jonno

Card Factory (LON:CARD)

Having watched Richard Crow's interview on Vox markets, the webinar of the recent interims on the the company website and read through the interims, I decided to open a position. No one gets it right every time, but Richard Crow is an astute stock picker and he wouldn't bet the house, well 30% thereof without doing his homework.

I have therefore started to build a position in my ISA, regularly buying smallish amounts on commission free trading that is offered around six times per month by Halifax. The absence of commission makes it cost effective to deal in smallish amounts using dividend income. I have bought 6/7 times between 91p and 96p and at present shall continue to do so.

1st Nov '23

Thanks .... makes more sense

epo001

An interesting test for Stockopedia. Currently it cannot provide a price for ULTP as the data provider have presumably not got their act together. However when the name change occurs will all previous mentions/articles of UPGS be updated? If not, much historical info will get orphaned as not everyone will think to search for UPGS as well as ULTP.

sharw

Utterly useless:

So try ULTP

NOTHING. Now compare the very pricey Stocko with FREE Investegate:

Rusty2

2nd Nov '23

Still no prices for ULTP.

Green button reply from Alex:

"Hi, Thanks for this. A price is now available. Please see the StockReport (link here).

We may need to refresh the search index. I will speak to the development team about this".

Alex Naamani

Hi,

Thanks for this.

I followed-up with the development team.

LON:ULTP is now available in the search tool, too.

Best,

Alex

Alex, Thanks. I wish the mcap was £11bn.

Why is all the news history lost on a name change?

UPGS is no longer accessible.

DWit199

Why is all the news history lost on a name change?

I am generally supportive of Stockopedia but on this issue they have failed dismally. They have known about the inability of their system to link the news history after a name/ticker change of a company for over a year. Although not a regular issue, name changes do occur surprisingly frequently and Stockopedia always fails to update correctly. I can only conclude that not fixing this is a deliberate choice by the company, something that I find extremely disappointing.

Hey,

I appreciate the candid feedback.

I won't go into too much detail, but in terms of the technicalities, the news is lost because it is tagged in the database by a changeable ID, namely the RIC, which changes when the ticker changes...

In the case of LON:ULTP, the RIC was UPGS.L. It is now ULTP.L. The old news is tagged with UPGS.L and the StockReport with the new RIC has no means to access the news tagged with the old RIC.

The proper solution to this is to use an immutable ID - i.e. one that does not change even if the ticker/RIC does change. We have already rolled this solution out with the StockRank histories (see here) and can, of course, implement something similar for news.

I can not promise when this would happen, because there is a long backlog of data issues/product improvements we want to roll out, but I hope the above provides more clarity.

3rd Nov '23

Thanks Alex. It's good to hear the cause and solution are known for this problem.

Unfortunately, there are other unresolved issues around a simple name change. I use your figure for volatility 1yr % in my screening. For UPGS it was around 55% for months but currently ULTP shows a staggering and highly unlikely 761%. Of course, this then changes the risk rating from "speculative" to "highly specualtive", a risk rating that I tend to avoid when looking for a new purchase.

Since the StockReport, the StockRanks and your risk ratings are your core product, I am surprised that such obvious anomalies have not been resolved

Thanks for this. I feel I need to provide a little more context. We say it is a simple name change, but we have to understand what is happening from the ‘perspective’ of a computer.

In the real world, if I simply change my name from Alex to Alec, people would still recognise me by appearance. Likewise, if a company changes its name from Facebook to Meta, people still know it is still Facebook. This doesn’t necessarily happen in computing...

Software code doesn’t have real world context and computers think in very literal terms (i.e. ‘Yes’ or ‘No’). Either the RIC / ticker is exactly the same, in which case everything runs smoothly, or the ticker is completely different, in which case a new ticker is an entirely separate security. If AAA.L changed to AAB.L then, in the eyes of a computer, that is as significant as AAA.L changing to ZY1.L.

To complicate matters further, different pieces of the puzzle receive knowledge of the ticker change at different times. We use various Refinitiv products to construct our data. If one product thinks the RIC is AAA.L, whereas another product still uses ZY1.L, then you would literally have a situation where some bits of data are present, whereas others are not. Tickers can also be reassigned and recycled between securities, but I won’t get into that.

A lot of this is arguably a flaw of the RIC system. They were never designed to track stock information over time. RICs were first used by the old Quotron machines, which came in during the 1960s. They just gave you the latest price. Users would get a snapshot (price now) and not a time-series (price through time). The (changeable) RIC is unfortunately very much baked into the Refinitiv product offering, whereas constant identifiers are much more peripheral. Indeed, the industry only came up with a solution for identifier changes later, over time, presumably because those problems only become apparent over time. For instance, ISINs often stay the same when a ticker changes, but they were only introduced in 1981, well after RICs, and it took a while for them to be used as an industry standard. But then ISINs change too.

We are grappling with identifier changes and can move away from RICs where possible. Nothing we can not do over time. Just something that needs to be done with surgical precision, alongside various items of work in the backlog.

UPGS/Ultimate Products (LON:ULTP) again. Currently there is a stock report for ULTP (yay!), the discussions section on that page shows UPGS material, that might confuse people new to the company but that is how it is, retrospectively changing the names would be falsifying historical material. Searching for UPGS shows nothing.

If I go to a discussion for UPGS and click on the UPGS link I (after a pause) get the ULTP stock report. It would be tidier if UPGS were searchable, this would require Stockopedia to maintain extra entries for the old names which mapped onto the new names.

Of course you want your own immutable IDs (ISIN would probably do) tying yourself to a data suppliers ID is just making trouble for yourself.

Small Cap Value Report (Tue 31 Oct 2023) - BEG, HEIQ, ELM, UPGS, D4T4, ESYS

Inflation falling

Explanatory notes -

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Paul Scott

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