Small Cap Value Report (Wed 10 Jan 2024) - JUP, MRK, BLV/TPFG, GRG, SDG, COST, SOS, AMS, NICL, CSFS, HSW

10th Jan by Paul Scott

97 comments 11104 reads

Good morning from Paul & Graham!

Today's mammoth report is now finished!

I've finally finished my long form article with my top 20 2024 share ideas, here's the link. It's the same shares as I put on my 2024 spreadsheet, originally linked to in the SCVR for 2/1/2024, so nothing's changed, I've just gone into a bit more detail about my selection process, and I reviewed each share in more detail to make sure I'm still happy with them. It's quite surprising how, only a week into the new year, we've already had some significant movers both up and down.

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. OR it's such deep value that we see a good chance of a turnaround, and think that the share price might have overshot on the downside.

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…

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Camtab

10th Jan

Mystery shopped at LON:JDW last night. Doom Bar £1.99 a pint. My amigo had a lager can be £13 a round down the road. £5.90 with a packet of cheese and onion thrown in. That's like wow!!

RichardK

At the time of writing Belvoir (LON:BLV) is down over 2% and Property Franchise (LON:TPFG) down nearly 3%. Therefore the combined market cap is somwhat lower than the sum of the individual market caps before the announcement. It implies that the 'merger' would reduce shareholder value, or possibly ythat the market thinks it will not go ahead.

I hold both, and am not feeling richer!

Richard

Rusty2

I don't think Belvoir (LON:BLV) is down, Stocko say it is but my platform says it is up slightly. 258p to buy, 252.6 to sell. Stocko works on the last trade which is obviously a sale.
Property Franchise (LON:TPFG) however is down 4%.

StrawberryDreams

Cheers David.I would be interested in your views on Poolbeg Pharma (LON:POLB) too.Cathal Friel is one of the 'Covid Aim favourites' CEOs whose company is still thriving.He did seem a little 'pumpy' at the time even to my then much more naive self, especially when Link were selling for Woodford and the share price wasn't moving the way everyone wanted it to.But he's really produced the goods with hVIVO, even if he isn't the current ceo.

Andy Sav

Sosandar (LON:SOS) (I hold). Seconded! This is very much my view as well

Interesting Burnt Onions and Planetx. My main issue with them at this point accepting they look cheap is liquidity. At these more bullish times following a depressing few years we are all sniffing around for bargains which leads us to a lot of micro stocks. In my role as a Stockbroker years ago I used to see lots of portfolios with illiquid micro stocks just sitting there as the buyers couldn't get rid at a price acceptable to them. I am concerned about this in particular this time round given a general lack of interest in small UK companies. Hope that at least alerts you to a potential concern. All the best.

organictrader

Thanks Mr C, always love your little updates to scan through first thing. Today's title gave me a fright though thinking you were talking about Marks and Spencer (LON:MKS) , Hopefully not a precursor for tomorrow's results.....

eParo

With the removal of cookies by Google Chrome and others, publishers like Reach (LON:RCH) and Future (LON:FUTR) are likely to benefit hugely from data they collect by user sign-ups. Reach uses the data as follows:

Targeting by Reach

We combine the information you give to us (for example, sign up information for newsletters and competitions) with the information we receive when you use our websites and apps, and analyse it in order to help us to understand your preferences and interests. We then associate this with a unique identification number. This is then used to tailor the content and advertising that you see on our websites and in our apps, so it is more likely to be of interest to you. We don’t share this personalised analysis with anyone outside Reach. In particular, it is not shared with advertisers or with the third-party advertising networks that we work with other than in highly aggregated form so that your personal data cannot be identified.

The data we use for this purpose is as follows:

The page you view, and associated information such as how long you spend on them.

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The newsletters you have subscribed to, the promotions and competitions you have entered and the surveys you have completed.

We will analyse this information to infer interests, preferences, and demographic characteristics, and associate it with an internal identification number. For example, if our website analytics tell us that you are located in the approximate area of Newcastle-upon-Tyne and you read our online title ChronicleLive (which is focused on local news for that area), and you sign up to receive an email newsletter about football from our national title The Mirror, then we could infer from that you are interested in things related to a local football club or to football generally.

We then divide up our identification numbers into groups based on the inferences we draw about them. Those groups are called “audience segments” or “audiences”. So, for example, an identifier associated with Newcastle, ChronicleLive and the football newsletter could be allocated to audiences likely to be interested in football, and events near Newcastle-upon-Tyne.

We then use those “audiences” to do two things: first, to help us to recommend content which is more likely to be interesting (for instance, more articles about football), and second to help us to target advertisements when advertisers buy advertising space from us directly.

The advertiser would never see the actual data that we use – it remains with Reach at all times. All we would share with them would be the criteria we used to target their advert, how many times their advert was shown and how many people clicked on it (but not who), so that they know how well the advert did and we know how much to charge them.

Reach (LON:RCH) sits on a p/e of 3.1 and a yield > 10%. There's a big pension deficit to sort out but recent rate rises should help as will cost cuts.

I've added in anticipation of better prospects as cookies are deprecated and results start to reflect this.

yiannos1

Same here-illiquid for a reason.

Burnt Onions

Camtab, your point is absolutely valid, it's not something you can trade in and out of so I treat this sort of purchase like a private equity investment.

But the three young 'activist' fund managers in Richard Staveley, Lawrence Hulse and Richard Penny who have bought into it in the last 9 months have relatively limited funds and an abundance of choice as to where to invest so I think some sort of positive action will be sooner rather than later. And of course I wouldn't blindly follow them in unless the fundamentals backed it up. Just my honest opinion and read on the situation.

Threepeat

I hold both Property Franchise (LON:TPFG) and Belvoir (LON:BLV) but they are held by different brokers. Would that cause any logitic problems do you know??

Steve

spglet

Me too if you get the time. Thank you David

Helvellyn

Avon Protection (LON:AVON)

I have a very small holding in these, which i would/should have added to in the last few months but i am always put off by the huge intra day SP volatility . Even with todays large volume, £1,000,000 worth of shares traded, which is roughly 2x normal daily volume the price jumps around with a complete mind of its own !!

I am missing something ?

Don't tell him Pike

Thank for todays report Paul & Graham. Top Notch!

PitBullCH

Good call on the Doom Bar !

djack

Unless they're planning to change the text yu show above, collecting some of that data, for example site usage, still relies on a user accepting cookies.

I sold out after the strategic decision to open their own shops. It may work out but I don't see how, with the state of the high street and the capex required. I really feel like this was a reponse to institutional investors asking 'how are you going to grow quickly?'

mojomogoz

Wow...I wouldn't touch a business Cathal Friel is involved in personally. Total bs artist. hVIVO (LON:HVO) got lucky and opportunistically got into its current line of biz when it really was not the plan. Best move Friel ever did was get the actually good and competent Mo Khan in to build out a real business...I like hVivo but my opinion is that it is overvalued at present and not time to buy as further development will take significant investment...this is not bad at all...just likely to challenge overly bullish sentiment.

Poolbeg Pharma (LON:POLB) I don't know well. But £14m cash with early stage drugs at best at phase1 of approval process and on a £50m valuation...well you'd better understand a lot (a lot!) about the chemistry they own and are developing. I'm gonna guess that no-one on these pages has that skill.

I like biotech/life sciences at the moment...but I know my limits so I own a basket of stocks at small weights looking for a trade off between valuation, funding and stage of proof...so probabilistic. Could be wrong (badly) on any one. IMO Poolbeg is very negative trade-off and would not get near my basket...

BUT interested to hear the counter

Chris Brown

Re. Ben Whitmore at Jupiter, Trustnet is the place to go to see a good summary of his (and any other fund manager's) track record:

Trustnet - Ben Whitmore

Paul Scott

11th Jan

Thanks for the positive feedback Don't tell him Pike - love the username!

I work flat out in January, partly as penance the inevitable excesses in December, but also because it helps winter pass more quickly.

Small Cap Value Report (Wed 10 Jan 2024) - JUP, MRK, BLV/TPFG, GRG, SDG, COST, SOS, AMS, NICL, CSFS, HSW

Explanatory notes -

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