Small Cap Value Report (Wed 15 Nov 2023) - RNO, KNOS, SCE, FSTA

15th Nov '23 by Paul Scott

85 comments 8907 reads

Good morning, it's Paul & Graham here again today!

We'll leave it there for today.

As I expected, Richard Staveley of Rockwood Strategic (LON:RKW) (part of the Harwood Capital stable) was absolutely brilliant on the Mello Funds & Trusts show yesterday afternoon. I took detailed notes, it really was a masterclass in how to create & manage a small caps portfolio. It's a tiny fund, only £46m, but it's established a fantastic performance track record, no.1 in small caps funds. You can see why when Staveley explains Rockwood's approach. He'll be appearing in person at Mello Chiswick too, along with loads of other superb speakers, so I'm looking forward to that.

Multibagger webinar is tonight at 18:00 - all subscribers should have been sent emails about this event, but you can register here if not. The boffins at Stocko HQ have come up with a data-driven way to spot multibaggers - that is certainly more than enough to grab my attention! I've set an alarm on my phone so I don't miss it.

Big drop in UK consumer inflation - this is as expected, but the ONS report today confirms that there has been a huge drop in CPI inflation from 6.7% in Sept, to 4.6% in Oct 2023, mainly due to a big jump in Oct 2022 inflation dropping out of the numbers as it annualises. What it describes as "core" inflation (which excludes volatile food/drink/energy prices) dropped from 5.9% in Sept, to 5.6% in Oct 2023.

Still some way to go before things have normalised, but it's clearly moving in the right direction. How long before investors start anticipating lower interest rates, and all that cash on the sidelines starts surging back into small caps?! Your guess is as good as mine!

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…

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Patrickmylnetrade

15th Nov '23

thanks Peterg. makes sense. We shall see how much the price drops on Friday 17th

Charles Mitchell

Palace Capital (LON:PCA) Peter Gyllenhammar increases stake RNS to-day https://newsfile.refinitiv.com...

thandouk

Early bird date was 5 days ago..............................

ACounsell

I recall that that some time ago Ed Croft & Ben Hobson contributed to an e-book 'The Smart Money Playbook' https://www.stockopedia.com/bo... . This looked at using this approach in detail along with with various other approaches. Some of the analysis was quite 'data heavy' and at the time I think there was a plan to incorporate it into a Stockopedia feature but I guess it proved too difficult in terms of getting hold of consistent quality data. Nevertheless as you say the concept is a very good strategy and it would be nice to see it on the Stockopedia new features plan at some stage in the future.

Chrisgsy

Ocean Wilsons (LON:OCN) very interesting quarterly update today. NAV £22.70/share v share price £11.25/share, ie 50% discount. NAV includes £15.74/share for its stake in Wilsons Sons ports and towage business, and the Board has received a number of “indicative non-binding offers” for its stake, following the initiation of a strategic review. Wilsons Sons has also just disclosed decent trading results.

Other asset is a portfolio of funds.

Dragon

Guess where I am, Paul. Malta for four days. I 've hired a bicycle (electric) for a few days to see the Islands. Hopefully I will pop over to Gozo tomorrow from Bugibba.

yiannos1

I can spot a couple that will probably double but none of these are multi baggers.

Helvellyn

Warpaint London (LON:W7L)

https://s3.eu-west-1.amazonaws...

It looks like there has been a reasonable upgrade to Warpaint's EPS for '23 and '24 recently .

The attachment is from 5/11/23 .

Stockopedia | Warpaint London Share Price - W7L Share Price Quotes, Charts, RNS & Stock Market News

and this is from today.

Paul Scott

Lucky you slopsjon!

I very nearly popped over to Malta myself this week, as the weather is beautiful out there at the moment, totally unlike a usual November, my sources on the ground tell me! Have fun :-)

Regards, Paul.

littledavesab

RKW Why buy the fund? I guess the answer with any fund is that buys and sells are not always immediately announced and corporates might get offers to join in placings that PIs might not receive, Also some PI's (not here lol) might not follow the markets avidly and smal lcaps can as we know move very quickly.

However yes one could most likely follow along if inclined.

jmallin1972

Hi Lawrence. I've registered for the seminar but no email has come through (checked junk mail). Are you able to post the link

Rusty2

Yes but do you? Did you hold Load? From memory you were not that keen on Load. You don't know when they buy and at what price. The information on holdings not up to date. They can buy at discounts sometimes. They have access to more information. The performance has been good, around 120% over 5 years and 88% over 3 years.

Actually I'm thinking of investing in more funds, small caps are taking too much time and effort, why not let someone else do all the work? If they make 120% over 5 years that is fine.

rmillaree

"The fact that inflation was supply shock driven has not been exacerbated by a much uglier problem of wage growth cycles leading to demand led inflation."

Is wage growth such a bad thing ? - i think the main upside from brexit (i didnt vote to leave) is that it has brought some obvious pricing power back to skilled workers which was lacking when europeans could come in enne masse charge cheap rates take the tax credits and leave with all the cash building nice new home at home.

With wage growth that will boost taxes and boost spending power of peeps in the shops - whats the problem with wage growth ? it should also be incentive for us to be more efficient. Seems that the more stable countries actually have higher wages.

And not fuelling that by increasing interest rates - surely rising base rates had peeps hounding employers for pay rises. WATP

davidjhill

Yes, too much wage growth is seen as very bad from an inflation perspective rmillaree. It leads to excess demand for services and products, which means companies have pricing power to push up and hold prices, leading to increased inflation. That in turn encourages employees to demand even higher wages and you quickly get an out of control wage growth cycle. That is precisely what the BoE and Govt are concerned about. The supply shock led inflation component is pretty irrelevant as that fades very quickly as supply is restored and monetary policy has zero impact on supply led inflation.

What you are looking for is a sweet spot of GDP growth, low but positive inflation and wages increasing in real terms but not far ahead of inflation. That keeps economy growing, money in peoples pockets but businesses hungry and price competitive.

Barry5

please send the replay to me Lawrence as yet again I didn't get an email informing me of the preso. I have raised this issue with you before but no action was taken. barryadd@btinternet.com

Matt, I think a number of subscribers have been omitted from the email list used to notify us of presentations.

Lawrence it is clear that many subscribers are not receiving the emails. I have messaged Ed.

carmensfella

16th Nov '23

It has been extended for all Stockopedia users until the event.

Boon

Not sure I am getting to the same conclusion...?

Obviously the boss of Hays Travel is optimistic of further growth for her company into 2024. But she doesn't explicitly say that current trading has been doing well.

All she says is citing a third party study that suggests consumers are likely to keep spending on travel into 2024, ahead of other areas of spend.

This is not the same as confirming that Hays Travel current trading is healthy, nor that their forward bookings order book for next year looks strong...

In fact, because she didn't say any of that, you could imply that Hays are not really seeing strong current trading nor strong forward books for 2024. Otherwise she would have stated that.

Caper4

Indeed they did. My take on it, is that Rockwood are banking on a Labour Govt investing significantly more in education and companies like RM will surely benifit. Certainly worth a small punt and a hold for a couple of years to see what eventuates.

Small Cap Value Report (Wed 15 Nov 2023) - RNO, KNOS, SCE, FSTA

Explanatory notes -

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Paul Scott

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