Small Cap Value Report (12 Sep 2016) - RST, BRY, GAH, SSTY, CTG

12th Sep '16 by Paul Scott

25 comments 15174 reads

Good morning!

Groan, it's one of those days where the RNS only lists results & trading updates from companies which I find of no interest to me whatsoever. So I can't cherry-pick the interesting ones, as there aren't any.

We seem to be having something of a correction at the moment. Not before time, as the post-Brexit boom really has been remarkable, and maybe got a bit excessive perhaps?

Whenever the market goes wobbly, I have a standard procedure now - I chuck out some of my low conviction positions (especially if they've risen a lot, and look fully priced). Then I also open up some short positions on over-valued US large caps, and/or indices. That tends to act as a good shock absorber for any downturn in the rest of my portfolio.

Then when the sell-off seems to have run out of steam, I buy back the shorts, and that usually provides a little pot of extra money to grab some bargains on the long side, at or near the lows. Obviously that's all a lot easier said than done. However, it's worked for me a few times now, and as my guru says to me - "Just do more of whatever works". Some of the best advice is the simplest.

ShareSoc Brighton evening

Is tomorrow! I'm very much looking forward to this, which we're hoping to make into a monthly event. It's ShareSoc's event, but I'm just an enthusiastic helper! There are a few places left, so if you fancy coming along for what should be a fun evening, here is the booking form.

The company presenting is Palace Capital (LON:PCA) . Also, I'll be giving a 30 minute presentation on my best small cap stock ideas from the last month's reports, and which shares I've been buying/selling personally. If people like this slot, then it may become a regular monthly thing.

Of course one of the best things about these events is that we also have the whole evening to chat to each other about shares we think look interesting. So there's always a lively & friendly discussion until closing time. Everyone has a shared interest, so conversation flows easily right from the start - so nobody should ever feel intimidated or shy about coming along to investor events.

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Raldridge

12th Sep '16

Hi Paul, long time reader who thoroughly enjoys your reports. I recently came across a share you have yet to cover and wondered if you would look at it, it came to my attention via John Lee. Titon Holdings. http://www.titonholdings.com/media/download/news/Interim-Statement-March-2016.pdf These are half year results from May. Maybe a bit small and boring but thought it point it out for a future report?

guyrendell

Any thought on Real Good Food, Paul? Interesting research note published by Hardman & Co released today. Seems like it could be a turnaround stock following the sale of its sugar business, Napier Brown.

Richard Goodwin

I always suspect that the risk with Central Asia Metals (LON:CAML) is political. They operate almost solely in Kazahkstan and acquired the second half of the asset by getting a local businessman to buy it from the government and sell it on to them (he got a seat on the board an lots of money).
The financials always look fantastic but it worries me that a new government might not look so favourably on these transactions.

Sharechap

Re: GAH I'm not surprised what has happened to this Company and as you say Paul the writing has been on the wall for a while. I was a shareholder a long time ago, but sold out long before the present troubles.

I came across them latterly in a professional capacity where they were insuring a construction risk. It was high margin risk stuff and the premium matched it. I experienced the worst ever service from an insurance company when seeking an assignment of the policy. You can tell a lot from a business in terms of the business that it does and the customer experience.

cic

Paul, regarding Gable you say "and of course never touch any company in future run by the same Directors". The problem here is that 10 years down the line we will have forgotten all about Gable and who the directors were. What we really need is a sort of database of duff directors and companies that they (used to?) control to help research possible investments. In doing due diligence I usually look at Companies House website to see what other companies the directors have been involved with, but that does not really go far enough. I do have a little database of my own duff directors, and if my attention is initially drawn to a company where a director is on my list that would be an automatic red flag. But I would rather spend my limited time investigating companies I want to invest in than ones to avoid. Something collective here would be helpful, but probably run into all sorts of problems. Just my thoughts!

mothy9

One would love to know the identity of a mentor's mentor! You have certainly become a valued though non-exclusive mentor to yours truly.

Thank you for all your valued and direct eveluations.

Beginner

Titon Holdings (LON:TON) keep cropping up on my value screen, but they look pretty much valued right to me. They make fixings and accoutrements for windows and vent sysytems. The Korean side of the company has seen a slowdown, and their future in the UK seems tied to the uncertain housing market. The US side may now be impacted by rate rises. They have cash though, and the continued weakness of sterling should also help. Hardman give an EPS forecast of 13p and DPS of 3. So plenty to be happy about, if you trust the housing market. Perhaps one to buy on the dips (when they come)?

Michael Billingham

I was interested to see that Tristel has received Regulatory Approval for it's Fuse for Surfaces and Jet for Surfaces disinfectant in Australia. Sales reached £1.2m for these two products in the UK last year and Tristel now has it's own wholly owned subsidiary in Australia which should enable the Company to take advantage of this new Approval.

I believe Tristel are also seeking approval for it's range of products in the States and, while still some way to go, I believe that this will provide significant further growth for the company when this is achieved.

Disclosure: I hold shares in TSTL.

rhomboid1

I sold a modest holding a month ago because I couldn't see a catalyst for a rerating, in so doing I crashed the price 10% or so on the day so it is horribly illiquid. Thankfully what I bought went on to perform as I'd hoped but be aware that the painful spread on the stock is exacerbated if you want to deal in more than a hatful and in less than week or so!

Carey Blunt

Hi Paul,
Next time there is a slow day for RNS test interest you, perhaps you could take a look at Joules (LON:JOUL) . There were a couple of plees to get your verdict on them last week while you were on holiday so you may not have seen them. Given its your specialist area of clothing retailers I and several others would welcome your thoughts.
Cheers

ganthorpe

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Interesting that both last year and this year , the "exceptionals" exceeded the adjusted profits. No wonder the cash flow is a bit thin.
I always wonder how regular charges like this can be called "exceptional". for several years
Not for me

xcity

Titon Holdings (LON:TON) I've seen it written that they manufacture MVHR exclusively in South Korea which offers(ed) a cost advantage in the UK. If so, I assume that will now be reversed.
It will take more thinking for me to have a view overall one way or the other.

Paul Scott

I've looked at Titon Holdings (LON:TON) several times before, and didn't like it. Can't remember why, but there was something wrong with it.

Regards, Paul.

jonesj

I've just made a long overdue move to start my own blacklist of directors, so thanks for the prompt for that. About 30 years late. If there are any pre-existing sources of data, perhaps that's a better starting point.

Charlie Munger keeps advocating "inverting". e.g. Figure out how people lose money and avoid that.

Samsgrandad

I was unsure before I invested that Tristel had a unique product that they could protect from competition. They have, I found, patented methods of packaging the two chemicals which produce chlorine dioxide, in a manner which enables on demand mixing for all manner of cleaning and disinfection. They have, from what I could find on the net, become the de facto supplier of disinfectant for the control of C.Dif and MRSA in UK hospitals. I have posted my research on the TSTL thread on ADVFN.

13th Sep '16

In reply to Samsgrandad,post 20

I believe C.Dif and MRSA are as much a problem in Australian hospitals as they are in the UK. Tristel will, no doubt, want to become 'de facto' supplier there too.

Disclosure: I hold shares in TSTL.

hayashi22

Top of my list would be Sean 'Baldy' Nutley out of Silverdell .If he is not in prison he should be.
I did not own shares -thank the Lord-but had reasons to follow the story.

Fegger

Seemingly flourishing http://www.luminaprime8.co.uk/sean-nutley/

So not in the nick then. I will certainly avoid luminaprime!

FREng

11th Jan '17

Titon Holdings (LON:TON) is shooting up now. John Lee bought back in, and said in last weeks FT Money "on a recovery trend, backed by hard assets, cash rich, well covered growing dividend".

Very hard to trade though. I managed to get 2000 today at 130p.

Small Cap Value Report (12 Sep 2016) - RST, BRY, GAH, SSTY, CTG

ShareSoc Brighton evening

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Paul Scott

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