Good morning! It's Paul here.

Remarkably buoyant market conditions continue. I really don't know what to make of it. So many smaller company shares are going through the roof at the moment. It feels too good to be true, but I really don't know whether I should be running my winners, top-slicing, or moving into cash?

I'm struggling to remember any similar time, in my investing career (c. 20 years) where mine (and other peoples') portfolios seem to go up almost every day, for weeks & months on end. Personally I've hardly top-sliced anything. I'm letting the winners run. Providing companies keep putting out sufficiently positive newsflow to justify an aggressive valuation, then in a bull market arguably one should just go with the flow.

It's going to end in tears at some point, we just don't know when!


Anyway, there's loads for me to get through today, so here goes.



K3 Business Technology (LON:KBT)

Share price: 154p (down 38.3% today)
No. shares: 36.0m
Market cap: £55.4m

Trading update (profit warning) - bad luck to shareholders here. 

This company seems to be a software reseller (mainly Microsoft products), describing itself as;

K3, which provides mission critical software, cloud solutions and managed services to the retail, manufacturing and distribution sectors...


It's a significant profit miss today;

As previously reported, half year results were impacted by Enterprise contract slippages and, although the Company has seen some major deals close, certain large Enterprise contracts have not been secured as expected.

 As a result, despite the high seasonality inherent in Q4 trading, the Board now believes that the results for the year to 30 June 2017 will be significantly below current market expectations...


As you can see from my favourite Stockopedia graphic below, this is the second profit warning this year;


591aca588a54dKBT_brokers.PNG


Broker forecasts - I haven't yet seen any revised forecasts, taking into account today's profit warning. FinnCap said that it's suspending its forecasts for now, until there is more clarity after the year end (30 Jun 2017).

Therefore, for now, we're in the realm of complete guesswork as to how bad this profit warning is likely to be. My hunch is that we could be looking at…

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