Small Cap Value Report (23 Sept 2015) - RGS, GBO, PTO, BEG, WAND, PURI, ECK

23rd Sep '15 by Paul Scott

20 comments 24322 reads

Good morning!

Due to computer problems, yesterday's report ended up taking me most of the day (I lost a large section and had to re-do it). So in case you missed it, here is the link, to where I looked at Regenersis (LON:RGS) and Pittards (LON:PTD), in addition to earlier comments about Boohoo.Com (LON:BOO)

The market so far today has that feeling of a crisp autumn morning, immediately after a big storm - a few bargain hunters are emerging from their battened down hatches, to be the first to collect up some of the debris from the storm!

Regenersis (LON:RGS)

Director buying - a couple of readers thought my comments on the Directors of Regenersis yesterday were a bit harsh, which on reflection they probably were. My main point is that they've been extremely shrewd in loading up with cheap shares at the right time, and dumping a large chunk of them a few months before things started to go wrong.

So, when you see Directors with a track record of timing entry/exits uncannily well, then it pays to take notice of what they are doing with their own money. Sure enough, and on cue, a decent-sized Director buy has been announced today.

Hanover Investors (the key shareholder in Regenersis, connected to Chairman, Matthew Peacock, and one of the NEDs) has increased its stake by 200k shares, to just over 5.4m shares (6.9% of the total).

As a general point, the only exception to when to follow Director trades (in my opinion), is immediately after bad news. Since, with many companies, such purchases are nearly always just done for PR reasons, to reassure shareholders. Often such purchases only stabilise the price for a day or two, before continued falls.

That's not the case here. As I explained in yesterday's report, Regenersis is starting to look interesting again, as the rather unimpressive, low margin electronics repair division looks set to be disposed of. That would then leave a higher margin, smaller business focussed on data erasure software, which Regenersis reckons is a good growth area.

I really hope management twig that "less is more" with the future accounts. The ridiculously over-complicated reporting, and incredible adjustments to the accounts, should be ditched. Instead I think investors would…

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kevanp

23rd Sep '15

"The market so far today has that feeling of a crisp autumn morning, immediately after a big storm - a few bargain hunters are emerging from their battened down hatches, to be the first to collect up some of the debris from the storm!" Poetry, bloody poetry.

Gostevie

Hi Paul,

I will donate £5 to a local charity for the first person who can tell me how many times WAND uses the capitalised term "Big Data" in this announcement!

27 capitalised "Big Data" and one lower case "big data". :-)

Paul Scott

Thanks Steve!

27 times that WANdisco (LON:WAND) mentioned Big Data in one RNS - how completely mad! That surely must be the most blatant attempt to latch onto & over-use a buzz-phrase in order to promote the share price, that I've ever seen.

I will donate £5 to the girl in my local sandwich shop, who's doing a sponsored month off alcohol in October, I'll let you know what the charity it's for! Her Dad told me that it would "nearly kill her" to go without for a whole month, so it seemed a good challenge, and one that I do myself each Jan (and sometimes Feb too).

Thanks again,
Paul.

cig

Why doesn't Globo (LON:GBO) buy back their own shares instead of new companies? If the numbers are accurate, they're unlikely to find a better deal externally!

LancashireLad

BEG In addition to its sometimes illiquidity, the spread is 10%+. I agree, long-term, probably worth a punt.

Rusty2

It is high but not quite that much, its about 6% at the moment. Although in thin trading or bad news I'm sure it will increase.

Splode

At its present size I do not think Globo (LON:GBO) can compete in the global space it wants to play in and its cash pile is nowhere near sufficient for its ambitions. The company needs much more money to achieve the land-grab it needs before it gets left behind in its fast-moving space. I do not know whether the company will be able to acquire the resources it is targeting or has the skills to integrate its targets. I do not think anyone knows.

Globo’s Interims next Tuesday will be interesting to review. I am not sure its two pre-announcements this month have been encouraging.

Re wide spreads - do bear in mind that the real spread is often inside the quoted spread. So if you ring up your broker to ask what the price is on the RSP (the invisible [to us] trading system that brokers use) you often find that the real spread is actually a lot narrower than the quote prices that we see.

If you don't have a telephone broker, then putting in a dummy trade on an online dealing platform will show you the RSP price - shown as a saving that the broker can achieve for you.

So very wide market spreads need not necessarily put you off, as there could well be orders inside the spread that only your broker can see.

Regards, Paul.

Thanks Paul, yes I realise that, I based my prices on actual traded prices, ie BEG was 44.5p to buy, 42p to sell. So about 6%, depends on size of deal though. Quoted spread is about 8% today.

mrwhits

28 times....

ericb

The WANdisco (LON:WAND) bloke was on share radio this morning comparing it to oracle when that was just starting out - game changing technology and industry challenging opportunities etc.
Makes the Blur (LON:BLUR) geezer Letts sound like Sir John Harvey Jones .......

@Herbie,

Ah sorry, didn't realised you had already adjusted the spreads to actual, rather than quoted prices.

Regards, Paul.

aiminvesting

Hi Paul,

About the quick comments you wrote on Porta Communications (LON:PTCM) yesterday, I agree that the Directors must have a good reason to buy shares, but personally I have lost patience and trust and sold yesterday. These are the things that have put me off:

- absolutely unable to turn a profit after several years of trading (even ignoring amortisation and depreciation, Porta is still trading at a loss this HY);

- according to the Director's talk, there is no plan to report a profit in the near future, and they seem happy to target adjusted EBIDTA. Given the level of indebtness, ignoring interest charge seems non sense to me.
- the situation looks good only because of the restatement of HY 2014 results: if you ignore the restatement, revenue is only up 7%, and EBIDTA and adjusted ABIDTA are actually down;

- a big chunk (2.6m) of what was previsouly long term loans are due in the next 12 months and have been moved to current liabilities, moving the current ratio in dangerous territory (71%).

To me, the last point shows that the situation is not turning out as planned. They obvisouly thought that at this stage they would be able to repay the monies borrowed to finance acquisition out of cashflows, and I don't see that happenning. Potentially in for a placing soon.

As always, thanks for your great insights!
Thomas

Chris Johnson

Hi Paul

Ref BEG "If you look back at previous years, the quality scores look more attractive." How do I do that? Or is that really a question for Stockopedia?

Thanks

Chris

imranawan

Hi Chris

The way I look at previous years is to go to the Stockreport for an individual stock and click on the drop down button next to the Print icon at the top of the page, and select a particular month and year and this provides you with a PDF version of the relevant Stock report. So for example looking at the Begbies Traynor (LON:BEG) Stockreport, the furthest I can go back to is September 2013.

Other users might have found a better way, but this is the way I look at changes in Stock reports.

Best wishes,
Imran.

FREng

Chris

Click the arrow to the right of the "print" tab on any stock report and you'll see a list of historic reports you can print.

Wayla

Globo: I owned shares in this company for some time but eventually took profit and sold. If the cash is there (maybe its stuck in Greece!) then their actions do not make sense. I asked them directly why they don't pay a dividend (the boss owns loads of shares) but was not happy with their answer.

24th Sep '15

Imran and FREng, many thanks for the pointers, I'll take a look

Chris

jonesj

I think it's high time there were some reforms to trading, such as:
1 Why can we not trade directly with other people ? OK, of course we need market makers for those who need to make instant trades. However, why can we not set some kind of limit order, with a price range AND a quantity range? If some other customer matches all or part of the order, a trade can be made directly? Therefore eliminating the spread.
2 An electronic system for holding the shares directly with the stock exchange, not via nominee accounts. Therefore we could route our trades directly or via any broker which we have an account with.
After all, it is the 21st century.

Small Cap Value Report (23 Sept 2015) - RGS, GBO, PTO, BEG, WAND, PURI, ECK

Regenersis (LON:RGS)

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Paul Scott

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