Small Cap Value Report (30 Oct 2015) - SHOE, SEE, SOLI, CAMK

30th Oct '15 by Paul Scott

15 comments 15085 reads

Good afternoon!

Hardly any company news of interest to me today, so I had a lie-in after skimming the RNS first thing in bed, on my iPad! What I'll do this afternoon is circle back to a few companies whose results or trading updates that were overlooked earlier this week.

So if you're reading this on the 1pm email, please refresh this page later, as the report will gradually build as I post more sections throughout the afternoon.

Shoe Zone (LON:SHOE)

Share price: 202p (down 2.2% today)
No. shares: 50.0m
Market cap: £101.0m

Director selling - the CEO & COO, founders of the company, have sold 2.5m shares. That's undoubtedly a negative, however they still retain a very high shareholding, of 25.0m shares, about half of the company.

I'm in two minds about this - Directors should have plenty of skin in the game, but 50% of the company is probably still too high, as they can do whatever they want with the company at that level. There again, Directors selling is a signal that they'd rather use the money for other things, and it sells a signal that they think the shares are fully valued.

In a separate announcement, the wife of the CFO has bought £30k of stock, but that looks like a fig leaf to me.

Seeing Machines (LON:SEE)

Employee Benefit Plan - I see that there was quite a significant revolt against this at the AGM - 13.9% voted against. That may not sound much, but considering so many shareholders are not able to vote at all (due to nominee accounts, shares held via Spread Bets/CFDs, etc), then any vote of more than about 10% shows considerable underlying shareholder dissatisfaction.

So management should stop, and think again about this plan, which I've not looked at.

Solid State (LON:SOLI)

I see it's down another 65p to 467p, after yesterday's bigger fall on a profit warning. Having slept on this one, am still no further forward on how to value it. For that reason, even though it looks tempting having fallen a lot, I'm not yet convinced that it's a bargain - but it's certainly gone on my watchlist.

As a general point, I feel that this market is significantly over-valuing a lot of small caps…

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dmjram

30th Oct '15

Hi Paul,

If you have the time, could you take a look at Bloomsbury's interims from earlier in the week please. You last looked at them back in July.

Thanks.

Chrisfarrell21

And Redde (LON:REDD) if you have time, thanks.

Chris.

imranawan

Hi Paul

I note that the cancellation of AIM listing for Camkids is a link to a Youtube video of 'Another one bites the dust' which made me chuckle. I assume this was deliberate to see if readers click on your links.

Best wishes,
Imran.

Paul Scott

Haha, well done Imran, you spotted my little joke! :-)

P.

achenaton

Hello Paul, just going back to UTW, I am struggling to understand the significance of the prior year adjustment. Has the effect of it been to take around £3.9m out of the turnover and pre-tax profits of 2013 and put £0.3m of that in 2014 and £3.6m of it in 2015? If so it follows that without the adjustment the earnings for 2015 would have been around £3m less on an after tax basis which equates to eps of around 4p less and the decline in gross margin from 2014 to 2015 would have been even greater. Also, in 2013 turnover and pre-tax profit were £25.5m and £6.2m respectively so £3.9m is a highly material sum to have taken out. Any comments appreciated. Thanks.

Steve L

Paul, if you have time please could you take a look at Prime People (PRP) who issued their interims a couple of days ago.

jraitt

Hi Paul,
I was expecting one of your pithy comments about the LWB RNS a couple of days ago. Takes Investor relations to a new high.

Low & Bonar PLC
Brett Simpson, Group Chief Executive
Mike Holt, Group Finance Director
020 7535 3180

Instinctif Partners
Matthew Smallwood
Helen Tarbet
020 7457 2020

Forward looking statements

This announcement includes statements that are, or may be deemed to be, "forward looking statements". These forward looking statements can be identified by the use of forward looking terminology, including, but not limited to, the terms "believes", "estimates", "anticipates", "expects", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. These forward looking statements include matters that are not historical facts.

By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward looking statements are not guarantees of future performance. The Group's actual results of operations, financial condition and liquidity may differ materially from the impression created by the forward looking statements contained in this announcement. In addition, even if the results of operations, financial condition, and liquidity are consistent with the forward looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: changes in the competitive framework in which the Group operates and its ability to retain market share; the Group's ability to generate growth or profitable growth; the Group's ability to generate sufficient cash to service its debt; the Group's ability to control its capital expenditure and other costs; significant changes in exchange rates, interest rates and tax rates; significant technological and market changes; future business combinations or dispositions; and general local and global economic, political, business and market conditions. In light of these risks, uncertainties and assumptions, the events described in the forward looking statements in this announcement may not occur.

Other than in accordance with its legal or regulatory obligations, the Group does not undertake any obligation to update or revise publicly any forward looking statement, whether as a result of new information, future events or otherwise.

troytea

You've earned the right to blow your own trumpet - please do keep it up.

I have no issue with TWs more abrasive style just so long as the dodgy companies keep being called out

AstonGirl

Love a bit of Freddie on a Friday, thanks Paul

cig

Isn't it standard lawyer boilerplate? While it's a pity as it dilutes actual information, it's everywhere. IPO/right issues prospectuses seem to have about 20% of actual text these days.

DJCP

31st Oct '15

Re NOMADS :
This may be of interest to people (where you can download 1000+ AIM companies with their NOMADS) :
http://www.londonstockexchange.com/exchange/companies-and-advisors/aim/for-companies/nomad-search.html

martinthebrave

1st Nov '15

Loved the Nick Taylor interview but had to listen via my Chrome browser. The audio on your website doesn't work with my Windows10. Not sure if the glitch is with your website or at my end? Anyone else having any issues?

Cleeve

3rd Nov '15

Paul am away greetings from Costa Rica, have you sold out of shoe zone or did you just miss it by accident
Well done on globe I was never in or out but it came up on some of my screens in stockopedia which I never bothered looking into so you saved me some time

TangoDoc

Rumour has it that he CEO of SHOE who already owns a small farm near where I live, is in the process of buying another chunk of agricultural land. That may be a more relevant to sales of shares than any implication for the company.

laynab

10th Nov '15

Paul,

I've subscribed to Stockopedia for 3 years, upgraded to the US/Europe version last year, and think it is superb.

I've been looking over your articles through this year, and find them insightful. Notwithstanding your usual disclaimers that are perfectly sensible, I still use your observations to inform my choices for my pension funds, and slow the rate at which my hair falls out, turns grey, or does both.

I'd therefore welcome any further observations you may have on SOLI, as I bought it twice in the last 9 months or so and am now nursing a 40% loss on a large holding, in my pension (ouch). Firstly, the stock reports for Feb and June both look excellent, with a good Stockrank, passing 3 screens and a PE of 14 (whereas you thought it was 20?) Does it deserve such a hiding or is Mr Market over-reacting.

Best wishes.

AK

Small Cap Value Report (30 Oct 2015) - SHOE, SEE, SOLI, CAMK

Shoe Zone (LON:SHOE)

Seeing Machines (LON:SEE)

Solid State (LON:SOLI)

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Paul Scott

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