Small Cap Value Report (5 Nov 2015) - ZZZ, TRCS

5th Nov '15 by Paul Scott

16 comments 15166 reads

Good morning!

It's very quiet for results and trading updates again today.

I really enjoyed the ShareSoc Masterclass last night. The topics were "Spotting shares with multibagger potential", where David Stredder in particular was the man to listen to on this - as he has an astonishing track record of spotting major multibaggers early on, and more importantly, holding them all the way - he revealed last night that his original purchase of accesso Technology (LON:ACSO) is up 118 times, and he still holds (I also hold ACSO, but bought much more recently).

We then had a discussion on the lessons to be learned from Quindell (LON:QPP) and Globo (LON:GBO) , with of course me explaining where to look for the really very obvious signs that the accounts are not quite right. At some point I'm going to record a video going through it all in detail, so that people can learn how to spot, and avoid this type of fraud again - it's really not difficult, the clues are always there in abundance, people just (bizarrely) choose to ignore them!

Snoozebox Holdings (LON:ZZZ)

Share price: 9p (down 6.5% today)
No. shares: 211.8m
Market cap: £19.1m

Trading update - this update follows the now very familiar pattern of saying lots of positive-sounding things about the company, but then revealing awful financial results. This looks like a profit warning, so I'm surprised the shares are not a lot lower today;

Turnover for 2015 is expected to be in line with market expectations. The Company anticipates higher operating costs this year associated with the substantial increase in activity in events and the acceleration of the deployment of the original stock on a semi-permanent basis. It is anticipated that the mobilisation costs in respect of the five additional semi-permanent hotels, will be incurred prior to the year end, with the hotels ramping up in Q1 2016. As a result of these developments, the expected 2015 EBITDA level is a loss of approximately £5m. The revenue from the further semi-permanent deployments is expected to be realised in 2016.

Stockopedia shows the current broker consensus as turnover of £5.2m, but no loss forecast is given other than EPS of -1.7p. With 211.8m shares in issue that equates to a forecast…

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Mark Carter

5th Nov '15

" At some point I'm going to record a video going through it all in detail"

Yes, please do.

paulhunt999

Hi Paul,

really enjoyed the Masterclass last night and meeting you. Lots of great clues in what to look for in both good and bad companies. Also some of the panel admitted to making mistakes so there is hope for all of us. What I took away is do your research and if it sounds too good to be true it probably is.

thanks Paul

rick

I look forward to the video (how to spot, and avoid fraud). I think this is something you have a real talent for spotting. Educating investors to spot the next QPP or GBO may indeed have as much (if not greater) influence as reforming the current toothless regulator and NOMAD system, which has allowed this to happen time and again.

ed_miller

Paul - The fast-growing challenger banks are probably a little larger than you're normally interested in, but do you have a view on Shawbrook (SHAW) which updated today?

If not, is it time for some much-needed trash-talk of crowd funding?

Regards,
Ed Miller

imranawan

Hi Paul

I just had a look at the last FY accounts for Snoozebox Holdings (LON:ZZZ), and the depreciation charge was £1.4m, but they spent £2.8m on PPE, which presumably bypassed the P&L, so the loss in PBT was flattered by £1.4m. As you say it sounds like a nice concept, but not an investment.

Best wishes,
Imran.

mikelevie

Paul Scott/Paul Hunt - Could you share any of the multi-bagging screening principles you learned last night from David Stredder et al?

We got a handout. Main points:

Management prepared to engage with investors
Companies can protect the downside risk. Have sufficient capital and avoid excessive dilution.
Unique product, or difficult to replicate.
Patent protected
Adding key management at he right time for development
Keeping it simple with a cohesive team
Heritage - family firms mentality
Keep close to the story and understand it
Identify crucial changes and spot when it may be time to sell up

It was videoed so there may be a stream on Sharesoc at some stage

CliveBorg

Come on Paul, what investors would really benefit from you is a 'How I sort the wheat from the chaff' type book under your authorship, with lots of details examples like you provide in these reports. I'd place an advance order, and suspect so would a couple of thousand other regular subscribers to your daily bulletins.

Of course, if you've already written one, I'd love to know how I can get hold of a copy.

Regards,
Clive

Many thanks Paul H.

Mike.

MichaelFBS

Thanks for last night all very interesting (apart from the ETF bit). The question I always ask myself is whether spotting early stage companies that are going to multibag is talent/gift that some people. like the David Stredder have, and one that I don't have!

I always enjoy your £ASC story but in all honesty how many many people would have bought at 9p not sold 18p or 27p let alone £5, £10 or £15.

I got out of Globo with an £800 profit and never touched Quindell thanks in part to you. I certainly think I am better prepared now to spot these type of stocks but a video (or for me better still a written paper) would be very welcome.

Thank you once again.

spglet

Paul, thanks for posting the link to your Tracsis interview. Very interesting.

Regards, Simon

Ramridge

Hi Paul -

Re. Tracsis (LON:TRCS) Just finished listening to the interview. The CEO John McArthur comes across very well; genuine down to earth, no b.s., "you get what you see" kind of bloke.

I was particularly interested in hearing his response to future organic/ acquisition growth and it is clear to me now that he is striking the right balance.

Anyway great format and I made a small donation to cover your admin costs, etc.

Regards, Ram

Paul Scott

Hi Ram,

The CEO John McArthur comes across very well; genuine down to earth, no b.s., "you get what you see" kind of bloke.

Absolutely, he very much is like that, which is why I like interviewing him - he gives me straight answers to my questions, every time, and I always feel I've learned useful things about Tracsis (LON:TRCS) from interviewing him. It's not a stock I currently hold, but wish I'd just bought some & tucked them away a few years ago. Trouble is, it always looked expensive!

Very kind of you to donate to my admin fund, very much appreciated! I'm paying to have the transcripts typed up now, and also paying more for decent we hosting, so it's really nice when people chuck something into the pot! Also, that motivates me to create more content.

Next interview is Proactis Holdings (LON:PHD) on 16 Nov.

Regards, Paul.

grb

Yes - great to meet you last night Paul, and thanks for all your ongoing work. As purpleski says, it was all interesting apart from the ETF lecture. Always more to learn!
Cheers,
Geoff

John McArthur

6th Nov '15

Paul

Thanks for the interview yesterday and for the barrage of questions from Stockopedia readers. All good stuff.

I think/hope we covered off all the pertinent ones but if people have other questions I will certainly check back from time to time to provide answers. Alternatively they can email me directly on j.mcarthur@tracsis.com as we're always happy to engage with sensible investors.

Cheers
John (CEO, Tracsis Plc)

janebolacha

John, that's a great example to set CEO's of other quoted companies.
Very well done!

Small Cap Value Report (5 Nov 2015) - ZZZ, TRCS

Snoozebox Holdings (LON:ZZZ)

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Paul Scott

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