Small Cap Value Report (Thu 7 Sep 2017) - ITQ, FUL, BOOM, TIDE, BOTB, KOOV, MCB, SSY, FDEV

Thursday, Sep 07 2017 by
74

Good afternoon, it's Paul here.

I'm starting late today, but will be working on this report for the rest of the afternoon, as I've got the rest of the day free. The header shows the companies that have caught my eye today.




Interquest (LON:ITQ)

Share price: 24.6p (down 24.3% today)
No. shares: 38.7m
Market cap: £9.5m

Termination of NOMAD and suspension - this is a small recruitment company. The story so far goes like this. The Chairman & major shareholder, Gary Ashworth, together with the executive Directors, tried to buy out the company on the cheap, with a 42p cash offer recently. This was opposed by the only independent Director, and a group of shareholders who resisted the opportunistic & under-priced takeover bid. Chisbridge didn't get enough acceptances to de-list the company (75% needed). The major shareholder (via a takeover vehicle called Chisbridge Ltd) now owns 58.3% of Interquest. So the company has been in limbo recently, with it being unclear what would happen next.

It was clear to me that management wouldn't want to keep the stock market listing. Indeed I warned readers here on 29 Aug 2017 of what might be ahead, saying,

My opinion - I just don't trust management here, so for me it's uninvestable. The problem is that management tried to take it private on the cheap, but failed to secure enough acceptances. So it's now in limbo, with management in control, holding 58% of the company. What happens if they decide to de-list the shares? That would trigger a collapse in the share price probably.  (SCVR: 29 Aug 2017)


Unfortunately for shareholders, my prediction was exactly right.

However, what the company has now done can only be described as despicable.

Today, it announces that it provided 1 month's notice to its NOMAD on 10 Aug 2017, so that means under rule 1 of AIM (requirement to have a NOMAD) that the shares will be suspended on 9 Sep 2017.

It is also, bizarrely, claiming that it can't find another NOMAD to replace Panmures! How utterly ridiculous. I find this a ridiculous assertion, and I don't believe it;


InterQuest Group plc Group, the AIM listed company focused on digital recruitment and solutions, announces that it has provided one month's notice of termination to its nominated…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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InterQuest Group plc is a United Kingdom-based specialist technology recruitment company. The Company offers permanent and contract recruitment in various markets, such as digital, information security, analytics, telecommunications and change management. Its segments are Niche, which includes recruitment practices focused on analytics, business intelligence, cyber security, Internet of things, telecommunications and risk; ECOM Recruitment Limited, which is a recruiter in the digital market space; Enterprise, which includes Recruitment Process Outsourcing services together with legacy client relationships with customers in the financial services and retail sectors; Public sector; Business Change, which is a candidate centric spot business focused on change management and providing the Company with an alternative route to market, and Other. The Company's subsidiaries include InterQuest Group (UK) Limited, Contract Connections Limited, Contract Connections B.V. and InterQuest Asia Pte. more »

LSE Price
28.5p
Change
 
Mkt Cap (£m)
11.0
P/E (fwd)
3.2
Yield (fwd)
5.5

The Fulham Shore PLC is engaged in the management and operation of The Real Greek, Franco Manca and Bukowski restaurants in the United Kingdom. The Real Greek food centre serves dishes of Greece and the Eastern Mediterranean. Franco Manca serves Neapolitan sourdough pizza, which is baked in a wood burning brick oven. Bukowski is a London-based, charcoal-grill restaurant and bar, serving breakfasts, burgers and grills. The Company operates 45 restaurants, comprising 32 Franco Manca, 12 The Real Greek, and one Bukowski Grill franchise in Soho. The Company’s subsidiaries include Kefi Limited, FM6 Limited and Souvlaki & Bar Limited. more »

LSE Price
13p
Change
-1.0%
Mkt Cap (£m)
75.0
P/E (fwd)
16.3
Yield (fwd)
n/a

Audioboom Group plc operates an audio platform for hosting, distributing and monetizing content. The Company works with approximately 2,400 active broadcasters, content creators and podcasters around the world, and hosts in over 7,400 content channels. The Company's hosting and distribution platform allows partners to embed, share through social channels and re-syndicate their content. The Company receives over 40 million listens per month. It also works with its partners to monetize their audio through live in-reads, the dynamic insertion of pre and post roll audio adverts and video advertisements. Its audio, cloud-based, software as a service (SaaS) platform enables the creation, broadcast and syndication of digital audio content across various devices, networks and geographies. Its subsidiaries include Audioboom Limited, Audioboom Inc, One Delta Limited and Audioboom Pty Limited. more »

LSE Price
2.25p
Change
3.5%
Mkt Cap (£m)
20.2
P/E (fwd)
n/a
Yield (fwd)
n/a



  Is Interquest fundamentally strong or weak? Find out More »


37 Comments on this Article show/hide all

iantjie 7th Sep 18 of 37
3

In reply to andrea34l, post #15

I'm with you there Andrea. Lost count of the "ones that got away" recently or should I rather say, those that have doubled or tripled before I cottoned on to the story......

Mind you, even for a raw beginner like me, I'm rapidly coming round to the view that as far as growth shares in a bull-market are concerned, PER is almost useless in terms of a value indicator. I tend to look at projected earnings growth and try to take a view on whether the product, whatever it may be, is likely to keep increasing in demand, earnings growth"acceleration" for want of a better term.

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Paul Scott 7th Sep 19 of 37
1

Hi,

I'm still working on the report (it's 17:35 now) - admittedly I didn't start until lunchtime, but doubt I'll be able to cover everything on my list + reader requests. I might defer some until tomorrow, as Graham will be doing the main report tomorrow. So no more requests for today please!!! :-)

Regards, Paul.

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JohnEustace 7th Sep 20 of 37

In reply to DMG2305, post #13

@dmg2305
Thanks for highlighting Filta - reading the RNS it does look interesting.

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shine66 7th Sep 21 of 37
8

In reply to grumpy5, post #1

Don't waste your time. I think it was Radio 4 who not so long ago interviewed AIM boss Stuttard about all the dodgy dealings and frauds on AIM. His languid response? "It's called risk capital for a reason."  Talk about shirking one's responsibilities.

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paraic84 7th Sep 22 of 37
2

Re Best Of The Best (LON:BOTB) I see they now proactively include in their frontpage website marketing that they deliver to any country worldwide. In the past, looking at their archived internet pages from 2015, this was buried in the FAQs of the competition. That's encouraging but I'd also like to see them more aggressively target another market. My slight nervousness is that management don't aspire to growth beyond the UK which could limit top line growth. The TV adverts could provide a decent revenue and awareness boost in the meantime.

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robarnold 7th Sep 23 of 37

Paul, When you say " It's too illiquid for me - I've tried to buy several times before, and there were only scraps of shares available.". Is this because you are wishing to purchase a number of shares in excess of the EMR?

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paraic84 7th Sep 24 of 37
2

I also want to just flag Water Intelligence (LON:WATR) (I hold) interims today with +53% revenue growth. Revenue for the half year just gone is higher than the whole of 2015. It is a bit illiquid and has a tiny market cap but the growth looks interesting and it is now expanding in the UK and Australia. I also think the SP looks reasonable in the context of the current bull market. Paul has commented on it previously and there is a thread here where I provide an amateur comment on today's interims: http://www.stockopedia.com/content/water-intelligence-the-long-story-195763/

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bestace 7th Sep 25 of 37
2
Why do Institutions pour money into basket case companies? He reckons it's because they view investments below 1% of their portfolios as just being "option money". So they might lose the (clients') money, but it could be a ten or hundred-bagger.

There might be some method in that madness if you think of the outcomes in terms of expected return, i.e. probabilistically.

If there is a 95% chance the company goes bust and you lose your money, but a 5% chance that it goes up 100x, that's a positive expected return overall of something like 4x. For a 1% position, the loss would almost be a rounding difference but the upside scenario would be material. That feels like an asymmetric risk/reward payoff in the investor's favour.

There's also the fact that they won't want to report that they lost clients' money if the company goes bust, but by pumping in more cash they can delay that day of reckoning indefinitely.

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nicktudor 8th Sep 26 of 37
1

Agree with Paul's comments on SCISYS (LON:SSY), its lowly rating has been a consistent theme over many years however its worth noting they've had a number of decent contract wins in the last 6 months most notably a place on the London Metropolitan Police's Solution Provider Framework. The size of their order book was confirmed as £64m in yesterdays AGM update and this compares favourably with the £35.5m on the order book in June last year at the time of the AGM. I've had a modest position in the company since June 17.

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VegPatch 8th Sep 27 of 37
2

Some fund managers in the small / microcap space have over 150 holdings and do specifically view some positions as option money. That's why they get some right e.g. ASOS and others wrong BNN, Dolphin Capital etc
It's like Private Equity I guess. Most investments make an acceptable return, a few go bust and a few go so unbelievably well that it positively skews the whole portfolio return.

That's not the way I manage my portfolio but I do get tempted by the odd high risk very high reward situation. Speaking of which I tried to buy BOTB at c25p when the cash, inventories and head office were worth more than the market cap. Couldn't find a single share to buy. Should have kept trying or raised my bid. Hindsight makes fools out of all of us !

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dominic higgins 8th Sep 28 of 37
2

If Graham is reading this, for Friday's report, it would be great if you could cover FLTA results from today. I bought after Graham initially flagged it up on SCVR a few months back (THANK YOU!) as a possible interesting company for further research and topped up last week pre-results as we knew from the TU they would be decent.
Although it won't be the fastest growth story on AIM, I like the business sector, good US growth story and recent launch into Canada. Its 'boring' nature appeals to me as well as the franchise model although there is clearly a dual strategy in the UK at least which i wonder might cause conflicts of interest with the UK franchisees...I'm aware that some of the national accounts driven from the HO supports the franchisees.
My main concerns are the iliquidity and small % free float, the latter particularly after the recent Interquest debacle hence I've restricted my position size to 5% of my portfolio (I run a concentrated portfolio of just 7 AIM companies currently).   I believe management have stated that they will not sell any more shares until late 2018.
Finally, both Graham and Paul, Iike for many others here, the daily SCVR is required reading for me and thank you for the great work...and feel free to deliver it any time of the day you want to! :-)
Regards
Dom

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Paul Scott 8th Sep 29 of 37
2

In reply to VegPatch, post #27

Hi VegPatch,

Very true - Best Of The Best (LON:BOTB) is so illiquid, that the spread has been 310p Bid, and 350p Offer.

I feel that we need a new forum to allow more meaningful transactions to happen. The MMs are bloody useless - they just ignore shares like this, widen the published spread, and then no trades happen.

I've met the mgt of BOTB a few times, and they're superstars. I interviewed William about 21 months ago, and found him brilliant & charming. The audio is here.

I'll ask him if he wants to do another interview, but haven't got time at the moment.

If he shafts small shareholders, then I really will lose faith in humanity. I don't see it happening.

Cheese, Paul.

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VegPatch 8th Sep 30 of 37
2

In reply to Paul Scott, post #29

Hi Paul,
I guess Graham is doing the SCVR today if you are up at 4.12am and posting !

re spreads: I am sure there must be some clever boffin who could make some kind of dark pool for private investors where we transact in the middle and cut out ridiculous bid / offer spreads that market makers love.

The obvious question is how does the platform sustain itself ? I guess if you charge a subscription fee, say £100/yr and got enough people do it = 3000 people = £300k of cashflow
Probably enough for 2 developers to run it and maintain it
Doesnt have to have all the bells and whistles - Stockopedia has those ! Just needs to be able to match private investors in the middle. Back in the early 2000s Mercury Asset Management started e-crossnet. I wonder what happened to that ? Could that be the basis for the platform ?
Anyone out there tech minded enough to do this ?

Ed Croft? is this your next value added service ?

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Beginner 8th Sep 31 of 37

In reply to andrea34l, post #15

iantjie is quite right: not a suitable metric for growth, but useful for value. I make the PER 116 now, but could still be wrong.

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Paul Scott 8th Sep 32 of 37
7

In reply to VegPatch, post #30

VegPatch,

Hi Paul,
I guess Graham is doing the SCVR today if you are up at 4.12am and posting !


Damn right!! LOL! I like to do the heavy lifting during the week, and then relax on Mondays and Fridays. I've got a delivery arriving from B&Q between 9:57 and 12:57, which seems very strange. Graham does a marvellous job for when I'm either too pissed to write, or its a Mon or Fri. (EDIT: or both)

Cheeese!

PP>


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laurie 8th Sep 33 of 37
9

Interquest (LON:ITQ) Do send comments on Interquest to market.abuse@fca.org.uk I have been in touch. I know that they have seen Paul's comments. Perhaps the FCA will look into the matter. (ex-holder)

On a practical and preventative matter, and this has been mentioned here before, one of the big players in the Interquest farce is Luke Johnson. He owns substantial positions in several AIM shares, which I have listed below. Please add to this list if you know of others. These positions could easily become controlling holdings if interests were combined with another major holder, or if options suddenly enlarged his position (I believe that Interquest (LON:ITQ) did this, too).
Patisserie Holdings (LON:CAKE) 39%
Elegant Hotels (LON:EHG) 12.5%
Brighton Pier (LON:PIER) 24%

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Geronimo9999 8th Sep 34 of 37

Thanks for this Laurie. I have now also written to market.abuse@fca.org.uk to express my 'concerns' over this recent ITQ debacle. I also referred them to Steve Moore's helpful timeline of events, link below.

https://www.shareprophets.com/...


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runthejoules 8th Sep 35 of 37

Thanks for commenting on Frontier Developments (LON:FDEV) and SCISYS (LON:SSY) Paul, very interesting, both of which I hold - SCISYS (LON:SSY) at considerable opportunity cost over the last seven months, had lots of good news but hasn't moved the SP, though a panic over Brexit did. If the next results don't re-rate it, I'm out.

Re Frontier Developments (LON:FDEV) I've just taken some profits after seeing IQE (LON:IQE) go from 160p to 152p even with the iphone to look forward to. Yes, you have to be very confident they will make a lot more money in future but with TenCent on board there is scope for much in-game monetisation and the thing is apparently the Chinese really love dinosaurs.

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Paul Scott 9th Sep 36 of 37
4

In reply to laurie, post #33

Hi laurie,

Absolutely, I'm amazed that Luke Johnson has taken on the reputational damage of getting involved with Interquest (LON:ITQ) management - he has apparently finances their shabby attempts to de-list, and take shaft minority investors.

So I think Luke Johnson really has some questions to answer. Maybe he's not such a Mr Nice Guy that he tries to project??? What's that saying about lying down with dogs & you catch fleas?

As fart as I'm concerned, Mr Johnson's reputation has just gone down the pan, due to his association with the scumbags at Interquest. Incidentally, I once met Gary Ashworth, and almost died of boredom - he's dull as dishwater, and as we now can see, morally bankrupt too. Good riddance.

Regards, Paul.

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janebolacha 9th Sep 37 of 37
7

In reply to Paul Scott, post #36

Paul, that's a tremendous (but so appropriate) spelling slip in the first line of the third paragraph!

Have a great weekend,
Jane.

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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