Last week I expressed a view on Stephen Hester's bonus. This proved interesting because reactions fall into two camps, those who can't see what the fuss is about and those who think that a) banking has been taken in the wrong direction from the standpoint of depositors and b) banking executives are overpaid in relation to the function which depositors require banks to fulfil. An interesting article which takes the second view can be seen by clicking here.
Why is this important against the backdrop of the LCF Research investment template? There is a small but noticeable sea change amongst certain journalists that in order for the UK to get itself out of its economic pickle, it needs to rebalance the economy with more resource allocated to wealth creating (and potentially wealth creating) businesses and less resource to wealth redistribution businesses.
This could be great news for those of us that invest in early stage wealth creating microcaps. Two such AIM listed companies which reported last week were Scancell and Surface Transforms (both of which I have an investment in). I seek to construct an 80/20 portfolio, with at least 80% invested in established businesses and up to 20% invested in a portfolio of companies such as these two. I am due to meet Scancell next month and will report on that. Yesterday I met the new chairman of Surface Transforms, David Bundred. He was appointed in October 2011 having been consulting to the company during the preceding six months. Set out in the following paragraph are my impressions from the meeting.
Mr Bundred's CV can be seen by clicking here, from which it can be seen that much of his career has been spent in senior positions within the motor industry with a particular focus on brake systems. For example, he was involved with the first anti-locking braking systems, based on which he observed the need for new technology for the automotive industry to be taken up first in the aftermarket as a prerequisite to being adopted by OEMs.
Key matters gleaned from the meeting included:
1. In order for Surface Transforms' technology to be acceptable to automotive OEMs it is necessary to:
- achieve significant cost savings.
- demonstrate access to increased capacity.
- demonstrate control over the supply chain in order to ensure that there are no areas requiring unacceptable lead times.
Like many early stage…
