Daily Stock Market Report (Mon 12th Oct 2026) - POLR, SDG, WATR, AOM, THRU

Yemen’s Houthis attacked Saudi Arabia’s main airport over the weekend, threatening to inflame tensions in the Middle East further.

From a financial perspective, this hasn’t yet sent the oil price to new highs. Brent crude for December delivery is trading just below $104. It did spike up close to $106 a few hours ago.

The 1-year chart from Trading Economics shows that we are still below the highs set earlier this year, although at the same time far above the pre-Iran war levels:

One calming factor is President Trump’s claim that there is an “energy ceasefire” between Russia and Ukraine, with Ukraine refraining from hitting Russian oil assets. However, it’s not yet clear if any such agreement has actually been reached.

In the US, bond markets are closed for Columbus Day today. Other markets will open as per usual.

Overnight market movements:

• The FTSE is up 0.3% at 10,590

• S&P 500 is up 0.3% at 7,830

• Brent crude (December) is down 0.8% at $103.95/bbl

• Gold is down 0.1% at $4,190oz

• Bitcoin is up 0.4% at $83,950

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Mark Simpson joins me today.
Done for today, thanks! Spreadsheet accompanying this report: link.

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Companies Reporting

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Mark's Section

Sanderson Design (LON:SDG)

The headline figures look good, with revenue up 6% year-on-year, leading to a 47% improvement in Adj. PBT:

However, this remains a tale of two regions. UK sales continue to be weak, whereas US sales are driving all of the growth:

The US is likely to overtake the UK in sales in H2 this year.

In terms of Brands, Morris & Co continues to maintain its recent recovery, but the big jump came from the core Sanderson.

It seems that despite 250 years of independence, the US attraction to the UK Royal Family remains:

The Highgrove by Sanderson collection has been the most successful launch to date and created a clear halo effect on the broader Sanderson brand.

External Manufacturing is another highlight, with revenue recovering close to recent highs:

Licensing:

This remains strong on an IFRS15 basis. However, taking away the accelerated revenue figure from the total suggests that this may have been a weaker half for sales above contracted minimums:

Profitability:

In the past, I have suggested that Sanderson may have been caught out by the sudden decline in their revenue, and managemnet were a little slow to cut costs to reflect this, in my opinion. Combined with a relatively high gross margin, this means that the StockReport shows a huge decline in EPS on a relatively slight revenue fall:

While the Gross margin for the branded business has remained consistently high, Manufacturing has been a lot more variable:

From a low of around 25% in 25H2, this figure now stands at a much more acceptable 40% in these results.

That focus on costs in the manufacturing division also aids the recovery in profitability there:

Although it is one of the smaller costs, Head Office costs appear to have increased by about 50% in the last 18 months or so.

Despite the high gross margin and strong US sales growth, Brands continue to be loss-making, and it is the strength of the recovery in Manufacturing that is driving these positive results:

Overall, this remains highly dependent on licensing revenue, and while the businesses can't really be separated, it shows how important this part of the business is.

One thing I think is missing from the reporting is what the licensing revenue would be from a pure sales perspective, excluding the minimum licensing guarantees. This would give us a measure of actually how profitable each period is based on sales. At the moment, it is almost impossible to tell, given the huge impact of licensing sales on the results, and that is skewed by IFRS15 revenue recognition requirements.

Adjustments:

All of this is on an adjusted basis, and it is important to look at what goes into these adjustments:

It is good to see the restructuring charge go to zero, as many companies restructure every year and ask us to ignore these costs. Share-based payments jump, perhaps due to the higher share price; at the very least, we should take the fully diluted share count in any valuation.

The defined benefit charge remains. While the company says it is in an accounting surplus and doesn't have to make recovery payments, these administration costs will continue until it gets a scheme buyout, so it seems unrealistic to exclude them.

The alternative in any valuation is to exclude the cost of any buyout from the net cash. Management has previously guided that this will cost high-single-digit £m.

Balance Sheet:
The good news is that the company has the cash to enable that buyout:

Net cash increased to £10.4m (31 January 2026: £9.8m) after £1.3m of EBT share purchases

Part of this cash rebuild reflects efforts to reduce SKUs and, therefore, inventory holdings. They make some further progress in this H1 on that front:

There is also a significant "minimum guaranteed licensing receivables" asset, which represents the cash that will be received in the future from licensing sales, where the revenue has already been booked under IFRS15. The current value has risen to £5.3m from £4.4m a year earlier, and the non-current figure has risen from £12.6m to £13.3m. Since these are guaranteed payments, they could be treated as cash.

The company is keen to point out that cash generated has gone into EBT share purchases. However, their behaviour here looks a little strange. We only found out that the EBT had been lent money to purchase shares and was active in the market in the Final Results, when they said:

Post year end, the Group has provided funds totalling £1,400,000 to the EBT for the purchase of shares to satisfy the future vesting of share schemes, as set out in our capital allocation policy. As at 23 April 2026, 1,513,683 shares had been purchased using these funds at a total cost of £855,000.

Most companies RNS this sort of event separately before purchases start, and announce each purchase. Given the scale and the speed of these EBT purchases, I don't think we can rule out this having an impact on the strong rise in the share price during this period:

After all, there is no sign of any changes to trading being reflected in broker forecasts in this period:

The company doesn't appear to give any update on this today, beyond saying that £1.3m had been spent in the reporting period to 30th June.

Management changes:

The other keen buyer during this period appears to have been LBV Asset Management:

They are a London-based fund manager, and have been trying to remove the Sanderson Chair. A separate announcement today sets 29th October as the date for the requisitioned GM to vote on removing Dianne Thompson and appointing Stephen Brooke to the Board.

LBV says the company has drifted into "inaction and inertia" and needs new leadership to push through change. Shareholders backing it have criticised the cost of fitting out the Voysey House headquarters, slow progress in the US, and executive pay. They say the CEO and CFO packages amount to about 36% of group profit, and quote the CEO's package at £729k.

With my conspiracy-theory tin-hat on, I wonder whether the EBT purchase timing has also been about strengthening the Board's hand in this battle as well as offsetting dilution. Typically, shareholders need 20%+ of the equity to have the right to appoint a board representative, and LBV has not managed to reach that level of holding.

Anyway, Dianne Thompson appears to have agreed to bow out gracefully, as in today's results, they say:

Dame Dianne Thompson, Non-Executive Chair, will have reached nine years' tenure in the role in February 2028. In line with corporate governance best practice, the Board is managing Chair succession in an orderly and considered manner, and intends to appoint independent consultants in January 2027 to oversee the search for a successor for Dame Dianne. The focus will be to appoint an individual who brings the required skillset, experience and independence to support the continued delivery of the Group's stated strategy.

However, I'm not sure this will placate LBV. After all, removing a board Chair is often the first step in forcing out a CEO and CFO. If one of their main critiques is the scale of board pay relative to corporate delivery, that won't change with a Chair retirement and a new Chair appointed by the same Board.

Outlook:

They are guiding in line for the full year:

We are pleased to have delivered a solid performance in the first half of the year and that the positive momentum we've seen across Manufacturing and US sales has continued into the second half of the year. We are on course to deliver full year results in line with current market expectations.

I can't see any updated note on Research Tree. The last substantive note from Singers in April kept the FY27 revenue assumptions the same at £102.9m, but cut adjusted EBIT from £6.2m to £5.7m. However, higher interest assumptions kept the PBT forecast at £6.5m. (The dividend assumption was cut from 2.2p to 1.5p, and today's flat 0.5p dividend declared looks in line with the reduced figure.)

This means that the full-year target needs very little from H2. H1 adjusted PBT of £3.3m is already 51% of the £6.5m forecast. Today's release says the market consensus is still £6.5m PBT, on slightly lower revenue of £102.0m. At that revenue level, H2 revenue would fall about 1% vs last year. Either way, hitting the full year only requires H2 PBT of about £3.2m, roughly in line with H2 FY26.

A H2 fall in licensing is already expected and in forecasts. However, manufacturing sales in the note now look too low, creating potential upside to these forecasts. The H2 for Brands implied in the in-line statement is undemanding, but again will be highly dependent on continued US momentum. Central cost estimates now look a little low given this H1, so they may offset potential sales upside.
Overall, I see these as comfortably in line on the key adjusted PBT metric.

Valuation:

Assuming no change to forecasts today, the forward P/E is around 12. I don't think we should count the net cash, as most of that is earmarked for a pension buyout. This isn't expensive, but this has rarely traded at high multiples:

At 1.5p forecast for the full year, the dividend yield is only 2%. A reluctance to raise it suggests a recovery in the declining UK and ROW markets is further away than the company would like.
Brokers are forecasting a P/E of around 10 for FY28, and the high gross margin means that if core branded sales can return to growth in more than just the US, then the increased sales will probably drop to the bottom line quite quickly.

Mark's view:

I am a little sceptical of the recent rise in the share price, which has now almost doubled on no increase in broker forecasts (indeed, EBIT was downgraded, and only increased interest on their cash position keeps PBT at previous levels). Recent demand for shares appears to come from two sources: EBT purchases and a fund trying to kick out the Board.

The good news is that if the fund is successful in their aims, then cutting board pay will drop directly to EPS, as will any recovery in trading. The current valuation is higher than it has been for a while. However, it probably isn't excessive if we view this as a largely recurring licensing business, with a consumer business tacked on the side.

While the current valuation looks up to date with current events, there are enough potential catalysts that would improve things going forward (e.g. a recovery in UK-branded sales, or board salaries slashed) that I am happy to stick with the Stock Ranks on this one. AMBER/GREEN =

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Water Intelligence (LON:WATR)

Water Intelligence is an incredibly cheap stock for a business whose revenue has grown 19% CAGR over the last few years:

Even though the EPS hasn't shown signs of operational leverage, it has still grown in the mid-double digits and is forecast to grow strongly in the future:

However, I am pretty wary about this company, because much of this growth has come from deals such as the one announced today:

...the strategic reacquisition of its fast growing franchise in southern Alabama within the Group’s core American Leak Detection (“ALD”) subsidiary....
The purchase price for the franchise is $4.7 million in cash with $2.5 million at completion and the remaining payments spread through 2029. The purchase price is based on trailing twelve-month performance of $2.15 million in revenue and $815,000 in adjusted EBITDA. As part of the transaction, the owner Ryan Speir will be joining the management team as Vice President for the Southeast U.S. Mr. Speir will receive stock options priced at 10% above the market price at completion as incentive to accelerate organic growth of corporate and franchise locations throughout the Southeast.Claude tells me that they have made 19 of these franchise re-acquisitions since the start021. The company argues that this model is a great way to gain access to new territories with minimal risk. However, as an external observer, it is almost impossible to tell if these are done at a fair price on an arm's-length basis.The headline numbers don't suggest that they are paying particularly high multiples, but then with any owner-operated business, you have to wonder how much of their salary is excluded from an adjusted EBITDA (business owners tend to pay themselves dividends out of profits, not large salaries). They are also giving their new VP share options, and will presumably ask us to exclude SBP from our analysis.

The net result of all of these deals is that despite generating what appears to be strong operating cash flow, more than that goes out on investing and deal flows:

With these characteristics, it should perhaps not be surprising that net debt continues to increase every year:

Existential threat?

Even if they are paying relatively low multiples, last time I looked at this on the DSMR, I mentioned a brilliant substack article written last year that argues that the company is at a fundamental crossroads, and there are huge long-term risks to the business. You can see why franchisees may be keen to sell the businesses they built back to the company for multi-millions and a salary.

H1 Results:

Looks like we didn't comment on the H1 results at the end of September (it was one of the busiest reporting weeks of the year). However, these didn't look great, with adjusted profits again rising more slowly than revenue and statutory figures down significantly. The RNS nor the Interim Report on their website don't provide a reconciliation between the two figures, but it's safe to say that I would probably disagree with the adjustments!

This adds to the risk here.

Mark's view:

When I reviewed this following final results in June, I gave them the benefit of the doubt and kept our broadly positive view. But the more I see deals like the one today, the more I struggle to justify this as an investable company. It is clear from the rating, that what shareholders want is organic growth, debt paid down, and free cash flow generation that is directed towards shareholder returns. Instead, we are getting more cash going out the door to reaquire franshises, and no dividend. The founder's large stake gives confidence that the company is thinking about the long-term, but it also means that external shareholders are likely to have no influence on the direction of the company. If they can generate FCF while growing sales and earnings this is undoubtebly too cheap. However, I see absolutely no sign that they are willing or able to do this. AMBER

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Thruvision (LON:THRU)

Having seen its share price pretty much decline continuously this year through to the start of August, Thruvision suddenly came to life:

The rise was kicked off by the anouncement of a £3m+ South-East Asian airport worker screening contract. They said that delivery is expected during the second half of the financial year ending 31 March 2027. Hence, we shouldn't expect any impact of this in H1.

However, this H1 trading update still seems a little lacklustre for a company where the share price has risen 231% more than the market in the last three months:

- FY27 H1 revenue was £2.6 million (FY26 H1: £2.6 million; FY26 FY: £6.0 million), in line with Board expectations.

This is better than some recent halves, but hardly seems evidence of a return to growth:

Which means the following lines leave more questions than answers:

- Order backlog has increased significantly, and as of 30 September was £2.6 million (31 March 2026: £1.3 million; 30 September 2025: £0.2 million) providing good revenue visibility for the second half of FY27 during which the current order backlog is expected to be delivered.
- FY27 full year revenue expectations remain unchanged at £8.0 million.

If the order backlog is £2.6m, what has happened to the supposed £3m+ South-East Asian airport worker screening contract? Was some of this delivered in the £2.6m H1 figure, making this look particulrly poor? Or has the contract been down-sized, or delayed? But then they reiterate the £3m+ and H2 delivery in this RNS.

Then they say this gives good visibility on H2, but then their order book coverage is less than 50% of the required £5.4m in H2. This would represent their best ever half for quite some time:

The company doesn't have a great track record of delivery against targets, even after a management changes and a rescue fundraising:

The bigger problem is that even if they hit the £8m revenue number, they will still lose about £900k before tax, according to their broker Allenby. So while they only appear to have had cash outflow of about £400k in H1, and have net cash, it is not clear when they will reach cash flow breakeven:

- The Group’s latest cash balance as of 9 October 2026 was £1.6 million (31 March 2026: £2.0 million).

Mark's view:

We tend to view companies that have been listed for a long time and still generate negative EBITDA pretty poorly on the DSMR. It seems that this should be a bare minumum for a company to be considered investable. So while I don't doubt the technology looks interesting (it always has), and we've not looked at the company for a while as it hadn't made our £10m market cap minimum until investors got excited about the Southeast Asian Airport deal, I think we should remain broadly negative. AMBER/RED

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Graham's Section

Polar Capital Holdings (LON:POLR)

Down 2% at 791p (£787m) - AUM Update - Graham - GREEN

There's been a slowdown in quarterly net inflows at this fund manager, but they do remain positive.

• Q2 (July-Sep) net inflows £1.2bn

• Financial year-to-date net inflows now £3.6bn

As for overall assets under management:

• Q2: AUM falls from £45bn (end of June) to £43.7bn (end of September), due to moderately negative market movements/performance.

• Financial year-to-date: AUM is still up massively from £30.6bn (end of March), with an extraordinary £9.5bn of positive market movements over the past six months.

The figures seem to be distorted by the fact that the end of March was around the low point for equity markets this year. The S&P 500 reached its low for 2026 that day, before Trump made what in hindsight sounds like an April Fool's Day joke: that the war against Iran was "nearing completion" and that he was planning to wind it down within "two to three weeks".

Stocks have soared since then, and especially the sectors in which Polar invests. So while Trump may have been wrong about the war neatly concluding, it is true that equity markets have become much more relaxed when it comes to assessing the long-term consequences of the war.

Performance fees: at first glance these might seem disappointing, with £8.8m of performance fees accrued by Polar in H1, compared to £15m in H1 last year. But last year was exceptionally strong and also very H1-weighted. Predicting full-year performance fees based on the position at H1 comes with a great deal of uncertainty.

Estimates: thanks to Equity Development for maintaining coverage here. They confirm that Polar's performance fee result in H1 was not bad at all; ED had only pencilled in £4.8m of performance fees for the year as a whole. With £8.8m of performance fees having already accrued in H1, they increase their full-year forecast to match that figure.

That strikes me as a nice, conservative way of predicting this unpredictable number.

Excluding performance fees, ED's adjusted EPS forecast for the current financial year is unchanged at 88.7p (and for next year, it's unchanged at 107.5p).

Including performance fees, the adjusted EPS forecast for the current year increases by 3% from 94.3p to 97.2p. But they emphasise that it's still to soon to say whether the performance fees that have been accrued thus far will ultimately crystallise. That mostly depends on fund values at the end of the calendar year.

CEO comment excerpt:

Demand was strongest for our differentiated specialist strategies, led by Global Technology and Artificial Intelligence. Healthcare, including Biotechnology, Smart Energy and several other strategies also contributed to net inflows. Client engagement remained high, particularly in Europe and Asia, while the geographic mix of new business continued to broaden.

Graham's view

The PE ratio for the current year is about 8x or 9x, depending on whether or not you include performance fees.

Based on expected AUM growth towards £50 billion next year, the PE ratio is expected to fall closer to 7x.

But I'll be the first to admit that this is highly uncertain: it depends to a large extent on sentiment towards the global technology boom.

As a reminder, here's the split of Polar's AUM in March:

As you can see above, Technology soared to represent more than half of AUM. And that was before the boom that occurred from April. Healthcare, Insurance and EM/Asia provide a limited degree of diversification.

Polar's success has flowed in part from its reputation as a sector specialist. So ending up with a highly concentrated AUM is perhaps inevitable. But it's the key risk here, from my point of view.

I'm still going to be GREEN on this stock, as I was before. The big picture is that its forecasts have just been upgraded and it's still trading on a single-digit PE multiple.

The music may stop playing at some point. But it hasn't stopped playing yet.

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Activeops (LON:AOM)

Down 46% at 121.9p (£87m) - H1 FY27 Trading Update and Notice of Results - Graham - AMBER

ActiveOps plc (AIM: AOM), a leading provider of Decision Intelligence software for service operations, today provides an update on trading for the six months ended 30 September 2026 ("H1 FY27").

This update starts out innocuously:

• H1 FY27 trading in line with expectations (revenue up 21% to £25.3m), including a £1.5m "termination receipt".

• FY27 expectations unchanged even though "new customer wins and implementations have been lower than in the prior year"

Then the bad news:

Major customer unlikely to renew. The customer has shared its intent not to renew its contract when it ends in March 2027. This has no impact on FY27. The contract is worth £3.8m of annual recurring revenue (“ARR”).
FY28 change to expectations. The Board expects FY28 revenue and adjusted EBITDA to be significantly below market expectations1 reflecting both the potential customer loss and lower new business activity in H1 FY27.

The market cap has reduced by over £70m today, and yet the major customer was only providing £3.8m of ARR.

So it's definitely the combination of the major customer loss and the reduction in new business activity that has resulted in today's enormous sell-off.

Also consider the earnings multiple at which this was trading as of Friday night:

And yet according to the StockReport, despite the stock's sky-high valuation, markets were pricing in revenue growth of less than 10% in both FY March 2027 and FY March 2028.

When I checked AOM's full-year results in July, ARR had just grown at the rate of 46% year-on-year, and revenue had grown at 48%.

I can only conclude that on the back of strong FY26 results, the market has been expecting AOM to beat the very modest FY27 and FY28 expectations.

Instead, it is now going to miss FY28 by a wide margin.

Estimates: many thanks to Canaccord Genuity for publishing on AOM today. Their note has the almost humorous headline "Bump in the upward slope". The key takeaways are the revenue forecasts have been slashed:

• The FY28 revenue forecast has been cut by 14% to £44m, which is 8% lower than the FY27 revenue forecast (£47.8m).

• The FY29 forecast similarly gets cut by 16% to £46.8m.

So the stock has suddenly gone from a growth story into a story of decline, at least in the short-term.

Cash is £19.6m and thankfully this is not a concern. The company is forecast to remain profitable, albeit at a lower level.

Outlook remains positive in the medium-term:

While some cost action will be taken as a result of the contract non-renewal, the size of the opportunity ahead, the breadth of the extensive customer base and strength of the Group’s balance sheet mean the Board intends to continue with its planned investments in growth initiatives, as it remains confident this will drive increased shareholder value in the medium term.

The business remains strongly cash generative and continues to benefit from an extensive and engaged global customer base, for whom its software delivers measurable returns on investment

A reminder of what the company does: it has a software platform that is supposed to organise a customer's data and helps them make better, faster decisions. The sectors it serves include banking, fund administration and insurance.

"Using ML, AI and data models, we extract insights that enable you to make strategic and tactical decisions in the moment." - its adjacency to AI doubtless helps to explain how it achieved such a prime valuation up to this point.

Comment by Exec Chair Richard Jeffery, who owns 12% of the company:

While the potential non-renewal by a major customer is a setback to our near term revenue growth, we remain strongly cash generative, with a robust balance sheet and a growing, global opportunity. The need for organisations to measure productivity gains from AI is a compelling driver for our software and one which we are uniquely able to meet, given our deeply embedded position within the heart of the operations of our customers. While cognisant of the disappointment that I and other shareholders feel at today’s news, the outlook for the business remains one of great opportunity, which we have the financial firepower, offering and dedication to exploit.

Graham's view

I was moderately positive on this stock in July. I noted that it was trading at about 4x ARR, " which in a SaaS context is not expensive, but what that does require is some conviction in the stickiness of revenues and the growth opportunity".

Unfortunately, that revenue has proven to be less sticky than expected, and it is now ex-growth, at least in the short-term. The loss of a major customer proves that recurring revenue is sometimes not all it's cracked up to be: it sometimes does not recur!

Given the seriousness of this profit warning I do have to downgrade our stance on AOM today, but I don't see the point in going any lower than neutral.

At an £87m market cap, it's now only trading at 2x ARR, which is well below the lower limit of where successful software businesses are supposed to trade. In other words, it's no longer being priced for success.

In P/E terms, it's trading at 23x FY March 2028 forecasts.

But remember that it also has a very decent cash balance, which covers nearly a quarter of the market cap and is expected to grow by year-end.

Once you account for that cash, the stock is trading at less than 20x forward earnings.

That doesn't make it necessarily a bargain, but I think RED or AMBER/RED would be overly negative for a profitable, cash rich business that has still made significant progress in recent years and which I suspect could fetch a decent takeover price, if it was up for sale. So I'm neutral.

3-year chart: