Daily Stock Market Report (Tue 16th June 2026) - GMS, W7L, RAT, TAM, IHC, STEM, IGR, EMAN

Iran: there’s been genuine progress, although it remains difficult to quantify as the text of the US-Iran agreement has not been published yet. A key provision is that the Strait of Hormuz will be open for 60 days, allowing negotiations and the fragile ceasefire to continue. The Strait is not currently open for business.

Early last week, Brent crude oil (for August delivery) reached a high of $98. As I type this, it’s below $83. There’s still a gap to fill, to reach pre-war levels of $60-70, but it’s progress.

Japan: I note that the famous “widow-maker” Japan trade, which involves shorting their government bonds (JGBs), continues to perform well.

Here’s the Japanese bond yield. A rising yield means that the value of the underlying bonds is falling:

This is even a trade that I temporarily sat in, about ten years ago. Unfortunately, its reputation as a widow-maker was not without justification: JGBs were remarkably resilient for a remarkably long time.

But that technical fact didn’t stop thousands of traders from betting that JGBs would collapse. Their (or perhaps I should say “our”, as I was one of them) reasoning was impeccable. Japanese rates were close to zero or even negative. Their debt to GBP ratio was over 200%. Their population was shrinking. Logically, it didn’t make sense that rates could stay at that level.

However, the irrationality of markets outlasted our exuberance, and many traders who attempted to short JGBs have been retired by the markets by now. The Bank of Japan has just raised its benchmark rate to 1%, the highest level in over 30 years, and JGB yields are finally at normal levels. A timely reminder that whether we are looking at stocks or bonds, we can never assume that financial prices will return to “normal” within a reasonable timeframe.

Overnight market movements:

• The FTSE is set to open up 0.7% at 10,542

• S&P 500 is set to open up 1.3% at 7,524

• Brent crude is down 4.4% at $83.50/bbl

• Gold is up 1.7% at $4,288/oz

• Bitcoin is up up 2.1% at $65,698

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Calling it a day there, thank you!

Spreadsheet accompanying this report: link.

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Companies Reporting

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Graham's Section

Rathbones (LON:RAT)

Down 16.5% at £16.29 (£1.49bn) - Regulatory Update - Graham - AMBER

This is a grim update:

Rathbones Group Plc… announces that it has undertaken a Skilled Person Review following engagement with the Financial Conduct Authority… The review has identified areas for improvement within the Group's UK Wealth Management business regarding the implementation and embedding of Consumer Duty, as well as certain aspects of its compliance, oversight and assurance arrangements.

The words “Skilled Person Review” sends shivers down my spine.

This is when the FCA mandates a review of a company’s processes. We’ve seen it before with the likes of Jarvis Investment Management and S&U. They tend to be long and very expensive episodes and the outcomes can sometimes be very serious for the organisation.

Rathbones announces that it’s taking the following actions:

• A programme of work addressing the recommendations from the review, which is expected to be conducted over a two-year period.

A two-year period - see what I mean about these reviews taking a long time? These reviews tend to hang over a company and its valuation for years.

Continuing:

• A targeted review of a portion of our clients to assess whether they have received good outcomes.

The FCA’s Consumer Duty requires firms to act to deliver good outcomes for retail customers. That might sound somewhat subjective - because it is. If a review is happening, that says that the FCA wants some questions answered.

• For a period of up to twelve months, a voluntary pause to the onboarding of new clients that require Enhanced Due Diligence ('EDD clients') whilst the Group focuses on implementing changes to its procedures and controls. In the last twelve months, relevant gross inflows from EDD clients totalled approximately £370 million.

• A voluntary pause to the acceptance of inflows into general investment accounts from some existing EDD clients…

Let’s try to put the flow figure into context. In 2025, total gross inflows were £11.2 billion, while total gross outflows were £13.3 billion.

So £370m would not have been a huge percentage of total inflows, but it would have been significant in terms of its impact on net flows, if it had been paused last year (net outflows were £2.1 billion).

Due diligence has been a hot topic at financial firms for many years as governments have attempted to crack down on money laundering and tax evasion. So it’s a significant misstep if Rathbones’ procedures have not been up to scratch - the type of thing that can lead to serious but avoidable fines.

Costs: these actions are expected to cost £60m over the next two years. Rathbones will nevertheless continue with its £20m buyback as planned.

Fees on cash balances: underlying PBT will take a £9m hit in 2026 from ceasing to charge fees on cash balances in discretionary portfolios. This will be implemented from 1st July, so that’s a c. £18m hit if it’s annualised and if it becomes a permanent change. This is part of the company “reviewing certain aspects of its pricing as part of its ongoing commitment to delivering fair value for clients.”

Graham’s view

We don’t usually cover this stock but it looks like this story will be worth following.

I’m willing to look past the £60m of short-term costs. However, what’s really important is the effect that this review could have on long-term profitability.

According to market forecasts, Rathbones’ PBT was supposed to progress from c. £260m to c. £300m over the next few years.

It sounds like the FCA might take a dim view when it comes to charging investment management fees on customers’ cash balances in portfolios that are being managed by Rathbones. I’ve annualised the cost to £18m and while Rathbones might be able to mitigate that figure, I think it’s reasonable to assume that this change will be made permanent and most of it will not be mitigated.

After that, there might be a more general overhaul of fees. Wealth managers such as Rathbones aren’t cheap and while some of their clients are financially sophisticated, many will not be. In the current regulatory environment, this puts the onus on Rathbones to deliver the best possible outcomes to them.

So I would consider Rathbones’ earnings forecasts to be highly fragile now, even after we cut them by £20m to reflect the change to fees on cash balances. I’d suggest that we could be looking at a 10-20% reduction in long-term profitability, plus the short-term impact from one-off costs. The initial £60m estimate in that regard should be taken with a pinch of salt.

In conclusion: the 16% fall in the share price this morning seems approximately right to me, although I personally might have marked it down by 20%+.

The earnings multiple isn’t expensive: perhaps still in the region of 10x, depending on what happens to EPS forecasts after this announcement. But economic returns here have been average and I tend to think of it as a people business. I’m therefore inclined to take a neutral stance on it today.

The QualityRank is 47:

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Inspiration Healthcare (LON:IHC)

Up 7% at 27.9p (£25m) - Final Results - Graham - AMBER/RED

Inspiration Healthcare Group plc (AIM: IHC), the global medical technology company, pioneering, specialist neonatal intensive care medical devices, announces its final results for the year ended 31 January 2026 ("FY26").

These are pleasant results and the outlook statement is in line with expectations.

In more detail:

• FY January 2026 revenue +24% to £47.5m

• Adj. EBITDA £2.8m (2025: £0.2m)

• Adjusted operating profit £0.8m (2025: loss of £1.9m)

While the turnaround from losses to profitability is impressive, it must be said that on a statutory basis, the result is still a loss of £0.1m (effectively breakeven).

There were “non-recurring items” of £0.8m, namely “restructuring costs resulting from employee severance payments, and increased provision for dilapidations at the Group's old site in Croydon where the leases were formally exited during the year.”

I don’t know if I trust that FY27 will see a cleaner result than this - it might be safer to assume that some non-recurring costs will be a regular feature here? But this FY26 result is still a mammoth improvement on FY25, which saw far higher non-recurring costs (£12.8m).

Net debt reduces from £8m to £5m.

Balance sheet: tangible equity is about £9m, mostly in the form of working capital (inventories and receivables). In practical terms it seems that most of the cash generation and debt reduction in FY26 was achieved through the 33% reduction in inventories (from over £13m to less than £9m).

Infusion: in the new financial year, IHC has agreed to give up the right to transfer infusion pumps made by the Greek company Micrel. There will be a transition period until January 2027.

Infusion products were responsible for about £10m of revenues in FY26, so this will shrink IHC’s revenue base over the next few years.

Estimates: accordingly, the latest forecasts from Cavendish are as follows.

• FY27 revenue £40m, adj. loss before tax £1.2m.

• FY28 revenue £33.1m, adj. loss before tax £1.9m.

Outlook statement:

Current trading is in line with the Board's expectations, and the Group has an increasing orderbook and an improving pipeline of opportunities for FY27. We have already secured some notable orders from European distributors which has been a strategic priority under the back-to-basics campaign.

The announcement that the infusion product rights will return to Micrel after 31 January 2027, allows the Group to focus on its core business of neonatology and neonatal ventilation in particular which are the markets where we have the most growth potential.

Graham’s view

The market hasn’t reacted much to the Micrel news - first announced at the beginning of this month - probably because the downside of losing the business is offset by the upside of reducing expenses and receiving a compensation payment (about £1m).

In other words: the Micrel distribution rights weren’t very profitable anyway.

As for my overall view on IHC, the lack of profitability in the forecasts, even out to 2028, is obviously going to be a problem for me. I’m a simple investor at heart: I like to see regular profits. IHC isn’t offering that for the foreseeable future.

More positively, the company does have plenty of working capital and the debt position is expected to be stable. Cavendish are forecasting that net debt will stay around the £5m mark for the next few years.

I’m going AMBER/RED for the simple reason that IHC is a small company that is both financially indebted and unprofitable. But hopefully they will figure out how to get into the black over the next few years. There couldn’t be a more worthy mission than improving neonatal care.

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Roland's Section

Warpaint London (LON:W7L)

Up 1% at 220p (£178m) - AGM Statement - Roland - AMBER ↑

Today’s AGM Statement takes a fairly measured tone on trading, but leaves full-year expectations unchanged. If management can deliver on this, it could mark an end to the run of profit warnings we’ve seen over the last 10 months:

Key points:

• The [challenging] trading conditions seen in 2025 continued into Q1.

• Trading remains difficult, but Q2 sales from 1 April - 31 May are ahead of the same period last year.

• Overall group sales are at “an improved margin” compared to 2025.

• The group has “significant planned expansion opportunities” for later in 2026 and expects further margin improvement.

• Expectations for the full year remain unchanged.

Inevitably this commentary means that an H2-weighting is expected this year:

… sales in 2026 are expected to be more second half weighted than prior years due to the timing of certain larger orders and planned customer rollouts.

Warpaint’s management flag up growth opportunities in Germany and the US:

• Germany: launched a capsule range of W7 products into 2,200 Dirk Rossmann stores in May, “early sales are encouraging”.

• US: “significantly improved Christmas order received from Walmart”. Warpaint will also be launching an online Christmas gift range with Ulta Beauty, “the largest specialty beauty retailer in the US”. This could lead to further opportunities in 2027.

Balance sheet: the company confirms that the balance sheet remains debt free, with cash of £20.6m at 31 May 2026 (May 2025: £15.0m).

Ward & Hagon: the company is in talks to renew a management consulting contract with Ward & Hagon for a further 24 months. The renewal is expected to include “additional sales responsibilities and increased time commitments” to reflect the expansion of the Warpaint business since the previous renewal on 1 February 2024.

The partnership with Ward & Hagon is a longstanding arrangement (since 2020) which has previously seen Ward & Hagon representative Paul Hagon serve as an executive director of Warpaint. As part of this renewal, Hagon will step down from the board.

Terms haven’t yet been finalised for the renewal, but the previous contract was priced at £225k per year. Further details of the renewal will be provided in due course.

Broker estimates

Forecasts from both Cavendish and Shore Capital are unchanged today and largely reflect the consensus estimates in the StockReport:

Roland’s view

I took a cautious view on Warpaint in April when the company issued a profit warning with its full year results. But I also noted at the time that “some value may be emerging” and suggested it could be worth watching for signs that the outlook had stabilised.

It’s too soon to be certain given the expected H2 weighting, but my feeling is that we may now have reached that point. The current valuation looks undemanding to me, with a P/E of 11 and PEG ratio of 0.9x, below the traditional value threshold of 1.0x:

The 6% dividend yield – covered by earnings and net cash – is an additional attraction in my view. Except for a pause during the pandemic, Warpaint’s payout has not been cut since the company’s IPO in 2016 – a typical characteristic of companies with owner management:

Taking a quantitative view, Warpaint shares have consolidated at the current level for more than six months and the StockRank has been rising steadily:

Finally, quality metrics for this capital-light business remain excellent, highlighting Warpaint’s ability to self-fund its growth while still generating attractive shareholder returns:

I am going to move our view to neutral today, with a view to turning more positive if guidance remains unchanged later this year. AMBER

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Tatton Asset Management (LON:TAM)

Up 16% at 698p (£428m) - Title - Roland - AMBER/GREEN =

Today’s full-year results are ahead of consensus forecasts and have prompted broker upgrades for both FY27 and FY28.

Key points (y/e 31 March 2026):

• Revenue up 20.1% to £54.4m

• Pre-tax profit up 17.2% to £25.3m

• Adjusted EPS up 22.3% to 35.05p (+6.8% vs Stockopedia consensus of 32.8p)

• Total dividend up 42% to 27.0p (+16.9% vs Stockopedia consensus of 23.1p)

• Cash of £33.9m (FY25: £32.1m)

These figures support excellent quality metrics and cash generation, as usual with this business:

• Operating margin: 44.5% (FY25: 45.7%)

• Return on Equity: 34.0% (FY25: 34.4%)

• Free cash flow: c.£18.5m, giving 100% conversion from net profit

Surplus cash generated by the business covered the dividend and buybacks last year.

Operational performance: Overall AUM growth for the year was held back by a planned one-off £3.3bn outflow relating to the loss of a specific contract. However, today’s results show good underlying investment growth and solid new business performance, with net inflows replacing the majority of the lost assets:

• Total AUM up 11% to £24.2bn

• Total net outflows of £0.52bn

• Underlying net inflows of £2.81bn, excluding the £3.3bn

• IFA firms increased by 9.7% to 1,218 (FY25: 1,110), with client accounts up 2.6% to 157,850 (FY25: 153,915)

• Paradigm Mortgages “participated in mortgage completions totalling £18.0bn” (FY25: £14.2bn)

Investment performance - beating the market? Tatton’s asset management business is built around a range of managed portfolios. Financial advisers can access these on popular platforms in order to invest their clients’ cash. This allows the adviser to maintain the client relationship, while outsourcing investment management to Tatton and avoiding the regulatory and risk burden of investment selection.

Tatton’s portfolios appear to be competitively priced, but the other question that matters when it comes to fees is whether strategies perform well.

To its credit, Tatton provides clear details of the annual investment returns for its six core model portfolio strategies. These have varying equity components – the Global Equity line is the most relevant for our purposes, I think, as I believe these strategies have a 98% equity allocation:

For some context, here are the returns from various key equity indices over the same period::

• FTSE 100 total return: 21.9% (3yr annualised: 14.2%)

• S&P 500 total return: 17.4% (3yr annualised: 18.3%)

• FTSE All-World: 16.6% (3yr annualised: 14.5%)

The performance of Tatton’s lowest-cost Tracker strategy last year was similar to the FTSE All-World index. This is also true on a three-year view, according to the tables above, which are included in today’s results.

However, given the similarity of results from the company’s actively-managed strategies, it’s not clear to me that the additional fees levied on these portfolios are delivering results for investors. Of course, the last three years has been a notoriously difficult time for active managers to beat the market, especially in the US.

Outlook & Updated Estimates

Clearly, many of Tatton’s IFA customers are happy with its services and are choosing to continue to add their clients’ cash to its portfolio offerings.

This momentum is not expected to slow anytime soon. Today’s outlook commentary from founder-CEO Paul Hogarth acknowledges macro risks, but sounds a confident note:

Tatton Asset Management enters FY27 with strong underlying momentum and a clear sense of strategic direction. The core business has delivered another year of excellent organic growth. Our adviser network has expanded, our margins have improved, and our investment proposition continues to attract recognition across the market.

Tatton has maintained its growth target for AUM of £30bn by the end of FY29 (March 2029).

Broker Zeus has translated this commentary into upgraded FY27 and FY28 forecasts:

• FY27E adj EPS: 41.0p (+8.9% vs 37.7p previously)

• FY28E adj EPS: 45.8p (+10.9% vs 41.3p previously)

These estimates put Tatton on a FY26E P/E of 16.5x, in line with the valuation on the StockReport prior to today’s upgrades (and share price gains):

Roland’s view

As I commented in The Week Ahead on Friday, this has been one of the most successful AIM IPOs I can remember in recent years. Today’s results don’t really change that view.

The company’s growth is being supported by a structural trend towards on-platform discretionary fund management, as an increasing number of IFAs choose to outsource their investment decisions to asset managers:

Source: Equity Development

I have no idea when or if this trend will slow, but I would imagine it’s likely to continue for some time yet. If more IFAs are outsourcing their investment management, then I would guess that progressively fewer will become willing to risk their reputations (and finances) by making their own decisions.

Today’s results leave the company’s target of reaching £30bn of AUM by March 2029 unchanged. Meeting this goal would imply annualised AUM growth of 7.4% over the next three years – below the 11% level seen last year.

Of course, last year’s result was aided by fairly strong investment returns, as has been the case for several years. If the market enters a prolonged slump, achieving AUM growth could become more difficult.

In such a scenario, Tatton’s premium valuation could come under pressure as investors priced in a period of stagnation.

Predicting the timing of stock market crashes is beyond my paygrade, but there’s clearly a narrative at the moment which suggests we could be closer to the top than the bottom of the current cycle. This may help to explain why Tatton’s share price has eased in recent months despite multiple earnings upgrades:

Graham was AMBER/GREEN on Tatton in November 2025, noting the quality of the business and the appeal of founder management. On balance, I don’t see any reason to change that view today.