Daily Stock Market Report (Tue 21st October 2025) - SQZ, HSW, GMS, WJG, BPM, CLBS, CCH, ECOB, MIND, ARB

Good morning! There's a nice mix of trading updates, plus a few acquisitions, to look at today.

All done for now, thanks everyone!

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Spreadsheet accompanying this report: link (last updated to: 23rd September).

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Companies Reporting

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Graham's Section

Hostelworld (LON:HSW)

Unch, at 126.1p (£158m) - Acquisition - Graham - AMBER/GREEN

(At the time of publication, Graham has a long position in HSW.)

My initial reaction to this news is negative, because I’m generally looking for organic growth at my investments rather than M&A. Ask an academic, and they’ll tell you that most acquisitions destroy value (for shareholders of the acquiring company, not the target!).

But I’ll try to keep an open mind as I explore this news. The market doesn’t seem to hate it at least, with Hostelworld’s share price unchanged.

What Hostelworld is buying: OccasionGenius Inc.,“a US-based B2B event discovery platform”.

Description:

OccasionGenius empowers businesses to inspire their audiences with a global event dataset delivered via API, comprising a rich, city-by-city catalogue of local 'Things to Do' and a unique global dataset of 'travel worthy' events that inspire travellers to book trips.

Checking OccasionGenius’ website, I see that they target a wide variety of industries including hotels, airlines, residential property, etc. For a hotel business, for example, they can help motivate prospective guests to make a booking, by showing them key events on certain dates.

So why is Hostelworld buying OG instead of simply using it?

Strategic Rationale:

The acquisition accelerates the development of our events capability, giving us immediate access to structured, global event data; content that would otherwise take years to build organically. By integrating this at scale, we expand from accommodation into events, strengthen community connection, and advance our broader social monetisation strategy.

They describe three pillars: 1) enhancing their existing social travel platform (travellers have more reasons to connect with each other), 2) accelerating growth by inspiring new trips that wouldn’t have happened otherwise, 3) creating a unique data set that combines their existing bookings data/social network with event data.

Price: $12m (that’s equivalent to ~€10.3m) on a cash-free, debt-free basis.

Funding: a €10.3m, 3-year loan facility with AIB, paying 2% over EURIBOR (EURIBOR itself is about 2% these days).

Valuation multiple: OG’s forecast ARR is €1.5m by year end, so Hostelworld is paying 7x ARR. That’s bang in the middle of the range of possible ARR multiples, with 6-8x ARR being an average range (don’t get me wrong - this is still a premium valuation, but in the software/SaaS world, it’s considered normal).

CEO comment:

"The acquisition of OccasionGenius is a significant development which positions Hostelworld as the first social travel platform with an integrated offering of social networking, event discovery and accommodation. This acquisition allows us to immediately supercharge our platform with a wealth of content that would take us years to build organically and enhances value creation opportunities for our shareholders."

Graham’s view

I’m trying to justify this acquisition. My first instincts are that Hostelworld could have simply been a major customer of OG, using it across its network, rather than buying the entire company. Or even better, created its own version of the same thing, using its existing cash resources.

But then Hostelworld does have 17,000+ hostels on its platform, in pretty much every corner of earth. Being a customer of OG would mean using all of OG’s global data. Perhaps it really was simpler to buy OG than to pay for all of its data on an ongoing basis? That said, how “global” is OG’s data, really?

I’m also saddened to see the company going back into debt, when it took so long and it experienced so much risk in the effort of trying to get itself out of debt, not that long ago.

Here are my summarised views around this deal.

First, the positives:

• Simplicity. Gets all of OG’s data on an ongoing basis. Could be the spark that helps ignite faster growth?

• The debt is not expensive at 2% over EURIBOR.

• HSW is forecast to generate €14.5m of net income this year, and €18m next year. So it should be able to pay the loan back without difficulty. Leverage multiple is “comfortably below our target of 1x”.

Some of the negatives:

• Hostelworld are paying a premium SaaS/ARR valuation multiple for this, when their own shares only trade at 10x earnings and at a price to sales multiple of 2x.

• They are voluntarily going back into debt, although this is consistent with their leverage “target” of 1x.

• OG is listed as only having 2-10 employees on LinkedIn. It seems to me that Hostelworld could have built their own operation doing the same thing for a tiny fraction of the price paid. They say that getting the same wealth of content “would take us years to build organically”.

I’m inclined to sell my Hostelworld shares today, but I haven’t made up my mind yet.

As far as our colour system goes, I’m downgrading from GREEN to AMBER/GREEN.

I hope I’m wrong, but I’m inclined to think as soon as Hostelworld started building up a net cash balance, the money started to burn a hole in their pocket, and they needed something to spend it on. In formal financial terms, this is called having “a target leverage ratio of 1x”. But is it really necessary for a company like this to run on debt? I don’t think so. If they really wanted to get rid of €10m, they could have expanded the share buyback or launched a tender offer.

I hope the acquisition works out, but it gets the thumbs down for me, as I fear that it’s overpriced and unnecessary, and bank money is being used to pay for it.

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B.P. Marsh & Partners (LON:BPM)

Up 1% at 675p (£244m) - Half Year Results - Graham - GREEN

BPM always provides plenty of detail on its investees - it’s a specialist investor in the insurance sector - but what interests me most is the big picture.

And the big picture remains as impressive as ever:

• 9.5% shareholder return in H1, made up of both NAV growth and dividends.

• NAV growth 7.1% to £349.5m.

• NAV per share grows to 956.1p; the current share price is a 29% discount to this level.

• Diluted NAV per share 909.8p, the discount to this figure is 26%.

We did have a H1 update in September which already disclosed the H1 cash figure of £52.6m (July 2025). The current cash figure is given today as £36.5m.

The company has been cash-rich ever since a large disposal triggered buybacks, a new dividend plan, and various new investments.

(Please note that I have completely different expectations of BPM vs. HSW, in terms of cash management and M&A - one is an investment company and the other is not!)

Comment snippets from Brian Marsh OBE, Chairman. He first points out that £8m of dividends have been paid out to shareholders in H1, and concludes his statement as follows:

…we entered the second half of our financial year in an exceptionally strong position in terms of portfolio holdings and NAV. Our new business pipeline is growing and, with our considerable available cash, we are well placed to make further new investments.

As the insurance rating environment continues to soften, we have balanced our portfolio towards supporting specialist teams that can deliver market-beating returns. This is consistent with what has historically been the signature B.P. Marsh operating model of selecting compelling opportunities in insurance distribution."

Activity: they made three investments in H1 and already made four investments so far in H2. The sizes of these investments vary, but the max size seems to be £10m. I like the discipline: while BPM’s portfolio does occasionally become rather concentrated, they aren’t betting their success on any of these new ideas.

Secondary placing: BPM reminds us that a major shareholder sold its remaining 9.8% stake in BPM in August. Buyers included the investment firm Wellington:

This successful exit and diversification of our investor base, including increased holdings by high-quality investors such as Wellington, reinforces market confidence in the Group's long-term growth strategy.

Portfolio breakdown

Here’s a nice image of the portfolio:

The main investment is Pantheon:

Pantheon is a UK-based specialist insurance broker specialising in property, casualty, professional lines & reinsurance and delegated authority established in partnership with Robert Dowman. Pantheon acquired 100% of the share capital of the Lloyd's broker Denison and Partners Limited.

Comment on insurance market trends from the CIO: rates are soft (down 7% globally in H1), with plenty of capacity, and this trend is expected to continue. But M&A is buoyant and the CEO says there will be “continued opportunities for… investee companies to expand and develop, either organically or through selective acquisition.”

Graham’s view

This is not the most exciting share in the market but it knows how to make money for its investors, as it has done for many years. It’s a good example of a compounder:

In StockRank terms, it’s a 96, and a Super Stock, and it passes 10 bullish stock screens.

That being said, the sparkling results of FY Jan 2025 are not really repeatable, as they came from an extraordinarily successful disposal. Disposals like that aren’t going to happen every year.

Even so, this is one of my favourite shares and I’m tempted to open a fresh position.

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Roland's Section

Gulf Marine Services (LON:GMS)

Up 7% at 16p (£184m) - 9M 2024 Results - Roland - AMBER

I find it’s often helpful to consider the disclosure in a trading update – the information the company is choosing to make prominent and that which it is seeking to obscure or exclude. Shaping the narrative in this way often helps companies to create the impression they want, while distracting investors from other less favourable metrics.

Quarterly comparisons can be an example of this. The standard convention is to make comparisons with the same quarter one year earlier. This may be appropriate for some businesses, especially where there’s seasonality. But it can also mask a sequential change over previous quarters.

Today’s update from liftboat operator Gulf Marine Services is a good example of this. Management reports an order backlog of $457.5m at the end of September, just 2% lower than on the same date in 2024.

Broker Zeus helpfully describes this as “broadly steady” in a new note today. But if we look at the change in Gulf Marine’s order backlog sequentially in 2025, we see that the pipeline of secured future work has fallen by 20% over the last six months:

Admittedly, contract wins can be lumpy. I recognise that this may not be a long enough decline to view as an established trend. But while the company still has around 2.5 years’ revenue on its order books, I am not sure I’d describe the order backlog as being stable this year.

I should emphasise that I am not suggesting that either GMS or Zeus are being misleading. Today’s update is perfectly standard quarterly reporting. But I think it’s an example of when we can gain extra insights by thinking about other comparisons we might make, rather than relying solely on those highlighted by the company.

Unfortunately, Gulf Marine has previous form when it comes to selective disclosure. When I wrote about the company in September, management were keen to highlight a small increase to adjusted EBITDA guidance for the year.

What they didn’t mention in the RNS was a 20%+ cut to earnings forecasts for both 2025 and 2026. This was only visible to investors with access to broker notes:

Moving on, let’s take a look at the remainder of today’s third-quarter update.

9M 2025 results summary

Gulf Marine’s standard practice is to report nine-month figures rather than Q3 numbers. So these results cover the nine months to 30 September 2025::

• Revenue up 10% to $138.3m

• Adjusted EBITDA up 7% to $81.5m

• Net debt down 22% to $172.2m

• Finance costs down 35% to $11.6m (9M 24: $17.9m) due to lower interest rates & refinancing

• Net leverage ratio: 1.63x (9M 2024: 2.31x)

• Fleet utilisation down 4% to 88%

• Average day rates up 10% to 36.0k

These seem pretty solid figures to me, on the whole. Day rates have continued to rise as vessels roll off lower-cost contracts onto new contracts. When paired with the reduction in finance costs, I’m confident debt levels should continue to fall towards the 1.5x leverage threshold at which the company has promised to consider shareholder returns.

Although debt reduction slowed slightly in Q3 compared to the same period in 2024, this is understandable given the cost of the Saudi Arabia tax settlement earlier this year.

One point that interested me is whether the geopolitical disruption flagged up in June persisted in Q3. This was said to have affected Q2 utilisation, but my sums suggest utilisation did recover in Q3:

• H1 utilisation: 87% (H1 24: 91%)

• 9M utilisation: 88% (9M 24: 92%)

• Q3 utilisation: 90% (Q3 24: 94%)

Outlook: CFO Alex Aclimandos says GMS remains on track to meet 2025 objectives, with unchanged EBITDA guidance of $101-109m.

This forecast implies Q4 EBITDA of $23.5m at the mid-point, which is lower than the quarterly average of $27.2m so far this year, so the guidance seems realistic to me.

Today’s broker note from Zeus has also left EPS forecasts unchanged:

• FY25E EPS: 3.3 cents

• FY26E EPS: 3.9 cents

These forecasts price the shares on c.6x 2025 earnings, falling to a P/E of 5 for 2026.

Roland’s view

Gulf Marine is continuing to deliver on its strategy of deleveraging, which should result in a gradual increase in net asset value. Despite some dilution from new shares issued through historic warrants, this has shown up in the accounts as expected:

In theory, this NAV accretion should support a share price re-rating over time. In practice, the market has remained a little reluctant over the last couple of years:

For this reason, GMS shares continue to trade at a hefty 40% discount to book value.

Investors considering the stock today need to ask if this is a fair valuation, or if the shares are too cheap.

In my view, there probably is some moderate value here. But I don’t think GMS is as cheap as it might seem. I’m keen to see if the decline in order backlog continues or reverses and I cannot ignore the reality that at some point, management will have to decide whether to commit funds to fleet expansion and/or renewals.

Mistiming fleet upgrades was the original cause of the company’s debt problems – but the risk remains for the future. Even if fleet investment is managed more successfully than last time, low returns on assets suggest to me that a discounted valuation is probably fair.

I took a neutral view on this stock in September, due to the cut to profit forecasts for 2025 and 2026. Today’s update is in line so I’m left with a difficult choice on whether to revert to an AMBER/GREEN view, or stay at AMBER.

It’s a finely-balanced decision and I suspect some readers may disagree, but I’m going to stay neutral for now until there’s more visibility on the outlook and strategy for 2026.