It's hard to believe that 2018 is almost over. Following a great 2017 this has turned into a very mixed year after such early promise. Having been burnt in October I believe that buyers remain cautious (myself included). Still this was all over-shadowed by the excellent two days that I spent at Mello London in Chiswick. Probably the best private investor event organised anywhere in the country I had a great time meeting interesting companies, hanging out with like-minded investors and hosting the biggest Stockopedia StockSlam so far.

One of the most apposite presentations involved a panel discussion around Patisserie Valerie and what investors could learn from this calamitous collapse. With a great deal of insight it became clear that internally the company was not being run effectively with a very dominant chairman, Luke Johnson, being surrounded by cronies and subject to minimal oversight. This might be the simple reason why one or more directors were able to hide poor trading and huge debts from anyone else. Equally usefully Steve Clapham, from Behind the Balance Sheet, showed how forensic analysis of the accounts indicated that the numbers were too good to be true. On one hand Patisserie Valerie appeared to be as profitable as Starbucks, despite having much larger fixed costs, while on the other employees/locations weren't as efficient as comparable companies in the dining sector.

Anyway the big takeaway for me is that I need to attend Steve's course on investigative accounting and possibly also his introductory courses! I've been in touch with Steve about this and will shortly be posting about an offer that he has made around putting on a bespoke course for private investors. If there is enough interest from us then he should be able to make this happen early next year. Watch this space.

Purchases

Keywords Studios Bought 1509p - November 18

It's interesting to me that following the big October sell-off a good number of shares have bounced back vigorously while others, such as Keywords Studios, have continued to languish. Given solid HY results in September, a FY forecast which has risen 20% in the past year and an undemanding P/E of ~30 I don't see a good reason for share price weakness here. From a longer term perspective I also believe that KWS has much opportunity for growth both organically and through acquisition (in a generally…

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