Paul's Weekly SCVR Summary - Episode 24 (week-ended 9 Dec 2022)

13th Dec '22 by Paul Scott

2 comments 1978 reads

Podcast Summary - w/e 9 Dec 2022

Not winding down for Xmas at the SCVR, we covered 42 companies this week! (a new record).

Our reports are driven by the daily newsflow - trading updates & results statements. Not tips or recommendations, it’s just a review of the day’s news, with our opinions. We chuck a whole load of share ideas at you, for you to research further if you like the sound of anything.

Monday 5 Dec

Fulcrum Utility Services (LON:FCRM) - equity now more-or-less worthless. We flagged in October that it announced need for more funding from its major shareholders. It was an immediate sell on that announcement. I sld mine at 3.8p. Whenever companies say they need more cash, and particularly if one of their major shareholders is Christopher Mills at Harwood Capital, it’s pretty likely you’re going to get stuffed, which is exactly what happened here. Convertible loan of up to £6m announced, with conversion price being a maximum of 0.5p per new share. Market price was 3.4p, so as I said in Monday’s report, this was an obvious sell on the opening bell. The turnaround hasn’t worked, so time to move on.

The worst place to be investing now, is micro/small caps, that have run out of money, or need to renew bank facilities, and are missing forecast earnings. Most risky situations you can get horribly diluted, as is likely at FCRM - share count could quadruple of bond converts at 0.5p. Complete waste of time, and probably only a matter of time until it de-lists. We need to avoid similar things. I would avoid anything that needs to raise cash in the next year - odds are so stacked against you.

Equals (LON:EQLS) - very interesting company, shares have done tremendously well. Another positive trading update issued. Forex services. Forecasts for FY 12/2022 now likely to be beaten by about 10%, which could drop through nicely to profits. I do have some caveats - large capitalised development spending which by-passes the P&L, rendering EBITDA meaningless. Also large profit adjustments - £10m adj profit turns into only about £3m statutory profit. Need to be sure you’re happy with those adjs. Not cheap now, £174m market cap. Lots of readers are interested in EQLS, it’s been in an impressive 3-year bull run. Make sure you’re happy…

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Michael C

14th Dec '22

Paul - apologies if I was one of the "moaners" who upset you. I certainly don't want to demotivate you and I always tick the "like" box.

I said in my post that your talents and Graham's are undoubted. And the amount of ground you cover is enormous. It looks like very hard work to me. Also, I understand that your reports are triggered by news and results, which is fine. I have been lucky enough to make a few profitable trades this year as a result of reading the SCVR - my best have been Jupiter Fund Management (LON:JUP) and £WIX where I saw 20% profits very quickly and took them.

My perspective is that of a chap in his 70s, managing a medium-sized SIPP. I feel I'm past the age when I can expect the passage of time to help me recover from losses, and this year the SIPP will enter drawdown so I'm really looking for that magic mix of dividend income and perhaps a little capital growth. For someone like me "blue sky" and "jam tomorrow" investments, and shares which pay no or very little dividend income, are of no interest. And I'm quite pessimistic about UK-centric businesses, especially those which are consumer-facing. I remember the 1970s and here we are again but a lot of people haven't quite clocked it yet.

What I would like is for you and Graham to continue to warn us where you see trouble ahead in the small cap world but when choosing what to cover a slight bias towards mid caps and companies with international earnings would appeal to me.

So far as Stockopedia is concerned, the thing which would absolutely guarantee my continued subscription would be something like the SCVR but focussing on yield rather than capital growth. The Questor column in the Daily Telegraph had a go at that and has made a bit of a hash of it and I haven't found anything better yet.

Whatever you and Graham decide to cover, please keep going!

wolfspirit

15th Dec '22

Paul,

"You’re work’s shit and you’re covering all the wrong companies" - I don't see this in the comments, directly or between the lines.

Either way, you can only choose your reaction, not change someone's comments. Please don't over value the negative comments compared to the many 1000's who quietly read and value their daily dose, and now very useful weekly summary (words are best for me - but I'm sure podcast is best for many others!)

Trying to infer people's intentions behind the words is futile - focus on the numbers of daily readers of this column. Your personality is part of that, don't go "automated".

Also don't even look at the number of likes - clicking to read it is the only real vote of genuine value! No value, then no clicks!

If those reader numbers fall then you should ask yourself if you are providing the right / enough value, not because someone gets a bit critical because you don't cover "XYZ plc's announcement that they have a £25k revenue deal over 5 years if Taurus rises in the eastern sky during a full moon".

My Stocko sub is 90% dependant on the quality of this column and what it brings to me. I would like other columns to provide other sector input (as you acknowledge you have a sector bias), but I think you're better off specialising where you add the most value. I for one am not retail orientated so like the perspective you bring.

Having said all that - it is vital to my portfolio that you comment, as a priority, on XYZ plc's deal ? :-)

Paul's weekly SCVR summary - episode 24 (week-ended 9 Dec 2022)

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