Small Cap Value Report (11 Aug 2015) - CAMK, JPR, PPH, YOU

11th Aug '15 by Paul Scott

22 comments 21678 reads

Good morning from overcast Bournemouth!

I've just had a delicious cooked breakfast in my posh B&B (called "The Living Room" - very nice), and am typing this on my smaller home PC, which I brought with me - perched on a small table in my room. That's the great thing about being an internet writer/blogger - you can work from more-or-less anywhere there's a WiFi signal.

Camkids (LON:CAMK)

Share price: on its way to zero, but currently 5.25p (down 20% today)
No. shares: 77.8m
Market cap: £4.1m

Trading update - this update missed my cut-off yesterday, which was a pity, as it can only be described as pure comedy gold. It's a genuinely funny announcement - I was crying with laughter as I read it.

As regulars will know, my stance here has been unequivocal - that AIM listed overseas shares should all be treated with `great suspicion (as there's usually something wrong with them), and that AIM listed Chinese shares are the worst - they are automatic bargepole jobs. You simply can't trust management, or the accounts with Chinese companies on AIM.

I've long thought (and commented here) that the main purpose of Chinese companies listing on AIM was to separate gullible British investors from their money. After all, creating a market (AIM) with no effective regulation, and then encouraging companies on the other side of the world to list on it, from a country which has a major cultural problem with fraud, wasn't really a terribly clever idea. Yet apparently the LSE still has salespeople in China, encouraging more Chinese companies to list on AIM!

The way AIM has been run is absolutely scandalous, and brings the whole financial sector into disrepute, in my view. Or rather, reinforces the disrepute which the financial sector had already brought upon itself. As things stand, AIM is a magnet for dodgy companies and promoters, aided and abetted by UK advisers who seem to have no moral compass - happy to promote anything, for a fee.

Cash - the vanishing act - the penultimate stage of China frauds on AIM, is to explain away all the fictitious cash on the balance sheet. Usually this is done by the company building a hugely expensive new factory, despite it not being needed, and then can't find workers for, so they have to write it off. Job done - cash has been disappeared.

However, in…

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brucepackard

11th Aug '15

Great rant! Agree about Chinese companies on AIM.

Paul Scott

Great! Glad to have been of service.

I don't always get things right (nobody does), but I'm pretty good at sniffing out dodgy companies, and warning people about them. Better to avoid questionable companies altogether, and avoid the crushing losses which usually ensue, even if it means occasionally missing out on something good.

Regards, Paul.

jonesj

Wish I could remember what Simon Thompson said about Camkids recently.

pka

"Wish I could remember what Simon Thompson said about Camkids recently."

Out of curiousity, I've just done a search on Investors Chronicle on 'Camkids Thompson'. According to that search, the most recent references by Simon Thompson were:

29 June: "Of course, I have had my failures; cutting paper losses sooner would have protected sizeable paper profits on previous winners ( Netplay TV (NPT:9.5p), Thalassa (THAL:63p) and Greenko (GKO:56p) spring to mind) and avoided the losses I crystallised on Aim-traded companies SeaEnergy (SEA:11.5p), Polo Resources (POL:5.3p); Camkids (CAMK:15.25p)."

30 April: "Camkids : Hold at 21p"

29 April: "Camkids : Sell at 20p (‘Hitting target prices’, 28 April 2015)"

28 April: "Another constituent of my 2014 Bargain Shares Portfolio is Camkids (CAMK: 20.5p), a share selection that has proved an unmitigated disaster, and the worst performer in last year's portfolio. I last advised holding the shares when the price was 20p when I updated my 2014 Bargain Shares Portfolio in early February. The price did recover, doubling to a high of 40p at the start of last week before the board dropped a bombshell to shareholders in its full-year results and which caused the price to slump to 20.5p. Despite sitting on 55p a share of net cash at the end of 2014, and taking a more conservative approach to its expansions plans given the tougher trading environment, the board have axed the final dividend of 2p share to preserve cash. True, the directors are also taking a pay cut, but I find the rationale for the shareholders' dividend cut impossible to comprehend because the cost of the payout is only £1.55m, or less than 4 per cent of Camkids' year-end cash pile of £42.6m. If prospects are so bad - the order book is down 38 per cent year on year - that the board are unable to maintain the dividend even though the business remains profitable, then there is really no point holding the shares. Sell."

xcity

Most recent ST recommendation was Sell.
I don't think he'd viewed it as a scam. Though he probably would looking back on it.

I think Simon Thompson is a really good analyst, so I don't want to slag him off, as a lot of his articles are excellent, and he's spotted a lot of excellent value/GARP stocks.

However, he has a bizarre blindspot on Chinese stocks, where he seemed incapable of seeing the obvious - that they are scams. Maybe some people are just too trusting, and it doesn't occur to them that listed companies might be fraudulent. That's a serious gap in your armoury, if you're investing in AIM stocks!!

Anyway, it's easy enough for readers to reject daft share ideas, just as I hope readers here reject my occasional clangers!

Regards, Paul.

andrewdb

My best guess is that as part of the Pearson group, ST is not allowed to state that a company is a scam otherwise the parent company would face a barrage of libel claims.

He can only comment on officially published information and present it at face value.

Monty9

Must admit I haven't read the Camkids trading update but they should get some sort of award for the creative and PC sounding means of disposing the shareholders' cash.

Camtab

Paul,
Have you come across a company called Avacta? They are based up at Wetherby near to where I was brought up and of course a thoroughly good race course where I quaffed many an ale. I have had a good look at it and really like it, although it is a bluesky stock. it does have a revenue stream but is valued at nearly £100m which seems "ambitious". That said the market is reputed to be £50bn and they have a patent on these things called Affimers which are sold as superior to antibodies. I am not a scientist. The story is good. But is it just another AIM hope which is bound to disappoint? Any comments welcome. I came across the stock on Stockopedia (Wan?). I have done my own research, and like it BUTfeel in need of a sturdy boot in either direction if someone feels strongy about it.
With thanks

Johns

Paul a quick question regarding YouGov, just want to improve my understanding of these issues.
You say the company capitalizes operating costs. Are you referring to the acquired intangibles figure of £2.34m in the last interims ?

FREng

Paul

What is the LSE ticker code for the Johnson Press bonds? I can't find it. Or is there a way to trade online using the ISIN code XS1028954441?

FREng

Ramridge

So to bring the story up to date,
Camkids Simon Thompson : 0 Paul Scott :1
Globo game is still in play, place your bets.

Rusty2

Naibu?

Indeed Naibu was another horror promoted by Simon T, but 'barge poled' by Paul.

Cisk

Camtab

There was a bit of comment on Avacta (LON:AVCT) in yesterday's report:
http://www.stockopedia.com/content/small-cap-value-report-10-aug-2015-nwt-fitb-tern-ght-104294/

However I suspect you're better off looking at the thread for that stock (as you mention), rather than asking Paul for an opinion on an off-topic (for the day) stock?

And if Paul says it's too blue-sky for him, would that put you off investing in it? Likewise, if his view is that it's the best thing since sliced bread, would you then invest?

Sorry to be pedantic here, but stockopedia isn't a tip sheet and no-one has a crystal ball...

Laughton

I did have a look at this when Paul mentioned them before but pretty sure they trade in Frankfurt - and only in hefty minimum size of £100,000 nominal.
So a bit beyond my range for a single holding.

laurie89

great work Paul. Worth two Yes ticks

rmillaree

Ref YouGov

I have had a quick look (never looked at this company before) - its all very messy - in 2014 full year they had goodwill then internally generated and externally bought and business combination intangibles - this included £2.3 mill of internally generated software - take your pick from that lot plenty of dubious stuff - although it looks like there are some sizeable writedowns too. also some related party items thrown into the mix. almost looks like they were scraping the barrel to find the profit level they wanted too :) (or avoid a loss) Ho Hum

rumplestiltskin

Camtab,
The antibody market is valued at $60bn. Antibodies take 12 months to produce inside rabbits. When the antibody is finally isolated from the second bleed of the year, there is no absolute guarantee that the antibody will do the job it is meant to. Affimers are produced in 7 weeks and are specific to the test or task to be carried out. No guesswork and no 12 month wait. That's it in a nutshell.

MGerard

13th Aug '15

The Investors Chronicle in April noted re Camkids 'on the face of it these shares are a steal'.
The Financial Times also reported this in its Weekend edition summary of IC highlights.
IC and other publications, such as Shares magazine, must cost investors a small fortune.
It is a shame the FT, with its excellent Alphaville (amazing job on Plus 500 and Quindell), is associated with IC.

Small Cap Value Report (11 Aug 2015) - CAMK, JPR, PPH, YOU

Camkids (LON:CAMK)

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Paul Scott

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