Small Cap Value Report (15 Jun 2016) - WGB, SERV, SFR, CHOO, CGS

15th Jun '16 by Paul Scott

115 comments 36839 reads

Good morning!

We're seeing a relief rally today, as the latest poll last night showed a small lead for the remain side. The last few days have certainly been a wake-up call to those of us who believe that a leave vote is the best thing for the country in the long run (and I fully appreciate that some readers disagree, it's a matter of opinion). There's no doubt that a leave vote would be chaotic for the markets, and would probably put a big hole in our portfolios for a while anyway.

We had another terrific, and courteous discussion about Brexit in the comments section after yesterday's report. Thanks to everyone who is contributing to the debate, which has been the best I've seen anywhere. Maddox in particular, who works in the City, left us in no doubt that a lack of EU passporting would lead to many job losses in the City, as banks, etc, relocate some operations to within the EU. I've heard the same thing from a friend who is Co. Sec. for an overseas bank which has London as its European HQ.

Some other fascinating snippets I picked up - apparently 80% of Dutch people want the UK to leave the EU. The article suggested this is because they are also disillusioned with the EU, and hence want the UK to open the door to them also leaving. Mind you, I did wonder whether they just think we're a pain in the neck, and want us out for that reason? Germans and Poles have apparently been polled, and strongly want the UK to remain in the EU - although it's pretty obvious why - for self-interest.

Probably the most astonishing intervention, was George Osborne basically blackmailing the electorate to vote remain - saying yesterday that he would impose an emergency budget, increasing income tax by 2%, and other punitive measures, if we vote out. He seriously thinks that he will still be Chancellor after an out vote? It's a diabolical tactic too, which to me indicates appalling judgement, plus malice. So he needs to be kicked out, regardless of the outcome of the vote.

In terms of the markets, it's obviously all about Brexit right now. When the polls & betting odds move towards remain, then shares go up. When they move towards leave, then shares go down. Goodness knows what would happen on an actual Brexit vote? Probably a…

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rhomboid1

16th Jun '16

I agree , tax credits are a distortion and as such prevent the labour market normalising , why should the taxpayer implicitly support wages that are too low? We need the free market to operate freely.

Carey Blunt

Hang on - you quote the Guardian like its backing up your point. Then you actually read the article and realise its not quite backing you up and so your all "of course they would say that its the Guardian".

Then you quote a load of DailyMail articles which my only answer is always going to be "of course they would say that its the Daily Mail".

No-one is saying that something wrong didn't happen in Sweden at that festival, i'm certainly not denying it. No-one is saying that the authorities there tried to cover it up which was wrong.

What I am saying is that event in Sweden is being trumped up and used in right wing propaganda to support a leave vote. Which is also wrong - at least as wrong as covering it up. "Whether you 're able to accept that its being trumped up as propaganda or not is half the battle. Because if you don't think it is then you're part of the problem". - To quote something that was once quoted to me!

The general message you seem to want us to believe is that unless we vote to leave the EU then the UK will end up with events like the one in Sweden happening daily. That's a real stretch because the UK isn't Sweden. Staying in the EU doesn't mean we have to welcome migrants with open arms (which is the reason given for the issues in Sweden according to the propaganda). It just means that we have to accept the free movement of people - this is not the same as open arms.
Also I back Britain to be able to sort out any issues on our own shores. I back Britain to tackle crime and bad behaviour of migrants and we don't have to be out of the EU to do that.

I go back to my point that bad people do bad things and its not something that is caused only by immigrants. You seem to have ignored my point about the white UK resident rapists, child molesters and killers.
All caught and convicted by the UK police force along with those in Rotherham.

Bad people in news stories does not give any real reason to vote leave, it just fuels general Xenophobia without any real context or facts.

Unfortunatly I think the damage is done and we will end up with a leave vote.

Paul always trumps this discussion forum as a notch above ADFVN and others. I hope we aren't letting him down by decending to that level. Role on the 23rd when we can then all just get on with the consequences!

Fangorn

Carey

"Hang on - you quote the Guardian like its backing up your point. Then you actually read the article and realise its not quite backing you up and so your all "of course they would say that its the Guardian"

I gave you the guardian because I suspected that was a news source you'd accept and not disregard immediately because you didnt accept its veracity!

"Then you quote a load of DailyMail articles which my only answer is always going to be "of course they would say that its the Daily Mail"."

I gave you Telegraph, BBC, Breitbart, some other source, and Daily Mail because I knew the DM would offend your sensibilities.

"No-one is saying that something wrong didn't happen in Sweden at that festival, i'm certainly not denying it. No-one is saying that the authorities there tried to cover it up which was wrong. What I am saying is that event in Sweden is being trumped up and used in right wing propaganda to support a leave vote."

So pointing out the truth is wrong is it? Because as events in Cologne, and Sweden, have proved,many of these migrants don't have the same values as us. Indisputable fact. And these hordes are taking advantage of no borders to move across Europe to their chosen destinations ie the Ones with benefits. (Germany, Sweden,UK)

The general message you seem to want us to believe is that unless we vote to leave the EU then the UK will end up with events like the one in Sweden happening daily. That's a real stretch because the UK isn't Sweden.

That's the point. UK isn't Sweden but its one of the three destinations of ALL economic migrants entering the EU illegally. Doesn't matter where they enter but Shengen allows them,once they've entered to head to Germany, Sweden, or Calais! And they head to those countries because they have the most generous benefits systems, decent economic growth, and populations that are reasonably tolerant.

So it isn't a real stretch at all...that's what they said in Cologne.We aren't Sweden. That's what was said in Rotherham....

"Also I back Britain to be able to sort out any issues on our own shores. I back Britain to tackle crime and bad behaviour of migrants and we don't have to be out of the EU to do that."

That worked out so well for Rotherham didn't it. 20+years because people were too afraid to say anything for fear of being smeared by the PC left as racists. Utterly disgraceful. How do we deport these bad apples by the way - if they're EU nationals we can't. As the 16,000 odd EU foreign criminals in UK illustrates.

"You seem to have ignored my point about the white UK resident rapists, child molesters and killers."

We're talking about Sweden aren't we?

As they are far more miniscule compared to the numbers of Non White UK rapists engaging in Paedophilia in Northern England. Doesn't make this lot you identify any more acceptable though.

"Bad people in news stories does not give any real reason to vote leave, it just fuels general Xenophobia without any real context or facts."

How is wanting democracy, liberty, xenophobic? You're a lefty aren't you? (That's a question btw,not a smear before you get all sensitive)

I guess all those Americans who wanted to throw off the tyranny of King George were racists as well by your definition - or perhaps they just wanted freedom, taxation with representation, and not be subservient to an unelected foreign party!!

"Unfortunatly I think the damage is done and we will end up with a leave vote."

I bloody hope so because I dont want to foot the bill when Greece, Italy, then Spain implodes leaving us with a bill for £60bn+ (I suspect I'm being too optimistic with this number)

I also don't want to be part of a United States of Europe

I leave you with the words of Jim Mellon - one of those economists consistently more correct than the trumpeted 600(only 17% of those actually asked)

www.youtube.com/watch?v=YuOIjK86c4o

Do you sympthasise with the sneering Bob Geldof yesterday, flicking the "V" sign at fisherman protesting a system that has deprived them of their livelihoods?

-5

ridavies

17th Jun '16

Paul
Would you like to comment on £CTH's interims on the 16th June. Thank you. I think they are a very good company whose value is not recognized, rather like £NXR! Maybe there is something I am missing!

underscored

"It could imply that immigrants are performing the jobs that UK nationals aren't prepared to do." It is insulting views like this that have got us into this mess (and I am a second generation immigrant!).

This guy gets it http://www.theguardian.com/commentisfree/2016/jun/17/britain-working-class-revolt-eu-referendum

"Yes, some people – from bigots in the stockbroker belt to raging gobshites in south Wales shopping precincts – are simply racist. But in a society and economy as precarious as ours, the arrival of large numbers of people prepared to do jobs with increasingly awful terms and conditions was always going to trigger loud resentment. For many places, the pace of change and the pressures on public services have arguably proved to be too much to cope with."

timarr

I'm puzzled that you find that insulting, as the Guardian quote appears to be making the same point I was. However taking one snippet from my post and quoting it out of context to make it look as though I'm saying something different isn't helpful.

I think my response, in full, is perfectly clear - low paid immigrants are able to afford to undercut UK workers to do menial jobs at least in part because the government subsidises them to do so via working tax credits. Which appears to be exactly the same point the Guardian article you're referencing is making.

One response to this could be to leave the EU; another might be to reform our badly designed benefits systems and/or to ensure that the living wage is just that. The latter would target the specific issue of immigrants undercutting the wages UK citizens are prepared to accept.

EU immigration, at least for economic reasons, is something our government can fix without leaving the EU. All it would require is a willingness to take bold and courageous decisions. So it's not likely anytime soon, I suspect.

timarr

hayashi22

With regard to benefits it used to be thought that these provided a safety net particularly in old age, and that was after a lifetime of paying in. The idea that you come to this country and immediately access benefits plus of course free education and health would I think cause disbelief in the original founders of the welfare State.

thorpo123

On a side note, I've really enjoyed reading through these comments. It's like being in a room of 40 people all having an equal say with considered arguments and not getting too emotional, staying on topic and seeking the facts rather than conjecture. Which is very refreshing, so thanks.

Whitbourne

Indeed, which is why the Prime Minister has negotiated a deal with our EU partners (which everyone has since forgotten in the heat of the referendum campaign) precisely to ensure that people cannot "come to this country and immediately access benefits".

That the welfare state has grown beyond the intentions of its founders is surely indisputable. Yet people are still going hungry in the UK, there is still homelessness and anyone who has actually experienced life on benefits knows that it's genuinely tough to make ends meet. It's a complex system with multiple constraints that isn't easy to get right, either in design or - even more - in how the rules are actually applied and the impact they have on often vulnerable individuals.

Velo

ACounsell @

"Paul,
There must be politician's blood in your veins! I refer to their ability to hold two (perhaps more) contradictory views in their head at the same time (there must be a technical term for it!)."

Hee hee - there is a technical term for it AC; it's called having "a first rate intelligence".

Here's the quote from the original source that you are referring to It.
It was said by F.Scott Fitzgerald (1930's, I think) when he said/wrote:

*** The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function. ***
:

ACounsell

Now while Paul might have 'first rate intelligence' I am not sure about most politicians. Also as a general point for Ed I fear this comment board is straying from the point of investment discussion and analysis. It is shouldn't really be a discussion forum about the pros and cons of immigration. That can be found on many other much less reputable sites.

I am sorry that I misinterpreted you. I find the attitude that surfaces elsewhere at least, that immigrants are "better" than the locals, because somehow the locals are too lazy or spoiled is racist and insulting.

It could also be that they are willing to work in conditions that were outlawed here long ago - also (from practical experience) are willing to accept terrible home conditions (10 to a terraced house) on the premise that they will stash their earnings and return later to their lower cost of living home country - an option not so available to the less educated natives.

There is a whole section of our society who feel that they have had economic warfare waged upon them, but whenever they protest get labelled racist. Suppression of legitimate discussion needs to stop.

Funderstruck

In a nut shell the incoming numbers need to be of a volume size that can themselves absorb the British way of life, as other migrants have for centuries , who themselves in turn contributed to this 'Britishness' .Only manageable numbers will achieve this other wise it is ghettoes.

Frankyboy

The beauty of these opportunities, as thorpo123 post 103, says, is that with email you just can't talk over each other! I've always wanted Question time, for example, to be STRICTLY limited to one speaker at a time for a few minutes MAX. The speaker doesn't HAVE to use all of his allotted time....although these talking machines won't have a problem using up all theit allotted time! :)

garkum01

19th Jun '16

I think its the sheer, unmanaged volume of migration which has angered ordinary people. for me, the tipping point was slightly different, it was the chaotic policy towards welcoming what were illegal migrants to europe, none fleeing war, after all the syrians had first come via other countries so by definition had ALREADY fled war.
The EU policy was a shambles and if they can't manage that competently, what hope was there! As others have pointed out the migrants are attracted to the richer, high-benefit countries of the EU, which makes them economic migrants.

jonesj

The students will pay high tuition fees, possibly over £16,000 for a masters plus rent or other costs & typically return home at the end of their stay. Those who remain probably contribute a lot to the economy. We should be encouraging more of these.

Another type of non-EU immigrant has about 8 children, does not integrate into society and sponges off our economy. We don't need them.

FREng

20th Jun '16

There's a good (IMO) analysis of what has to happen if we leave the EU, in LRB. http://www.lrb.co.uk/v38/n12/francis-fitzgibbon/if-we-leave

Paul Scott

21st Jun '16

Hi ACounsell,

I definitely don't have a first-rate intelligence, and have never claimed to!

I'm a 2:1 I'm afraid. If you want to be surrounded by geniuses, then Ed & Dave are there - why do you think I work for them?! As Guy Spiers says - surround yourself with people who are better than you. That lifts you up.

Anyway, back to my Technotronic album - "PUMP up the jam!!!" ;-D

Cheese, Paul.

MadPunter

10th Jul '16

Paul I have a small number of shares in Servelec which I bought after the profits warning and the subsequent dip in by one of the directors. I have since noticed that the Ennismore Fund Management have increased their holdings. I think this is significant as their two funds are closed and have a waiting list due to their 15% annualised return since launch. They specialise in smaller companies that are under-researched. As I am no expert I would like your view on the significance?

Just to give a bit of flavour on immigration. I live in London and over the past 5 years or so had noticed an increasing number of Colombians. Mostly very nice people, I got talking to one and asked him how/why so many Colombians had arrived recently without any obvious tie or family history etc. As to why its what you might expect-work opportunities etc. As to how -easy for them as so many have links to Spain and once in Spain they have the run of the EU. Non of this was properly thought through by naive politicians.

Small Cap Value Report (15 Jun 2016) - WGB, SERV, SFR, CHOO, CGS

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