Small Cap Value Report (17 Jun 2014) - FDM, SRT, TRI, MOGP

Tuesday, Jun 17 2014 by
36

Good morning! 

FDM Group (Holdings)

This morning sees the return of this Brighton-based IT company, which trains and hires out IT consultants. It's a fantastic business in my opinion, and one that I am familiar with because it has previously been stock market listed in the UK. The IPO has been priced at 287p per share, and the proceeds are being used to cash out for the Private Equity backer of the MBO a few years ago.

When the seller is PE, you can be virtually certain (in my opinion) that the offering will be significantly over-priced, and that you'll probably end up regretting having funded their profitable exit. After all, if it was great value, they wouldn't be selling!

Things are further complicated in this case, in that the founder/CEO, Rod Flavell, who is still in situ, conducted what I considered to be an opportunistic and unethical buyout of the company in 2010 for just £28m. We woz robbed at the time - from memory the buyout price was a PER of about 6, which was ludicrously under-priced for a decent growth company. Minority shareholders (a number of large ones I liaised with at the time) were left in no doubt that if they didn't accept the buyout offer, then there would be trouble - management effectively put a gun to shareholders' heads and implied - sell up or else we'll walk.

Here we are just four years later, and they are bringing it back to market at a valuation of more than 10 times the buyout price, confirming what we shareholders knew at the time, that we were having an exciting growth company snatched from our hands at a disgracefully low price, with undue pressure being put on shareholders to sell.

Therefore I consider this company uninvestable, as having been shafted once by this management team, there's no way I'll be letting them do that again. Who's to say they won't do exactly the same thing again (i.e. buy it out at a depressed price) if the share price tanks in the future? So, lovely company, but horrible management, in my personal opinion.


Software Radio Technology (LON:SRT)

Results for the year ended 31 Mar 2014 have come in as expected, with £6.1m turnover and a loss before tax of £1.5m. Although forecasts were guided much lower…

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SRT Marine Systems plc, formerly Software Radio Technology plc, is engaged in the marine technology business. The Company's principal activity includes development and supply of automatic identification system (AIS)-based maritime domain awareness technologies, and derivative product and system solutions for use in a range of maritime applications from safety and security to fishery management and environment protection. AIS is a mesh network radio communications system technology specifically designed for the marine domain, and it uses a combination of global positioning system (GPS) and high frequency radio to enable real time, simultaneous data communication between multiple, independent entities providing information, such as identity, GPS position, speed and other customized data. It offers a range of AIS products and maritime domain monitoring system solutions, which also fuse other maritime sensor technologies, such as radar, closed-circuit television and communications. more »

LSE Price
31.45p
Change
-0.2%
Mkt Cap (£m)
48.3
P/E (fwd)
11.0
Yield (fwd)
n/a

Trifast plc is a manufacturer and distributor of industrial fastenings and category C components to a range of industries and customers. The Company designs, manufactures and distributes mechanical fasteners on a global basis to both distributors and to original equipment manufacturer (OEM) assemblers. Its geographical segments include the United Kingdom, Europe, the United States and Asia. It owns a range of fastener solutions for specific industries and applications, including fasteners for sheet metal, fasteners for plastic, security fasteners, thread-locking nuts and micro-diameter fasteners. Its brands include Pozidriv, Polymate, Binx and Hank. Its products are used in various markets, such as automotive, electronics/telecoms and domestic appliances. It operates in Norway, Sweden, Hungary, Ireland, Holland, Italy, Germany, Poland, Malaysia, China, Singapore, Taiwan, Thailand and India. Its subsidiaries include Trifast Overseas Holdings Ltd and TR Formac Fastenings Private Ltd. more »

LSE Price
187.44p
Change
1.3%
Mkt Cap (£m)
225.3
P/E (fwd)
12.6
Yield (fwd)
2.4

Mountfield Group Plc is engaged in the supply of fit-out services (and in particular the supply and installation of flooring systems) to data centers, office, retail and other commercial premises and of specialist construction services, including those related to property fabric repair and refurbishment. The Company's segments are Construction and Fit-out. The Construction segment includes direct contracting and trade contracting services to both main contractors and corporate end users. The Fit-out segment provides raised flooring systems to main contractors and corporate end users. It provides construction support and property services to private and public sectors. It provides construction and internal fit out of data centers for the information technology (IT) industry. Its activities include design and installation of environmentally controlled data centers; fitting out and refurbishment of commercial office buildings, hospitals and education facilities, and principal contracting. more »

LSE Price
1.54p
Change
4.6%
Mkt Cap (£m)
3.8
P/E (fwd)
n/a
Yield (fwd)
n/a



  Is LON:SRT fundamentally strong or weak? Find out More »


7 Comments on this Article show/hide all

Beginner 17th Jun '14 1 of 7
1



Hi Paul
If time allows I would really value your opinion on Red24 (LON:REDT) . It is a real tiddler, and below your usual limit, but it seems still interesting to me. However the short report today is almost indecipherable. I hold a few already, and am wondering whether to add. The figures are largely up, but a previous takeover is now being handed back. The result has been a 15% drop.
B

(I should add my previous problems with logging in were due to my lap top. Thanks all round for the help given).
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Funderstruck 17th Jun '14 2 of 7
3

Paul, Thanks for the pointer to the context Menu on the current stock being viewed ;for past Stock Report snapshots--extremely useful as you've demonstrated.

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kenobi 17th Jun '14 3 of 7
2

Completely agreed re PE, its their job to sell at a premium having picked all the low hanging fruit, and painted the company in it's best light. The story of how the management behaved previously just makes it completely uninvestible. Thanks for the warning,

Really like the new ish layout with the company headings which makes it easier to skip something you're not interested in (not that there's anything you write that I'm not interested in ! but hypothetically good to have the option !)

hope like is treating you well,

K

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kevanp 17th Jun '14 4 of 7
2

Paul, that drop-down menu on the print button is a bit of an Easter egg! Never knew that facility was there. Very useful. Thanks for the tip.

Best, Kevan

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FREng 17th Jun '14 5 of 7
1

Paul. Any chance you could look at Red24 (LON:REDT) again this year, as you did last year. It has reported today and the market has marked it down, for no good reason that I can see.

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Montyville2 18th Jun '14 6 of 7
2

Totally agee with SRT, all jam tomorrow! I held for a number of years and was in profit for a while but sold out over a year ago.... The story always sounds plausible but never delivers. Nevertheless good luck to holders.

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Mark Carter 18th Jun '14 7 of 7
1

In reply to post #84094

Completely agree on Software Radio Technology (LON:SRT).

I had heard of them a couple of years ago through a Motley Fool write-up. The story was very exciting, and I almost bought. Good job I didn't. Given the regulatory requirements, this should have been like taking candy from a baby.

Time has rolled on, and I see that nothing had changed. The company promises much, and delivers little. Management credibility is non-existent, as far as I'm concerned.

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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