Small Cap Value Report (19 Oct 2016) - MOTR, FOXT, HOTC, ONEV

Wednesday, Oct 19 2016 by
70

Good morning!

CEO/FD Interviews

I've decided it's time to do another batch of audio interviews, with CEO/FDs of interesting small caps. I'm generally doing them free now, as I think charging a company creates a conflict of interest. Also, as questions are sourced from the private investor community, then the questions are genuinely independent. All of which makes for interesting & unique interviews.

I'll usually (but not always) hold a position in the companies concerned, or at least will be considering taking a position. Otherwise the company wouldn't be of interest to me, and hence I wouldn't want to waste mine or their time doing an interview in the first place.

The interviews are a good way for me to learn more about a company, so why not publish it, and let everyone listen in? People seem to like them, so I'll try to find the time to do more of them.


Begbies Traynor (BEG)

(at the time of writing, I hold a long position in this company)

My next interview is with Ric Traynor, of £BEG . This is an interesting one, as it's the UK market's only listed pure play insolvency practitioner. I am wondering whether sterling weakness, Living Wage, and various other headwinds might tip the UK into recession next year?

With this in mind, I thought that Begbies could be a good hedge for my longs, as theoretically it should benefit from a recession. Although that's what people thought in 2008, but ultra-low interest rates prevented the wave of insolvencies that was expected.

I'm looking forward to asking Mr Traynor what he thinks about the outlook for the UK economy, impact of Brexit/sterling, etc. Should be interesting. So I need some questions please!

This is the link for submitting your question for Begbies, through an online form, which collates them all into one place for me, saving lots of time. The deadline for questions is midnight of 23 Oct 2016, as I'm conducting the interview on the 24th. Please don't put questions in the comments section here, as that messes up my system.


Staffline (STAF)

(at the time of writing, I hold a long position in this share)

This interview is a bit further out - I'm interviewing Andy Hogarth, CEO of Staffline, on 9 Nov 2016. So please submit your questions (deadline midnight of 8 Nov 2016) using the form here.

Staffline shares have sold off heavily, and now look…

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Motorpoint Group plc is an independent vehicle retailer in the United Kingdom. The Company's principal business is the sale of vehicles, of which are approximately two years old and which have covered over 15,000 miles. The Company sells vehicles from brands representing vehicle sales in the United Kingdom, with models from Ford, Vauxhall, Volkswagen, Nissan, Hyundai, Audi and BMW. The Company operates from over 10 retail sites across the United Kingdom. The Company has a national contact-center dealing with online enquiries. In addition to sales of vehicles, the Company operates Auction4Cars.com, a business to business online auction platform for vehicles. The Company also offers ancillary products to customers, including customer finance packages, vehicle guarantees, insurance products and vehicle protection treatments. more »

LSE Price
224.2p
Change
-1.7%
Mkt Cap (£m)
222.9
P/E (fwd)
11.3
Yield (fwd)
3.4

Foxtons Group plc is a United Kingdom-based company, which operates as an estate agent. The Company and its subsidiaries are engaged in the provision of services to the residential property market in the United Kingdom. It operates through three segments: Sales, Lettings and Mortgage Broking. The Sales segment generates commission on sales of residential property. The Lettings segment earns fees from the letting and management of residential properties and income from interest earned on tenants' deposits. The Mortgage Broking segment receives commission from the arrangement of mortgages and related products under contracts with financial service providers and receives administration fees from clients. The Company offers its residential property sales and lettings services through its network of approximately 60 branches. It offers independent mortgage advice and other related services through Alexander Hall. It offers corporate services, property management and other services. more »

LSE Price
55.7p
Change
0.2%
Mkt Cap (£m)
153
P/E (fwd)
1,931
Yield (fwd)
0.8

Hotel Chocolat Group plc is a chocolate company. The Company is engaged in manufacturing and retailing of chocolate in the United Kingdom and overseas. The Company operates in three areas: the United Kingdom, Europe and Rest of World. The Company offers chocolates under the brand, Hotel Chocolat. The Company sells its chocolate direct to customers though subscription, online and its approximately 83 stores. The Company's product ranges include self purchase, gift and occasion, rare and vintage, and other. Its product types include boxed chocolates, luxury boxed chocolates slabs and batons, enrobed fruit and nuts, chocolate hampers, ribbon bags, wine and spirits, hot chocolate and cocoa cuisine. Its chocolate types include dark, milk, white, bean to bar, boozy, caramel, cocoa gin, coffee, fruity, marzipan, mint, nut, patisserie, praline and truffles. The Company owns a cocoa plantation in Saint Lucia called the Rabot Estate. more »

LSE Price
334p
Change
1.2%
Mkt Cap (£m)
372.4
P/E (fwd)
31.7
Yield (fwd)
0.7



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


37 Comments on this Article show/hide all

stpalm 19th Oct '16 1 of 37
2

Any chance you can cast your eye over lrd profit warning Paul? not sure if it's above your threshold though.

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rmillaree 19th Oct '16 2 of 37
5

Paul
" I think there's a strong argument for introducing deferred fees for advisers, so that maybe half their remuneration could be held back in escrow, and only released at the end of year 1, and year 2, providing there have been no profit warnings?"

Excellent common sense suggestion, therefore no chance of this happening from the "illuminati" - if this was in place i wonder what the stats would be with regard to profit warnings turning up just after the two year period :) ?

I was recently looking at a not so long ago listed chocolate retailer, everything looked good but i couldn't help getting the feeling that the pre-listing numbers were so good that the advisors had been using the same asthma medication as Sir Bradley - although that company seemed to be doing ok trading wise since listing so far.










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underscored 19th Oct '16 3 of 37

Hi Paul, I thought Hotel Chocolat (LON:HOTC) looked interesting this morning. Very richly priced, worthy of the valuation?

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shanklin100 19th Oct '16 4 of 37
2

Hi Paul

An interview with the G4M CE would obviously be of interest to many of us.

You mentioned yesterday that you will be "meeting management this Thursday." Do you expect to be posting your thoughts on this meeting please?

Thank you

Martin

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tomps3 19th Oct '16 5 of 37
19

Morning Paul - great that you're doing some more interviews. I look forward to listening in due course.

In the same vein, we/I (piworld.co.uk) have just interviewed Bioventix (LON:BVXP), Peter Harrison, CEO. It aims to give a good update on FY results, and an insight to the revenue transition from the expiring NT proBNP licence, to the Troponin licence with Siemens.

http://www.piworld.co.uk/bioventix-bvxp

(The interview is second, the first video is a brief intro to Bioventix c.6 mins. Final video BVXP at ShareSoc, June).

Here's an outline of the interview:

Peter Harrison, CEO, talks through the latest FY results 30 June 2016 with @tamzinpiworld. He expands on the success of Vitamin D and its future prospects, together with the positive impact of foreign exchange.

He goes on to talk about the NT proBNP licence, which comes to an end July 2017, with all revenue (c.£750k) being lost from August 2017 onwards. Peter is confident Troponin, will launch at some point in 2017, based on all the updates given by Siemens, although timing is in Siemen’s hand. He has estimated July 2017 to start roll-out, it being the mid point of the year. He mentions the initial and on-going revenue expectations for Troponin.

Peter briefly discusses other antibodies already producing revenue, and future developments for the medium term. Cardinor, Norway is not discussed, since this is unlikely to result in revenues over the near term.

Peter answers questions on a few potential threats, including consolidation of customers and any new technologies that could disrupt their market.

Finally, he talks about staff motivation, and financial reward.

Hope that's of interest to everyone, and you don't mind me adding here.

Tamzin

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tads 19th Oct '16 6 of 37
2

In reply to post #155155

Excellent interview with Peter Harrison. They have a great history of under promising and over delivering. Lets hope it continues.

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Michael Billingham 19th Oct '16 7 of 37

Anybody had thoughts on today's announced take-over of TD Direct Investing by the private company Interactive Investor plc together with the backing of the private investment firm, J C Flowers?

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purpleski 19th Oct '16 8 of 37
2

In reply to post #155173

My only thoughts are that I am a bit hacked off!! Got an email yesterday.

I was initially with E*Trade which was then sold (or whatever) to TD and now TD is sold to Interactive Investor.

I assume that TD clients will be in time transferred over to III's platform.

My main concern is one of security of my cash (I dont think I have to be concerned about my shareholdings). Currently I have a fair chunk of cash is it safe protected? Who owns III. Will have to do some research.

I have wife's ISA and my son's JISA with HL and am thinking of transferring to HL on the assumption that they won't change?

Does anybody use III and have an opinion?

Perhaps this discussion should be posted elsewhere on Stocko?

Thanks

Michael.

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Damien84 19th Oct '16 9 of 37
9

Paul

Always love reading you cut through crap like a lightsaber through ice-cream when picking apart company reports. Ruthless and as honest as ever. You provide us small retail investors a top notch service.

Thumbs up from me

:)

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Fangorn 19th Oct '16 10 of 37

In reply to post #155149

Superb chocolates though. Beats the pants off anything in high street.

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Fangorn 19th Oct '16 11 of 37
2

In reply to post #155185

Similar concerns Purpleski,

Security of cash / ultimately who owns III. Don't know enough about them. They have a bulltin board inhabited by loons don't they which is enough to convern in its own right.

In similar fashion to yourself I hold SIPP/ISa at HL so temopted to just transfer everything to them..not surte HL as flexibile on foreign stocks holdings though -eg Aussie/Canadian/US as TD.

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dustyie 19th Oct '16 12 of 37

Hi Paul ,
Softcat results out this morning , announce a special div. of 28 million , no debt , It looks very promising to me . Would like to hear you opinion of the results ,
thank you

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bobo 19th Oct '16 13 of 37

ONEV, I have tried to run a number of businesses with mission critical one off sales and un certain start dates. They need to have fantastic salemen, hoggins of cash and calm share holders. I'd not have it as publically owned share.

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Michael Billingham 19th Oct '16 14 of 37
1

In reply to purpleski and Fangorn.

Speaking with TD this morning, I'm advised that the take-over is under review by the regulators but likely to go ahead. I'm also told that TD do not charge a fee for the transfer of portfolios.

Being a quoted company, HL would seem a better option. At least one would have some vision.

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paraic84 19th Oct '16 15 of 37
3

Paul you report on Fairpoint (LON:FRP) occasionally. One of the significant issues that led to Fairpoint (LON:FRP) 's share price being knocked was a Govt announcement to consult on reforms to payouts for whiplash injuries. According to media reports over the last few days this has now been shelved by the Government https://www.solicitorsjournal.com/news/201610/insurers-cry-foul-moj-rows-back-whiplash-reform The Government haven't confirmed publicly yet but based on my experience (I work in PR and political lobbying) this is the Government briefing in an unpopular u-turn via the press so it doesn't have to issue an official announcement more widely. I suspect the Ministry of Justice is trying to avoid any difficult issues to concentrate on Brexit.

The proposed consultation also hit NAHL (LON:NAH) massively so could be an interesting play there too (although NAHL (LON:NAH) are operating in a space which could easily be affected by any changes to NHS litigation which the Government are surely keen to clamp down on given the high costs).

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JohnEustace 19th Oct '16 16 of 37

In reply to post #155215

They seem to be systematically going through every Osborne initiative and cancelling it or occasionally as with Help to Buy declaring it a great success that no longer needs to be continued - one of Paraic's colleagues at work there methinks.
I read that they have also abandoned the idea to create a secondary annuity market because the industry didn't want to touch it.

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Fangorn 19th Oct '16 17 of 37

Cheers for the comment Michael.
I'm probably going to move to HL although I'm a tad concerned about all eggs in one basket (in addition to the International Shares issues)

Will give HL a call tomorrow...

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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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