Small Cap Value Report (20 Apr 2015) - MAR, WOR, TRI, TRK

Monday, Apr 20 2015 by

Good morning!

UK Investor Show

I thoroughly enjoyed the UK Investor Show on Saturday. As always, Mark Slater's insights were absolutely superb, he talks unadulterated common sense. Another highlight for me was the recorded video from Nigel Wray, who was unable to attend in person unfortunately. He is another brilliant investor who is full of wisdom & experience.

I enjoyed the perspectives from the "bear pit" too. Bears don't always get it right, but if they turn on a company where I hold a long position, then I sit up and take notice. They're more often right than wrong, and bears are usually the most experienced & thorough (in their research) investors, so fighting them on bulletin boards is a pointless exercise, when we should instead be listening carefully to what they say.

The Stockopedia session with Ed was so popular that four rooms had to be amalgamated into one, and even then there were people standing & sitting on the floor! A few people got up to leave when I took over, but thankfully not too many lol!

Dozens of readers of this blog chatted to me, as I was wandering around the venue. Almost every conversation started with the words, "Hello Paul, I read your blog every day..."! I was thrilled to get such positive feedback, with lots of people saying how useful they find these reports.

One chap made a good point, he said that to save time, he skips to the "My opinion" paragraph in every section, and if I sound positive on a stock, then and only then does he read the rest of that section. What a good time-saving idea, for those of you that are very busy, so thought I would pass that idea on to you here.

It's such a pity the investing world is so male-dominated. I wonder what we can do to encourage more ladies to get involved too? Females apparently make better investors, due to being a bit more cautious than men, and less prone to taking a gung-ho attitude towards risk, that is the undoing of many of us from time to time. A friend was trying to point out someone they knew in the crowd to me, saying "He's the older gentleman over there, with grey hair". I responded, "That doesn't narrow it down much! Everyone in the room fits that description!"

I thought the bearish comments against

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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 »

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46 Comments on this Article show/hide all

Bezhe 20th Apr '15 27 of 46

Reading Paul's comments on Tungsten (LON:TUNG) reminds me of the comments attributed to JM Keynes: "When the facts change, I change my mind. What do you do, sir?" I would prefer to see Paul change his views based on new evidence, rather than trying to massage the facts to fit the unchanged opinion.

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nevilleaustin 20th Apr '15 28 of 46

Hi Paul,

'I wonder what we can do to encourage more ladies to get involved too? Females apparently make better investors' !
Sadly from my bitter experience they do tend to spend the money!, as I watch the estranged walking off into the sunset with her 300 pairs of shoes and her 19 suitcases packed for her next cruise.

Paul I do remember your wonderful words of wisdom to me, "don't worry Neville, think of divorce in the same way as CAPEX, you will be better off in the end"

I have been a bit reclusive lately, but I am looking forward to catching up with you Paul and all my investor friends at the various events.


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DanielRudd 20th Apr '15 29 of 46

What minimum free float % will you be using going forward?

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Laughton 20th Apr '15 30 of 46

Re TRIFAST which is a big holding for me - good media interview with Executive Chairman which is even more positive than the RNS. Encouraging (to me anyway).

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Splode 20th Apr '15 31 of 46

I am apparently the only member who thought mikehunt's comments were appropriate. They attracted useful clarification from Paul on his frequency of trading in some circumstances and the temporary nature of opinions. However, I thought some of the comments in this space on mikehunt's comments were not constructive.

(I wonder whether the country might run better if politicians were allowed to admit to changing their minds when facts change.)

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AstonGirl 20th Apr '15 32 of 46

I wholeheartedly concur with PP's wanting to see more female investors. I bought my first shares at the age of 12, encouraged by my father, after a modest premium bond win & continued to invest in equities for the next 30 years.
I now have 3 children & have started equity portfolios for all 3 with modest monthly contributions. All 3 look at their portfolios & discuss the companies with me; hopefully I am starting them off on a successful interest which will empower them through their lives. I believe that financial education & encouragement of girls (& boys) in secondary school will be vital to empower the next generation & produce successful investors.
As to attending trade shows/ investor forums, I would very much like to go but with school age children& full-time work, this is very hard to arrange so please keep up the updates

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Paul Scott 20th Apr '15 33 of 46

In reply to post #97121

Hi Splode,

It's absolutely fine for any reader to ask me to clarify particular points.

What is NOT fine is to open the questioning by accusing me of lying, on the basis of taking 2 + 2 = 5, which is basically what the reader above did today.

He wouldn't have phrased it like that if asking me in person, so why is it OK to adopt such an approach when hiding behind a fake name, and the safety of an internet connection?

As you know, I'm always happy to clarify anything, so people only need to ask. It makes life a lot more pleasant however, if people ask first, rather than shooting me down with false accusations, sprinkling in some completely invented statements of their own about my portfolio, quoting selectively from two reports here, whilst conveniently ignoring the report in the middle which disproved their accusations.

If everyone behaved like that I wouldn't bother writing any more reports. Thankfully however, the vast majority don't take that approach.

Regards, Paul.

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Paul Scott 20th Apr '15 34 of 46

In reply to post #97115

Hi Neville,

Good to hear from you & sorry about your problems.

I've been thinking about this a bit more, and in my view perhaps it's best to regard divorce as a major restructuring, with a large one-off exceptional charge to the P&L. Whilst painful, this kitchen sinking will leave your organisation more efficient, and with much lower cash burn in future years! ;-)

Regards, Paul.

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nevilleaustin 20th Apr '15 35 of 46

In reply to post #97129

Absolutely Paul,

I am very positive, and I am seeing this as a fantastic new opportunity to create the life that I want to live. I can now really focus on several long term ambitious projects that were fading away from me.

So the portfolio will be much smaller, but like you proved starting all over again after 2008, I will not give up either.

Kind regards, Neville

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Paul Scott 20th Apr '15 36 of 46

In reply to post #97135

Well done Neville, and as I've said to you before, your positive outlook on life is inspiring to people who know you.

In my experience, the key to rebuilding a portfolio is keeping living costs low. My portfolio is still nowhere near the size it was in 2008, but I hardly have to withdraw anything for day-to-day living costs, having built up other sources of income.

Also, living a more normal life, rather than an extravagant/flamboyant lifestyle is actually more peaceful and pleasant in some ways, I've found. You don't have to worry about impressing anyone, and if the bills are only a small amount each month, then you can sit back & relax knowing that there's ample money to cover outgoings, even if the portfolio is not huge.

In that set of circumstances, I think it's easier to make mostly good investing decisions too. Whereas if you have humungous monthly outgoings, then the pressure is on to make a profit all the time from the stock market, which of course eventually tends to go wrong.

Regards, Paul.

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Paul Scott 20th Apr '15 37 of 46

In reply to post #97109

Hi Beginner,

That's very interesting scuttlebutt about Mitie (LON:MTO) thank you.

I shouldn't really talk about it here, as I did open a short today.

Regards, Paul.

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davidtalbo 20th Apr '15 38 of 46

In reply to post #97140

Hi Paul

Further to your comments about MITIE " I shouldn't really talk about it here, as I did open a short today", I also refer to my earlier comment above about your daily report "In my view, this daily report has only one shortcoming and that is that he is not allowed to comment on shares in which he is short. Note to Ed Croft: address this issue, please."

Unless Ed has some moral objection to shorting (and, if so, why are there short screens on Stockopedia?) I really do not see the reason why you are not allowed to comment on shares in which you are short. Of course, this ban does lead to gaps in your reporting on Stockopedia which persons who do not know the situation could misconstrue. For example your unavoidable, intermittent past history on commenting on Quindell here, according to whether or not you are short at the time.

You are allowed to comment positively on shares in which you are long, and you are allowed to comment negatively or positively on shares in which you do not have a position. What is the logic, therefore, on your not being allowed to comment on shares in which you have a short position?

Clearly, these are rhetorical questions as far as you are concerned: they are addressed to Ed.

Best wishes

David Talbot

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Paul Scott 20th Apr '15 39 of 46

In reply to post #97143

Hi David,

I take on board your points, but it's down to basic economics - there are I'm afraid a relatively small number of very naive subscribers who have threatened to cancel their subs here when I used to mention stocks that I was short of. They tried to get me sacked too - obviously there was never any chance of that happening, as I'm totally fabulous!

So we had to be commercial about it, and after all, I don't want to undermine the site by driving away subscribers. I could have just not disclosed when I was short of a stock, but I don't do things that way - everything always has to be 100% transparent - even if, as today, I might get the detail/timings slightly wrong on disclosures relating to past transactions (as done from memory to save time), the broad thrust will always be correct.

So a balance was agreed whereby I agreed to not talk about stocks where I have short positions. Instead, I just talk about them on Twitter, where of course I'm free to say anything I like.

Ed has to strike a balance between letting writers say what they want (and he's brilliant at that, I'm given complete editorial freedom, which is wonderful!), but also being commercial about the site, by not having writers drive away subscribers.

Generally I think people totally understand that the reservations I express about many stocks are usually correct. But once I actually short them, I have to stop discussing them here. That's fine, I can live with that. But I do fully appreciate your point that, for more sophisticated investors, it's annoying that things have to be done this way to appease the type of novice investors who only ever want to hear positive opinions on their favourite stocks, and actively try to shut down negative views from commentators.

Regards, Paul.

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davidtalbo 20th Apr '15 40 of 46

In reply to post #97145

Hi Paul

Thank you for the explanation, although I still think it a great pity that a few small-minded subscribers are allowed to circumscribe your comments on Stockopedia, to the detriment of what I am sure are the overwhelming majority who want your unfettered opinions at all times.

I quite agree that you are "totally fabulous", although it is a good job I did not add modesty, when describing your qualities in an earlier post.

Keep up your excellent work; it is very much appreciated.

Best wishes

David Talbot

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Paul Scott 20th Apr '15 41 of 46

In reply to post #97146

Thanks David,

I recognise your name - are you the same David Talbot that I was chatting to about my plans to do a Cheshire investor evening, at the investor show on Sat afternoon? If so, it was good to meet you.

These investor shows are becoming very social, especially around the Stockopedia stand & presentations. Many, maybe most (?) of the people who gather & interact with us at these events are already subscribers, and are very keen to hear Ed explaining features of the site, and how best to use it. I know you can get much of the data elsewhere, sometimes free, but in my view the real value of this site is that it presents things in such a way that you can very quickly home in on good stocks.

Mark Slater used Company REFS to illustrate his points, and I couldn't believe how old fashioned and user-unfriendly it looked in comparison. Company REFS is only good if you have used it for a long time, and know where to look for everything, but in my view Stockopedia is far better - the colour-coded graphics just leap out at me when I find a good stock, as my subconscious knows exactly what to look for (in a nutshell, high quality scores, with low valuation scores, especially PER and divi yield), plus a good progression of divi payments, low debt or net cash, little to no new shares issued in last 6 years, positive current ratio, reasonable PTBV, decent liquidity, and a few other things. Then I can check the Annual Report and RNS for the other things I look for, e.g. hopefully no pension deficit, reasonable mgt shareholdings, sensible Insti shareholders with >3% holdings, reasonable share options, strong outlook statements, a track record of delivering in line or above market expectations, etc.

Maybe Stockopedia and Mello could join forces, to create the Rolls Royce, or maybe the Jaguar, of small cap investor shows in future, to supplement the existing offerings? The more the merrier, in my view. With investor shows, I usually listen to the key talks, do a talk or two of my own if I'm invited to do so, then slope off to the pub with one or two other reprobates by mid-afternoon!

Regards, Paul.

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davidtalbo 20th Apr '15 42 of 46

Hi Paul

No Paul, that must have been a different David Talbot, although I did manage to grab a quick word, with others, when you were surrounded at the UK Investor Show.

I totally agree with your assessment of the usefulness of the many superior features Stockopedia has (I wonder now how I ever managed without it) and your other ideas.

Best wishes

David Talbot

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Paul Scott 20th Apr '15 43 of 46

In reply to post #97152

Hi David,

Yes, I was pretty sure we'd chatted on Saturday, so my apologies for forgetting the exact subject matter, I was rather inundated, as you alluded to! Still, it's great to meet readers of the blog, I really enjoy it, and everyone is so nice in person - even people I've crossed swords with online are always charming in person - and there's usually mutual embarrassment, wracking our brains to try to remember how rude we'd actually been to each other online, and apologising!

I can only recall one person who was obnoxious in person, as well as online, and that was about 10 years ago at a Motley Fool social. I just smiled & said nice to meet you, and walked off. No idea who he was.

Regards, Paul.

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jonesj 21st Apr '15 44 of 46

In reply to post #97108

The Torotrak – SFTV
The Torotrak system has evolved from work done by the British government shortly after the second world war. One of the individuals involved was Forbes Perry a British engineer who was the motivating force behind this work and developed the Perbury Variator in parallel with this work.

Says it all. When exactly will the profits arrive?

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purpleski 22nd Apr '15 45 of 46

In reply to post #97222


I don't understand the comment!:-)

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pkarnezis 25th Apr '15 46 of 46

In reply to post #97111

23.59: "It's a piece of sh**, isn't it?"

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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 on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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