Small Cap Value Report (20 Aug) - FWEB, CHRT, LID, HVN, VP.

Tuesday, Aug 20 2013 by

Good morning! The takeover bids are coming thick and fast this week. Yesterday we had one of my favourite stocks, Kentz announce a potential takeover bid, with the shares now 50% above the price they were flagged here (no less than three times!) as being good value, on 3 May, 17 May, and 26 Jun. Also, as "nswier" pointed out in comment 8 of 17 after yesterday's report;


On Kentz, chalk up another result for Stockopedia's own screen of screens. It has been near the top of that screen for a good few months now.




Well, it gets better, as we've had another takeover bid today! This time on Fiberweb (LON:FWEB). I spotted what good value the shares were at 75.5p on 2 Aug, and devoted most of that day's report to reviewing the company's interim results, concluding that;

"I think this looks an attractively-priced share with good value characteristics, of a healthy dividend yield, reasonable PER, and a strong Balance Sheet. It probably won't shoot the lights out, as it looks a mature, and fairly boring business, but should benefit from the economic cycle improving in its main markets."


This morning Fiberweb announce that Polymer Group Inc. is close to tabling a 97.5p cash bid for them, with shareholders also receiving the 1.2p interim dividend on  top. I think that's a fairly tight offer, as the shares look worth about 100p just putting it on a reasonable PER. 100p translates into 15.9 times 2013 forecast earnings, and 13.5 times 2014 consensus forecast earnings.

So it's certainly not generous, and I reckon there's a chance that a higher competing offer could come along, so personally I am minded to hold my shares, as they are bound to be marked up today to around the 97.5p level. Although Fiberweb's Board say they would recommend the offer to shareholders if it is formally made (it's only a potential offer at the moment), which surprises me, as I would prefer management to seek the highest possible bid for the company, rather than recommending the first, not very generous offer that comes along.

On the other hand, "a bird in the hand", and all that. So I reserve my right to change my mind on this, and might decide to…

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Cohort plc is a holding company. The Company's segments include MASS, MCL, SCS and SEA. Its subsidiaries include Systems Consultants Services Limited (SCS) and SEA (Group) Ltd. (SEA). Its sub-subsidiaries include MASS Consultants Limited (MASS) and Marlborough Communications Limited (MCL). SCS is a defense consultancy. SEA is an electronic systems and software company operating in the defense, transport and offshore energy markets. MASS is a specialist defense and technology business, focused on electronic warfare, information systems and cyber security. MCL is engaged in sourcing, design, integration and support of communications and surveillance technology for the defense and security markets. It provides a range of services and products for the United Kingdom, Portugal and international customers in defense and related markets. The Company operates in the United Kingdom, other European Community (EC) countries, Asia Pacific, and North and South America. more »

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LiDCO Group Plc is a United Kingdom-based supplier of non-invasive and minimally invasive hemodynamic monitoring equipment to hospitals. The Company is engaged in the development, manufacture and sale of cardiac monitoring equipment. It operates in the segment of supply of monitors, consumables and support services associated with the use of its cardiac monitoring equipment. The Company's products include LiDCOplus, a computer-based platform monitor; LiDCOrapid, a cardiac output monitor; LiDCOview, a graphical display, and LiDCOunity, which is its hemodynamic monitor. Its LiDCOrapid is designed for multi-parameter monitoring of both depth of anesthesia and fluids. Its products are used in the treatment of high-risk patients in both critical care units and in the operating theatre. They monitor the amount of blood flowing around the body helping clinicians and nurses to ensure that organs are kept perfused with oxygenated blood by the adjustment of supportive fluid and drugs. more »

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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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