Small Cap Value Report (21 Jun) - VLK, CUP, CRA, CTG, FLYB

Good morning! Am running a bit late today, apologies. The deadline is 11 a.m., as that's when our automatic email goes out, with a link to this report. If you haven't added your email to our list yet, then please feel free using this link.

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It's encouraging to see the Executive Chairman and FD at Vislink (LON:VLK) dip into their own pockets to buy some shares in the company. The quantities at £25k and £30k respectively are reasonably meaningful, although neither Director had any meaningful amount of shares previously.A group of us met with these two Directors last week, and John Rosier has done a useful write up here (see comment 4 of 4 below the article). I hold some VLK. My view is that the company has interesting, market leading products, and looks cheap especially when you strip out the cash on its balance sheet.

 

 

Controversial online dating group Cupid (LON:CUP) has issued a cleverly worded AGM statement, where they appear to tacitly admit to sharp practices, by talking about improvements that have been made following a financial and legal review of their operations. This is all nonsense. Directors of companies know better than anyone what goes on in their company, because they give staff their instructions!

I've heard enough about this company to put it on my personal investing black list - i.e. nothing would make me buy the shares, at virtually any price. Unlike yesterday, I'm not going to change my mind within 5 minutes and buy some!

 

 

Webinar

For anyone who is free on Weds at 12:30 pm, I have been talked into doing my first Webinar here on Stockopedia, with Ed. It's an online audio/visual presentation, showing how I use the StockReports here to quickly ascertain whether a company is worth investing in.

There are some places left, but it's filling up fast, so I hope some of you can listen in & ask questions (by text) on the day, and that you will find it useful. Click here for more info.

 

 

 

 It's really very quiet for results today. There has been a bit of Director buying at Corac (LON:CRA), with the CEO and FD spending £23.5k and £4.5k respectively. Not huge, but it seems to have helped sentiment. Their blue sky project (which supposedly increases flow from oil wells) sounds interesting, but has been a bottomless pit for shareholders money over many years now. So it's a big leap of faith to expect it to pay off now, when it hasn't done so far. Also, it worries me that they bolted on some unrelated acquisitions to generate turnover & cashflow, as that tends to make you wonder whether management are lining up a Plan B in case they get nowhere with Plan A?

I just don't know enough about their technology to make an informed judgment on whether it is likely to succeed or not.

 

 

Stock-taking company Christie (LON:CTG) has issued a slightly wobbly AGM statement. It talks about growth opportunities in Europe, but the final paragraph entitled "outlook" would make me nervous if I held. They say that Q1 was slow, and they are expecting profits to be H2 weighted. In my experience that usually means that another profits warning is very likely, as the expected upturn usually doesn't happen with most companies.

It doesn't look a very good company, and has struggled to get into the black in the last three years, so I cannot see any reason to invest here, it just looks a very marginal business.

 

 

 Finally, I've had a quick look at the results from airline Flybe (LON:FLYB). It's a substantial business, with turnover of £781m. However, on any measure (and lots of different ones are presented) they are trading badly. The most ridiculous profit measure they list is EBITDA before aircraft rental costs! Since aircraft rental costs are their absolutely core expense without which they don't have a business, it is absurd to try to construct a profit measure which ignores these costs!

The balance sheet looks precarious to me, so I would expect it to either go bust, or have to do a discounted fund-raising. So much too high risk for my tastes.

 

 

Right, that's me done for today, and indeed this week.

Have a smashing weekend, and see you as usual from 8 a.m. on Monday.

Regards, Paul.

(of the companies mentioned today, Paul has a long position in VLK, and no short positions)