Small Cap Value Report (23 Oct 2015) - GBO, AFN, NAR

Sunday, Oct 25 2015 by

Good evening (being written on Sunday evening).

Apologies for this report being 2 days late. I want to get it done before the new week starts, so that I can start the week up-to-date, and with a clear conscience. Plus, how could I not comment on £GBO shares being suspended, after publication of a dossier alleging that 60% of its sales may be fictitious?!

Globo (LON:GBO)

Share price: Shares suspended
No. shares: 373.7m
Market cap: £105.6m (based on c.28.25p price at time of suspension)

(at the time of writing I have a short position in this share)

Shares suspended - under Stockopedia's editorial policy, I'm not supposed to comment on shares where I hold a personal short position. However, since the shares are currently suspended, and we don't know when they are coming back from suspension (if at all), then it's not a stock which can currently be traded. Therefore I think it's perfectly reasonable for me to comment on this.

In any case, technically I don't personally hold the short position - it's in a family member's spread betting account, but I always over-disclose, because I think it's best to be completely open, and tell people all mine & my family's positions as if they were mine.

As regulars here will know, Globo has been a bargepole stock for me, for nearly 3 years now, I've been warning readers here in numerous reports that there are many red flags with the company's accounts, and its behaviour. Put those things together, and I've been virtually certain that this thing was very badly wrong, and would probably end in disaster.

We don't know for certain yet, but it's looking increasingly likely that my suspicions were correct.

A small New York based Hedge Fund, called Quintessential Capital Management ("QCM") seems to have issued its highly critical report on Globo via ShareProphets. I've googled it, and can't find the report anywhere else, not even on QCM's own website, which is visually pleasing, but almost entirely devoid of content. I saved a copy of the report onto my hard drive, just in case the report is pulled from the web.

I've read the full report twice now. My reaction is similar to others, in that it appears a little amateurish in parts, seems to make some factual errors - not good when you're trying to establish credibility. The little details…

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Northamber PLC is a United Kingdom-based company engaged in supplying computer hardware, computer printers and peripheral products, computer telephony products and other electronic transmission equipment. The Company's Wholesale business provides a wholesale function for information technology (IT) products. The Company's Solutions business unit focuses on a consultative approach to IT technologies. Its Retail business unit focuses on providing consumer goods to national retailers. It offers products, such as personal computers, tablets, smart phones and monitors. It offers hard disks, memory cards and optical media. It also offers a range of cables. The Company provides a range of infrastructure solutions. It offers networking and security solutions. It offers software solutions, such as design and publishing, cloud, desktop software, security software, server software and licensing. It also offers home control solutions and conference phones. more »

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

32 Comments on this Article show/hide all

bsharman 26th Oct '15 13 of 32

Brilliant work Paul!

As an aside - a couple of years ago I attended a presentation by the CEO of Globo (LON:GBO). He knew that the allotted time was for a 20 minute presentation and 10 minutes of Q&A's. He deliberately rambled on and on, without taking a pause and knowing full well that he was eating into the Q&A's. In the end there was (surprisingly) no time for questions. This was a MASSIVE red flag and i therefore avoided the company like the plague.

Thanks for all your hard work and dedication - I'll try and think up a Gotham City type name for you!

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Cisk 26th Oct '15 14 of 32

sounds like Papadimitrakopoulos should be arrested. And to sell that many shares just before the report was published and shares suspended - he probably got wind of it and knew the game was up.

But knowing how the city works he'll probably set up another house of cards and lure in investors / gamblers.

Paul, echo your sentiments re: ADVFN. I only use them for news notification now (seem to be quicker than investigate on many occasions) and look at lightly-populated BBs. And the amount of morons on their site is, as you say, staggering.

As for TMF, I once paid for a membership for a limited period. Their stock tips were a joke and every single post wanted you to download some crummy report that a GCSE student could have put together.

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dangersimpson 26th Oct '15 15 of 32

In reply to post #109269

The CEO stock sales to me suggest that this could well be a zero (or close to one) - why sell down so agressively if the cash balances were real, unencumbered and you could generate a decent return by an orderly wind up of the business, selling the legitimate subsiduries.

I would have thought it would be much better to have £10m in the bank and everyone think you were a bad business man than have £15m in the bank (52m sales x c30p) and have to publically admit to 'falsification of data and the misrepresentation of the Company's financial situation'.

Book: Excellent Investing: How to Build a Winning Portfolio
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pka 26th Oct '15 16 of 32

Paul, Your insightful comments on Globo over the years have been proved to be right today. Fantastic work!

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CMWilliamson 26th Oct '15 17 of 32

No wonder Canaccord Genuity has resigned as joint broker for Globo (LON:GBO). These brokers really need to get a grip - not least to recognise the reputational damage they suffer when blow-ups such as this occur. Makes me wonder about my Cenkos Securities (LON:CNKS) holding!


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Ramridge 26th Oct '15 18 of 32

Excellent work; Paul. Fully vindicated.

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pkarnezis 26th Oct '15 19 of 32

Re ADVFN (LON:AFN) - Don't knock it, Paul, its forum is an excellent depression support group. It's what I read it for.

"Many people tell us they feel ashamed about being invested in Tungsten (LON:TUNG)," says RagingBull. "When they meet other people with depression and realise that it's common and can happen to anyone, it can really help their self-esteem."

Whether ADVFN (LON:AFN) is a good investment that's another matter. Maybe they could ask the NHS for funding.

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janebolacha 26th Oct '15 20 of 32

Since Globo were trading in the US and the executive management seem to have been based there, I hope that the US authorities get involved and mete out appropriate justice over there, something that might just set some sort of example for the gutless (cough) "regulators" in London who seem to punish no-one, no matter what they do or how much they cheat and deceive investors.

PS:  One reaction here from someone on the iii bb says it all about the gullibility of pi's and the need to be sceptical of company managements:

"I really thought Costis was convincing"

(It also confirms my rule of being wary wherever pi's refer to CEO's by their first names!)

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pka 26th Oct '15 21 of 32

In reply to post #109269

janebolocha wrote: "Another example of the wonders of the LSE's much-vaunted light-touch regulation!"


And our esteemed Chancellor, George Osborne, is encouraging more Chinese companies to list on AIM! That will certainly boost British exports - of British investors' money to China, in return for share certificates, most of which in time will prove to be worthless if past experience (Naibu, Camkids, etc) is anything to go by.

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Edward Croft 26th Oct '15 22 of 32

What a farce this has been. That RNS is one of the most shameful I have ever read.

However, at the Board meeting, Costis Papadimitrakopoulos the CEO of the Group brought to the attention of the Board certain matters regarding the falsification of data and the misrepresentation of the Company's financial situation, and offered his resignation, as did Dimitris Gryparis the CFO of the Group.

There must be thousands of investors who've been misled here. Unbelievable. If the administrators get to the bottom of this and find there's been criminal activity (which seems very likely) then I hope justice is served. 

Kudos to Paul for his persistent warnings on Globo's accounts.  I hope that Stockopedia readers listened and haven't been too caught up in this one.  

Regarding the editorial policy here that doesn't let us discuss our shorts (too much).  Sadly, short selling posts tend to lead to a nasty (often litigious) mess and attract too many wrong'uns.  If they didn't we'd remove the policy.  I'm sure that Paul will agree that there's far less admin for him (and the rest of us) when he's quieter about his shorts - of course to everyone's benefit Paul is not exactly silent on these matters  ;-)

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dasv 26th Oct '15 23 of 32


If you want more attention for your bear thesis: compile evidence over time, present it in a big dossier with an executive summary at the top, and devastating detail in between. Take the short position before publishing the report. Publish via twitter. Laugh all the way to the bank. You have the forensic ability to do this v. well. Giving yourself a name with the word "capital" or "research" at the end, moving to NYC or being anonymous may help too ;)

Thanks for the great insight on GBO and other bargepoles. I sold on the change of auditor - figuring out the "unable to agree scope" was indicative of "dodginess". Of course the bulls berated me too. But that's what always happens. As JakNife said - they operate in an echo-chamber. They are all about confirmation bias.


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hayashi22 26th Oct '15 24 of 32

What sanctions can be taken I wonder.? I believe Nutley out of Silverdell is still walking the streets. No doubt these Greek chaps hope to disappear from sight with their ill gotten gains to enjoy a leisurely retirement.

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BlueFrew 26th Oct '15 25 of 32

In reply to post #109314

Hi Ed,

Thank you for that explanation. When you see the grief that Tom at ShareProphets gets and the many court appearances, it's understandable that you don't want to have those problems. It seems like current legal setup is very effective at shutting down effective debate.

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Cisk 26th Oct '15 26 of 32

In reply to post #109332

that was one of them that stank the most from recent memory. It looks like the guy basically lied through his teeth saying all was well when it wasn't and then he was still employed when the company was restructured and shareholders got nothing! unbelievable!

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hayashi22 26th Oct '15 27 of 32

Cisk-I used to work as in fund management and had a meeting with Silverdell and its management. Thank goodness we didn't fall for it as superficially it looked attractive. Yes one of the worst of recent times.

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Firtashia 26th Oct '15 28 of 32

Paul, many thanks for your repeated warnings on this, and other foreign AIM stocks. No doubt they have saved me money. I'm unfamiliar with the process by which such companies are listed on our stock markets, but if you could see these accounts were fradulent years ago, why couldn't anyone else involved with flotation/listing/auditing see it? Are they negligent (at best), or complicit (at worst)? Sadly it seems the standards of corporate governance of Greek companies appears to mirror that of the country as a whole, as the EU is finding out to its cost.

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dasv 26th Oct '15 29 of 32

In reply to post #109332

didn't Aston driving Nutley buy the assets off the liquidator?

Utter lies in the final numbers - and what about the positive outlook statement?

I missed the CCJ and lost 100% on SID.

Still the frauds, lies and very importantly: omissions, continue.

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robinleggate 26th Oct '15 30 of 32

Having been caught by Quindell, I took your warnings seriously and got out at break even. Many thanks!

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Cisk 26th Oct '15 31 of 32

In reply to post #109485

dasv & hayashi22

I'm not sure what the final outcome was - didn't the bank take the lot, and maybe he did.

It just goes to show that loud-mouth CEOs of small caps are best avoided. I've tried to weed them out - but suspect there are still a small number lurking in my portfolio.

There needs to be a change in the law to stop this thing happening. Can't see it happening though. It's too much of a cozy relationship between all those involved. And the SFO seldom brings any prosecutions.

I've been hit by a number of these frauds in my investing career - it never gets any easier though!

I remember one company, Griffin Mining (LON:GFM), where the business was / is being run as some kind of personal piggybank for the CEO - indeed when the share options were under water, the board simply approved of the resetting of the options price! Unbelievable!

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carmensfella 1st Nov '15 32 of 32

Just in case any of you reading this have been affected by the Globo announcements last week
I think it is critical that those of you invested in Globo get a really strong and large group of shareholders together for a campaign and have it backed and endorsed by a shareholder organisation and ShareSoc are trying to help in this area so this is a good starting point..

Personally I do not like to see resignations by directors and nomads just at the point when all the hard work needs to be done to help investors and shareholders to understand and hopefully recover something from the situation.

Why have the non executive director and company secretary resigned ?

What are the AIM team at the LSE planning to do for investors as it is very unlikely a replacement nomad will be found and delisting looks inevitable ?

Is an EGM needed to add shareholder action/campaign representation to the board of Globo ?

What will the larger institutional investors do in this situation ?

ShareSoc will certainly try to get as many answers as possible through official sources so do add your name and join the campaign.

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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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