Small Cap Value Report (24 Dec) - ABM, UCG, AVA, CIN

Tuesday, Dec 24 2013 by

Good morning! As expected, there's very little in the way of company announcements today, what with it being Christmas Eve, but as mentioned yesterday, I like to keep monitoring the market over this period because there have been some interesting buying opportunities thrown up in previous years, caused by a mixture of illiquidity and clumsy year-end portfolio rebalancing by Institutions.



One of the potential buyers for Albemarle & Bond Holdings (LON:ABM), Better Capital, has dropped out of the sale process, as announced today. The company goes on to say, "The Board confirms that the formal sales process is on-going and that it is continuing discussions with a number of interested parties". I'd be surprised if anyone buys it in its current form, because it's trading at EBITDA negative, but you never know. The shares are really now little more than gambling tokens, with a (probably) binary outcome. Hence I am avoiding these shares.





In a similar vein, another turnaround situation which has gone somewhat better, is United Carpets (LON:UCG). Unusually, this carpet retailer went through a pre-pack Administration process, and remained Listed. So having ditched the loss-making shops, and renegotiated rents down on the remaining shops, the company now has a low cost base, and a clean Balance Sheet. This pre-pack process is tough on suppliers and other non-secured creditors, who are stuffed with the losses, so it's a controversial process. On balance though, it saves jobs and enables the viable parts of troubled companies to continue trading.

Also, to be blunt, nobody who has proper financial controls should be supplying goods on credit to any company that is at risk of going bust. If they do, then that's a risk they have chosen to take (actively, or by omission), hence the consequences follow.

Shares in United Carpets have more than doubled in the past six months, and the market cap is still only just under £4m. They are horribly illiquid as a consequence, and I've found it almost impossible to get hold of any stock, so you have to wonder why they bother with a Listing?

Their last set of results here looked encouraging, although I'm not sure what the cyclicality of carpet sales are…

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United Carpets Group plc is engaged in carpet and bed retailing. The Company is also involved in franchising of retail outlets. The Company's segments include Franchising and Retail, Warehousing and Property. The Franchising and Retail segment receives income from its franchise activities together with the results of its corporate stores. The Warehousing segment reflects the Company's in-house cutting operation, which services the franchised and corporate stores and a small number of third parties. The Property segment leases properties from third parties and sublets those properties to the store network. Its advice categories include caring for beds, carpet care, caring for flooring and free fitting. The Company offers a range of floor coverings, such as carpet, laminate and vinyl flooring. It offers a range of carpets, such as wool, kids, striped, patterned, berber loop, twist pile and plain. Its backing types include waffle, gel action and felt. It operates approximately 60 stores. more »

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15 Comments on this Article show/hide all

sjw 24th Dec '13 1 of 15

Paul, I'd say it's time for you to enjoy a well-earned Christmas break. Thanks for another year of great insights.

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Ultimate_behemoth 24th Dec '13 2 of 15

Merry Christmas Paul, thanks for a great year of reports.

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BahrainChris 24th Dec '13 3 of 15

Happy Christmas Paul. Thanks for the interesting and entertaining reports.

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Carcosa 24th Dec '13 4 of 15

Avanti Capital: Suspect it's related to the 105p dividend payment

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Paul Scott 24th Dec '13 5 of 15

In reply to post #80147

Hi Carcosa,

Aha, mystery solved, thank you! I didn't think about dividends.

Regards, Paul.

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Gostevie 24th Dec '13 6 of 15

Hi Paul,

Have a great Christmas break. Thanks again for the brilliant daily blogs.


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Fangorn 24th Dec '13 7 of 15

Have a great Christmas PP - make sure you don't start on the "Cheese" too early though :)

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merlin51 24th Dec '13 8 of 15

Merry Christmas Paul, and thanks for your great daily reports, hope there is not too much damage in Brighton, we are just a tat North of you and lots of problems all around here.

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Leven 24th Dec '13 9 of 15

Looks like Avanti went ex yesterday? Ouch!

Have a good Christmas all

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ajrc00 24th Dec '13 10 of 15

Season's greetings and thanks a lot Paul for your honest and helpful commentaries.

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lightningtiger 24th Dec '13 11 of 15

Merry Christmas Paul, Thanks for all your superb reports. Now is the time to enjoy seeing and singing Merry Christmas by Celtic Women on WWW. 700 club Pat Robertson CBN, previous shows. Mon 12/2 Celtic Women, click, watch their performance and enjoy..........................Priceless!
Cheers from Lightningtiger

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bobdouglas 24th Dec '13 12 of 15

Merry Christmas Paul,
I note the sub two hour target for your half marathon - watch the mince pies over the festive period !!

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rheiner 24th Dec '13 13 of 15

Well done Paul. Have a well-deserved break.

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bsharman 24th Dec '13 14 of 15

Hi Paul. Have a great Christmas. Thanks again for your daily reports which have certainly been interesting and invaluable reading each morning. Ben

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cyberbub 24th Dec '13 15 of 15

All the best for Christmas Paul and keep your helpful reports coming in 2014!

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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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