Small Cap Value Report (24 Nov 2016) - BLV, LTHM, MTC

Thursday, Nov 24 2016 by

Good morning!

Apologies for there being no report yesterday, I was under the weather so had a sick day. I know the service from me is a little unreliable, but it's still pretty good coverage considering it's just one person working all year round.

Plus I don't think anyone is complaining, considering the series of big winners we've had here (e.g. BOO, AVS, LVD), in what is turning out to be a blockbuster year. My broker even quipped that if I find any more takeovers, the FCA will probably come knocking. Still, when you have a portfolio of 40 value/GARP shares, there do tend to be plenty of takeover bids.

There's a very clear trend now of overseas (esp. American) companies buying up cheap UK companies, since sterling weakened. Let's hope there are lots more!

Letting agents

The Autumn Statement earlier this week has put the cat amongst the pigeons for letting agents, as the Government is proposing to ban fees to tenants. Although it should be noted that proposals like this are often watered-down, or dropped altogether, during the consultation period. No doubt lobbyists will be paid handsomely to nobble the proposals.

I've been sounding out opinion on Twitter, and it seems mixed. Some people think that landlords will just jack up rents to recoup their additional costs. My view is that, even if that is the case, it's still a much better idea to have the landlord paying the letting agent, since the agent works for them. Also, there's greater transparency with no fees for tenants - the rent is transparent, but often the fees are not.

I rent a flat in Hove, and was recently appalled at being charged £70+VAT just for a one year renewal document. This would have take all of 5 minutes for the agent to prepare. I texted my landlady and suggested we draw up the document ourselves next time. She agreed, as she had also had to pay £70. So that's £140 the agent earned from a few minutes work, and hitting a few buttons on her keyboard. As I quipped to my landlady, "we're in the wrong game!". She laughed, and said that she's just been saying the same thing to her mother-in-law.

Belvoir Lettings (LON:BLV) has issued an interesting RNS on this matter today, saying;

At this stage, Belvoir cannot fully predict the likely financial impact on…

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Belvoir Group PLC, formerly Belvoir Lettings PLC is a United Kingdom-based company engaged in selling, supporting and training residential lettings franchises. The Company operates a nationwide property franchise group with four brands that offer a range of services in property rental, property management, residential lettings, buy to let and property sales. Its property franchise group manages approximately 58,000 properties in Grantham, Lincolnshire. more »

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James Latham plc is a timber and panel products distributor. The Company is engaged in timber importing and distribution, carried out in approximately 10 locations. The Company offers a range of wood-based panel products, natural acrylic stone, hardwoods, high grade softwoods, flooring, cladding, decking and plastics. The Company also supplies commodity and specialist products to timber and builders' merchants. The Company offers a range of product categories, such as panels, solid surface, door blanks, hardwoods, softwoods, engineered timber, flooring, decking, cladding, modified timber and panels, fire retardant panels and technical panels. The Company caters to door and kitchen manufacturers, shop fitters and other market sectors. The Company's subsidiaries include Lathams Limited and James Latham Trustee Limited. Lathams Limited is engaged in importing and distribution of timber and panel products. James Latham Trustee Limited is a corporate trustee company. more »

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Mothercare plc is a retailer for parents and young children. The principal activity of the Company is to operate as a specialist omni-channel retailer, franchisor and wholesaler of products for mothers-to-be, babies and children under the Mothercare and Early Learning Centre brands. The Company's operating segments include the UK business and the International business. The UK business segment includes the United Kingdom store and wholesale operations, catalogue and Web sales. The International business segment includes the Company's franchise and wholesale revenues outside the United Kingdom. Its clothing and footwear product includes ranges for babies, children and maternity wear; home and travel includes pushchairs, car seats, furniture, bedding, feeding and bathing equipment, and toys are mainly for babies. It operates in the United Kingdom through its stores and direct business, and across the world in over 60 countries through its international network. more »

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55 Comments on this Article show/hide all

Montyville2 24th Nov '16 1 of 55

Certainly don't begrudge you a day off Paul, you deserve it after alerting us to BOO, AVS & LVD. RBG seems to be tipped a lot at the moment, but you heard it here first folks!

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Howard Adams 24th Nov '16 2 of 55


Just to say, please do not apologise for missing out reports on a few days. The quality and consistency of what you provide is what, I for one and I'm sure many others, value highly. I believe most of us on Stockopedia are investors rather than traders and we will be looking at our own holdings with diligence anyway. You need your breaks from the analysis and writing in order that you return refreshed and sharpened in mind and judgement. So, please take you days away without any feelings of guilt and enjoy them.


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brileen 24th Nov '16 3 of 55

Hi Paul

Hope that you are feeling better today.

From my perspective I have nothing to complain about. I bought and have now sold AVS,BOO,ands LVD. In the cases of BOO and AVS I was in them from the your first report and have done particularly well. Have a feeling that I got out of BOO too soon. Sold at 117p but still almost a 5 bagger.

Thanks for a great service


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Ajay_Gajree 24th Nov '16 4 of 55

In reply to post #159503

Hear Hear! I'd add MYSL to that list as well!

Have you stopped your Charity things Paul? Some of us probably owe your a drink or two but failing that a contribution to some of your fave charities is probably due!

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Bluey68 24th Nov '16 5 of 55

Hope you are feeling better Paul. No need to apologise! A very belated thank you for your quality write ups regarding Avesco.
Regards, Ruth.

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Trident 24th Nov '16 6 of 55

Hi Paul

Mentally its quite tiring I would imagine to do a blog, and it takes a fair bit of time to review RNS's and dig into related accounts etc. I think the fact we miss your reports is a testament to the quality of the blog. So hope you are feeling better.

Do you think you will have an interview with the CEO of Tracsis in the future? It would be quite interesting to hear your take on them.

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Bluey68 24th Nov '16 7 of 55

Apologies, I meant to say 'quality write-ups daily' .

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simons1874 24th Nov '16 8 of 55

Hi Paul the idea that Landlords are going to reimburse Letting Agents for lost Tenants fees is ridiculous - They will either take them off LA and manage them themselves ( as I have done) or will use a cheaper letting agent/internet LA- Letting fees are in a downward spiral and this measure will merely increase the speed of it

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danyou 24th Nov '16 9 of 55

Paul, Agree with all the sentiments above. I have learned a lot from your blog- and you owe nobody any apologies. Thanks!

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cholertonandrew 24th Nov '16 10 of 55

Paul, well done on your recent successes, sounds like you've had a good year. Interested to know whether there's a publication date in mind for your book?


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Beginner 24th Nov '16 11 of 55

The underlying message from the estate agents is 'don't worry, we will squeeze the money out of someone, somehow'! And to be honest I believe they will. The London market is definitely cooling, but rentals are a growth area across the country, so letting agents should be safe enough from any fee waiver idea in the longer term. More worrying for some may be the spread of Universal Credit. This sees Housing Benefit no longer paid straight to the landlord/agent by the DSS, but given to the tenant, who is then expected to pay his own rent. In many marginal areas, and amongst certain classes, this is a recipe for disaster. Agents will really have to start doing their job, chasing rents. I would not like to be a buy-to-let landlord in the lower social sector. For the first time in my life I think it may be time to believe an estate agent: don't worry too much for now!

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Sunny350 24th Nov '16 12 of 55

Hi Paul, glad you are feeling better and thanks for all your insights! Should you find the time it would be great to hear your take on QXT. Thanks!

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bobo 24th Nov '16 13 of 55

mother care lost a lot of reputation and allowed a load of people to enter the market. What mother wants to wander off to a store when they can just have it delivered, so old model trying to access the cutting edge of the new world.

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peterthegreat 24th Nov '16 14 of 55

Thanks Paul for the latest comments on James Latham. It has been run by the Latham family since 1757 and I think it illustrates how family owners like to leave a large safety margin when a substantial part of their own wealth is tied up in the company. Long live inefficient balance sheets!

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LovelyLovelyGorgeous 24th Nov '16 15 of 55

I wonder how many bosses will be ok with staff calling in sick and saying that is unreasonable for them to have to work all year. I'd be asked to leave even though I do a good job, work 9 till 6 five days a week, commute for three hours total a day and have five weeks paid holiday.

Yes, yes, I know it is different here

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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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