Small Cap Value Report (29 Jun 2015) - REDD, QPP

Monday, Jun 29 2015 by

Good morning!


Well, what an interesting 24 hours, what with the Greece Euro crisis finally coming to a head. I find that Twitter is the best source of breaking news, if you follow the right people. I was glued to Twitter last night, trying to assess whether the stock market here was likely to go into full-blown panic mode this morning, or not.

As it's turned out, the markets are recovering well from the overnight plunge, which makes sense really - if anything, a conclusion to the Greek crisis could be cathartic for equity markets, removing a major source of uncertainty. How it all pans out, who knows, but I've seen stats which show that not much of the Greek debt is held by the private sector, so default if/when it comes may not even have that much of an impact? Although I am a bit worried about the ripple effect of derivatives, and possible contagion to other Eurozone countries.

There again, the banks have had 7 years to plan for the inevitable Greek default, so any bank that can't cope now doesn't deserve to remain in existence anyway.


The plunging stock market in China doesn't concern me, as it's a largely self-contained bubble, from what I can make out. Its gyrations won't affect the valuation of my small cap investments, so I'm not concerned about this factor either. The key thing to remember with China, is that it's not capitalism. It's a command economy (or a strange hybrid anyway), so the Govt can pull levers whenever required, to achieve policy aims.

In the long run though, with company and Bank balance sheets filling up with bad debts, there will have to be a gigantic flushing out of the system. When that will happen, who knows? It may not even be in my lifetime, so why worry about it?

ShareSoc Masterclass/Garden Party

Sounds like this event, hosted by Killiks, in their wonderful Mayfair office, will be excellent. It's this week - on Thu 2 July. Full details are here. There is a special offer for Stockopedia readers - click here.

The panelists for the discussion part of the evening are star small caps investors - David Stredder, Lord Lee, and Leon Boros (all three are self-made millionaires from small cap investing), plus Mick Gilligan (Partner and Head of Fund Research at Killik).

My view is that the best people to learn from…

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Redde plc is a holding company. The Company is engaged in providing non-fault accident management assistance and related services, fleet management and legal services. The Company offers a range of motor claims accident management services, including vehicle replacement and repair management together with full claims-handling assistance, as well as legal and other personalized services. The Company manages its own fleet of approximately 7,000 vehicles and has access to over 50,000 vehicles through selected rental partnerships. It also provides specialized large fleet accident and incident management services through the FMG group of companies with over 300,000 fleet vehicles under management. It provides accident management services from operational call center sites in Peterlee, County Durham, Huddersfield and Croydon, as well as solicitors' services through Principia Law Limited from Northwich and NewLaw Legal Limited from Bristol, Cardiff and an associated office in Glasgow. more »

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Watchstone Group plc offers technology solutions to the insurance, automotive and healthcare industries. Its segments include Hubio, Healthcare (pt Health and InnoCare), and ingenie. Hubio provides integrated solutions to help organizations in the insurance and automotive sectors to build customer engagement and enable usage-based personalization. Healthcare includes ptHealth, a national healthcare company that owns and operates physical rehabilitation clinics across Canada, and InnoCare, a clinic management software platform and call center and customer service operation based in Canada. Its ingenie is an insurance broker. Using telematics technology, ingenie gives its community feedback, advice and discounts to help young drivers improve their driving skills. more »

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Progility plc is a holding company. The Company, along with its subsidiaries, provides a range of project management services, including technology solutions. The Company's principal activities involve Professional Services, Healthcare and Communications. Its segments include Professional Services, Healthcare and Communications. The Professional Services segment includes the training, recruitment and consultancy activities operating in the United Kingdom, Dubai, Australia and New Zealand. The Healthcare segment includes the operations of Starkstrom Limited and Progility DMCC, which operate in the United Kingdom and Dubai. The Communications segment includes its technology solutions goods and services businesses, which operate in Australia and India. Various brands in the Communications segment include Communications Australia, focused on communication systems integration; CA Bearcom, a distributor of two-way radio communications products, and Minerals & Energy Technologies. more »

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

9 Comments on this Article show/hide all

underscored 29th Jun '15 1 of 9

Interesting to see the StockRank fingerprint of Redde, just before it took off. V95, Q74, M68, forward yield of 9.95%.

Avesco currently has a very similar fingerprint - as have all my best returns to date (trending value), will be interested to watch on a forward basis.

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00mrmark00 29th Jun '15 2 of 9

Any thoughts on HSS Paul?

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Paul Scott 29th Jun '15 3 of 9

In reply to post #101929


Yes, HSS Hire (LON:HSS) is the next share I'm looking at. But first, an ice cold can of beer in the fridge left over from last night, and lunch on the beach beckon!!

I'll do a section on HSS when I get back.

Cheers, Paul.

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drvodkaquickstep 29th Jun '15 4 of 9

Paul - would also welcome any thoughts on IS Solutions (ISL)? Prelims out today.

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00mrmark00 29th Jun '15 5 of 9

In reply to post #101933

Very jealous… Currently sat in a humid office in Wilmslow with no beer or beach in site!!! :(

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herbie47 29th Jun '15 6 of 9

In reply to post #101945

Actually just been on the beach but its cloudy and windy here now.

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maxhayden 29th Jun '15 7 of 9

Good article on S&G. Being in the sector it's of particular interest to me. There were rumours on the grapevine before the QPP acquisition that S&G's book of aged WIP had built up to over 18 months. Law firm WIP valuation is a 'black art' at the best of times. A cynic might say S&G did the QPP deal to make it's own account errors less visible...

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Graham Neary 29th Jun '15 8 of 9

Re: S&G, you should be able to earn 116% in 12 months if you buy the shares now:

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Catstycam 29th Jun '15 9 of 9

Hi Paul,
thanks for the report on REDDE. Some good news for investors on what has been a predictable poor day. I tend to agree with your view that the price is now looking pretty much full right now. There is an argument to average up and look to gain from the increased dividend and special dividend. However, there is a real possibility that there will be a retrace (if only slight, possibly low 130s high 120s) from todays value and so there may be a better opportunity.
We tend to be our worst enemy when it comes to investing and get greedy, buying when it would be better to sit on the sidelines and watch. Sometimes the hardest thing to do is to do nothing, or even sell. Sometimes we just have to be content with the holdings we have. I too often have invested in haste and repented at leisure. We can get very blinkered with our investments, focussing solely on our holdings and failing to look further at possibly better opportunities. It is quite likely that REDDE will trade higher but as you rightly say, there will come a time to top slice, or even say thank you very much Mr. Banker, and leave something on the table for others before there is nothing left for anyone and no one is interested. Not sure we are quite there just yet.

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 Are LON:REDD's fundamentals sound as an investment? Find out More »

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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