Small Cap Value Report (29 Jun 2016) - IGR, BRAM, ZZZ
Good morning!
Thanks for all the positive feedback about yesterday's report - it's good to know that people find these reports useful.
Brexit
There has been far too much partisan nonsense about this issue, which I largely ignore, because it's at best a waste of time, or worse still, misleading. So for me, it's now all about listening to experts, and trying to work out what is most likely to happen next.
There was a fantastic programme on Radio 4 yesterday, where 3 professors in law discussed how Brexit might work out in practice. It also clarifies some of the complex issues, which I found extremely helpful. Highly recommended - the iplayer link is here.
A consensus seems to be developing that the most likely outcome is for the UK to go down the Norway route - i.e. full access to the single market, for a fee. I'm not interested in discussing the rights or wrongs of this. The only issue for our purposes here, is how it might affect our shares.
Going down that route would undoubtedly be positive for shares, and I think this is what's driving the current rally - i.e. a realisation that the world is not going to end, and business will probably continue pretty much as normal.
Set against that, as I mentioned yesterday, the economy is likely to slow down in H2 of this year. So plenty of profit warnings to come, for UK-focused companies I think. If the market thinks that a prolonged recession is likely, then the price drops will be brutal. However, if the market thinks a slowdown might be short-lived, then it will start to look through poor current performance, and factor in a recovery next year. We'll have to keep monitoring events closely to determine which is happening.
IG Design (LON:IGR)
Share price: 163.5p
No. shares: 59.3m
Market cap: £97.0m
(at the time of writing, I hold a long position in this share)
Results, y/e 31 Mar 2016 - I read these numbers on my iPad in bed earlier, and was impressed - a good solid set of figures, and reasonable outlook comments too.
Adjusted fully diluted EPS is up 15% to 13.2p.
The PER is 12.4 which seems reasonable to me.
We have to be very careful with PERs at the moment. Since there is considerable economic uncertainty, we cannot just assume that earnings will continue rising in a nice progression, or even hold level. If companies see a slowdown in demand, this has a leveraged effect on profits (as overheads are usually fixed, in the short term, at most companies).
Therefore the absolutely key question to ask, for every company, is this: "are profits sustainable?"
I think it's also vital to look at the geographic spread of where companies generate their profits. A spread of geographies can smooth out results, and reduce vulnerability to forex movements such as we are seeing at the moment.
The adjustments to earnings here relate to exceptional items, and LTIP charges. I think that's OK. As a friend pointed out recently, if you're using fully diluted EPS then you're already taking into account dilution from share options. So it's logical to strip out the cost of options from earnings, otherwise you would be double-counting the cost of options. That sounded persuasive to me, although I've not crunched the numbers to fully satisfy myself on this point. Do any number-savvy readers have any view on this?
Turning to the balance sheet, net debt has come down considerably - down 40% to £17.5m. This is 1.0 times EBITDA - a comfortable level.
Overall I would describe the balance sheet as satisfactory.
Referendum comments sounds OK;
Whilst it is too early to know the full long-term impacts of the UK's exit from the EU, the Board feels that Design Group's diversified global portfolio of activity, together with our new global funding arrangements, means we are well positioned to manage the effects, and this outcome of itself results in no material change in outlook for the Group's near term financial results or future growth prospects.
There are also some very interesting comments about forex, which I think has wider relevance. Note that companies are not passive when it comes to forex. As well as hedging, they can re-engineer products to mitigate forex headwinds;
Additionally, the relative strength of the US dollar against other currencies can materially impact purchase prices out of China. This is most noticeable in the weakness of the euro and Australian dollar and our European and Australian businesses are finding their margins are squeezed through substantial foreign exchange headwinds on products bought in from the Far East.
Balanced against this, we have seen the renminbi weaken against the US dollar and thus it has been possible to negotiate lower prices to mitigate at least in part. It is also a feature of our business that we innovate, invest and commercially redesign product to combat this effect but this can take more than one season.
Of course, as I write, the risk of Britain's exit from the European Union is particularly high profile. Our business would undoubtedly be impacted by this but our global presence and diversity is again our protection in this regard. The principal impact would manifest itself through movements in foreign exchange rates as our European businesses largely sell in the European markets with limited export from the UK to the European Union or vice versa other than one major customer where existing hedging for the 2016/17 season would provide protection.
Weaker sterling against the dollar would make those goods we import from China more expensive but again, we are well hedged into 2016/17 allowing us the benefit of time to see macroeconomic considerations settle and for us to re?engineer our product to hit required price points.
Meanwhile our earnings from our US and European businesses would be translated at more favourable rates.
Conversely a substantially stronger sterling would result in weaker translated overseas earnings but provide us with a platform for cost efficient imports into the UK, still our largest business segment.
As we fund the working capital needs of our overseas businesses in local currency, the translation impact is in any event less pronounced than otherwise would be the case.
Overall then, this group seems to have a good setup, with some natural hedges, whereby adverse forex movements one way are partly offset by an opposite effect elsewhere within their business. That's reassuring.
Outlook - unless I've missed it (which is possible, as the narrative in this RNS is very long-winded, and the very small font makes it difficult to read) I can't find anything specific about current trading or outlook. Just lots of positive-sounding waffle.
This is the closest I can find to an outlook statement;
The Group delivered another very strong year, with all metrics well beyond our initial expectations. We are still building further foundations for success, investing carefully and creating new competencies that will power our continued growth in profitability for many years ahead.
Net debt and earnings per share performance were especially pleasing and continued outperformance in the arena of cash management is providing the Group with additional flexibility and options to create value for shareholders in the future.
My opinion - I like it, and hold some personally. I don't see any particular reason to rush out and buy more, but am happy to continue holding for the foreseeable future.
Brammer (LON:BRAM)
Share price: 69p (down 52% today)
No. shares: 129.4m
Market cap: £89.3m
Trading update (profit warning) - if a share price is down c.50%, then you know there's something badly wrong. A normal profit warning hits a share by about 30% typically. Although in these jittery markets, there can be more extreme reactions.
I've just re-read my previous reports on Brammer, to refresh my memory. I was underwhelmed by the share when I reported on its profit warning here on 15 May 2015, and another profit warning which I reported on here on 11 Nov 2015.
The company has made it a hat-trick today with another, more serious profit warning.
Weak sales, and various other factors mean the group is now trading not much above breakeven - bearing in mind that this is quite a big group (turnover of £717m last year);
...As such, we now anticipate Group adjusted profit before tax in the first half to be below expectations at approximately £5m. As a result of this reduced level of profitability, the Group will be close to its net debt/EBITDA bank covenant1 at the period end.
It's the bank covenant issue which is the big deal. I mentioned in yesterday's report how the key banking covenant is net debt:EBITDA, and when profits fall sharply, this can then put highly indebted companies into a whole world of trouble - fighting for survival basically.
Remember that debt ranks ahead of equity. So if an indebted company cannot service its debts, then the equity is wiped out, and holders of the debt end up owning the company. The only way to prevent this happening, is to do an equity fundraising, or negotiate relaxed terms with the debt provider.
We saw recently the same problem at Sepura (LON:SEPU) - management borrowed too much from the bank, and then got into serious difficulties once trading deteriorated. They had to do a deeply discounted fundraising at about one sixth of the share price before problems began.
I think we're likely to see wave after wave of highly indebted companies getting into trouble in H2 of this year. When time permits, I'll compile a list of potential shares to short, to take advantage of this opportunity. At the very least, I think this is a time to throw out any shares we have in highly indebted companies. They're an accident waiting to happen now, with an economic slowdown on the cards, in my view. Why expose yourself to that risk?
Going back to Brammer, they are taking sensible action;
In the light of current market conditions, we are reviewing the Group's trading outlook for the year as a whole, and the UK in particular (where recovery plans are still at an early stage).
We are taking measures to improve profitability and strengthen the Group's balance sheet. Our stock reduction programme continues to make progress and is still expected to deliver a £30m reduction by the end of September 2016.
That's actually quite encouraging.
Net debt was £104.3m at 31 Dec 2015, so if inventories are run down by £30m, then that should reduce net debt to a more manageable £74.3m. Also I imagine the group is probably trying to extend supplier payment terms too, to squeeze out more cashflow, and reduce bank debt.
The Board is now reviewing whether it is appropriate to declare an interim dividend in respect of the half year and will provide a detailed update on its revised expectations for the full year at the time of the interim results announcement on 4 August 2016.
I think it's a given that divis are now likely to be stopped altogether. So treat this like a non-dividend paying share for the time being. That's the only sensible thing to do, to reduce debt.
I mentioned in my previous reports how the balance sheet was too weak, and debt too high, and it's coming home to roost now.
My opinion - In my view, an equity fundraising is now quite likely. Although I think they could probably get away with a relatively small equity fundraise (say c.£30m) to pacify the bank. Therefore this share is not a basket case, in my view. It might even be an opportunity, possibly?
I'm tempted to have a dabble, as this looks a salvageable situation. If a turnaround is executed without dilution, then there could be decent upside here. However, on balance, with the company close to breaching bank covenants, I'm wary of getting involved. Probably safest to leave it alone for now.
Snoozebox Holdings (LON:ZZZ) - I've a quick look at the numbers, but am afraid I think it's toast. Nice idea, but it hasn't worked. Management seem to be giving it one last go, cutting costs, and focusing on semi-permanent installations. The equity is clearly worth nothing now, with NAV down to only £1.9m, and huge losses still being incurred. As a listed entity, it's game over fairly soon, I think.
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52 comments
IG Design (LON:IGR) CEO Paul Fineman comments on the FY results (from yesterday), their ongoing strategy, and the outlook in light of Brexit.
http://www.piworld.co.uk/videos/2016/6/29/ig-design-group-plc-preliminiary-results-march-2016
IG Design (LON:IGR) CEO Paul Fineman comments on the FY results (from yesterday), their ongoing strategy, and the outlook in light of Brexit.
This is my one grumble with the company - why on earth did they rename themselves or why couldn't they have chosen a different name? The ticker was close enough to IG Group (LON:IGG) already and now they've made the name almost the same. If you hold both (which I do) it will not be that much of a surprise when you accidentally trade the wrong share. Be careful!
All the best, Si
Has your broker not converted the old ticker over to the new one? I don't really see your point they are the same company?
Has your broker not converted the old ticker over to the new one? I don't really see your point they are the same company?
I don't see a "smiley", are you joking? One is a FT250 spread betting company and the other is an AIM small cap that makes gift bags for Tesco's!! The ticker for IG Design Group has not changed, just the name. I hate companies that change name for no apparent reason. they probably paid some "branding consultant" a fortune too...
All the best, Si
Sorry I misunderstood, I see what you mean. But this happens quite a lot with tickers, such as FLO and FLOW. Yes I agree about branding but maybe it works?
Paul, I may be missing something and am not an accountant but I believe that it is NOT right to strip out share option charges even if using diluted eps.Even if you are using diluted eps surely this will only reflect the share options which have already been agreed i.e. the amount of shares that will be issued say over the next few years. But this will not reflect the fact that the share option charges will be ongoing indefinitely, or in the absence of share option payments employees would have to be paid more cash in the future. Actually it probably makes sense to INCLUDE the share costs but use undiluted eps.This will give a different, lower and more accurate result than using diluted eps with share costs stripped out. When calculating forecast eps for future years then you also have to use the number of shares that you expect to be in issue then, after new shares have been issued as well as the expected share option cost for that year. Does this make sense or have I confused something?.
Re IG Design (LON:IGR), I would suggest that they look to place some of their purchase contracts in GBP rather than USD. There's no rule that says you have to buy from China in USD.
Well I added Galliford Try (LON:GFRD) today, doubling my holdings of housebuilders. Whether we get immigration from EU or Rest of World, I can't see the population falling. The Telegraph described the housebuilders as a value trap, but I think they are so oversold right now that they should come good in time.
My view on dilution, specifically executive share options, is that it is the agents taking the upside for themselves to the detriment of the shareholders. In my opinion senior managers should be in the same employee share schemes as any other employee.
I find it best to look at adjusted basic earnings per share but when considering forecast earnings to take account of dilution and to avoid companies where dilution is very high.
I agree, one company that is very bad for potential dilution is IMImobile (LON:IMO). Pity because otherwise it seems a good company.
Best joke I heard yesterday.
The Tory's are searching for a new leader who'll be, talented, experienced, and above all else show great expertise in getting the country out of Europe.
They've been informed Roy Hodgson is available.
Sorry to go on about the Brexit situation, but, we had a referendum and there was a small majority for leave.
That's not a mandate to leave at any price.
It seems to me the EU are planning to give us a kicking to deter the others from ever trying to leave. They seem to be demanding that if we want access to the free market, we have to accept free movement.
If we have to accept free movement, it's quiet possible that a second referendum would result in a remain result. Infact, remain/brexit is a difficult choice to make if you don't know the terms of Brexit.
I'm feeling that, as usual, the UK are following the rules, and doing as their told, when other countries don't.
I think we're going to have to toughen up if we're going to get out of this mess.
First, no more oh dear I'm so sorry we voted leave. It is a matter of fact that a lot of people's wages have been compressed by unlimited flows of people from poorer countries.
Is there any other trading block in the world where free trade is predicated on unlimited free movement of people ?
Is there any free movement of people area where the richest and the poorest individual countries are as widely spread as in the EU ??
(I am thinking the answer to both is no. Would the US form a eu type thing with mexico and south america and then let them have subsidies and free movement ? hell no ! , and the mexican president has suggested it recently)
Now this hits the UK harder than most, because 1) we're at the top end of wealth, and in recent years economic growth, so people coming in are likely to come to the UK, as they're more likely to get a job.
2) we're a relatively small nation, especially if you consider that vast numbers of the people coming in are coming to the south east of england, almost certainly the densest populated part of europe.
So to me it seems like this is being used as a stick to beat the UK with, and throw them out. As soon as we invoke article 50, there will be no way to reverse it, and the EU can string us along for 2 years and then say take it or leave it. Not a prospect I relish.
I think we should say, look we've had a non binding referendum, which suggests there's a small majority for leave, but not at any cost. We need to know the terms of exit and take it back to the people, so no article 50,
lets see the terms, and we'll go back to the people.
In the meantime, we're members, we pay, and have all the commitments so we want all the benefits, so no meetings that we're not invited to, and if you think we're going to allow any new countries into the eu, you might want to think again. Ever closer union is out of the window, and unless you co operate with us, we won't play ball with you.
There seems a lot of people wanting to kick us out so you can get on with a closer union. That's fine if we can agree on amicable terms.
What possible reason is there for free movement ? if we leave, and don't accept it, (and I'm telling you now we won't), Where do you think that the people now coming to the UK will go ?
Surely the other rich countries in the EU, france and germany, other norther european countries.
Is that what you want ? (because that's wall it'll happen - Harry Enfield eat your heart out. ).
The free movement issue is just a function of relative wages. I personally would have no issue with free movement with "old europe" even if in the short term that would mean Spanish and french people coming because of the situation in their countries. I don't even know where you'd draw the line on the map,
Certainly any new joiners from very poor countries need to be looked at . Perhaps there's the basis of some compromise there ? Perhaps based on gdp per person or average earnings or something ? I'm not suggesting no migration from these countries but perhaps there are some controls / point system based on that ?
The gist of what I'm saying is, We're shouldn't be pushed about, if we have to stay until we finialise a deal (which I want before activating article 50), then we'll stay. We won't be deliberately hostile, but we'll stand up for our interests. When we have a deal, we'll go back to the country to reconsider.
Perhaps other countries should consider getting a mandate for eu membership themselves too ?
K
Yes, surely UK can force reasonable terms by not invoking article 50 and then being thoroughly awkward about all other business in the EU that needs unanimity unless and until it is treated fairly i.e. EU agrees to negotiate and agree fair trade terrms before article 50 is invoked (i.e. variation on Norway deal with some limits to migration). This would be difficult for the EU and I think they would have to be reasonable.
Hi Kenobi
We hold a ref. & you are not happy with the result - therefore we need a second ref. ????????
Sth. Korea have ALREADY said they will ask for a trade deal with the UK. I suspect Japan & their manufacturing industry will jump at the chance of a trade deal with the UK, if they could get the German automotive share of car sales it would be like Christmas or their equivalent. The Common Wealth will agree trade deals. I would not be surprised if a deal was agreed with USA/Canada/Mexico quickly - not 7 years & still no agreement with the EU.
I genuinely believe the UK will prosper outside the EU - just think which country has 3 of the top universities in the world the UK. For example 20 of the 21 F1 teams are based in the UK - because of the UK's engineering prowess. Please have some confidence in YOURSELVES & YOUR COUNTRY. While you may not like B Johnson , he was correct in saying that all the remain side offered was fear of failure, not of determination & ability. Finally Kenobi I am not british but I sure as hell appreciate this country
Hi Owen,
I'm not unhappy with the referendum result, I'm looking at what might happen from here.
No prime minister is going to take us out of the EU regardless of future trading terms.
Hasn't Boris been quiet since he won the referendum, isn't it curious that he's not been hitting the tv shows trying to calm fears and telling us what he would do next and why he should be leader.
I'm starting to wonder if he wanted to win at all, or if it was all a stunt to put him in a better position to win the leadership when Cameron left.
Forget what you and I think, what will the next PM do ? If he could get a deal with free access to the single market, and limit immigration, then perhaps he'd just do that. But it's sounding pretty unlikely at the moment, and unless the new leader is an argent anti european, surely if he gets a luke warm deal, it will make sense to put it to the country before leaving ?
It's one thing to leave, but if the result is marginal, it would be a brave PM who takes us out without checking. I wouldn't be surprised if this has been discussed behind closed doors.
I don't know, but it seems that one option the EU has is to make leaving the EU so unappealing that it's not an option.
I hear what you say about F1 teams, that's what we've always been good at, technical challanges, what we've always been pants at is running manufacturing businesses. That's why despite have 20 out of 21 F1 teams based in the UK, it's worth nothing in Car manufacturing terms. And ALL the car manufactures in the uk, without exception (even those formerly british ones like jaguar, landrover and mini), are foriegn owned. And why if they woke up one morning and found they now had to pay 9 or 10% tarrif to get into europe, they might start moving manufacturing to eastern europe.
(especially the japanese cos, they might do a deal with us, but the manufacturing plants here, are here as a entry point to the eu).
If the EU play hardball about this (we could loose many many jobs), or about banking/services access (ditto),
Can they make it so unappealing that no government would take the deal without a referendum ?
The margin was close, and many people already seem to be having some doubts.
My opinion is neither here nor there, I'm talking about what's likely to happen.
Remember the EU have form on either re running referendum's when they don't like the results, or changing the game and ignoring them.
K
I must say that the experience of the Brammer investor above who attended the AGM is truly shocking.
It might suggest the FD is not on top of events in a timely manner. It might also suggest a reluctance to dish out bad news at what is a showpiece occasion with lots of bonhomie and mutual self regard.
Management credibility in tatters I would concur.
tads,
An update on anything you learnt at today's CRAW AGM would be much appreciated.
Thank you, Martin
These people:
1Know what they are doing.
2 Know how to do it.
3 They are highly focused.
Every shop is profitable from day one. The roll out continues at at least 15 per year....with no obvious limit on the eventual total number.
Thank you Tads
So long as they generate sufficient cash to fund the roll-out, I am happy to continue to hold.
Clearly there will be ups and downs in trading caused by issues such as the weather, as reported today.
Cheers, Martin
Each new shop costs £250k. All funded from cash flow.
Norway option plus fee with some break on migration.
Norway option involves accepting 9% of the laws we currently do.
Repatriation of powers including agriculture, fishing, energy, human rights and a whole lot more.
Because of the small mandate this is probably the most acceptable option.
http://www.aecr.eu/less-than-10-of-norways-laws-emanate-from-brussels/
http://www.hannan.co.uk/how-norway-beats-the-eu/
Just out of Crawshaws AGM.
Happy holder.
You mean you are holding a sausage in both hands?
No sausages....but we did get sandwiches and sausage rolls.
Oh good. Finally good news though only a small part of my portfolio.
Hi Paul, any broker updates on BRAM you might have seen today you can share?
Thanks, Mark
Listening to experts ????
Surely you've learnt your lesson by now?
Hi Paul,
Thanks for your thoughts on IG Design (LON:IGR). Indeed, thanks for highlighting it here in the past which put it on my investment radar. It was nice to see the section describing the sensitivity to exchange rates... I had to try and work this out from reading the Annual Report for myself before I first bought and so was happy to buy more last week. Although I could have timed the purchase of my last buy better (last Thursday) at least it's looking a lot better than Ed's bet on the referendum result :-)
The only thing of interest you didn't mention is the 150% increase in the dividend which is still well covered so there could be more big rises (albeit from a low level) to come. And of course, something which is not on the balance sheet - quality of management - which I believe is really important. The management here seem to be really switched on.
All the best, Si
Paul, I confirm that it is correct that companies should exclude stock options from the adjusted diluted EPS figure. If they don't they will double count the negative impact, as the increased shares are already accounted for in the denominator.
Cheers,
Mick
Yes, great article on Radio 4.
If I was the new Prime Minister I would deliver the Norway option and tell the electorate take it or leave it. Politics is the art of the possible and it sinply won't be possible to leave the EU AND remain in the single market unless we allow free movement of labour and contribute financially. Any other theoretical solution simply isn't going to be approved by the remianing 27 members of the EU and politicans on both sides will be doing their economies great damage if they spend ages debating other options.
As one of the legal contributors on the programme said, we live in a parliamentary democracy. The key will be explaining to the electorate that what parliamentary democracy means is that they delegate decision-making to politicians through the ballot box. The leave-voters simply cannot have their cake and eat it. The Greeks learned that the hard way last year and their economy was incrementally damaged by pointless negotiations when it was clear to all that the troika couldn't and wouldn't cave. Nowhere in our referendum did it allow leave-voters to dictate the terms of leaving. That's up to the politicians to decide and the electorate will have to live with that (as the Greeks did) or vote the Tories out at the next election.
The markets seem to be assuming a Norway EEA style outcome at the moment, just as they assumed a remain vote until about 2am on Friday.
Really not sure how wise that is given the Tory leader election is going to be fought by candidates setting out their position on the leave negotiations with the risk of each outbidding the other - we got into this position in a large part because Cameron had to placate his own party. The first to declare has already made immigration a red line. That isn't compatible with Norway's deal.
If there is anything we should have learnt from the past 5 years of the euro crisis, is that Merkel, Schauble and co don't blink first. It could well be well be tin foil hat time once the summer is over and the new PM is in place if we end up going into negotiations with red lines set out which aren't compatible with what the markets and business want and need. Risks still on the downside I think for small caps.
We have to hope that the winner of the Tory leader election is either an unfeasibly gifted negotiator or that the members of the party choose a candidate who sets out realistically achieveable (and not mutually exclusive) objectives. Otherwise, as you say, we are in for more politcial posturing that, like Tsipras's, succeeds only in delaying the inevitable.
Frankly, I can't see any of the candidates achieving a better outcome trhan Cameron who, for all his faults, is regarded as a decent and (for a politician) honourable person. I do not think BoJo could back up any claims to be a gifted negotiator or possessed of reasonable objectives.
I'm sorry, Edward, for continuing the discussion about the wider political (and, therefore, macro-economic) landscape. However, I may not be the only one on this board who is sitting on his hands at the moment. This is not really a traders' board but an investors' so I suspect there may be others like myself who are considering some significant losses, who think the trend is still down and, therefore, have time on their hands to consider how events will unfold.
please post on a brexit board
I thought Cameron said yesterday it would not happen until the new leader is elected?
Has anyone got a view on SOPH after their positive update this morning? Or are they too big to consider here?
Sorry if I'm being a bit thick Paul, but in relation to "plenty of profit warnings to come, for UK-focused companies" when you say "If the market thinks that a prolonged recession is likely, then the price drops will be brutal", do you mean the price drops of the individual companies or the markets as a whole?
Also, very good advice about looking at geographies of a company's markets, I bought NFC yesterday after their positive update because in my mind they have a good geographic spread and are geared more to the dollar... whereas I have considered buying DC. (I know it's a large cap) after there recent positive announcement and the huge drop in price but now I doubt that I will because in the results statement today they are being clobbered in numerous countries already with FOREX issues and Brexit hasn't even hit yet.
In general a deep UK recession with hammer stocks which have a high reliance on the UK for their earnings as its the UK economic activity that is contracting - this is often the case with small caps and the FTSE250 compared to the bigger companies in the FTSE100 which earn huge amounts of their profits overseas in other currencies. So a UK recession will likely see the FTSE100 index outperform the smaller cap indices.
In addition, small caps are generally more reliant on bank financing to keep going as opposed to larger ones with access to the capital markets so they are inherently more risky in a recession in addition to the downturn in activity. Hence you always see Paul talk about the strength of the balance sheet - a strong balance sheet reduces that risk and enables a company a ride out a recession. A weak one coupled with a downturn is a recipe for investor disaster.
So a deep UK recession will likely see a repeat of what we saw on Friday and Monday - large falls in UK focused stocks with smaller falls, even gains in those with a large overseas/defensive profile eg Glaxo, Unilever. Unless of course we enter a more widespread recession including the US, China etc. In which case it will really will be bloody everywhere, though the defensive stocks will still outperform others.
There is a Reuters database I'm going to buy for the site that will help everyone screen on this data. Frankly it's needed now more than ever, but won't be live for some time.
I'm always banging on about the importance to internationally diversify, but you don't have to own international stocks... you can buy local listed exporters (foreign earners)... but you have to know how to find them. We need a way to screen for them in a few clicks.
Prior to this going live on Stockopedia, if people want to dig deeper into the geographic profile of a company they are interested in, the accounts include some information on this. You can download them for a pound from the companies house website.
Happy to be corrected but I think accounts are now free from Companies House - https://beta.companieshouse.gov.uk
Yes that is correct. I have downloaded countless accounts for free
Paul,
Thank you for excellent insights. Brexit will likely lead to prolonged low interest rates which continue to dog the pension funds and therefore companys that maintain them. I saw somewhere that deficits stand around £300bn which is all money that companies won't be able to pay out in dividends or investment. In my view pension fund deficit has stepped up a gear as we go it alone.
best wishes
Just to reiterate on this thread - please can all Brexit comments be posted elsewhere unless DIRECTLY related to today's stock movements and stock results. Yesterday's SCVR comment stream was a shambles.
Please can we keep the signal to noise ratio high on the SCVR. There are plenty of other Brexit Threads to comment on in the Market Outlook section - http://www.stockopedia.com/investment-topics/market-outlook/discussion/
Ed - you could see who the main culprit was with his provocative and arrogant posts. If you need any more evidence go and read the bile he spews out on ADVFN. Just get rid of him.
Ed,
Paul mentioned coming up with a screen for cash-poor companies that may be good for shorting
Is there a way on stocko to screen for the reverse - I do not generally go short but might want to cull less secure companies
That leads on to asking what 'secure' is as the buffer a small cap needs will be a log bigger (proportionately) than a big cap with large reliable earnings
On my way to Crawshaws AGM. Looking forward to trying one of their award winning sausages.
Yes good results from IG Design (LON:IGR), now back above the pre Brexit falls, I do hold some but agree with Paul, not one to top up, think they are quite exposed to any downturn, it's good not much EU exposure though. Re currency yes goods from China will be more expensive but if selling abroad then it should offset that?
Agreed, tired of politics at this stage, let's find some cheap stocks!
Hi Paul, any thoughts on Brammer BRAM?
Considered a bottom fish on this one this am, but given the issues with debt and the lack of NTAV it could get ugly.
Guessing the might need to get a placing underway to ease the pressure?
Cheers, Mark
Hi Mark,
I'm looking at Brammer next!
Regards, Paul.
Thanks Paul. I must have learned something from yourself and Stockopedia over the last 12 months as I arrived at the same conclusion.
Cheers, Mark
Hi Paul,
I attended the Brammer AGM just 6 weeks ago, where I was reassured that trading in the UK business was improving and sales were now growing. I was therefore very shocked by the horrendous profits warning this morning. I find it difficult to believe that the deterioration in trading has occurred so quickly. To me management have a huge credibility problem. The shares may well be value at these levels, but I have taken my punishment and sold all my shares at a whopping loss this morning. To buy them again I would need to see new management.
Best
Keith