Small Cap Value Report (30 Jun 2016) - REDD, VNET, AVG, SPRP, COST

Thursday, Jun 30 2016 by

Good morning!

Let's have a day where we don't mention Brexit!

Pensions administrators & Companies House

A friend tweeted yesterday that he'd just been informed that the pension administrator for his SIPP has gone bust. No financial loss is expected, but it could be a bureaucratic nightmare retrieving his investments, and parking them somewhere else. Will he be able to trade in the meantime? Possibly not.

I looked up the accounts of the company in question at Companies House, using their fantastic (and free!) accounts look up service. There was nothing in the figures to suggest that the company was likely to go bust. Mind you, accounts filed at Cos Hse can be 18 months old, or more, so a lot can change in the meantime. Although the accounts for that particular company were clearly the accounts of a very small company, with only a handful of staff, and little in the way of assets.

This got me thinking, I really should check the accounts of the administrator for my own SIPP. I was horrified to find that it only had net assets of £1! However, on closer inspection, it's a subsidiary of Charles Stanley. I checked the group accounts, and they're absolutely fine.

I'm sure many readers have SIPPs, so I strongly suggest that people look up the accounts of the pensions administrator which does all the back office stuff for you, and make sure they are decently solvent. If not, then it might be worth talking to your broker about moving to a different, more financially strong administrator?

Also, I think it's good to get into the habit of checking out private company accounts at Companies House. We lost some money a few years ago, to a local company that fitted expensive blinds. They went bust & we lost a hefty deposit (having paid by cheque, unfortunately - no protection unlike credit cards). Later, I checked out the company's accounts, and it was obviously insolvent. If only I'd checked the accounts before paying them, then the money would not have lost, as I wouldn't have paid it over.

Redde (LON:REDD)

Share price: 153.3p (up 4% today)
No. shares: 303.9m
Market cap: £465.9m

Pre close statement (trading update) - this is the latest in a long series of positive trading updates from this insurance services outsourcing company; for the final quarter ending 30 June 2016 has…

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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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Vianet Group plc is a provider of real time monitoring systems, data management services, and actionable insights for the leisure and vending sectors. The Company's segments include Leisure Services, which includes design, product development, sale and rental of fluid monitoring equipment, data management and related services; Vending, which includes design product development, sale and rental of machine monitoring equipment, data management and related services; Technology, which includes the provision of data management and technology related services, and Fuel Solutions, which includes wet stock analysis and related services. Its Leisure division consists of the core beer monitoring business (including the United States), and gaming machine monitoring. Its subsidiaries include Brulines Trustee Company Limited, Vianet Americas Inc and Vianet Limited. more »

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Avingtrans plc is a United Kingdom-based company, which is principally engaged in the provision of engineered components, systems and services to the energy, medical and traffic management industries around the world. The Company operates in energy and medical segment. The energy and medical segment is engaged in the designing and manufacturing of machined and fabricated pressure and vacuum vessels and process plant and equipment for the power, oil and gas and medical markets. The energy and medical segment is also engaged in the designing and manufacturing of fabricated poles and cabinets for roadside safety cameras and rail track signaling. The Company's geographical locations include the United Kingdom, Europe, North America and Rest of World. The Company's subsidiaries include Crown UK Limited, Stainless Metalcraft (Chatteris) Limited, Composite Products Ltd, Hayward Tyler Ltd and Peter Brotherhood Ltd. more »

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

43 Comments on this Article show/hide all

janebolacha 30th Jun '16 24 of 43

Good article from Phil Oakley:

"Sifting for bargains amid the stock market carnage"

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seadoc 30th Jun '16 25 of 43

In reply to post #140366


Avingtrans (LON:AVG) has just under 28m shares in circulation. £52m is therefore an offer of about 186p per share for about 3/4 of the company. On publication of the offer the share price rose to almost exactly 186p, valuing the company at the cash price of the offer. Completion was confirmed on 27th May since when the sp was maintained until it fell dramatically on Friday, I believe there has been a recent political event. It is not an easy share in which to deal but Tuesday I could pick up small lots of 2k - 5k shares at 163p or just under. The RNS today quantified the plan to return just over half the cash at 100p a share with exact details to follow with the final results in September. I am really hoping for some sort of A and B share options as this is one of the few shares I still hold outside of an ISA with an average purchase price of 88p.


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Howard Adams 30th Jun '16 26 of 43

In reply to post #140435

Hi seadoc

Thank you for that explanation. Your comments have elevated my confidence about topping up Avingtrans (LON:AVG) in my portfolio this morning. I will continue to watch it with interest and await their September offering.


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Dearg Doom 30th Jun '16 27 of 43

In reply to post #140429

Hi Jane,

Really appreciate the links given in your replies. Radio 4 debate link was very enjoyable. Can I  encourage you and anybody else to link anything financial that would be of interest to readers.


Dearg Doom

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aflash 30th Jun '16 28 of 43

In reply to post #140414

This is fantastic.

You get one thumbs up from me. No one else! Yet 15 to 20 thumbs up appear for posts that hardly impinge on my awareness.

Since we are talking about 50% drops from peak to trough over a two year period July 2001 to March 2003 and September 2007 to March 2009 how can investors ignore such signals?

Of course nothing goes down or up in a straight line and there will be plenty of bounces.

Nevertheless the short term tendancy since April 2016 on all the major US indices is for lower highs and lower lows.
The FTSE Brexit bounce is a very rare multi-point swing.

Over the last month I have made 5 sales of the VIX fear index and yet today a buy order got filled at well below my sale prices.

I am selling some overbought Gold, however. It may have further to go but a lot is in the price already.

Keep in touch

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crazycoops 30th Jun '16 29 of 43

In reply to post #140414


As aflash says, that is a fantastic post with very valuable observations and analysis. It has already made me reflect on some gaps in my own thinking and making the right structural decisions based on technical and macro factors. I for one would like to see/discuss more of your analysis as these current events unfold over the next few months - a wonderful opportunity to learn more.

I wonder if you (or Stocko) would consider copying your post into a new thread of its own, so that a separate and ongoing discussion can ensue?

Blog: Share Knowledge
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spaceinvader2 30th Jun '16 30 of 43

Ft100 fell couple of weeks ago on strength in brexit vote polls thurs and fri then boom as bremain got the upper hand mom-thurs of vote week,then crashed fri and mon of this week as panic set in over brexit winning then rallied strongly tues-thurs when everyone thought it ain't so bad.Its the crash coccaine of the indexes-can't understand if myself panic selling panic buying panic selling panic buying-panic selling next too many weak stocks what do others think

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douglas 30th Jun '16 31 of 43

In reply to post #140444

Thumbs up or down do not work on ipad or iphone. Have a 'rec' from me. Cheers.

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Robert corden 30th Jun '16 32 of 43

Charles Stanley's pension admin is EBS. That is a PLC itself, so should it not have moe assets than £1?

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Paul Scott 30th Jun '16 33 of 43

In reply to post #140393

Hi Banzii,

Zanaga Iron Ore (LON:ZIOC) was only of interest to me when the price of iron ore was over $100 or so, because the project only made commercial sense at that sort of level.

I ditched the stock (a long time ago) when iron ore fell to a level where the project would not make commercial sense.

Regards, Paul.

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Paul Scott 30th Jun '16 34 of 43

In reply to post #140351

Hi jimmygee,

I looked at accounts from LPA (LON:LPA) today, and they look excellent. Although the narrative says that H2 probably won't be quite so good.

It looks an interesting little company, on a roll. The drawback with this type of stock, is that they might have just landed a few big contracts, that won't necessarily be followed on. So it's dangerous to chase the price up, because results can then hit a brick wall later. I've had that with numerous micro caps over the years, hence why I tend to avoid things this small.

Overall though, it does look worthy of deeper research, as today's figures looked good to me.

Regards, Paul.

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dscollard 1st Jul '16 35 of 43

In reply to post #140462

Thanks, granted a Small Caps thread is not the place to discuss macro or technical in-depth Though by extension nor is it one to discuss Brexit in detail

By the same token, as it now appears that capital flows into UK stocks seem to correlate with GBP,
then discussion of the impact on all caps is probably a good idea.

Carney's announcement yesterday was significant as we may also be heading for NIRPs. It also challenges my hedge on UKX but that is heavily asymmetric on my risk profile so I will happily take it off on a good rally

On Fear I use the CNN Fear and Greed index as it uses multiple inputs including VIX, Put/Call ratios , breadth etc. It is a better blended view of risk and is updated daily. I don't trade VIX as it is very lumpy and have got caught with contango and bakwardation in the past,. Probably  my ignorance on the instruemnt though

Like I say I use fundamentals as much as technicals so happy to be inclusive in other threads. Relegation to separate threads just enhances the divisions and misunderstanding between the camps

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aflash 1st Jul '16 36 of 43

In reply to post #140492

Yes agree or learn.

To conclude my own contribution on technical analysis I say:

It was partly to wean the comments off Brexit but that event has far more impact on small and mid caps. Technical analysis of individual stocks is only reliable where the data is constant and volume high.
I only consider trading patterns for companies in the FTSE 100, although among the 250 and Allshare I look closely at HIs and LOs, buy falling knives and sell anything that is popular.

Attempts to match recognized technical analysis patterns to, for example, small resource exploration and drilling companies is unreliable.

So to come the full circle to my first comment that this is not the forum, I have been surprised how many big caps have poor Stock Ranks and how many medium and small caps have good ones. Public pyschology moves household names long after they have become mature industries. Up and coming companies will eventually make it but not UK orientated ones in the short term. Only take over bids will produce out-performance. We are better off looking for those in this comments section than boring other contributors with our oscillators and indicators.

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dscollard 1st Jul '16 37 of 43

In reply to post #140498

I am not a huge fan of patterns though some have uses: I favour those which align to sensible underlying principles such as areas of supply or demand in historical price action (like double bottom or tops). To me they have to have a rationale in the physics of price rather than the zealotry of Elliott waving and the theory of crowd psychology. It is often the extremists from the Elliott/Gann camps that rightly (imo) give their flavour of technical analysis a poor reputation and hence technical analysis in general

I tend to focus more on volume-price-time interactions and metrics and to align to the trendlines that are formed from these underlying principles. Observance of/or the breaking of these trendlines tends to have good underlying reasons in terms of changes in sentiment or changes in ownership of major players in the market. Price action is physics driven by human sentiment.

No matter what framework we use, fundamental, technical, macro it is simply to provide a statistical edge on the chaos that is the markets.
I have little respect for any camp that believes itself to be superior to another. Just because your hammer is shiny doesn't mean everything is a nail

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crazycoops 1st Jul '16 38 of 43

In reply to post #140492

I am not criticising you making the post on this thread but I think it will get lost over time on the SCVR thread, "what date was that great post on macro and technical analysis?". My point was that it deserves a thread of its own so that a separate and ongoing discussion can ensue over the weeks/months ahead. Of course, I could copy the post myself but I think it is better if you do so and therefore "lead" the thread.

Entirely your decision of course...

Blog: Share Knowledge
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herbie47 1st Jul '16 39 of 43

In reply to post #140429

Thanks for posting that. I see Stagecoach (LON:SGC) which was one he picked out is down 10% today, can't see any news why.

OK I see JPM have cut its rating, seems a bit overdone the fall.

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aflash 1st Jul '16 40 of 43

In reply to post #140507

OMG this improves with the exchange. Stocko should publish it as an educational thread. I am busy with the markets now but would reply this about Elliott Wave.

When it 'gets it right' it is uncanny how accurate the price movements are. The problem is that if you miscalculate the beginning of your trend or counter-trend the whole sequence will be 'off.'
Fortunately or un-fortunately I have never been able to internalize the system so use simpler methods. This places me more or less or 'your side' although even you use some indicators that are more complicated than mine.
Many software packages offer Fibonacci retracement tools now and I subscribe to one. Candlesticks are the only price display I use and the same software has an interpretation tool. Finally I am working on retracements and extensions on the x and y axes, i.e. price AND time for symetry calculations. This is new and has not yet influenced my trading but RSI, Volume, retracements and candlesticks help a lot.

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aflash 1st Jul '16 41 of 43

In reply to post #140513

Ask Ed to do it for you. I agree. See my last post.

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Pantastic1 1st Jul '16 42 of 43

The mention of problem with SIPP providers also applies to ALL stockbrokers. If they do go bust you can only get (I think) £50.000 recompense from the government protection scheme.

I used to have 3 ISA providers which were all above that limit.

Although I have left one with more than the limit, I now (for safety) have 8 providers. Not easy to manage - but relatively safe.

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Carcosa 1st Jul '16 43 of 43

Not quite accurate wrt compensation scheme. If the Stockbroker goes bust then the shares are still yours as they are in a segregated account. However this is essentially an honour system and if any fraudulent activity has occurred then it is only after an investigation has subsequently occurred and if assets are missing from your account and your stock broker is unable to make good the difference then that part is subject to protection.

Of course if you still have paper certificates or CREST membership then you are safe from a 'regular' bankruptcy (assuming no fraud activity linked to the latter).

Either way it will undoubtedly take a LONG time for the investigation and awards to be made; years.

Sticking with a large Stockbroker is more likely to be safer than smaller brokers.

It is not true to say that ALL stockbrokers are associated with the government protection scheme. Only those that are authorised by the FCA

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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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