Small Cap Value Report (5 May 2015) - GVC, XSG

Tuesday, May 05 2015 by

Good morning!

So, it's General Election week - as we get to decide which dismal set of lying nonentities will nominally be in control for the next five years - the next set of media-trained, clueless departmental spokespeople with (often) no relevant experience at all. The sort of people whose CVs are so lacking in practical experience & entrepreneurial vigour, that in many cases, any business owner would not even consider them for the shortlist, if recruiting for an office admin role supervising perhaps 4 or 5 staff. Let alone a more senior position. Yet they end up running the country!

Still, at least it leaves the civil service and the EU machinery untroubled to get on with running the show as before - in this charade of a democracy. I am currently undecided, and am awaiting today's guidance from Russell Brand, as to whether I should vote Green, Labour, or start a revolution.

GVC Holdings (LON:GVC)

Share price: 446p
No. shares: 61.3m
Market Cap: £273.4m

Trading update - this sounds upbeat and slightly negative at the same time.  Confidence in the year sounds solid though;


KPIs look good, apart from the margin, which is down;


There's an amazingly high dividend yield here - questions have been raised about sustainability of earnings, but it keeps chucking out big divis. From memory, I think this is the company where staff bonuses are linked to dividends - sounds a good idea, providing they don't overpay and strip the balance sheet bare.


Xeros Technology (LON:XSG)

This one is impossible to value, and I see is down 17% today, after previous spectacular rises. It looks a ramped up speculation to me. Impossible to value, and probably over-valued. Lots of punters in it, using stop losses, so lambs to the slaughter. Reminds me of Bioprogress a few years ago - very volatile & lots of punters trading it on margin, so rich pickings for the city spivs, providing they can move the price more than 10% suddenly, to trigger those stops.

The market generally is looking frothy to me, and I think we could be due for a sharp correction in story stocks like this. Social media stocks have sold off in the US, and that seems an ominous sign to me -…

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GVC Holdings PLC is a United Kingdom-based sports betting and gaming company. The Company offer sports betting, casino, poker and bingo gaming solutions via its technology platform. The Company operates in five operating segments: Online, UK Retail, European Retail, Corporate and Other segment. Its Online segment comprises betting and gaming activities from online and mobile operations. Its sports brands include bwin, Coral, Crystalbet, Eurobet, Ladbrokes and Sportingbet; and gaming brands include CasinoClub, Foxy Bingo, Gala, Gioco Digitale, partypoker and PartyCasino. Its UK Retail segment comprises betting activities in the shop estate in Great Britain, Northern Ireland and Jersey; European Retail segment comprises of all retail activities connected with the Republic of Ireland, Belgium, Italy and Spain shop estates; Other segments: includes activities primarily related to telephone betting, Stadia, Betdaq, on course pitches and Intertrader. more »

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Xeros Technology Group plc is engaged in the development and commercialization of polymer bead systems with multiple potential commercial applications. The Company's services include Xeros Sbeadycare and Xeros Sbeadycare XTEND. Its Xeros Sbeadycare is a customized laundry management program that provides a solution across multiple laundry applications, including industrial, hospitality, commercial, dry cleaners, work wear, and even athletics clubs and spas. Its Xeros Sbeadycare XTEND works in three ways: Gentler Cleaning, Stained Linen Recovery, and Cloud-Based Monitoring and Measuring. It offers Sbeadycare CONNECT, which installs meters to measure the water use (both hot and cold), as well as the electricity and chemical data for the entire laundry operation. It offers tumble dryers, such as 80 pound (lb) on-premises laundry (opl) dryer and 120 lb opl dryer. It offers washing extractors with various capacities, such as 90 lb/40 kilograms (kg) extractor and 35 lb/16 kg extractor. more »

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

27 Comments on this Article show/hide all

janebolacha 5th May '15 8 of 27

In reply to post #98122

I really hate to say this about any company
but Tungsten (LON:TUNG) has, imo, a whiff of Monitise (LON:MONI) about it,
lots of spin about a British champion in tomorrow's
next world-beating technology but, in reality, facing
a very hard slog against dozens (or more) other
companies offering the same kind of product.

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CliveBorg 5th May '15 9 of 27

Great opening rant!.Genuine political angst, or that last bottle of wine kicking in, leading to some bottled up whine? Pauly for PM (so called because they only work half the day).

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cig 5th May '15 10 of 27

In reply to post #98128

There's a strong consensus between the main parties on most core policies (nobody is offering a revolutionary programme) so who's in charge is mainly tweaks here and there. Nothing much for markets to worry about.

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Ramridge 5th May '15 11 of 27

In reply to post #98133

re Tungsten (LON:TUNG) I doff my hat to you , Jane. You were very early in telling us that Tungsten was overrated and hyped up, when most (including me) had bought into the story.

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jonesj 5th May '15 12 of 27

That's the problem with modern democracy summarized very well.

People who do not have the nous to run even the smallest business running the country. With no oversight, non-execs or anything.

Also, when the left-wing BBC is the dominant media company, what hope do we have of this being discussed?

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herbie47 5th May '15 13 of 27

Paul talking about valuations I would be interested in your view on Pure Wafer, sp has shot up about 85% in last few days, I really don't understand the announcement.

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herbie47 5th May '15 14 of 27

In reply to post #98140

Unless the SNP hold the balance of power?

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underscored 5th May '15 15 of 27

@Jonesjeff, I would be among others in proposing that left/right are not very helpful terms in trying to frame the discussion on modern politics. Tim Morgan had a bash it over on his blog with what I think to be some helpful insights.

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Fangorn 5th May '15 16 of 27


"Yesterday a friend asked me whether I had read the party manifestos. But why? They have less connection to reality than a TV advert with its fake promises of eternal youth, happiness and sexual fulfilment if you buy the right chocolates / soap powder..."

Only ONE party has come out with a "Fully costed" manifesto - notice the lack of nit picking,and querying aforementioned manifesto?? That's because it is fully costed - the mubers add up and are therefore unchallengeable. Compare that oto the election promises of Lab,Lib Con and SNP which are all Lalala land,pie in the sky manifestos promising the earth, but without saying how they intend to pay for it.

Good riddance to a carnival of nonsense and futility

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cig 5th May '15 17 of 27

In reply to post #98149

The SNP are no revolutionaries either, and have limited bargaining power: if they go too far the natural outcome is a grand coalition. Long term the Scottish issue may or may not cause perennial instability, but that's way beyond markets' attention span.

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Robert Smith 5th May '15 18 of 27

Gosh Paul. You've gone a little overboard in your praise of the political elite don't you think?

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Fangorn 5th May '15 19 of 27


"The SNP are no revolutionaries either, and have limited bargaining power:"

Disagree. They've far too much power should they be propping up Milliband.

"if they go too far the natural outcome is a grand coalition."

Chance of that smaller than slim (assuming youre talking a Lab/Con grand coalition encompassing both "Left" and "Right"

"Long term the Scottish issue may or may not cause perennial instability, but that's way beyond markets' attention span."

Scottish issue? Oh you mean the NEverendum ,and the bi annual instability we will see goign forward as we fight the same battle, over and over, until the SNP get the result they want. What happened to Salmond's "settled for a generation" resignation speech on losing the vote the first time around?

I trust we will get several attempts to get a YES vote then to the EU referndum question.

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mcdermov 5th May '15 20 of 27

One major difference between TUNG and Monitise. TUNG has insider buying, MONI had insider selling. TUNG is at a much earlier stage in its evolution. It is in my opinion, a bit early to be taking it out and shooting it.

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purpleski 6th May '15 21 of 27

In reply to post #98128

Hi Ramridge

I think mainly to do with FTSE100 being a very international index so the result of the UK election has less impact on these stocks. I maybe wrong but that is my take on it.

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Ramridge 6th May '15 22 of 27

In reply to post #98206

Hi purpleski - Thanks for your reply. Actually I could have equally asked the question with respect to FTSE 250, because this index also is near 5 year all time high.
The question will soon be academic :).

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purpleski 6th May '15 23 of 27

In reply to post #98209

Hi Ramridge

Maybe because, to use your great word, the politicians are irrelevant! Certainly in my case, even though I am a Tory, I believe to a large extent that is the case. Certainly in the case of running my business I just get on with running it and hopefully making money, regardless of what the politicians do or what colour they are. I certainly don't turn to the government for help and am actually very mindful of Reagan's saying:

"the 11 most frightening words in the English language are: I'm from the government and I'm here to help"

Corporation Tax and Employers NI are my second and third largest costs so have a very real (uncontrollable) impact on my bottom line.

I just think that most (and please before people leap down my throat I say most meaning more than 51%) business men and PI's would rather see a Tory government because it is the lesser of two evils.

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herbie47 6th May '15 24 of 27

I think people are too focussed on Tories or Labour winning, I think that no one will have a majority, the only possible government will be Labour/SNP, if that does not work then we will have to have another election, oh no not going through all this again.

As for the markets they will not like that, so even if the company is international does not matter.

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Fangorn 6th May '15 25 of 27


I dont think anyone is focused on Tories or Labour winning - nearly everyone resigned to a hung parliament, with the most likely outcome being a Labour/SNP coalition(Despite Millibands protestations of such)

There might well be a "Minority government" which wont last that long as it'll be a Conservative one - propped by DUP/LIbdem on case by case basis.

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herbie47 6th May '15 26 of 27

In reply to post #98229

Well most of the comments here seem to be about Tory or Labour or other policies, no mention of no govt. and possible chaos after the election, I think that is the main concern to the markets.

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Fangorn 6th May '15 27 of 27


I presume that's because one of the main parties will be governing,and the lead, so their policy differences important to understand. As to government - a hung parliament has been on the cards for a long long while.

Agree vis market concerns.

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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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