Small Cap Value Report (5 Sep 2016) - CAMB, VTU, SDY, KOOV, BLV, CARR, REDS

Monday, Sep 05 2016 by

Good morning!

This morning's report comes to you from an alley on a side street in Corfu old town!

I'm flying back to the UK on Weds. So there will be a normal report today & tomorrow, but Weds will be late I'm afraid, as I don't get back home until about 3pm. I'll still do a report, but it will be late afternoon/early evening on Weds. Sorry about that.

My experiences of fund management

EDIT: Clarification - Fundamental Asset Management

I seem to have accidentally caused some confusion, for which I apologise. Fundamental Asset Management has asked me to clarify that the only part of their business I was involved in was a minor portfolio service called the Small Cap Value Portfolio.

So the SCVP had nothing to do with FAM's core business of IHT portfolio management, which is of course continuing completely as normal! (and is an excellent, well-run, strongly performing service).

One reader apparently misunderstood, and thought that FAM was shutting down, which obviously it isn't! This has caused a few red faces, for which I profusely apologise.

Over the last 3 years, I helped to run a portfolio management service, called the Small Cap Value Portfolio, through an excellent FCA-regulated firm called Fundamental Asset Management (who are specialists in IHT planning portfolios). Working with FAM has been terrific - they're really genuine, decent people, and have a wealth of experience in AIM stocks.

I've not mentioned it here before, as it could have been seen as a conflict of interest (i.e. being seen to drum up new clients by mentioning it here), so Stockopedia asked me not to refer to it here in the past. I did however declare all positions held, within my usual disclosures here, as if I held them personally (which I did in nearly all stocks anyway).

However, seeing as we're winding down the very small SCVP service (due to failing to reach critical mass to make it cost-effective), I thought it would be worth a mention, to pass on some snippets on what I've learned from 3 year's work, helping to (as part of a regulated team) manage other peoples' money.

NB. This has no effect on FAM's main activities, as noted above.

Firstly, it's incredibly stressful! If you lose your own money on a share that goes wrong, it's annoying, but you learn the lessons (if there are any - sometimes it's things you could never…

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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>

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Cambria Automobiles plc is a motor dealer, which is engaged in the sale and servicing of motor vehicles. The Company is engaged in the provision of car vehicle sales, vehicle servicing and related services. It is a retailer of new and used cars, commercial vehicles and motorbikes. It operates on a dealership-by-dealership basis. It operates from approximately 30 sites with a total of over 50 dealer franchises. It operates dealerships across England, from the North West through the Midlands, down to Kent in the Southeast and across Exeter in the South West, trading under local brand names, such as Dees, Doves, Grange, Invicta, Motorparks and Pure Triumph. Its brand portfolio comprises Abarth, Alfa Romeo, Aston Martin, Dacia, Ford, Fiat, Honda, Jaguar, Jeep, Land Rover, Mazda, Nissan, Renault, Seat, Triumph, Vauxhall and Volvo. It also provides ancillary services. It offers finance and insurance for the execution of the transaction along with service plans to maintain the vehicle. more »

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Vertu Motors plc is an automotive retailer in the United Kingdom. The principal activity of the Company is the sale of new cars, motorcycles, and commercial vehicles and used vehicles, together with related aftersales services. The Company is engaged in the provision of management services to all subsidiary statutory entities. The Company operates a chain of franchised motor dealerships offering sale, servicing, parts and bodyshop facilities for new and used car and commercial vehicles. The Company also operates various franchise dealerships, such as Volvo, Volkswagen, Land Rover, Audi, Mercedes-Benz and Jaguar, and operates Honda dealerships in the United Kingdom. The Company operates approximately 125 franchised and over three non-franchised operations across England and Scotland. The Company's subsidiaries include Bristol Street First Investments Limited, Bristol Street Fourth Investments Limited, Vertu Motors (VMC) Limited and Grantham Motor Company Limited. more »

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Koovs plc is a supplier of branded fashion garments and accessories for sale by a third party through Website principally in Republic of India. The Company offers dresses, tops, jumpsuits and playsuits, skirts, trousers and leggings, cardigans and pullovers, lingerie and sleepwear, and swim and beachwear, among others, for women. It offers shirts, t-shirts and polo shirts, vests, jeans, jog pants, shorts, hoodies and sweatshirts, coats and jackets, and innerwear and socks, among others, for men. In addition, the Company offers bags and wallets, accessories, sunglasses, jewelry and watches. The Company offers its products of various brands, including Knockaround, KOOVS, Kultprit, Pataaka, Pepe Jeans, Shuffle, Sole Threads, Vans, Voi Jeans, Modello Domani and Mr Button, among others. The Company's subsidiary is Koovs Marketing Consulting Private Ltd. more »

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66 Comments on this Article show/hide all

Philip Wigg 6th Sep '16 47 of 66

Hi Paul,

Thanks for the report. Hope you've enjoyed your hols.

Any views on the Half Yearly Report from SDM this morning?

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cig 6th Sep '16 48 of 66

In reply to post #149283

This problem can probably be solved in software: split the load among the (many) cells so that they each remain close to their optimal cycle regardless of usage patterns at the whole-car level.

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crazycoops 6th Sep '16 49 of 66

In reply to post #149457

Where/How do you follow Lord Lee Herbie?

Blog: Share Knowledge
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purpleski 6th Sep '16 50 of 66

In reply to post #149391

Hi Paul

On an inflation adjusted basis US$100,000 is now $998,535.27. See

However using the S & P as a proxy for stock prices it opened at 16.66 in 1950 and now stands at 2,183. So up 131 times as opposed to inflation's 10 times. Which shows what a good hedge against inflation stocks are.

I think it is correct to say "$100,000 in 1950 is equivalent to about $1 million today." But that is just my opinion.

Kind regards

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herbie47 6th Sep '16 51 of 66

In reply to post #149556

Well it started about 1 year ago he had all his holdings in one article since then I just look up his registered interests on his House of Lords profile. There were several articles about him and interviews last year, his trading seems to have settled down since January.

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purpleski 6th Sep '16 52 of 66

In reply to post #149493

I think the point about the 100 bagger idea is that if you can find a 100 bagger (let a lone two) in an investing life it can change the returns of your portfolio as it did for Ben Graham. Asos has is currently a 263 bagger but would you have spotted and stayed with it? It is not about finding a stock that is going to perform averagely it is finding the next ASOS or Coke or Nike or Amazon. The list is huge.

People who run small businesses do that all the time. The start a business with a small amount of money and after 20 years end up with something incredibly more valuable.

I think one has to think very long term at least 20 years and probably more like 30 or 40 years. But if you put £20k into a business and stick with it..... I think it is the patience to stick with a stock that prevents more people from having multi baggers. Certainly my best performers have been those where I have held through thick and thin for three or four years.

A current example is Boohoo.Com (LON:BOO) this is now up 237% since i purchased in November and represents 18% of my portfolio. I intend to hold. Even if the stock halves I am still well ahead of where I would have been with any other stock that has come across my radar but if it manages say £5 by 2020 then it will transform my portfolio returns. I am prepared to take that risk.

I recently read a book 100 Baggers which I found informative

May be the above shows some naivety as a relative newbie.

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herbie47 6th Sep '16 53 of 66

Interesting, the FT100 since 1978 is up about x15 and inflation is 5.6x. However as we knew the FT100 has not gone in the last 16 years. Although if you include dividends it's probably ahead of inflation. Ashtead (LON:AHT) has gone up about 30x in last 7.5 years, if you hold for another 10 years you could well have a x100. Also I remember when Stagecoach (LON:SGC) fell to 10p wish I had topped up but did not want anymore exposure, then they went to over 400p before falling back to 200p. Timing is the key with many shares.

Have you read the Naked Trader's book?

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warmerjo 7th Sep '16 54 of 66

Constellation Healthcare - I have googled the history of the CEO, he is indeed a colourful character (as someone mentioned on this site), indeed somewhat too colourful to my liking. I decided to sell my shares to avoid feeling uncomfortable.

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rhomboid1 7th Sep '16 55 of 66

In reply to post #149604

He's not short of self confidence is he?

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warmerjo 7th Sep '16 56 of 66

In reply to post #149607

He reminds me of a certain Mr Terry, CEO of spectacularly failed Quindell.
Own interest at heart, not shareholders interest, IMO.

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crazycoops 7th Sep '16 57 of 66

In reply to post #149562

Thanks Herbie

Blog: Share Knowledge
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Paul Scott 8th Sep '16 58 of 66

In reply to post #149559

Hi Michael,

Oh well, I stand corrected.

It still doesn't feel right to me though, whatever the statistics apparently say.

Regards, Paul.

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purpleski 8th Sep '16 59 of 66

In reply to post #149715

Hi Paul

I know what you mean but if it was the UK the £100k in 1950 is the equivalent of £3.2m. So maybe that's why it doesn't feel right!

Enjoy you duvet day today.

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rjmahan 8th Sep '16 60 of 66

In reply to post #149565

Problem with multi baggers is they become your portfolio.

If Boohoo triples again you have all your wealth in boohoo - therefore for portfolio management purposes you are better selling down - even though it reduces your return it dramatically reduces your risk.

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herbie47 8th Sep '16 61 of 66

In reply to post #149805

It's true if you only have one. Looking at ASOS (LON:ASC) that crashed down so I think it is a good idea to take some profits along the way. I don't think Boohoo.Com (LON:BOO) will do as well as ASOS (LON:ASC) because it is already £1bn, ASOS (LON:ASC) is £4bn but has gone up over 200x.

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crazycoops 8th Sep '16 62 of 66

Yes, that's the reality with multibaggers - the prudent thing is to top slice along the way for portfolio/risk management purposes. It is a fine line between that and running your winners.

Blog: Share Knowledge
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purpleski 8th Sep '16 63 of 66

In reply to post #149571

Hi Herbie

Were you replying to me?


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purpleski 8th Sep '16 64 of 66

In reply to post #149805

Well currently if Boohoo.Com (LON:BOO) triples and in the same period (the period does not matter) the rest of the portfolio increases 30% then Boohoo.Com (LON:BOO) almost exactly 33% of my portfolio and 66% in my other 17 holdings. I am talking just equities not inc cash, property or my business (which preBrexit had a value!:-)).

It may not triple or double from here but I am just trying to explain my thinking.

On the £ASC v Boohoo.Com (LON:BOO) argument I will have to do some more studying of their comparative merits.

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purpleski 8th Sep '16 65 of 66

In reply to post #149460

Yes I quite like MC2 but doubt I will join but Brooks Macdonald (LON:BRK) was in the $90's in the 70's and in 1982 it was in the $500 to $800 range, which makes me question the veracity of the article.

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TMFMayn 9th Sep '16 66 of 66

In reply to post #149460

While I do like Microcap's punchy, optimistic articles, I do have a nagging doubt about Mr Cassel.

He has been asked about his own returns from the strategy he articulates, but has admitted he does not calculate his returns -- let alone publish them. I'd have thought if he's enjoyed several immense winners from his 5-7 share portfolio, he'd be more than happy to write about them for his site.

Instead, he and his contributors cover impressive big winners that none of them own and generally would only have been bought using a fair bit of hindsight.

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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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